Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Manufacture - process of converting `Tarpaulin Fabrics' into `Tarpaulin made-ups' would not amount to manufacture – Supreme Court

MANUFACTURE implies a change but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation, a new and different article must emerge having a distinctive name, character or use.

Income Tax

Income tax - Sec 37 - assessee reimburses costs incurred by Andersen Worldwide SC as per RBI approval - any disallowance of expenditure made by AO following doctrine of tokenism and adhocism not justified: ITAT

THE assessee, Arthur Andersen & Co. is an Indian firm of Chartered Accountants. The assessee has signed a Member Firm Interfirm Agreement, with Andersen Worldwide SC (earlier known as Arthur Andersen & Co. SC (AWSC), to receive various technical services from AWSC, for its professional use, against an obligation to share the costs incurred by AWSC. Under the agreement with AWSC, the assessee is permitted to use the name. Under approval from RBI, the assessee is allowed to reimburse the costs incurred by AWSC. THE issue before the Tribunal is - Whether on the facts of the case, the AO was justified in disallowing expenditure incurred on ad hoc and token basis. And the plain answer is NO.

Service Tax

Service Tax 'Storage and warehousing - Buffer subsidy received by Sugar Factory for storage of Sugar as per Government directive' No Service - No Tax - High Court

THE Assessee is engaged in the manufacture of sugar. The Central Government vide letter dated 23.1.2003 directed the Assessee to maintain buffer stock of 3790 MT of sugar for the period from 18.2.2002 to 17.12.2004 of free sale sugar. The said quantity of buffer stock was further revised from 3790 MT to 4010 MT vide letter dated 9.6.2003. To compensate the Assessee, the Government of India extended buffer subsidy towards storage, interest and insurance charges for the said buffer stock of sugar. The Revenue issued a Show Cause Notice to the Assessee (Respondent) raising the demand of service tax amounting to Rs.11,50,955/- alleging that amount received by Respondent-Assessee as buffer subsidy is covered within the definition of 'Storage and Warehousing' services.

See our columns Tomorrow for the judgements