Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Commercial or Industrial Construction Service - Laying of pipelines for water supply projects run by Gujarat Water Supply and Sewerage Board, not leviable to tax – NCC case (2010-TIOL-789-CESTAT-BANG) – followed: CESTAT

THE purpose of buying water and bringing it from Narmada Dam was not for selling it, but for supplying it to needy people. In this case, buying and selling is incidental. The purpose is supply of water to the needy citizens of the State. The term used "for commerce" would mean that only purpose would be buying and selling, which is definitely not the case here. The term used "primarily for commerce" would mean that primary purpose should be buying and selling and the other purposes also may be served incidentally. In this case, purchase and sale of water are incidental and the main purpose is supply of water to needy citizens of the State.

Income Tax

Whether when assessee borrows funds at high interest rate from sister concern and invest same in another sister concern which yields low dividend, AO is right in questioning wisdom of assessee's decision, and is justified in disallowing interest expenditure - NO, rules High Court Full Bench

THE issue before the Full Bench of the HC is - Whether when assessee borrows funds at high interest rate from sister concern and invest the same in another sister concern which yields low dividend, AO is right in questioning the wisdom of assessee's decision and, therefore, is justified in disallowing the interest expenditure. And the full bench answer is NO.

Central Excise

Goods should be assessed in stage in which they are removed - all through out, stand of department is to include Erection & Commissioning charges and value of bought out items: CESTAT

THE department initiated proceedings against the respondent for including the erection and commissioning charges and value of bought out items in the assessable value of the product, which emerges at the customer's site. Accordingly, a show-cause notice for demanding differential duty along with proposal for penal action was issued against the assessee and the Director.

See our columns Tomorrow for the Judgements