Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Over-invoicing of export goods to get undue DEPB benefit - Illegal fraudulent transactions indulged in by individuals, corporate and even banks - Customs officers not moving their finger to ward off possible abuse; CESTAT orders pre-deposit of Rs 1 crore

THE DEPB scheme, as laid down by CBEC through circulars, required the assessing officer to maintain records, draw samples and take all other precautions to ward off possible abuse of the scheme. Prima facie, these three officers did not move a little finger in this direction. Their conduct was, apparently, irresponsible. When such conduct results in fraud on the Revenue, it assumes dismal proportions so much so that hefty penalty under Section 114 of the Customs Act gets attracted.

Income Tax

Sec 32(1)(iia) - Whether when Directors' report admits that there is no change in installed capacity of company, a contrary CA report cannot contradict same to claim additional depreciation - Assessee's appeal dismissed: ITAT

ASSESSEE Company purchased a new plant and machinery and claimed depreciation @25%. It further claimed additional depreciation @10% relying on the provisions of section 32(1)(iia) of the Act. AO during the course of assessment proceedings noted from the director's reports that the capacity of the unit remained un-changed - AO further observed that the machinery installed not in any way had enhanced the capacity of that process by virtue of which production could have been increased - accordingly the AO disallowed the claim of the assessee.

Service Tax

Services rendered by Research Designs and Standards Organization - Just because organization giving such service is constituted under statute activity does not become statutory function: CESTAT

PROVIDING railway service cannot be considered as a "Sovereign Function " as per the classical understanding of the expression. So the issue has to be seen with reference to the expression "statutory function". Just because the organization giving such service is constituted under a statute of the Parliament the activity does not become a statutory function. Further, the consideration to be paid is not in the nature of fees to recover the cost for doing such service but in the nature of a commercial consideration. In the case of fees charged for testing the equipment to be used on Indian railways system, the matter is on a more disputable footing.

See our columns Monday for the judgements