Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Manufacture - Rosin and Turpentine - process of lifting water is incidental to manufacture; Supreme Court decision prevails over Board Circular: SC

THE operation of lifting of the water from the well to the higher levels, is so integrally connected with the manufacture of "Turpentine Oil" and "Rosin", that without this activity it is impossible to manufacture the said goods and therefore, the processing of the said raw material in or in relation to manufacture of the said final goods is carried on with the aid of power.

It is well settled proposition of law that Circulars and instructions issued by the Central Board of Excise and Customs are no doubt binding in law on the authorities under the respective Statutes but when this Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Courts or the Tribunal, as the case may be, to direct that the Board's Circular should be given effect to and not the view expressed in a decision of this Court or a High Court.

Income Tax

Sec 32 - Whether when Revenue fails to bring any fact on record to doubt authenticity of transaction, assessee is entitled to claim depreciation on asset leased back to vendor - YES, rules High Court

AO disallowed the claim of the assessee of 100% depreciation on the equipment purchased by it from the Haryana State Electricity Board, which was already installed at the said Board's Thermal Power Station at Faridabad and immediately thereupon leasing the said equipment back to the HSEB on certain terms and conditions relying on the decision of Apex Court in the case of McDowell and Company Limited v. Commercial Tax Officer (2002-TIOL-40-SC-CT) stating that the transaction was not a case of purchase and lease back of equipment, but was a pure financial and loan transaction.

Foreign Trade Policy

Telecom Sector SFIS – DGFT Circular 38 dated 15.7.2010 is ultra vires FTP – Para 3 Quashed – The foreign exchange earned cannot be defined as remittance of foreign exchange less an outflow: HC

THE policy document has defined both the eligibility and the entitlement with reference to foreign exchange earned. Where the policy intended that the concept of the net foreign exchange should be applied it has stipulated so expressly. In the absence thereof, it was wholly impermissible for the DGFT, by means of a policy circular, to direct the implementation of what constitutes clearly an amendment of the policy.

See our columns Tomorrow for the judgements