Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Apprehension of department that expenses incurred for sale of pressure cookers (valued u/s 4A) have been included for deduction is not supported by any evidence – Revenue appeal dismissed: CESTAT

DURING the period from April 2000 to March 2001, the assessee claimed a deduction on account of dealer discount, taxes and octroi, equalised freight and interest on receivable @ 36.28% of the sale price. Assessment was done on provisional basis. The assessment was subsequently finalised and the Assistant Commissioner allowed deduction on account of dealers discount and taxes and octroi. The discounts were allowed on the basis of Chartered Accountant's certificate submitted by the assessee.

Income Tax

Ransom paid to kidnappers of one of directors - allowable deduction: HC

ASSESSEE is a private limited company, engaged in the business of manufacturing and sale of bidis. Its director ‘S' was kidnapped and immediately an FIR was lodged but the police remained unsuccessful to get the director released from the dacoit and a sum of Rs.5,50,000 was paid by way of ransom. The said amount was claimed as General Expenses by the company. AO disallowed the claim stating that the ransom paid to the kidnappers was not an expenditure incidental to business. CIT (A) allowed the claim of the assessee. ITAT also confirmed the order of the CIT(A).

The issues before the Bench are - Whether when the Director of the company is on business tour and is kidnapped by dacoits; ransom money paid to get him releases is to be treated as incidental to business as per Sec 37(1) and whether the payment made towards ransom for saving the life of the Director of the assessee-company is prohibited by law and thus, not allowable expenditure. And the verdict is that it is allowable expenditure.

Customs

MRP based CVD assessment applicable to importers who affix their own brand name on notified goods and supply to institutional consumers: CESTAT

IT is settled law that substantive statutory provisions should be strictly construed. Upon such strict construction, if the goods in question should be held to have been manufactured by the assessee, it should bear clear markings indicating that it was made, produced or manufactured by them. It is not in dispute that the packaged commodity imported by the appellant did not bear any such marking. There is nothing in the definition of “manufacturer” to show that mere affixture of trade mark would suffice the requirement of the inclusive definition."

See our columns Thursday for the judgements