Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Income tax - Whether term aircraft is different from term aeroplane, and thus, different depreciation rates are to be applied - NO, rules ITAT

THE issues before the Tribunal are - Whether the term 'aircraft' is different from the term 'aeroplane', and thus different depreciation rates are to be applied; Whether where the assessee fails to prove that the remuneration paid to director of the company is as per the market rate, the disallowance u/s 40A(2) is rightly made particularly when there is substantial increase in the last as compared to preceding year and Whether the expenses incurred in cash due to the rules laid down by the Airport authority of India and as per urgent business need, no disallowance can be made u/s 40A(3). Assessee's appeal partly allowed.

Central Excise

Settlement of case - Immunity granted from imposition of penalty u/s 11AC by Settlement Commission - By approaching Commission allegation of suppression etc. in show-cause notice remained unproved - mere allegation does not prove charge - Supplementary invoices issued in respect of Excise duty of Rs.14.7 Crores are cenvattable: CESTAT

THE facts go thus - Against the input supplier M/s Chennai Petroleum Corporation Limited (CPCL), the jurisdictional authorities at Chennai had booked a case and issued a show cause notice demanding additional excise duty which had been allegedly evaded by suppressing the material facts.

M/s CPCL found it prudent to approach the Settlement Commission, Customs & Central Excise, Additional Bench, Chennai and for settling their case and seeking available immunities. Their application was allowed by the Commission and resultantly M/s CPCL paid up the total Central Excise duty demanded of Rs.31.5 Crores. The case was finally settled by an order dated 23.11.2007 and the Bench granted them immunity from imposition of penalty and prosecution under the Central Excise Act, 1944.

Service Tax

Yoga and Meditation Services - Applicants on their own wrote to department in October, 2002 detailing their spiritual meditation activities and sought clarification - they were informed in April, 2003 that no service tax is payable, however in March, 2009 it was clarified that it is a taxable service – Demand for earlier period - limitation - Prima facie case - Pre-deposit waived and stay granted: CESTAT

THE applicant(s) submitted that “Health and Fitness Services” was defined in the year 2002 and it included meditation also. Furthermore, out of abundant caution the applicants on their own in October, 2002 wrote a letter to Service Tax department detailing their spiritual meditation activities and sought clarification about the levy of service tax on meditation. After consulting the Central Board of Excise & Customs, the Chief Commissioner informed them vide letter dated 25th April, 2003 that service tax registration is not required for meditation and yoga. However, on further communication in March, 2009 the Central Board of Excise & Customs clarified that yoga and meditation falls under taxable service and is chargeable to service-tax. Therefore, the applicants started paying service tax with effect from 18th March, 2009.

See our columns Tomorrow for the judgements