Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

CENVAT Credit - Cement used for foundation/supporting structure of machinery cannot be regarded as ‘capital goods' - Duty paid on cement not eligible as CENVAT Credit: CESTAT Larger Bench

IN the instant case, since the assessee availed credit in respect of duty paid on cement used for foundation/supporting structure for machinery, treating the same as “capital goods”, the Larger Bench, following the ratio of the Rajasthan High Court judgment on a similar issue, held that the provisions of sub-rule (2) of CENVAT Credit Rules, 2002 are similar to the provisions of CENVAT Credit Rules, 2004 and therefore, the issue referred to the Larger Bench was no longer res integra .

Income Tax

Income tax - Whether arrears of rent received after court order are to be taxed in relevant year in which they were due - No, it is to be taxed in year of receipt: HC

WHEN the matter was still at the stage of notice u/s 148 pertaining to the aforesaid AY, the assessee filed its return for the year 2000-2001. In this return, the assessee disclosed receiving of arrears of rent and appended a note stating that this amount was not taxable in this year. In the assessment order passed, the AO accepted this position and did not tax the said receipt pertaining to arrears of rent albeit on the ground that in respect of this receipt notice u/s 148 for the relevant years had already been issued. The questions before the Bench are - Whether maintenance and other charges are deductible from rent while calculating Annual Letting Value of the property and whether the arrears of rent received by the assessee pursuant to the final order passed by the court can be taxed in the relevant year to which the rent relates. And the final verdict goes in favour of the assessee.

Customs

Assessment of imported goods found short in quantity at time of filing of ex-bond Bills of Entry - No conflict in decisions rendered by coordinate Benches of Tribunal - Matter returned to referral Bench for deciding case on merits: CESTAT Larger Bench

THE assessee imported three consignments of edible oils during March 2003 through Kakinada port. The consignments were surveyed by independent surveyors in the presence of suppliers' representatives, importer, master of the vessel and Customs and ullage survey reports were prepared. Based on these reports, the assessee filed Into-bond Bills of Entry for bonding the imported goods. Thereafter, the assessee, on different dates filed several ex-Bond Bills of Entry and cleared the edible oils by declaring quantities as per shore-tank receipts. Since the department noticed shortage of quantity, a letter was issued to the assessee to pay duty on the quantity found short. In lieu of this, the assessee filed three Bills of Entry for the short quantity, which were assessed provisionally pursuant to which duty was paid under protest. The original authority assessed the goods on the basis of ship ullage survey reports.

See our columns Tomorrow for the judgements