Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Service Tax - Tax with interest paid before SCN - non payment of tax when liability is known - Penalty @ 25 percent payable - No penalty under both Section 76 and 78: High Court

IT is now well settled that the liability cannot be imposed both under Section 76 and 78. Therefore, in this case the liability to pay penalty is only under Section 78. In fact the proviso to Section 78 makes it very clear that if penalty is payable under this Section, the proviso to Section 76 shall not apply. Thereby no penalty could be imposed both under Sections 76 as well as 78. Therefore, in this case the penalty is to be construed under Section 78. To that extent, the appeal succeeds. Once Section 78 is attracted, proviso to Section 78 makes it clear, a person who is liable to pay penalty in addition to payment of tax and interest, if he pays the said tax and interest within 30 days from the date of determination of the liability by way of an order the penalty payable is only 25%.

Income Tax

Whether while computing indexed cost of acquisition of asset sold, which was acquired under a Gift, assessee is entitled to benefit of indexation from date of purchase of asset by previous owner - rules in favour of assessee: High Court

ASSESSEE declared long term capital gains arising from the sale of a residential flat which was received to the assessee from his daughter by a gift deed. The flat was purchased by the daughter of the assessee i.e. the previous owner on 29/1/1993 and gifted to the assessee vide gift deed dated 1/2/2003. The assessee sold the flat on 30/6/2003. During assessment proceedings, the assessee contended that the gains arising therefrom were liable to be computed as long term capital gain, by deducting from the total consideration received, inter alia, the amount of indexed cost of acquisition and contended that the indexed cost of acquisition had to be determined with reference to the cost inflation index for the year in which the cost of acquisition was incurred i.e. on 29/1/1993.

Central Excise

Cenvatted capital goods destroyed due to natural causes in year 2005 - no provision in law to seek reversal of Cenvat credit initially availed: CESTAT

THE flash floods of 26th July 2005 had one more casualty. Cenvatted Inputs and capital goods lying in the factory of the assessee got destroyed. Insurance claim settlement saw the assessee getting a sum of Rs.1,39,69,851/- and which excluded VAT and CENVAT. Incidentally, the said claim included an amount of Rs.27,77,437/- on account of loss of capital goods on which CENVAT was availed. The Department certainly wanted to have its pound of flesh on the clearance of "Cenvatted capital goods".

See our columns Tomorrow for the judgements