Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Addition and mixing of polymers and additives to base bitumen does not result in manufacture of a new marketable commodity: SC

IT is trite to state that "manufacture" can be said to have taken place only when there is transformation of raw materials into a new and different article having a different identity, characteristic and use. It is well settled that mere improvement in quality does not amount to manufacture. It is only when the change or a series of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity but is instead recognized as a new and distinct article that manufacture can be said to have taken place.

Income Tax

Whether when assessee purchases development rights for construction project and writes off certain payments as bad debt for extra land space detected after five years, and that too without making a claim, same is to be allowed u/s 36(1)(ii) - NO: ITAT

THE assessee, engaged in construction activities, purchased development rights for its projects known as Gangotri & Yamnotri. Payments were made in this respect. Against the outstanding credit balance of Rs 90,165/- as on 1.4.2004, the payment of Rs 9 lacs was made on the ground that the excess land space utilized for the aforesaid project was required to be adjusted. In view of utilization of the land space which was very negligible, the excess amount of Rs 8,09,835/- was written off being non-recoverable with the understanding that it was on account of the cost of extra land space utilization for the aforesaid project. The profitability in respect of the aforesaid project was already offered for taxation in the earlier years. Therefore, the assessee claimed the aforesaid payments as bad debts.

Service Tax

Review by Commissioner - date of passing the order would be date on which order or decision is made public or notified in some form or when it can be said to have left adjudicator's hand - Order passed after two years, not valid: CESTAT

UNLIKE the Tribunals or the courts, where the orders are pronounced in the open court, the orders passed by a Commissioner of Customs/Central Excise as adjudicating Authority or as reviewing authority under Section 84 of Finance Act, 1994 are not pronounced in the open court. Therefore, in such cases, the date of passing the order would be the date on which the order was dispatched to the assessee, not the date on which the decisions was recorded in the review file as on this date it can be said that the adjudicating authority has ceased to have authority to tear it off and draft a different order.

See our columns Tomorrow for the judgements