Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

There is no time limit under rule 16 of CER, 2002 for availing CENVAT Credit on goods returned to factory - appeal allowed with consequential relief: CESTAT

ON going through the provisions of Rule 16 of the Central Excise Rules, 2002, the appellant is entitled to take credit of duty paid by him at the time of clearance of the goods received back by him as defective. There is no time limit under rule 16 ibid. Therefore, the contention of the learned AR is not acceptable. As the appellant are entitled to take credit as per rule 16 of the Central Excise Rules, 2002, therefore, they have taken credit correctly.

Income Tax

Whether assessee is liable to capital gains tax on relinquishment of right to allotment of shares in lieu of advances paid - YES, rules ITAT

ASSESSEE Company is engaged in the business of manufacturing and sale of bulk drugs. While completing the assessment, the assessing officer held that Rs.10 crores received as compensation for foregoing right to acquire the shares of Krishnapatnam Port Co. Ltd., [KPCL] as short term capital gain instead of assessee's claim that it was not taxable since the cost of acquisition of such right was to be taken notionally as 'NIL'. The assessee company also claimed that right to acquire equity shares was not a capital asset as per section 2(47) of the Act and compensation received for waiver of such right was a capital receipt and the same was not taxable.

Service Tax

IPO financing fees, Processing fees and Recovery of common expenses - prima facie not leviable to Service Tax: CESTAT

PRIMA facie, the activity undertaken by the applicants is for the investments in the bank assigned by the IPO issuing company. The amount of interest income which the bank shares with the applicant is not because applicant is promoting or marketing of any of the services provided by the bank. Therefore, the applicants are not liable to pay service tax in this category and made out a case for 100% waiver of pre-deposit.

See our columns Tomorrow for the judgements