Jurisprudentiol – Friday's cases

By Vijay Kumar

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Exemption - Expert Opinion should be given due importance - beneficial notification should be given a liberal interpretation: SC

IT is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words.

Income Tax

Whether when assessee fails to deduct tax at source from salary paid to expats, amendment in Sec 201 by Finance Act, 2009 enables Revenue to overcome limitation of initiating proceedings even for FY ending before April 1, 2007 - NO: ITAT

A search was conducted on 11/09/2007 in the premises of the assessee, a U.S. based NGO, established in 1943 and engaged in aid and relief work in India for a number of years. The assessee did not deduct tax at source on salary and perquisites of its expatriate employees. The issues before the Bench are - Whether when non-resident assessee fails to deduct tax at source from the salary paid to its expat employees, the amended provisions of Sec 201 by Finance Act, 2009 enable Revenue to overcome the limitation of initiating proceedings even for FY ending before April 1, 2007 and Whether when decisions of some HCs are contrary to the decision in the NHK Broadcasting Corporation, even then the law laid down by the jurisdictional HC is a good law. And the verdict goes against the Revenue.

Service Tax

Activity of storage and retrieval of records of banks and corporate houses viz. discharged cheques, vouchers, agreements, books of accounts etc. which were not intended for sale and do not have any commercial value – Not leviable to Service Tax under the category of "Storage and Warehousing of goods" as "goods" should be saleable: CESTAT

THE various old records such as discharged cheques, vouchers, books of accounts in respect of which the service was rendered by the appellant to his clients such as banks and corporate houses for management of the records, cannot be considered as storage and warehousing of "goods" as defined in the Finance Act, 1994 read with section 2(7) of the Sale of Goods Act, 1930.

See our columns Tomorrow for the judgements