Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Whether when franchisees conduct learning classes as per agreement with assessee, payment made in this regard is covered by provisions of Sec 194C - NO, rules Delhi HC

THE assessee provides its services across the country through education centres run by the assessee itself or by its franchisees. While completing the assessment, the AO noted that the assessee had debited a sum of Rs.6,38,64,018/- to the profit and loss account as payment made to franchisees. On a perusal of the agreement between the assessee and one of its franchisees, which was apparently taken as a specimen agreement, the AO took the view that the payment made by the assessee came within the provisions of Section 194(C) of the Act as a payment made for carrying out a work in pursuance of a contract and accordingly the assessee ought to have deducted tax from the payment at the applicable rates. He further took the view that since the assessee failed to deduct the tax as contemplated by Section 194C, the amount cannot be allowed as a deduction in view of the embargo placed by Section 40(a)(ia).

Service Tax

Services utilized for construction/erection and installation of Ammonia Storage tank outside factory premises (at the port) to store imported inputs – since taxable services are covered under definition of ‘input service' prima facie strong case in favour – Pre-deposit waived: CESTAT

THE applicant is engaged in manufacture of excisable goods and the inputs were imported which are being stored at the port and subsequently transported to the factory for use with the manufacture of the final product. In view of the definition of ‘input service' during the relevant period, prima facie, the applicant has a strong case in their favour. Stay petition is allowed. The pre-deposit of duty, interest and penalty is waived and recovery of the same is stayed during pendency of the appeal.

Central Excise

CENVAT Credit - shortage of Raw Material - Penalty Confirmed - Appellate authority and Tribunal should be very precise: HC

IN the process of giving brief statement of submission of the appellant, if all the grounds running in several pages are quoted in any order or judgment and that too in a different font, then it may be possible that instruction may have been given to the Steno or any other person to type verbatim the grounds raised in the appeal starting from one point to the last point. Such practices are required to be deprecated and the Appellate authority and the Tribunal should be very precise in narrating the facts of the case and the grounds raised by the parties.

See our columns Monday for the judgements