Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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Appeal - Appeal dismissed on ground of limitation - does not merge: SC

SUPREME Court had in a plethora of decisions had categorically, observed that if for any reason an appeal is dismissed on the ground of limitation and not on merits, that order would not merge with the orders passed by the first appellate authority.

Service Tax/Arbitration

Principal can deduct Service Tax from the Bills of the contractor: SC

THE respondent as the contractor had to bear the service tax under clause 9.3 as the liability in connection with the discharge of his obligations under the contract. The appellant could not be faulted for deducting the service tax from the bills of the respondent under clause 9.3, and there was no reason for the High Court to interfere in the view taken by the arbitrator, which was based, in any case on a possible interpretation of clause 9.3. The single Judge as well as the Division Bench clearly erred in interfering with the award rendered by the arbitrator.

Income Tax

Whether when assessee pays regularisation fee to State Govt for violation of building bylaws but State Ordinance later declared ultra vires by HC, assessee cannot claim depreciation on enhanced construction costs as fee paid becomes penal - NO: ITAT By Majority

THE assessee had constructed a hospital building. It was later found out that the assessee had violated certain regulations of Chennai Metropolitan Development Authority (CMDA) in constructing the said hospital building. Meanwhile, the Government of Tamil Nadu issued an Ordinance to add a new section 113A into the Tamil Nadu Town and Country Planning Act, 1971, whereby the State Government may regularize deviations made in constructing buildings. In the light of that Ordinance and the newly brought in section, the assessee opted for regularization of the violation. The violation alleged in the hands of the assessee in constructing the hospital building was thus regularized on payment of Rs. 18,41,787/- to CMDA as regularization fee. This amount was paid by the assessee in the previous year 2003-04, relevant to the AY 2004-05.

See our columns Tomorrow for the judgements