Jurisprudentiol - Monday's cases
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Valuation - Physician Sample - Transaction Value for samples manufactured on job work; Pro rata value for free samples - CESTAT
WHEN physician samples manufactured and cleared to brand owners/ buyers on principal-to-principal basis for a consideration, which are further distributed by the buyer free of cost to physicians/doctors, the same is required to be assessed to duty on the transaction values.
As regards the physician samples manufactured by the appellants on their own behalf and distributed free of cost, the issue is no more open for arguments inasmuch as the Larger Bench of the Tribunal in the case of Cadila Pharmaceuticals Ltd. Vs CCE Ahmedabad - has held that valuation of such physician samples is required to be made on the basis of pro rata
Income Tax
Income tax - Whether when assessee is given licence to manufacture denatured spirit but also manufactures arrack under compulsion for supplies to Govt, assessee in such a case loses entitlement to investment allowance u/s 32A - NO, rules HC
THE assessee filed the return of income for 1986-1987 claiming net loss of Rs. 16,54,000/-. By a subsequent return, the loss was revised downward to Rs. 16,09,450/-. The assessee claimed investment allowance, which was allowed by the ITO. The CIT on scrutiny found that investment allowance cannot be allowed as the petitioner manufactured rectified spirit and denatured spirit and also sold arrack after diluting the rectified spirit. Therefore, in exercise of powers u/s 263 of the Act, the CIT revised the order on 26.02.1990, aggrieved by which, the assessee filed an appeal. The ITAT allowed the appeal holding that item 1 of Eleventh Schedule disqualifies manufacture of only potable liquor from claiming investment allowance and that the rectified spirit and denatured spirit do not come within the purview of item 1. Aggrieved by the order of the ITAT the Revenue sought a reference to the High Court.
Service Tax
Service Tax on reimbursement of salaries - prima facie activity undertaken by applicant is covered under Manpower Supply Services. Pre-deposit ordered: CESTAT
THE applicant was engaged in the business of manufacture of Steel Ingots but due to heavy losses in steel industry, they could not run the factory. Due to this reason, the company was unable to clear the dues to its creditors. Therefore, the creditors approached the Bombay High Court for liquidation of the Company for recovery of their dues. Before the High Court, an arrangement was made and as per the arrangement the plant was leased out to M/s. Ferro Alloys Corporation Ltd., on Leave and License agreement. This agreement is being renewed from time to time. Arrangements were made like, all the employees of the applicant were engaged by M/s. Ferro Alloys Corporation Ltd. (FACOR in short) and their salaries, service charges and other office expenses should be paid by M/s. FACOR and the applicant will disburse to the respective employees.
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