Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Since under statute, power of granting refund are with Assistant/Deputy Commissioner of Central Excise, passing of refund orders by Additional Commissioner has rightly been held as unsustainable: CESTAT

EVERYTHING about this case is interesting - right from adjudication till appeal. And, therefore, it was but natural that the case had to go back to the "proper" adjudicating authority. Coming to think of it, it is just unimaginable as to how "powers are usurped" by the higher adjudicating authorities citing that they can exercise powers of any officer who is subordinate to him!

Income Tax

Income tax - Whether when assessee has deducted tax at source on payments made to related party, and there is no attempt to evade taxes, even then AO can disallow such payments questioning necessity of availing services from sister concern - NO, rules ITAT

ON scrutiny of the assessee's income tax return, the AO observed that the assessee had paid service fees to its associate person, while being under the same control and management. The assessee's explanation for justification of expenditure was found to be general in nature, which did not specify any services which needed specific expertise. The AO noted that the assessee's agreement was brief and basic and did not indicate that it had been prepared by an expert. The assessee company already had a team of professionals looking after financial matters, and the agreement / reports did not reflect any benefit to the assessee's business. The AO therefore held that the service payment was superfluous expenditure and had no correlation with the business of the assessee whatsoever. The AO disallowed the entire amount and made an addition to the assessee's income. The AO also disallowed the commission on sales paid, for similar reasons.

Service Tax

Valuation - Stock Broker Service - No amount other than commission or brokerage made by a stock broker is covered in ambit of assessable value of service: CESTAT

THE dispute in all the appeals relates to the inclusion of certain charges like Demat Charges, Turnover charges, BSE Charges, SEBI Charges etc in the taxable value. It is the case of revenue that all these charges are includable in the taxable value under the provisions of Section 67 of the Finance Act, 1994.

All the appellants contested the demand on the ground that other than Brokerage or Commission charges, no other charges will form part of the taxable value.

See our columns Tomorrow for the judgements