Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

There is no provision for imposing personal penalty on the Director under the Finance Act, 1994 - Appeal allowed: CESTAT

A penalty under section 77(c) of the Finance Act was imposed by the Commissioner of Central Excise, Customs & Service Tax, Goa on the appellant, who is a Director of Top Security Ltd. , for delaying the payment of service tax by Top Security Ltd.

The appellant, Shri Diwan Rahul Nanda is before the CESTAT with an appeal and a Stay application.

The Tribunal ordered:

"As there is no provision for imposing personal penalty on the Director, under the Finance Act, 1994, therefore, the impugned order is not sustainable. Accordingly, after waiving the requirement of pre-deposit, we allow the appeal by setting aside the impugned order."

Income Tax

Income tax - Whether when assessee earns exempt share income, disallowance u/s 14A is warranted only with reference to expenditure incurred and not any other allowance like depreciation, admissible under other provisions - YES: ITAT Special Bench

THE issues before the Special Bench are - Whether when a partnership firm is a transparent vehicle under the Partnership Act, it is not so under the Income Tax Act - Whether, for the purpose of Income Tax Act, a firm can be equated with a limited company - Whether the relationship between a firm and its partners can be said to be that of an employer and employees - Whether when the firm pays salary and interest income to partners, the same is allowed as expenditure in the hand of the firm but taxed as business income in the hands of partners so as to avoid double taxation - Whether since share income is excluded from the total income of the partners, any expenditure incurred has to be diallowed as per Sec 14A - Whether provisions of Sec 14A only refer to disallowance of expenditure - Whether such provisions also apply to statutory allowance admissible u/s 32. And the verdict goes in favour of the assessee.

Customs

No employer, worth his name, will put such terms and conditions in respect of his employees holding the employee responsible for all the wrong doings - it is evident that the appellant CHA was receiving commission and not the other way around - CHA has violated the provisions of CHALR, 2004 by sub-letting his licence and also undertaking various transactions in violation of the CHALR provisions stands clearly established - revocation of licence cannot be faulted - Appeal dismissed: CESTAT

THE Directorate of Revenue Intelligence, Mumbai investigated a case relating to undervaluation and mis-declaration of a consignment of shoes illegally imported. It was found that the CHA had aided and abetted the act of smuggling of the goods. Accordingly, an Inquiry was conducted against the CHA under the provisions of CHALR,2004 and certain charges were made:-

Under Regulation 12 of the CHALR, 2004 - CHA licence cannot be sold or otherwise transferred. In the case under consideration, they allowed another person to use the licence for a monetary consideration which is in violation of Regulation 12 of the CHALR, 2004. It was further imputed the CHA failed to obtain authorization from the importer and without obtaining valid authorization they violated the Regulation 13(a) of the CHALR, 2004.

See our columns Tomorrow for the judgements