Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Commissioner (A) forgetting basic principles while deciding stay application - ordering for pre-deposit on the premise that applicant had not pleaded any financial hardship and then dismissing their appeal for failure to comply with his order citing provisions of s.35F of CEA, 1944 r/w s.83 of FA, 1994 is not proper in eyes of law - Matter remanded: CESTAT

THE appellant had challenged the jurisdiction of the adjudicating authority on the ground that they had obtained a centralized registration but the lower appellate authority decided the stay application on the premise that the appellant had not pleaded any financial hardship by ordering a pre-deposit of the entire dues confirmed.

As the pre-deposit order was not complied with, the Commissioner (A) dismissed their appeal citing the provisions of Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 and, therefore, the appellant is before the CESTAT.

Income Tax

Whether compensation paid for 'Right of Way' to Government agencies which owned land, for laying gas pipelines can be capitalized in cost of pipelines - YES: ITAT

THE issues before the Bench are - Whether reopening of assessment is based on a "change of opinion", even when the AO has not specifically applied his mind during the original assessment proceedings on the depreciation claimed by the assessee; Whether the mere fact that the case of the assessee was accepted as correct in the original assessment for an assessment year, precludes the AO from reopening that assessment u/s 147(a); Whether compensation paid to third parties for crops standing on the land acquired for laying pipelines can be capitalized in the cost of the land for claiming depreciation, even when the same was paid only for avoiding delay in the project; Whether compensation paid for the "Right of Way" to Government agencies which owned the land, for laying gas pipelines underneath their land can be capitalized in the cost of the pipelines; Whether further expenses incurred in security deposit can be capitalized in the cost of such pipelines and Whether acquiring limited right to use a land is an intangible asset. And the verdict partly goes in favour of the assessee.

Central Excise

CENVAT - Agreement between appellant (job worker) and principal manufacturer has been entered into to circumvent provisions of Rule 4(4) of CCR, 2004 inasmuch as while principal manufacturer has claimed depreciation under Section 32 of IT Act, 1961, Appellant has availed capital goods CENVAT credit - Stay application dismissed and Pre-deposit ordered of adjudged dues: CESTAT

THE appellants are manufacturers of confectionery on job work basis for M/s Parle Products Pvt. Ltd. They received capital goods from M/s Parle Products Pvt. Ltd. under a rent agreement and took CENVAT Credit of Rs.33,44,067/- of the duty paid on these capital goods.

The Department was of the view that since these capital goods have not been acquired by the appellant from a financing company under a lease or hire purchase or loan agreement, they are not eligible for capital goods CENVAT credit in terms of the provisions of Rule 4(3) of CENVAT Credit Rules, 2004.

See our columns Tomorrow for the judgements