Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Applicant, retired Supdt.of CE, imposed with penalty of Rs. 25 lakhs by adjudicating authority u/s 114(i) of Customs Act - considering facts and circumstances and financial hardship pleaded, pre-deposit ordered of Rs.50 thousand for obtaining Stay: CESTAT

APPLICANT who was Superintendent of Central Excise gave a false certificate that the goods in question were stuffed in his presence. The evidence on record shows that containers were not at the given place at the time when the applicant gave certificate in respect of the goods export. The exports were made on the basis of certificate given by the applicant, and the exporters were entitled for the export benefit of approximately Rs. 4 Crores. Therefore, prima facie it is not a case for total waiver. However, taking into consideration the facts and circumstances of the case and the financial hardship as pleaded, the applicant is directed to deposit Rs.50,000/-within eight weeks.

Income Tax

Whether cost indexation for computing capital gains can be applied by a charitable institution for purpose of Sec 11(1A) - YES: ITAT

THE assessee is a charitable trust carrying on the charitable activity of providing education. For AY 2006-07, the assessee filed return of income declaring a net deficit of Rs.3,61,77,979. During the previous year (PY), the assessee sold land belonging to it and earned capital gains for investing the proceeds in Capital Asset to be held as corpus of Trust. The assessee declared taxable long term capital gains on sale of one of its property for Rs.3,41,169. The return was processed u/s 143(1). Later on the AO issued a notice u/s 148 for the reason that the net consideration received on sale of the property had not been invested in capital assets by the assessee and therefore, the assessee is not entitled for exemption of the entire capital gains u/s 11(1A). The DIT(E) in exercise of powers u/s 263 was of the view that the aforesaid computation of capital gains done by the AO was erroneous and prejudicial to the interest of revenue. Accordingly, the DIT(E) issued a show cause notice proposing to recompute the capital gains.

The issue before the Bench is - Whether cost indexation for computing capital gains can be applied to a charitable institution for the purpose of section 11(1A). And the answer goes in favour of the assessee.

Central Excise

Brass scrap generated out of CENVATTED inputs during manufacturing of zip fasteners sent to job work - there is prima facie merit in contention that the entire exercise is revenue neutral, pre-deposit waived and stay application allowed: CESTAT

THE appellant is engaged in manufacture of Slide fasteners, Chain and Sliders and availing CENVAT credit of the duty paid on inputs. During the period April to December, 2009, the appellant removed the waste and scrap i.e. cutting and drilling scrap of brass generated during the manufacture of the zip fasteners to the job worker without payment of duty under the job work challans. The job worker, in turn, processed the same and after converting the same into brass wire returned it to the appellant who re-used the brass wire for manufacture of the zip fasteners.

The department is of the view that since the material removed from the factory of the appellant to the job worker was waste and scrap, the benefit of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 was not available to the appellant and the appellant was required to pay duty at the time of removal of aforesaid scrap and waste.

See our columns Tomorrow for the judgements