Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Commission agent is directly concerned with sales rather than sales promotion - Sales commission services are not Input Services - Revenue appeal allowed: CESTAT

NONE of the illustrative activities, viz.. "Accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, is in any manner similar to the services rendered by commission agents nor are the same in any manner related to such services. Under the circumstances, though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agents not being analogous to the activities mentioned in the definition, would not fall within the ambit of the expression "activities relating to business". Consequently, CENVAT credit would not be admissible in respect of the commission paid to foreign agents.

Income Tax

When assessee incurs costs for purchase of export quota, unutilisation of such quota is necessarily to be treated as revenue loss: ITAT

ASSESSEE claimed deduction u/s 80IA. AO disallowed the claim made by assessee observing that as per modification made by Finance Act, 2001 as per clause (d) the plain reading in respect of the airport could mean that deduction under section 80IA(4)is admissible to the assessee who develops, operates and maintains an airport. As per the agreement between the assessee and the Airport Authority of India shows that A.A.I. intended to extend the runway for which tenders were called and the assessee got contract to extend the length. Developing, operating and maintenance or airport is a very vast infrastructure facility having numerous operations. Issues before the Bench are - Whether the assessee is entitled to deduction u/s 80(IA) for only developing a part of the airport and not operating and maintaining the same as these are not the cumulative conditions to be fulfilled; Whether the unutilized quota for export of goods is allowable as revenue loss or capital loss and Whether the advances given to staff and to suppliers remained unrecovered written off are allowable as revenue expenditure. And the verdict goes in favour of the assessee.

Service Tax

Amount collected as ‘contingent liability' cannot be treated as ST per se - provisions of s.73A(2) of FA, 1994 are not at all attracted to case - Appeal allowed: CESTAT

THE appellant constructed flats for sale during the period May, 2006 to December, 2006. During the period of construction, they entered into agreement of sale of flats, which on completion of the construction was sold to the prospective buyers. In view of the confusing legal position, the appellant collected sums from the prospective buyers of flats as ‘contingent liability" towards the service tax amount, if any, payable to the Central Excise department for the sale of the flats. After issue of a Board Circular, the appellant returned the entire money collected as contingent liability to the buyers of the flats.

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