Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

ST - 'levy of service tax on distributors/sub- distributors of films and exhibitors of movie' - Board Circular 148/2011 upheld: HC

WITH more multiplexes and single theaters on rise right from cities to moffusil, there is a huge rise in business over all. The source of concept of service tax lies in economics. Huge money is involved in film industry, coupled with host of commercial activities right from the Box Office to theatrical exhibition. Having regard to the variant modes of arrangements between the distributors/sub-distributors of films and exhibitors of movie, CBEC was justified in issuing the Circular

It should be noted that the clarification was not suo-moto, but on account of request made by the association of exhibitors. The circular makes this aspect abundantly clear, since it states that there are also other varied modes of transaction in the industry.

The apprehension of the petitioners that the assessing authority shall mechanically proceed to levy service tax is without any basis. Therefore, the revenue is right in contending that the writ petitions are pre-mature.

Income Tax

Whether forex loss incurred in course of advancing loan to a Mauritius-based subsidiary for acquiring another company in South Africa is to be treated as capital loss - YES: ITAT

THE issues before the Bench are - Whether in case of short deduction of tax at source, the provisions of section 40(a)(ia) would not be applicable at all; Whether if there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payment falling under various TDS provisions, the assessee can only be declared as an assessee in default u/s 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act; Whether the foreign currency exchange loss incurred in the course of advancing loan to the subsidiary company for the object of acquiring a company in South Africa is to be treated as revenue loss or capital loss; Whether the loss suffered by the assessee company in the forward contract has to be allowed as business expenditure - Whether even if the claim of loss was not made in the return of income, the CIT(A) ought to have admitted the claim as an additional ground and examined the issue on merit;

Central Excise

CE - Reversal of CENVAT Credit before issue of Show Cause Notice - SCN does not detail grounds for imposing penalty - application of Section 11AC would depend upon existence or otherwise of conditions expressly stated in section - No penalty: HC

AS far as present case is concerned, it is no doubt true that the assessee originally made the claim for CENVAT credit. As rightly submitted by the counsel for the assessee, the same was availed on the basis what had been stated so by the department. However, subsequently, on receipt of intimation from the department in October 2003, the assesee reversed the credit immediately thereon and paid the duty. On a reading of the show cause notice, it can be held that it is bereft of any details which are required to be considered for the purpose of levy of penalty under Rule 13(1) of the CENVAT Credit Rules 2002.

See our Columns Wednesday for the judgements