Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Service Tax - Works Contract Service in relation to execution of works contract in respect of canals - Lift Irrigation covered by Exemption Notification 41/2009 - Pre-deposit waived: CESTAT

THE appellant submitted that the services provided by them in respect of works are in respect of Lift Irrigation Schemes for lifting the water from source to the canal and for further transmission of water. After considering the submissions and the meaning of the words 'in respect of', prima facie conclusion is that the expression covers the work undertaken which is in relation to canals. Undisputedly, the pump house and other facilities were erected by the appellant to lift the water from lower level to higher level of canals. In these circumstances, the appellant has made out prima facie case for complete waiver in view of the fact that the period involved is subsequent to October 2009 and during the relevant period, exemption notification was available.

Income Tax

Whether during adjudication u/s 263, CIT can bring new materials into picture to prove that order of AO is erroneous - NO: Delhi HC

ASSESSEE is an Indian commercial broadcasting television network Company. During assessment, disallowance of interest of Rs.1,83,503/- was made. Assessee had claimed deduction u/s 80HHF of Rs.14,73,12,763/- which was specifically mentioned and allowed in the assessment order. Subsequently CIT issued show cause notice u/s 263 on the basis that in AY 2002-03, deduction was claimed u/s 80HHF, for which essential conditions include export or transfer of any film software, television software, music software, telephone news software including telecast rights. The issues before the Bench are - Whether inadequate inquiry made by assessing officer would render the order erroneous, so as CIT can exercise its power u/s 263; Whether commissioner u/s 263 can initiate proceedings on the basis enquiries, in matters or orders which are already concluded; Whether CIT can issue show cause notice merely on the basis that, AO exercising its quasi judicial powers has concluded a matter differently; Whether CIT can remand a matter to AO to decide whether the findings recorded are erroneous; Whether during adjudication u/s 263, CIT can bring new materials into picture to prove that order of AO is erroneous and Whether notice u/s 263 can be raised merely on suspicion basis. And the verdict goes against the Revenue.

Central Excise

Rule 7(2) of CCR - Recipient of inputs is expected to know his immediate supplier and there is no further requirement to find out as to from where his supplier has procured inputs - penalties set aside and appeals allowed: CESTAT

INASMUCH as Rule 7(2) of the Cenvat Credit Rules requires the recipient of the inputs to know the identity of the supplier of the goods, which in the present case was second stage dealer, the said rule stands satisfied by the manufacturer with second stage dealer having deposed that they had in fact supplied to the manufacturer, payment for which were made by them in cheque, no reasons to uphold the findings of the lower authorities that no inputs were actually received by them. There is neither any allegation nor any evidence on record to show that such inputs were procured from some other alternative source. Admittedly, the said appellant could not have manufactured final product, without the receipt of the inputs, in which case revenue findings that no inputs were actually received cannot be upheld. Recipient of the inputs is expected to know his immediate supplier and there is no further requirement to find out as to from where his supplier has procured the inputs.

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