Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Service Tax - CENVAT Credit - Capital Goods cleared as such - assessee would be entitled to reverse whatever Cenvat credit availed on the value to be assessed on the date of such subsequent sale as capital goods: CESTAT LB

THE use of capital goods is to spread over many years. A decision to the effect that assessees can bring in capital goods, use it for a few days and then remove it without reversal of any CENVAT credit taken is not consistent with the overall scheme of CENVAT credit and can lead to abuse of the scheme. On a conjoint reading of Rule 3(4) with the provision added to Rule 3(5) with effect from 13.11.2007, the Board's Circular dated 01.07.2002 along with Board's letter dated 26.05.1993, it is quite clear that the inputs or capital goods when disposed of after putting it into some use over a period of time, then the assessee would be entitled to reverse whatever Cenvat credit availed on the value to be assessed on the date of such subsequent sale as capital goods.

Income Tax

Whether when assessee purchases shares at a price lower than quoted market price, there is any provision in I-T Act to tax the deemed difference between the two - NO: Delhi High Court

THE assessees are HCL Employees and Investment Company Limited (HEICL) & Associated Techno Plastics Private Limited (ATPPL). ATPPL had purchased 77929 shares of HCL Limited, which were sold by HEICL. These shares were purportedly purchased at the price of Rs.6.02 per share though the market price on the date of sale, i.e., 16th December, 1988 was Rs.41/- per share, being the quoted price on the recognised stock exchange. The issue before the Bench is - Whether when the assessee purchases shares at a price lower than the quoted market price, there is any provision in the I-T Act to tax the deemed difference between the two. And the ruling partly goes against Revenue.

Customs

Matter in appeal before High Court; not appropriate for Larger Bench of Tribunal to decide the issue: CESTAT LB

MATTER referred to Larger Bench due to two conflicting decisions of the Tribunal. The later order of the Tribunal is in appeal before High Court. Larger Bench does not consider it appropriate to answer this reference. The pronouncement of the High Court on due consideration of the ratios of Colombowala and KI International, would provide a wider jurisdictional guidance than in an order of reference. The appellant is at liberty to pursue the appeal on merits before the Member having the roster without awaiting the result of the appeal in High Court.

See our Columns Tomorrow for the judgements