Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Whether services provided could be vivisected and services provided within taxable territory alone brought to tax on proportionate value received therefor - Pre-deposit ordered of Rs.60 lakhs: CESTAT

THE appellant is an American company registered in British Virgin Islands (tax haven!) operating in the specialized area of mineral exploration and prospecting and has developed advanced technology for the purpose. The recipients of the alleged taxable service ONGC and RIL entered into agreements with the appellant for exploration and prospecting, for identification of oil and gas reserves in the sea bed within the territory authorised for exploration by India.

Income Tax

Whether any disallowance of expenditure u/s 14A is warranted if dividend income is earned on shares held as stock in trade - YES: ITAT

THE assessee, a company, is engaged in the business of trading in shares and therefore its main object is to earn profit on purchase and sale of shares and not to earn dividend income from such shares. On the date fixed for hearing, assessee's counsel filed an application for adjournment on the ground that two of the partners of the CA firm, who had briefed the counsel, had gone out of station and therefore the case may be adjourned. But when the counsel for the assessee was asked to show whether this firm of CA had been engaged by the assessee through any POA having been executed in their favour, the assessee's counsel was unable to show the same. Therefore the request for adjournment was turned down in the absence of any power of attorney executed by the assessee in favour of the firm of the CAs.

The issue before the Bench is - Whether any disallowance of expenditure u/s 14A is warranted if dividend income is earned on the shares held as stock in trade. And the verdict goes against the assessee.

Central Excise

Valuation - Assessee clearing flux cored wire/welding electrodes to Unit no. 2 for reconditioning work of old/used grinding rollers - Revenue alleges that valuation should be in terms of rule 5 and not rule 8 as no excisable goods have been manufactured -argument of Revenue has no basis whatsoever - Revenue appeal dismissed: CESTAT

THE respondent-assessee has two units named as Unit No.1 and Unit No.2 and they are engaged in the manufacture of wear plates and sleeves of iron and steel. The respondent also manufactures flux cored wire and welding electrodes at Unit No.1 and removes the same to Unit No.2 for undertaking manufacturing activities at Unit No.2 and discharges excise duty liability on such flux cored wire and welding electrodes at 115% of the cost of production as provided in Rule 8 of the Valuation Rules, 2000.

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