Jurisprudentiol - Monday's cases

By Vijay Kumar

Service Tax

Board Circular 56/5/2003-ST cannot substitute a notification issued u/s 93 of FA, 1994 - ST demand confirmed but cum-tax benefits extended: CESTAT

IT is submitted that prior to 1.07.2001 the appellants were paying the service tax on the assessable value including reimbursable expenses. However, after 1.7.2001, they were not including the reimbursable expenses in the assessable value of service. It is submitted that the issue was settled only by the Larger Bench in the case of Sri Bhagvathy Traders vs. CCE 2011-TIOL-478-CESTAT-BANG and prior to that there were divergent views on the issue. Inasmuch as since they were in bonafide belief that the reimbursable expenses are not to be included in the assessable value, the larger period cannot be invoked and, therefore, the demand is not sustainable.

Income Tax

Whether when assessee has declared income from partnership firm he is right in pleading for exclusion of income from property occupied by firm - NO: ITAT

THE assessee files salary income stated to have been received from five partnership firms. The assessee also disclosed income as a financial advisor for investment in mutual fund. The assessee also received commission income. As per the AO, the assessee had not shown any "notional income" from the residential flat. According to the AO, the assessee was required to show rental income from the said flat in terms of Section 22. The AO held that the assessee was unable to prove that flat was indeed used for the business purpose of the assessee. The CIT(A) held that the assessee had not established that the property was used by the staff member, therefore, action of the AO was confirmed by rejecting the ground of the assessee.

The issue before the Tribunal is - Whether when the assessee has declared the income from the partnership firm he is right in pleading for exclusion of the income from the property occupied by the firm. And the verdict goes in favour of the Revenue.

Central Excise

Stay/Dispensation of pre-deposit - Fatty Acid, Soap stock and Spent Earth which are resultant products of processing of crude oil - Whether exempted under Notification No 89/95 CE as waste arising in the course of manufacture of exempted goods - Pre-deposit reduced to 75 lakhs from 1 Crore - High Court

TAKING note of the reasons stated by the Counsel for the assessee, and the decisions cited, the High Court found that interest of justice would be served and the interest of the revenue would also be protected by directing the assessee to deposit a sum of Rs.75,00,000/- within a period of six weeks as against the direction of the Tribunal to deposit Rs.1crore. As regards the applicability of the decision of the Mumbai Bench of the Tribunal, the same has to be thrashed out by the appellant/assessee only at the time of the final hearing of the appeal before the Tribunal.

See our Columns Monday for the judgements