Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

CENVAT-Appellants are job workers carrying out manufacturing operations on behalf of the principal & paying duty-Credit of Tax paid on Services received cannot be distributed as an ISD by principal manufacturer and availed by job workers-CENVAT availed by job workers incorrect in law-appeals dismissed: CESTAT

IT is alleged that M/s. Merck Specialties Limited who distributed the credit did not have any manufacturing unit of their own and the appellants are only job-workers who undertake repacking/re-labeling of goods imported/procured by M/s. Merck Specialties Ltd. It is also alleged that the input service credit distributed by M/s. Merck Specialties Ltd. pertains to services such as car hire charges, outward transportation, clearing and forwarding charges, manpower recruitment agency services, maintenance and repair services and Custom house agent's services, event management services and since these input services were not used either directly or indirectly by the appellants in relation to the manufacture and clearance of the final products from the place of removal they are ineligible to avail the credit on the same.

Income Tax

Whether when assessee converts premises into gym by installing necessary equipments, even then its income is to be treated as rental income from house property - NO: ITAT

THE assessee company is initially in ship-breaking business and subsequently the company changed its business to conducting gymnasium and fitness business centre. The assessee also changed its name. The assessee entered into two separate business centre agreements for giving the premises for running a fitness centre. The A.O found that the assessee had received rental income of Rs. 18,75,000/-. The assessee computed the said rental income as business income. The AO treated the rental income as income from other sources and thereby disallowed various expenses such as depreciation on car and municipal tax which were not paid during the year.

The issues before the Bench are - Whether rental income can be considered as business income when this was not a case of simple letting out of a premises but the assessee had developed and prepared the premises as a fitness centre/gymnasium by installing the all requisite equipments, machines and other facilities and Whether disallowance of Municipal taxes by invoking section 43B is justified when the amount has been paid on or before the due date of filing the return of income u/s 139. And the verdict goes against the Revenue.

Customs

There is no contemporaneous import value available and no expert opinion or any import by another importer as is required for enhancement of the value-Revenue appeal rejected: Tribunal by Majority

THE Commissioner (A) observed that the Revenue has not advanced any argument for rejecting the transaction value, which is required to be accepted in terms of Rule 4 of Customs Valuation Rules. He has further observed that no reasoning stands given by the original adjudicating authority for enhancement of the value; there is no contemporaneous import value available and no expert opinion or any import by another importer as is required for enhancement of the value.

See our Columns Tomorrowfor the judgements