Jurisprudentiol - Monday's cases

By Vijay Kumar

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Transaction through authorized persons - No violation - Penalties quashed - Supreme Court

IT was concluded that it was incumbent upon the Appellants by virtue of the terms of instructions contained in paragraph 3 of the Memorandum of FLM issued by RBI to have verified the bonafides of the persons deputed to them by M/s Hotel ZamZam before handing over the foreign currencies to such persons. It was, therefore, ultimately concluded that the said failure on the part of the Appellants resulted in contravention of the directions contained in paragraph 3 of the Memorandum of FLM read with Section 6(4), 6(5) and 7 of FERA. Ultimately the Appellants were found guilty for the said contraventions and the penalty came to be imposed.

Income Tax

Whether employees' contribution to PF credited after statutory date under respective Provident Fund Acts but within due date of filing return u/s 139 is eligible for deduction u/s 36 - NO: High Court

THE assessee is a Corporation run by State of Gujarat, engaged in the business of public transportation. The assessee filed their return of income declaring total loss which was again filed through a revised return declaring more loss on the basis of the final audited accounts and auditor report u/s 44AB after considering the observations/comments of the Statutory Auditor. The case was selected for scrutiny and several notices were issued u/s 142(1) followed by notice u/s 143(2), to which finally the Accounts officer of the assessee along with its Chartered Accountant submitted submissions showing provident fund contribution collected from the employees and deposited with PF Trust as well as Corporation's contribution towards contributory provident fund and its deposit with the PF Trust.

THE issues before the Bench are - Whether employees' contribution to provident fund credited after the statutory date under the respective Provident Fund Acts but within the due date of filing return u/s 139 is eligible for deduction u/s 36 of the Income Tax Act; Whether amendment in section 43B vide Finance Act, 2003 which deleted the second proviso can be applied for interpreting section 36(1)(va); Whether section 36(1)(va) and section 43B operate in two different fields with respect to two different contributions and Whether merely because with respect to employer's contribution Second Proviso to Section 43B which provided that even with respect to employers' contribution, assessee was required to credit amount in the fund within the due date of the relevant Act, is deleted, it can be said that section 36(1)(va) also stands amended. And the verdict goes against the assessee.

Central Excise

SCN invokes extended period and alleges that the appellant has availed abatement wrongly -word ‘wrongly' means that there was no deliberate act by the appellant - duty liability not contested but paid along with interest - mandatory penalty u/s 11AC of CEA, 1944 not imposable: CESTAT

THE appellant is a manufacturer of Anti-freezing coolants (Heading 3820) which is subject to valuation on MRP basis. The appellant was claiming abatement of 40% as per the Notification 2/2006-CE(NT) and paying appropriate duty. On 01.03.2008, vide a superseding Notification 14/08-CE(NT) the abatement on the said product was reduced to 38% but the appellant continued to avail 40% abatement. This notification was again superseded by Notification No. 40/08-CE(NT) dated 24.12.2008 and the abatement was reduced to 35%. Since this date, the appellant paid the duty after availing the correct abatement of 35%.

Thanks to the Audit conducted by the department, the availment of excess abatement of 2% by the assessee during the period 01.03.2008 to 23.12.2008 came to notice and upon pointing out the same, the appellant paid the differential duty along with interest.

See our Columns Monday for the judgements