Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Mandatory penalty u/s 11AC of the CEA, 1944 is attracted only when allegations of fraud, collusion, willfulmis-statement, suppression of facts etc. with intent to evade payment of duty against respondent are invoked in SCN - understanding of AR is not correct - Revenue appeal dismissed: CESTAT

REVENUE is in appeal against the order passed by the Commissioner(Appeals) wherein he has dropped the mandatory penalty imposed u/s 11AC r/w Rule 25 of the CER, 2002 by the adjudicating authority on the premise that provisions of section 11AC has not been attracted in the show-cause notice.

The Revenue representative submitted that in the case of Rajasthan Spinning & Weaving Mills (2009-TIOL-63-SC-CX), the Apex Court has held that although duty and interest has been paid before issuance of show-cause notice the assessee is required to pay mandatory penalty.

Income Tax

Whether co-developer of Special Economic Zone qualifies to be developer for purpose of claiming benefits u/s 115JB - YES: ITAT

THE assessee company was engaged in the business of real estate and other allied activities. Assessee claimed deduction under Section 14A. In the year 2008-09 the Assessing Officer disallowed an amount of Rs.27,24,000/- u/s 14A as expenses pertaining to earning of exempt income. The amount of disallowance in the year 2009-10 was Rs.20,17,000/-. Assessee had claimed exclusion of income earned by its SEZ business for the purpose of calculating profit u/s 115JB of the Act.

The issues before the Bench are - Whether deduction u/s 14A read with Rule 8D has to be allowed where the assessee has sufficient interest free funds and where the assessee has earned income instead of incurring expenditure in the form of interest; Whether where the disallowance under Section 14A was made on notional basis, disallowance u/s 14A could be added back for the purpose of calculation of book profit and Whether a co-developer of Special Economic Zone qualifies to be a developer for the purpose of claiming benefits u/s 115JB. And the verdict partly goes in favour of the Revenue.

Service Tax

Bus reservation charges is for conduct of tours and, therefore, it rightly forms part of tour operator services as defined in law - demand upheld, however, penalty is not leviable u/s 78 of FA, 1994 since activity was under dispute and department cannot allege suppression or willful misstatement of facts - except for above modification, Appeal dismissed: CESTAT

THE appellant undertakes tours to various places and they entered into agreements with various parties and for the services rendered they are collecting amounts under the heads 'Bus Reservation Agreement', 'Seat Reservation Agreement', Nasik Darshan', and 'Tour Extension'. They are discharging service on the charges received for seat reservation, Nasik Darshan and Tour Extension. However, no service tax liability is discharged on the consideration received for 'Bus Reservation'.

See our Columns Tomorrow for the judgements