Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

BAS - Merely because particular sub-clause of section 65(19) has not been specifically mentioned in SCN it does not vitiate the SCN or proceedings initiated thereunder: CESTAT

THE appellant is registered with the department under the taxable service category of "Steamer Agent Services". The department was of the view that the services rendered by the appellant merited classification under "Business Auxiliary Service" with effect from 1-7-2003 and accordingly issued a SCN on 26th August, 2007 proposing to demand ST of Rs.1,37,36,500/- along with interest & penalties.

The CCE, Thane II upheld the charges and confirmed the ST demand. Penalties and interest also visited the appellant. An amount of Rs.46.64 lakhs paid by the appellant was appropriated towards the ST liability for the period 16-6-2005 to 31-12-2005 along with an interest payment of Rs.2.28 lakhs.

Income Tax

Whether when assessee, noted lyricist by profession, has both professional and residential setup in same apartment, sums spent on installation of LIFT can be claimed as revenue expenditure - Only Partly: ITAT

THE assessee is a lyricist and a well-known film personality. The assessee stated that he operates his profession from the premises 6th and 7th floor, Juhu Sagar Samrat, Co.op Housing Society Limited. The building was an old seven storied building having one lift. Since the lift was old, it used to get out of order very frequently, causing substantial hardship to the persons visiting to the assessee for professional purposes. The society was reluctant to spend money to replace the lift. The assessee spent a sum of Rs. 17,32,436/- for installation of a new lift in the building and claimed the same as society development charges in the Profit & Loss Account. The AO disallowed the same and held that the elevators installed was at the cooperative housing society and an essential part of the building to be treated a capital asset, and, therefore, it cannot be considered as revenue expenditure.

The issues before the Bench are - Whether a lift installed by an assessee in the premises of the society apartment can be claimed as revenue expenditure, considering the person has both professional and residential set up in the same apartment; Whether the entire amount of such expenditure can be allowed as business expenditure when the advantage and facility of the new lift is not restricted exclusively for the professional activity of the assessee, but also enjoyed by assessee as well as family members of the assessee - Whether it is a relevant criterion for the purpose of considering the allowability of expenditure that the lift is also being used by other residents of the buildings and Whether the assessee, who is a lyricist by profession can be said to have derived any capital advantage from such expenditure, although the ownership of the lift vests with the society. And the answers partly favour the assessee.

Central Excise

Demand of duty on account of clandestine clearance and under-valuation - Adjudicating authority was not correct in disallowing cross-examination of persons, except cases covered by Section 9D of Central Excise Act, 1944 - Matter remanded: CESTAT

THE appellants are engaged in the manufacture of Ceramic Glazed Mixture known as Frit, falling under Chapter 32 of the Central Excise Tariff Act, 1985. The frit manufactured by the appellant is used as a major raw material for manufacturing Ceramic Glazed Tiles. It is the case of the Revenue that manufacturers of ceramic glazed tiles were engaged in evasion of Central Excise duty. On the basis of the investigations done by DGCEI, proceedings were initiated against the appellants. The DGCEI also conducted parallel investigations against the other frit manufacturers. In one of the search operations conducted by DGCEI on 17.07.2008 on a Ceramic Tile manufacturer, the DGCEI seized incriminating documents along with two computer pen-drives containing incriminating information which according to them contained documentary evidences establishing undervaluation of frit by some frit manufacturers including the present appellants, resulting in demand of duty with penalties.

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