Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Mandap keeper Service or Convention Service - Neither SCN, primary authority nor Appellate order had alleged or concluded that renting appellant's Banquet Hall to pharmaceutical, insurance and other companies was for holding formal meetings or assembly which is not open to general public, specific ingredients for transaction to fall within ambit of "convention": CESTAT

THE appellant is registered for providing Mandap Keeper service. The period in question is 24.7.2001 to 10.6.2004 and during this period they were remitting service tax under the category of "Mandap Keeper" after availing abatement in terms of exemption Notification No.12/2001-ST dated 20.12.2001 and filing regular returns.

Invoking the extended period of limitation, the Revenue vide SCN dated 3.1.2006 alleged that the services are properly classifiable under ‘Convention Service' and demanded Service Tax of Rs.1,98,038/-, apparently by denying the exemption.

Income Tax

Whether principle of apportionment embedded in Sec 14A has any application when no expenditure has been incurred in relation to exempt income and primary object of investment was to acquire controlling stake in Group Concern and not earning any income out of investment - NO: ITAT

THE assessee received dividend income of Rs. 36,90,456/- which is exempt from the Income Tax. The assessee worked out the disallowance u/s 14A at Rs. 103915/- and added back the same in the statement of the total income. The Assessee claims that no borrowed funds was used and the interest expenditure is on the bank term loans, therefore, there is no nexus between the interest expenditure and the investment in shares. The AO disallowed the administrative expenses by applying Rule 8D. The AO accordingly worked out the disallowance at Rs. 8,83,569/- on administrative expenses. The CIT(A) has confirmed the disallowance made by the AO.

The issues before the bench are: Whether principle of apportionment embedded in section 14A has any application when no expenditure has been incurred in relation to the exempt income and the primary object of investment was to acquire controlling stake in the group concern and not earning any income out of investment and whether depreciation has to be allowed on written down value (WDV) after reducing the actual depreciation allowed in the earlier years. And the verdict favours the assessee.

Central Excise

Exemption under Notification No 3/2001 CE to Paper and Paperboard - Two registrations given for same plot having common facilities cannot be treated as two factories for benefit of exemption - Tribunal confirms demand for normal period.

THE respondent is engaged in manufacture of paper and paper board chargeable to central excise duty. Sometime in the year 1994, they made a declaration to the jurisdictional central excise authorities that they have set up another factory for manufacture of the same products and applied to the jurisdictional central excise authorities for separate excise registration. The plot location of both the units I &II is the same. The jurisdictional Superintendent of Central Excise, after verification issued central excise registration to the other unit also.

Both the units, were manufacturing the same final products and both of them were availing of exemption under notification no.47/97-CE dated 1.3.97 and its successor notifications no.5/98-CE dated 2.6.98, no.6/2000-CE dated 1.3.2000 and no.3/2001-CE dated 1.3.2001 respectively which exempted paper and paper board and articles made thereof in a factory starting from the stage of pulp, which contains not less than 75% by weight of pulp other than bamboo, hardwoods, soft wood, reeds (other than sarkanda) or rags. This exemption was available in respect of first clearance in a financial year upto a specified limit as mentioned in the notification.

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