Jurisprudentiol - Monday's cases

By Vijay Kumar

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

'BSS' has not been carved out of 'franchise service' - If service is classifiable under "Business support service” from a given date and said service is not carved out of any of existing services, it cannot be construed that service was taxable prior to that date: CESTAT

THE appellant was awarded a contract by Maharashtra State Road Transport Corporation (MSRTC) for the sole right of transporting parcel, courier and allied services on/in ordinary buses having luggage carrier of the licensor for the entire State of Maharashtra and Inter-State services of Maharashtra for the purpose of above business. The right granted under the contract was for right to book, deliver, transhipment, handling, loading & unloading and transportation of parcels, specified allied services and to carry out the business of courier by the ordinary buses of the licensor for all types of clients including Government, Semi-government, banks and public undertakings for a period of three years from October 2005 to September 2008.

Income Tax

Whether when assessee discontinues manufacturing activities and commences trading from part of premises and also earns rental income by leasing out remaining part, it is entitled to set off business loss from trading against rental income on which Sec 24 benefit was also availed - NO: HC

THE assessee was in the business of manufacture of air conditioners. The assessee had given building as well as land on lease for the production of printing inks and received total rental income at Rs.39lacs. Assessee filed return of income declaring income. The assesse made a claim of expenditure under the head repair & maintenance. Assesse had also claimed traveling and conveyance expenses which were disallowed by itself in the computation of income. Except for these expenses consisted of remuneration to director, salary & wages, visiting fees, insurance expenses and interest expenses. Assessee had also shown sales against which cost of goods sold was shown. Assessee had also shown purchase of one AC, which had been shown as part of the closing stock. Assessee's case was processed under Section 143(1).

THE issue before the Bench is - Whether when assessee discontinues manufacturing activities and commences trading from part of premises and also earns rental income by leasing out remaining part, it is entitled to set off business loss from trading against rental income on which Sec 24 benefit was also availed. NO is the HC's answer.

Central Excise

Laptop with special software used for managing functionalities of machine is eligible for credit as capital goods: CESTAT

THE appellants are manufacturers of aluminium extrusions falling under Chapter Heading 7604 of the First Schedule to the Central Excise Tariff Act, 1985. For controlling the machines used in such manufacture they used a laptop on which special software required for managing the functionalities of the machines was installed and the laptop was so used. Revenue issued a Show Cause Notice alleging that the said laptop was not either part of any machine or linked with the production process. After considering the submissions of the appellant, the adjudicating authority denied the Cenvat credit for the reason that the laptop is movable and hence not capital goods. Aggrieved by the said order, the appellant filed appeal with the Commissioner (Appeals) who rejected their appeal.

See our Columns Monday for the judgements