Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Aerated waters - Whether contaminated, under or over filled bottles or badly crowned bottles amounts to manufactured finished goods, which are required to be entered under R.G.-1 register and which are exigible to payment of excise duty ? - No - High Court answers question of law in favour of assessee Sets aside order of CESTAT

THE appellant is a manufacturer of aerated waters. Central Excise Officers visited the factory of the appellant and, upon investigation, found that the appellant was draining out the aerated water without entering it first in the R.G.-1 register and were not maintaining any record relating to draining out of the aerated water. The officers also found that the aerated water so drained out was not on account of being unfit for human consumption, but on account of the fact that it was not in conformity with the specifications provided under the Prevention of Food Adulteration Act and Weights and Measures Act, 1976. Accordingly, Show Cause Notice was issued demanding duty and penalty, confirmed in adjudication, upheld by the Commissioner (Appeals) and the Tribunal with partial relief in respect of penalties imposed. The assessee is in appeal before the High Court

Income Tax

Whether even if investments made by assessee earn no income, expenditure incurred on such investments is liable to disallowed under Rule 8D(2) - NO: ITAT

THE assessee is a non-banking financing company engaged in the business of investing in micro finance companies in India. Assessee entered into a fund management agreement with CAPL as per which, the said company would render consultation services to the assessee in the matter of investment etc. as fund manager. Assessee filed its return declaring 'Nil' income. Initially the return was processed u/s 143(1) and refund on account of TDS was also issued to the assessee. Subsequently, assessee's case was selected for scrutiny. During the scrutiny assessment proceeding, after examining the books of account and other details submitted by the assessee, it was noted by the AO that the fund manager i.e. CAPL was holding 18.7% shareholding in the assessee company. One of the Director in the assessee company was also a director in CAPL with 99% shareholding. He further noticed that in lieu of the services rendered, the fund manager was to be paid remuneration to the fund based services. It was further noticed that while computing its income, assessee has disallowed expenditure u/s 14A read with Rule 8D, out of the fund management fees claimed. After examining the details, AO was of the view that the disallowance of fund management fees worked out by the assessee was not correct. On the basis of the agreement with fund manager, AO worked out the fees paid to the fund manager.

The issue before the Bench is - Whether even if investments made by assessee earn no income, expenditure incurred on such investments is liable to disallowed under Rule 8D(2). And the tribunal's answer is NO.

CUSTOMS

Cus - Provisions of s. 27 of the Customs Act, 1962 are not applicable to Interest paid for warehoused goods u/s 61(2) of Act, 1962 - Consequently, bar of unjust enrichment is not applicable - Appeal allowed: CESTAT

THE appellant had imported S.S. Tubes vide ‘Into Bond Bill of Entry' for warehousing. As the appellants were not having licence for import of the goods duty-free, they kept the goods in the bonded warehouse. After getting the Special ImprestLicence to import, they filed Bills of Entry and the goods were cleared. The appellant did not pay duty but the department asked the appellant to pay interest for the warehousing period as they were not having license during the period. The appellant paid interest Under Protest.

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