Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Lower authorities have not understood provisions of CENVAT Credit Rules, 2004 in true spirit and, therefore, have denied credit - B/E in name of Head Office endorsed in name of appellant is valid document for taking credit in terms of rule 9 of CCR, 2004 - Appeal allowed: CESTAT

THE appellant imported certain inputs/capital goods and Bills of Entry were in the name of their Head Office in all the six cases but in one case the address of the appellant itself was mentioned in the Bill of Entry. All the Bills of Entry were endorsed in the name of the appellant by their Head Office and the lorry receipt shows that the goods were delivered in the premises of the appellant only but the lower authorities denied CENVAT Credit on inputs/capital goods on the premise that the Bills of Entry were in the name of the Head Office but are not in the name of the appellant.

Income Tax

Whether interest received on account of enhanced compensation of acquired property by State is liable for taxation in year of receipt - YES: SC

THE assessees are individuals. They had inherited a land property from their father. Subsequently, a part of the said land was acquired by the State Govt. and they were accordingly paid compensation. The amount of compensation was however enhanced and additional compensation was awarded to them along with interest. Thereafter, the assessees filed their return claiming themselves to be "individual". However, the AO passed the assessment order by treating them as "Association of persons" (AoP). The AO also refused to spread the interest income over the years and treated it as taxable in the year of receipt. Ultimately, the High Court had decided that these persons were to be given the status of 'individual' and assessed accordingly and not as AoP and that the interest income was to be spread over from the year of dispossession of land, that was the assessment year 1987-88 till the year of actual payment which was received in the assessment year 1999-2000 applying the principles of accrual of income. It was in this backdrop that the Revenue approached the Apex Court challenging the decision of the High Court.

The issue before the Bench is - Whether interest received on account of enhanced compensation of acquired property is liable for taxation in the year of receipt . And the answer is YES.

Service Tax

CENVAT credit is admissible on towers and cabins used by appellant as Passive Telecom Infrastructure for providing output service namely ‘Business Auxiliary Service': CESTAT

THE appellants sought clarification from the department as to whether the activity of Passive Telecom Infrastructure comprising of tower/masts/pole, shelter, battery banks, DG Sets etc. attracts service tax under the category of Business Auxiliary Service. It was informed vide letter dt. 20.9.2005 that appellants are liable to pay service tax under the category of ‘Business Auxiliary Service'.

After conducting audit in June 2009, the Department objected to availment of CENVAT Credit on parts of Towers, BTS Cabins etc.

See our Columns Tomorrow for the judgements