Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

CENVAT Credit is admissible on fuel used for manufacture of steam /power supplied to neighbouring EOU situated in same premises - factory means more than one premises - No error in the order of Tribunal: HC

Question of law:

When the assessee who manufacture the steam, use the same in the factory of manufacturing and also utilized the steam in its another unit which is situated in the same compound, is he entitled to CENVAT Credit proportionately to the extent which was used in the other unit?

In view of clear language in the statutory provisions coupled with the fact that the factory includes more than one premises, to be eligible for CENVAT Credit, an assessee has to use the input in the manufacture of dutiable goods in his factory. If the factory includes more than one unit and if the assessee uses this input in the manufacturing of excisable goods in both the units, he would be entitled to CENVAT Credit.

Income Tax

Whether Clause (d) of Sec 80IB(10), condition linked to date of approval of housing project, will not apply to any project sanctioned prior to Mar 31, 2005 - YES: HC

THE assessee is engaged in the business as builders and developers and was following the project completion method of accounting. It had declared its income at NIL after claiming a deduction of Rs.56,27,583/- under section 80-IB(10). During assessment, the AO noticed that the assessee had claimed a deduction under section 80-IB(10) on the profit after sale of shops . The same was disallowed on the ground that the assessee had not complied with the basic requirement that the profit derived on the sale of commercial area of the project was not entitled for deduction.

The issue before the Bench is - Whether Clause (d) of Sec 80IB(10), a condition linked to the date of approval of the housing project, will not apply to any project sanctioned prior to Mar 31, 2005. And the answer goes against the Revenue.

Service Tax

Prima facie no Service Tax liability arises on construction of low cost housing & Vipassana Kendra for Nagpur Improvement Trust & Ramtek Municipal Council: CESTAT

PRIMA facie there is merit in the contention of the appellant that when Nagpur Improvement Trust gets flats constructed for renting out to low income group or slum dwellers, it would be construction of complex by a person directly engaging the service of another person and such complex is intended for personal use. Such complexes are specially excluded from the scope of the levy. Therefore, as far as the demand of service tax in respect of residential complex built for Nagpur Improvement Trust and Ramtek Municipal Council is concerned, the appellant has made out a prima facie case for grant of stay.

See our Columns Tomorrow for the judgements