Jurisprudentiol-Friday's cases

By Vijay Kumar

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

Remuneration received towards sale of JP Miles to business partners to promote business is not BAS - Pre-deposit waived: CESTAT

AGAINST a Service Tax demand of Rs.1.40 crores confirmed by the Commissioner of Service Tax, Mumbai-I, the applicant is before the CESTAT with a Stay application.

As per the agreement between the applicant and the applicant's trade partners, the applicant being an airline issued Jet Privilege (JP) miles to their business partners and to the persons utilizing the services of the business partners. Revenue is of the view that these JP Miles are being given by the business partner free of cost, therefore, in these circumstances the applicant is promoting the business of business partners.

Income Tax

Whether if loan is taken from friend and repayment of same is made in cash within same FY, it can be assumed that such loan is for business exigency and not of undisclosed income - YES: HC

THE assessee, an individual, is engaged in the business of civil construction. It had filed its return of income for AY 2006-07, in which the assessee had debited various expenses like, payment of accounting charges, etc. According to AO, the assessee had to deduct TDS u/s 194J before making payment to the payee. It was claimed by the assessee that he was a labour supervisor and consequent to the sincere and dedicated work, he was awarded labour contract by his clients. He had no resources to finance the construction and hence he resorted to take loans from friends at time of emergency, particularly on Saturdays when labour payments had to be made. He also made certain payments in cash with regard to purchase of civil construction material and for accounting purposes without deducting TDS. AO disallowed the accounting charges paid u/s 40(a)(ia) and added the entire amount u/s 68 and imposed penalty u/s 271D and 271E. On appeal, CIT(A) confirmed the order of AO.

The issues before the Bench are - Whether in case a loan was taken from friend and repayment of the same was made in cash within the same financial year, it can be assumed that such taking of loan is for business exigency and it is not a case of undisclosed income and Whether the genuineness of the transaction to meet the immediate necessity can be accepted by the Tribunal in the quantum appeal and that would amount to reasonable cause in terms of Section 273B. And the verdict goes in favour of the assessee.

Customs

Royalty paid by appellant for technical-know-how received has nothing to do with imports of raw materials & consequently, same is not includable in AV of imported goods: CESTAT

THE appellant imports parts and components from their related foreign entity M/s Atlas Copco Air Power, Belgium and other related parties for the manufacture of manufacture of various compressed air and gas equipment, construction and mining equipment, generators, industrial tools and assembly systems. They pay royalty to the related foreign supplier on the basis of various agreements in respect of technical knowhow for the manufacture and sale of equipment.

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