Jurisprudentiol-Wednesday's cases

By Vijay Kumar

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

CENVAT - Wind mill installed by appellant away from factory to generate electricity which has been used in course of business of manufacturing - credit of service tax paid on annual maintenance charges of wind mill is admissible: CESTAT

THE appellant is a manufacturer of motor vehicle parts for which they need electricity. The appellants have windmills. They installed windmill away from the factory and the electricity generated from the windmill was transmitted through Maharashtra State Electricity Board (MSEB). As the electricity was given to MSEB and in turn equivalent electricity taken from the MSEB, Revenue was of the view that the electricity generated by wind mill has been not used for manufacturing of the final product, therefore, they are not entitled to avail input service credit for the maintenance of the wind mill.

As to how the electricity from windmill and that given by MSEB can be distinguished is the million dollar question but the fact of the matter is that both the lower authorities confirmed the demand against the appellant.

Income Tax

Whether if assessee does not claim Sec 80IA benefits in initial years, same can be claimed in subsequent years when conditions stipulated are fulfilled - YES: HC

THE assessee concern is engaged in the business of forging and manufacturing of various types of auto parts. It had filed its return for the AY 2001-02, declaring total income of Rs.47,66,167/-. It had also claimed deduction u/s 80I in the relevant year whereas the business was started on 25.09.1991. It was also contended by the assessee that it became entitled to deduction after purchasing the new machinery. However, AO rejected the claim of the assessee. On appeal, CIT(A) allowed the appeal of the assessee. On further appeal, Tribunal had dismissed the appeals of the revenue and confirmed the order of the CIT(A).

The issue before the Bench is - Whether if assessee does not claim Sec 80IA benefits in initial years, same can be claimed in subsequent years when conditions stipulated are fulfilled. YES is the answer.

Customs

Royalty paid for Process knowhow and various fees paid for basic engineering services and supervisory services are includible in AV of equipment imported u/r 9(1)(c) and 9(1)(e) of CVR, 1988 as these payments are integrally connected with supply of the equipment and formed part of a package deal - Appeal dismissed: CESTAT

THE appellant imported capital goods, equipment, components, etc. for the initial setting up of a plant to manufacture ‘hot briquette sponge iron' in Raigad District under the Project Import Regulations, 1986. For this purpose they entered into four agreements, all dated 22/10/1989 with two foreign suppliers/collaborators. The agreements pertained to (a) Supply of Equipment Agreement; (b) Basic Engineering Services Agreement; (c) Process Licence Agreement and (d) Supervisory Services Agreement. The suppliers and the appellant are not related.

There is no dispute about the includibility of the amount paid for equipment supply. The dispute is about the balance 3 agreements relating to basic engineering services, process licence and supervisory services agreement.

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