From our Legal Corner – tomorrow's cases

By Vijay Kumar

Income Tax

VSNL Earth Stations are not undertakings for the purpose of Section 80 IA; VSNL is not providing basic telecommunication services – ITAT Special Bench

An order that runs into 101 paras involving Crores and the appellant is the giant VSNL. The Special Bench passed three orders by each of the three Members.

The assessee had commissioned two Telecommunication Earth Stations in the previous year relevant to the assessment year under appeal. One earth station was commissioned at Calcutta in May 1995 and the second one was commissioned at Madras in June 1995. The assessee-company treated these earth stations as new undertakings and claimed deduction u/s. 80IA in respect thereof. The income attributable to the Earth Stations has been computed by the assessee, in a separate exercise.

COD permission for a former PSU?

As per the Supreme Court judgement in the ONGC case, PSUs have to take the permission of a Committee of secretaries to file an appeal before the Tribunal or courts.

Now VSNL was a PSU at the time of dispute but became a private company at the time of appeal. Should it take the permission of the COD to file the appeal before the ITAT?

This was also an issue before the special Bench, but was not decided as the Revenue did not object.

AO cannot reopen assessment based on SC decision when CIT(A) had passed an order in favour of assessee - CIT's order may be erroneous, but having reached finality, AO cannot sit in judgement : Madras High Court

++ Unless and until the order is set aside by the process known to law, the said order is valid in law as well as it binds the lower authorities.

++ Hence the Assessing Officer is not entitled to circumvent the earlier order passed by the C.I.T.(A) which had become final.

++ Under such circumstances, the Assessing Officer should not reopen the assessment and seek to adjudicate on the issue which was already adjudicated by the Appellate Authority.

Central Excise

Samples of 'explosives' removed within factory for 'testing' are not liable to excise duty : CESTAT

After testing, the samples become unusable and therefore they destroy the said unused samples as waste and scrap. A separate record of these samples drawn for testing is maintained by the assessee. As the samples were being destroyed within the factory premises for the purpose of testing and before marketing, duty was not being paid on the same. This was disputed by the department.

Informer has no locus standi to be respondent : Tribunal

It is an interesting case where the informer has filed an application before the Tribunal to be heard as a respondent. His plea is that he had given information about evasion of duty by an assessee. He had given evidence of evasion of duty to the tune of over Rs. 1 Crore. He alleges that instead of demanding the entire duty from the assessee the department has demanded only around Rs. 85 Lakhs.

See our columns tomorrow for the judgements