From our Legal Corner – Monday's cases

By Vijay Kumar

Income Tax

If expatriate employees are paid salaries by the PE of non-resident company, such income is taxable in India : Tribunal

THE Double Tax Avoidance Agreements (DTAA) signed by India with various countries are to be taken on case by case basis and the terms of one agreement with one country can't have application on another agreement with another country blindly. This is what can be inferred from the latest decision of the Tribunal in a case in which Zarubezhneft, a co. incorporated in Russia, represented its employees (assessees) as their agent in India. The assessees sought exemption of their remuneration paid for their services in India from tax in view of Article 15 of DTAA. But the same was disallowed by the revenue on the ground that all the three conditions laid out in Article 15.2 were required to be satisfied simultaneously in order to avail exemption and since the assessees failed to satisfy the third condition, their remuneration was liable to be taxed in India.

Customs

Metropolitan Magistrate ought to have referred to material placed before Tribunal which resulted in discharge rather than short-circuiting the issue and apply SC decision in Standard Chartered Bank to hold that complaint was maintainable : Delhi High Court

THIS is a Customs case and the issue concerns alleged illicit import of fabrics. The petitioners are co-accused in a complaint filed by the Inspector, Customs Preventive under section 135(1)(b) of the Customs Act.

Central Excise

Poultry farm is a factory - substantive benefit of an exemption notification shall not be denied for a minor procedural lapse - Procedure, after all, is only an aid to justice : Tribunal

THE Commissioner of Central Excise demanded duty of over Rs 62 lakhs from the appellants in respect of weld mesh (chain links) cleared to poultry farms during the period from 01.04.2001 to 18.12.2002. He also imposed equal amount of penalty on the assessee.

The tribunal held, Exemption from payment of duty, granted by the Central Government under the above Notification, is a substantive benefit which shall not be denied on the ground of non-fulfilment of a minor procedural condition. Procedure, after all, is only an aid to justice.

See our columns Monday for the judgements