From our Legal Corner - Wednesday's cases

By Vijay Kumar

Income Tax

Income from foreign commission - deduction u/s 80-O - both direct as well as indirect expenses to be considered to work out allowable net income : ITAT

INCOME Tax allows deduction u/s 80-O in respect of convertible foreign exchange received by an assessee. Title to Sec.80-O says 'Deduction in respect of royalties etc. received from certain foreign enterprises' and the section lays down that where the gross total income of an Indian Co. consists of income received from a foreign enterprise or foreign State in consideration for use outside India of any patent, invention, design or trade mark in convertible foreign exchange, the same will be allowed deduction under this section at the prescribed rates. But the moot point is, how is such income to be computed for deduction purposes which was also the question that came up before the Delhi Bench of the Tribunal. The bone of contention in this case was whether only direct expenses were to be deducted from such income eligible for deduction u/s 80-O or even indirect expenses? And the Tribunal relying on a Delhi High Court judgement held that both direct as well as indirect expenses are to be taken into account for arriving at net foreign income for deduction u/s 80-O.

Service Tax

Services used at site of windmills cannot be held as input services by unit in Jamnagar - Cenvat Credit not available : Tribunal

The Tribunal while upholding the order of the lower appellate authority observed -

If it is the case of generation of electricity with the help of the windmills within the factory premises , there should be no doubt about extending service tax credit claimed by them .

Central Excise

Applicant having no faith in appellate system and being mentally disturbed as Commissioner (A) dismissed his plea for compliance with pre-deposit order knowing that he was in penury and unit was closed - COD allowed : CESTAT

The assessee pleaded and poured his heart - he did not have a dime and was a pauper - there was nothing he could fall back upon, even his unit had closed - right down to the nucleus!

The Commissioner (A) had his way and the assessee was asked to pre-deposit an amount of Rs.5 lakhs, nothing more nothing less. The assessee could not and his appeal was dismissed.

Distraught he looked up to the heavens & cried. There was no one to hear him. It seemed that even the Lords had shunned him. For him, the Commissioner(A) had become the villain - he lost faith in the judicial system, he was mentally disturbed for he felt that even his suffering in penury could not melt the heart of the appellate authority.

See our columns Wednesday for the judgements