From our Legal Corner - Tomorrow's cases

By Vijay Kumar

Income Tax

Provision for NPA debited to P & L account as per RBI Act, not eligible for deduction under I-T Act - Bad debts under I-T does not include doubtful debts - No conflict between RBI Act and I-T Act : ITAT Special Bench

THE issue before the Special Bench of the ITAT was :

"Whether, a Provision for Non Performing Assets ('NPA') debited to profit and loss account and claimed as a deduction in accordance with the prudential norms issued by the RBI in exercise of powers conferred on it under section 45JA of the RBI Act, 1934, called the Non Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998, should be allowed as deduction while computing income from business under the provisions of the Income-tax Act, 1961?"

Customs

Is an offence under Customs Act bailable? HC grants bail on second application

REMEMBER Avinash Bhosale case where the Pune Builder got bail from a magistrate at midnight after DRI arrested him in Mumbai. The High Court had quashed the bail and Supreme Court set aside the High Court order and upheld the magistrate's bail.

Around this time we carried a case of LALIT GOEL Vs COMMISSIONER OF CENTRAL EXCISE, DELHI-I - 2007-TIOL-420-HC-DEL-CUS wherein the High Court observed,

Bail in economic offence cases - unscrupulous elements on a prowl to maximise material gains by unlawful means, needs to be placed in shackles - Personal liberty of an individual though precious, is of little value if the larger interest of the people and the Nation are at stake - the petitioner by his alleged criminal act caused loss to the public revenue, he, by diverting non-edible grade crude palm oil, meant for manufacture of washing soap, to Vansapati ghee manufacturers played for his selfish gain with the health of public at large thereby adding to the gravity of the offence - Bail plea rejected

We had also carried an article by SK Choudhuri, former Member CBEC, Bhosale a free man - SC declares alleged Customs offence as 'apparently' bailable! Is the Apex Court right?

Now get back to Lalit Goel, who is back in the High Court with a second application for bail on the ground that the offence committed by the applicant is a bailable offence in view of the latest order of Supreme Court in Avinash Bhosale v. Union of India.

Central Excise

Credit taken wrongly reversed with interest - no penalty : CESTAT

THE appellants had initially taken CENVAT credit of Countervailing duty (CVD) on certain raw materials imported by them. These credits were taken on 29.11.2001, 8.01.2002 and 15.02.2002 in respect of three bills of entry, amounting to Rs. 38,06,068/-. They wrongly took CENVAT credit of the same amount once again on 31.03.2002. Subsequently, they realized their mistake and reversed a major part of the above credit on 09.04.02 and the balance credit on 12.04.02. They also paid Rs. 25,496/- in cash on 12.04.02 towards interest on the CENVAT credit amount from 31.03.02 to the dates of reversal. The Department issued a show cause notice dated 17.02.03 to the appellants proposing to impose penalty on them under Rule 13 (1) of the CENVAT Credit Rules, 2002. The adjudicating authority dropped the proposal. Its order was reviewed and, thereupon, an appeal was filed by the Department. The appellate authority allowed the Revenue's appeal to the extent of imposing penalties of Rs. 3.80 lakhs and Rs. 3.75 lakhs on the party respectively under sub-rule (1) and sub-rule (2) of Rule 13.

See our columns tomorrow for the judgements