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By Vijay Kumar

Central Excise

Officers of DGCEI cannot be considered as law unto themselves – It was quite improper on their part in obtaining post-dated cheques and encashing the same thinking as if they are not accountable to anyone on earth : Tribunal

ABHISHEK Fashions Pvt. Ltd. had filed a Petition under Article 226 of the Constitution of India praying that the forcible collection of 13 cheques by the department from the petitioner be quashed and set aside. They further sought directions against the respondent to return the dishonored and un-deposited cheques as well as to refund Rs. 2 ,00,000 /- to the petitioner, which had been recovered in violation of provisions of Section 11A of the Central Excise Act, 1944.

The Gujarat High Court while allowing the Petition [ 2006-TIOL-430-HC- AHM - CX ] had the following piece of advise to the Preventive Officers of Surat -I Commissionerate – “Any tax or duty can only be levied and collected in accordance with law, namely, backed by and supported by appropriate provision empowering the authority to undertake such an exercise of levy and collection. The respondent authorities must bear in mind that they are creatures of statute and are bound by statutory law; the powers that they exercise are granted to them by the statute and there are no powers de hors the statute. Therefore, the authorities are bound to act as provided by the provisions under which they can exercise such powers. The revenue is not an organization which is entitled to retain money without sanction of law.”

Income Tax

Software exports - Deduction u/s 10A - uplinking charges to be reduced from export turnover before incentive allowed; Transfer pricing - deduction allowable for enhanced income returned : ITAT

IN this case involving a major software exporter, the Tribunal has decided many law points related to Section 10A which has of late become controversial. Some of the points which landed up before the Tribunal are :

1) Whether uplinking charges are to be reduced from export turnover in arriving at the amount of deduction eligible under section 10A ?

2) Whether uplinking charges reduced from the export turnover are also to be reduced from the total turnover ?

3) Whether loss of one STP unit is to be set off from profits of other STP units along with deduction under section 10A ? , and

4) Whether deduction u/s 10A is allowable on the adjustment made by the assessee on the basis of the arms' length price?

Interest on deposits made compulsorily to get BG is not income; Fee paid to RoC is capital expenditure and loss on account of exchange rate fluctuation is admissible deduction : ITAT

this is not a case where the assessee had made deposit of surplus money lying idle with him in order to earn interest. This is a case where the amount of interest earned from fixed deposit was due to compulsorily keeping the funds with the bank as margin money against the letter of credit issued for import of capital goods and for bank guarantee. This issue is squarely covered by the decision in the case of Karnal Cooperative Sugar Mills Ltd. So the Tribunal held that Revenue was not justified to make the impugned addition and so deleted the same ..

See our columns tomorrow for the judgements