Jurispruden tiol – Monday's cases Legal Corner Icon — the image was hosted by the publisher and was not captured.

By Vijay Kumar

Income Tax

Income Tax disallows provisions for doubtful debts and damaged stocks - Assessee suffers damages on account of expiry, shortages and leakages during transportation which are ascertained liabilities - Books prepared in compliance with Sec 115JA - deduction allowable : Delhi HC

TILL a few months back, it used to be a rare event in which the Delhi High Court used to impose costs on the Income Tax Department. And this is what perhaps encouraged the Revenue to keep filing appeals indiscriminately and virtually in all cases. But such a cosy run has evidently run out of luck now. So much exasperated is the High Court over the Department's thick-skinned approach to curb frivolous appeals that it can now be seen imposing costs in most of the cases. And it happened even in this case where the issue revolves around allowance of bad debts and stock damages. While computing book profits u/s 115JA, the AO added back the provisions of doubtful debts and stock damages as he felt that such provisions cannot be categorised as ascertained liabilities in advance.

Service Tax

GTA muddle – receipt of goods into factory is input service; clearance of goods from factory is output service? - Consignee factory eligible for credit even if consignor pays Service Tax on goods transport: CESTAT

THE jinxed tax that is Service Tax on GTA , is haunting the tax administration, courts and the hapless assessees for more than a decade. While the net collection from this tax would be less than peanut, the amount of litigation it has generated must have cost the nation heavily – the Government should seriously consider doing away with this tax or maybe levying a flat 2% without credit.

Here is a landmark judgement, where the Tribunal has come to some remarkable conclusions.

You are a factory receiving raw materials by trucks and the Service Tax on goods transport is to be paid either by the consignor or you as the consignee. Now if you pay the tax, it is input service for you and you can take credit. But what happens if the consignor pays the tax? Can you take credit? “ YES ”, says the Tribunal. “ in respect of service tax on the freight paid for receiving inputs/raw materials, the service tax paid whether by the consignor or by the respondents as consignees they are eligible to take credit of the service tax paid. Whether the service tax was paid by the consignor of the inputs or by the respondents does not make any difference in so far as eligibility for credit of the duty paid. The nature of input service does not undergo a change merely because the tax is paid by the recipient.

Central Excise

Climax and Stud are Anaesthetics - Revenue loses sexually stimulating appeal before Tribunal

NO, our site has not been hacked just like that of the leading political party down South. It is just that we could not “erect” any other caption while reporting this story.

Now, what are Climax & Stud doing in Central Excise – nothing, dear netizens except that it is their classification that is being “hotly” debated. Whereas the Excise authorities felt that it cannot be termed as Anesthetics, the assessee was very much convinced that it was & hence claimed the benefit of the exemption notification available to “Anesthetics”.

No doubt, everyone was too shy to reveal as to where these aerosol sprays were being used except referring to the fact that they are used on a specific part of the human anatomy. We also wish to keep everyone's penile feelings intact, hence try not revealing the same!

See our columns Monday for the judgements