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By Vijay Kumar

Income Tax

Depreciation and amortization on investments held in permanent category cannot be allowed to be deducted while computing taxable income : ITAT

Since RBI guidelines as held by Madras High Court in the case of TN Power Finance and Infrastructure Development Corporation Ltd. cannot override the mandatory provisions of Income Tax Act, 1961, the depreciation and amortization claimed by assessee on investments held in the permanent category cannot be allowed to be deducted while computing the taxable income. We may also like to state that income is to be computed as per the mandatory provisions of section 145 of the Act and not in accordance with guidelines issued by RBI .

Central Excise

Cenvatted Master cartons cleared from factory to depots for packing excisable goods cleared from factory in primary cartons eligible for Credit after 14.05.2003 when 'depot' was notified as place of removal : Tribunal

HARAKIRI at its best was exhibited by the Central Government when it substituted the earlier provisions of Section 4 of the Central Excise Act, 1944 by the Finance Act, 2000 [ w.e.f 01.07.2000]. The earlier concept of ‘normal price' was replaced by the new generation “Transaction Value” in an effort to garner more revenue and avoid the embarrassment suffered on account of the earlier provisions which had failed to weather the cyclonic valuation storms. Just prior to this substitution, the Finance Act, 1996 [ w.e.f 28.09.1996] saw the advent of “extended place of removal in the form of depots, consignment agents etc. ”.

The significance of this change was that sale price at any of these “places of removal” will be the normal price for levy of excise duty and there could be different assessable values for the same excisable goods depending upon the place of removal. It also meant that duty will be required to be paid at the time of clearance of goods from the factory for those goods which are sold by the manufacturer at depot, consignment agents or any other place etc. at a sale price of the place of removal i.e. depot, consignment agents etc. [Board Circular No. 251/85/96- CX , dated 14-10-1996].

All this good deed was turned upside down when the new Section 4 saw its birth. The reason being that the new definition of “place of removal” failed to incorporate in it a reference to depot, premises of a consignment agent or any other place or premises. Anyways, this inadvertent omission was set right by the Finance Act, 2003, by re-insertion in the definition of place of removal a clause (iii) w.e.f 14.05.2003.

Customs

CHA – resignation of a qualified employee would not automatically cancel Custom House Agent licence – in worst situation, it becomes inoperational until a qualified person is appointed : Bombay High Court

A Commissioner is determined to cancel the licence of a CHA that he is before the High Court against a Tribunal decision which set aside his decision.

The respondent was having a CHA License valid upto 31st December, 2006. It appears from the record that they have appointed one Shri Girish P. Manjeshwar , who was a Regulation 9 Pass holder (now Regulation 8 as per CHALR , 2004). The said employee tendered his resignation. The respondents by letter dated 10th August, 2004 accepted the resignation with effect from 14th August, 2004 and relieved him from the services of the Company as per the terms and conditions of the appointment letter. As the respondents did not have a Regulation 9 pass holder they surrendered his pass on 18th November, 2004 as though they had made attempts to get a qualified person they were not in a position to get one. The Commissioner of Customs (General) vide notice No.116 /06 dated 8th August, 2006 made the license of the respondents inoperative. The respondents vide their letter dated 17th August, 2006 wrote to the Commissioner of Customs (General) that they were shortly employing a qualified person and would continue to work as CHA and requested to condone the delay. They were informed by letter dated 30th August, 2006 that their request to continue the license as CHA cannot be considered in terms of the provisions of Regulation 15(2) of the CHALR , 2004. On 1st September, 2006 the Respondents intimated the Commissioner of Customs that they have appointed Shri S.Subhash , a Rule 9 qualified person under CHALR , 2004 and he would join in the first week of October, 2006. Various other representations were made.

See our columns Monday for the judgements