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By Vijay Kumar

Income Tax

Illegal gratification to Govt servants cannot be treated as incidental to any lawful business activity - Expenditure incurred for such purpose cannot be allowed as business expenditure u/s 37 of I-T Act : Allahabad HC

CAN an illegal gratification or a bribe to a government servant be treated as legitimate expenditure, eligible for deduction u/s 37 as business expenditure? This was the question which came up for argument before the High Court. And the Bench, without mincing words, ruled that a payment which was made in the form of commission to government doctors for prescribing the assessee's medicines to patients cannot be termed as legitimate expenditure as per Explanation to Sec 37(1) as it is an offence for violation of a statutory provision and amounts to misconduct for the Govt doctors as per their service rules and Prevention of Corruption Act. Since paying bribe cannot be incidental expenditure to any lawful business activity, such an expenditure cannot be allowed as deduction.

Central Excise

Modvat eligible when duty is paid subsequently, even though procedure was not followed – Revenue reference petition dismissed: Madras HC

The Tribunal dismissed the application holding that the order in appeal was passed following the decision of the Supreme Court in M/ S.FORMICA INDIA DIVISION Vs. COLLECTOR OF CENTRAL EXCISE. Hence, no referable question of law arose. The aggrieved Revenue has filed the Reference Case Petition seeking a direction to the Tribunal to state the case on the question of law referred to above.

The High Court certainly has more respect for the Supreme Court than the haughty department and so could not have taken a decision against the Sc order as the Revenue appeal wanted. So the High Court rejected the Revenue reference petition.

Customs

No custodial interrogation by Customs officers – anticipatory bail granted: Delhi HC

IN 2008, the DRI wants to arrest an alleged offender for the offence committed in 2003. Why? To obtain a statement! But don't they know that a custodial statement is not valid?

The Custom Authorities unlike the police authorities cannot take the petitioner into custody for custodial interrogation

and that proposition is not even disputed by the respondent. There will be no purpose served by taking the petitioner into custody

Central Excise

Tribunal orders grant of interest beyond the date of refund just because it's earlier order was not challenged and had attained finality

CESTAT order is dated 30.03.2004, it (Tribunal) could not have referred to the Commissioner( A)'s communication dated 18.04.2004 which is a date subsequent to passing of Tribunal's order. But Tribunal's order attained finality as it was not challenged.

See our columns tomorrow for the judgements