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By Vijay Kumar

Income Tax

Investment allowance - Diagnostic Centre or Hospital cannot be treated as industrial undertaking by any stretch of imagination; Sec 32A benefits not allowable: Delhi HC

TO encourage economic activities in the country the Income Tax Act has a provision to allow deduction for investment allowance. Every business entity which has set up a manufacturing plant has availed the benefits of such allowances under Sec 32 of the Act. But, it has also been experienced that in the face of lack of a clear-cut definition of manufacture in the Income Tax Act, all sorts of 'industrial undertakings' which claimed to be involved in the business of manufacture of an article or a thing took benefits of this provision. In the present dispute settled by the High Court, the assessee owns a diagnostic centre and installed an X-ray machine which he treated the same as an industrial undertaking and claimed deduction as he also qualified as a small-scale undertaking. However, the High Court preferred to differ with the views taken by several High Courts on this issue except the Bombay High Court and held that before it is seen that whether the assessee qualifies the financial conditions laid down in the relevant Section, what should first be determined is that whether the assessee is an industrial undertaking or not? And, going by the expression industrial undertaking used in the I-T Act and not in the context in which it is used in other laws like the Industrial Disputes Act, a hospital or a diagnostic centre which may manufacture an article or thing but cannot be considered as an industrial undertaking. Therefore, such business entities are not eligible for benefits of Sec 32A.

Customs

Can Commissioner of Customs restrict DEPB credit on ground of export over-valuation? Cestat sets aside Commissioner's order as it is the job of DGFT

CAN the Commissioner Customs pass an order restricting the DEPB benefit? How to draw samples of an export / import consignment? Well, this case throws some light on these elementary issues. The Customs officers found an exporter filing shipping bills for export of ‘Dyed and printed fabrics made from 100% polyester filament yarn'. On examination the goods were found to be printed polyester fabrics of inferior quality. The samples drawn from consignments were found on test to be not 100% polyester fabric. The weight per sq.m of fabrics was found to be around 50 gms. Market enquiries revealed that none of the consignments conformed to be declaration as regards value. As against the declared unit price Rs. 183/- per yard, enquires revealed the unit price of similar fabrics in the local market to be within Rs. 25/- to Rs. 30/- per metre.

Error in calculating duty – Refund admissible – Section 154 is independent of Section 27 of Customs Act, but doctrine of unjust enrichment applies – Matter remanded by Tribunal

THE appellant discharged the duty liability by paying the same at the rate of 50% instead of paying 5%. Subsequently, they filed an application for the refund of excess duty which after being rejected traveled upto the Apex Court when they submitted that they would make an application for rectification of the clerical error under Section 154 & accordingly the Civil Appeal was disposed.

This application for rectification under Section 154 was allowed by the adjudicating authority but the refund claim was rejected as being time barred by invoking the provisions of Section 27 of the Customs Act. The Commissioner(Appeals) too upheld this order.

While upholding the order of the lower authority, the Commissioner (A) held that the provisions of section 154 do not override those of section 27 of the Act.

See our columns tomorrow for the judgements