Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax

No deduction is allowable, against the income from taxable business, in respect of any expenditure in relation to income which does not form part of the total income – ITAT Sp. Bench by majority

THE President, ITAT, has constituted the Special Bench to adjudicate upon the following issue:

“Whether, in the facts and in the circumstances of the case and in law, the provisions of section 14A of the income Tax Act, 1961, are applicable with respect of dividend income earned by the assessee engaged in the business of dealing in shares and securities, on the shares held as stock in trade and when earning of such dividend income is, therefore, incidental to trading in shares?”

There was a difference of opinion in the Special Bench and the Bench by majority decided the issue.

The core of the issue is to interpret section 14A of the Income-tax Act, for determining as to whether or not any disallowance of expenses is warranted under this section when the assessee is dealing in shares by way of purchase and sale and any dividend income, which is exempt u/s. 10(33), is earned on the shares or other securities held by it as stock-in-trade.

Customs

Education Cess payable by the EOUs on clearances in DTA - goods cleared in DTA are to be treated as imported goods. Issue remanded - Bombay High Court

THE 100% EOUs while clearing the goods in DTA are required to pay central excise duty equivalent to the aggregate duties of Customs leviable on like goods imported. While computing aggregate duties of Customs, the education cess is also taken into account as a part of CVD and again on the aggregate duties of Customs. The revenue is of the view that the EOUs have to pay education cess again, as whatever amount paid under Section 3 of the Central Excise Act is only excise duty and cess is levied under Section 93 of the Finance Act 2004.

Central Excise

Merely because a particular CTV Model no. 21HT 1532 is sold to Hotel industry but not in retail, it cannot be said that they are exempted under rule 34 of SWAMs Rules, 1977 so as to be assessed u/s 4 of Excise - Televisions rightly assessable u/s 4A : Tribunal

THE appellant is engaged in the manufacture of Colour televisions (CTVs). Inasmuch as CTV is one of the specified items in terms of Section 4A of the Central Excise Act, the appellants were clearing the same on payment of duty, in terms of the said section based upon MRP fixed on the CTVs. The dispute in the present appeals relates to CTVs of a particular model No.21HT 1532 manufactured by the appellants and supplied to M/s Philips Electronic India Ltd., Pune. The said particular brand of CTVs was sold by M/s Philips Electronic India Ltd. only to hotel industry and not to the open market for retail.

Revenue feels that such an assessment is improper (they want assessment u/s 4 of the CEA'44) little remembering the fact that CTV's were brought under the ambit of Section 4A to mop up more revenue by assessing them on the basis of the MRP.

See our columns tomorrow for the judgements