Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

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

New unit set up by splitting up of the business of the old unit is not eligible for deduction under section 10A: it is a case of the same people doing the same business, the only difference being that the people have been shifted to the new office. The existing business of the assessee was development of software and in the new unit also, the assessee has done the same business of software development using the same employees and therefore it cannot be a case of different business requiring different specialization being taken up for which setting up of a new unit can be said to have become a business necessity - ITAT

MERELY because the customers in the new unit were different, it cannot be a basis to hold that the new unit was separate and independent. In case, customer is the criterion to classify a new unit, one can easily set up a new office and start executing orders from new customers from the new place and get exemption by splitting up the business which is not permissible. Whether a new unit is different and a separate can be decided not by difference in customers but by the fact that the same is independent and is capable of functioning as such and is not an integral part of the old business. When a new unit is set up to produce a different product requiring different specialization and set up, it can be easily identified as a new and independent unit. The difficulty arises when new unit is doing the same business where the possibility of splitting up is very high.

Central Excise/Customs

Countervailing duty paid under the provisions of the Customs Act, is payment of central excise duty – Not desirable for High Court to dismiss writ petition after 15 years just because alternate remedy at CESTAT is available, especially when issue is settled by Supreme Court – High Court

IN the above said background, we are of the view that the learned single Judge, after keeping the cases pending for more than seven years from the date of their filing, i.e. in 1992/1993, on the request of the learned Standing Counsel appearing for the Central Government, awaiting the decisions of the Central Government and after the issuance of Central Government Notification No.104 of 1983, dated 28.12.1993, clarifying on the matter by making amendment to the relevant Notification, it was not desirable for the learned single Judge to ask the appellant-writ petitioner-assessee-Madura Coats Limited, to avail of the alternative remedy of appeal before the CEGAT/CESTAT

Central Excise

CENVAT Credit – Input credit legally availed when final products are dutiable not to be reversed when final products are exempted subsequently – CESTAT Five Member Larger Bench decision in Ashok Iron & Steel Fabricators [2002-TIOL-274-CESTAT-DEL-LB] and Supreme Court decision in Dai Ichi Karkaria [ 2002-TIOL-79-SC-CX] followed – CESTAT Three Member Larger Bench

THE short point that came up for decision recently before this CESTAT Larger Bench (three member) was whether CENVAT credit availed by a manufacturer of dutiable final products has to be reversed when such final products become exempt subsequently.

See our columns tomorrow for the judgements