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SC raps tax authorities

Finally deciding the issue, the apex court held that the benefit of an entitlement to make duty-free imports…

Litigation policy

Coming down heavily on the tax authorities for doing ?flip-flop? and not ?letting the matter rest? in the case Commissioner of Income Tax vs M/s Excel Industries Ltd, the Supreme Court has expressed hope that the revenue department will ?implement its litigation policy with a little more practically and a little more seriously?. Finally deciding the issue, the apex court held that the benefit of an entitlement to make duty-free imports of raw materials obtained by an assessee through advanced licences and duty entitlement pass book issued against export obligations will be treated as income accrued not in the year in which the exports were made but in the year of import.

The assessing officer had rejected Excel Industries? claim for deduction benefit on the ground that any benefit arising from a business is income. Both Commissioner of Income Tax (Appeals) and the tribunal overturned the AO?s order by holding that income does not accrue until the imports are made and raw materials are consumed by the assessee. On appeal, the top court noted that in the assessee?s cases starting from 1992-93 onwards the department had accepted deductions in certain years, but took a contrary stand for other years.

Cheque bounce cases

Dismissing the appeals of Gujarat State Fertilizers Company Ltd, the Supreme Court has held that for prosecuting a company director in a cheque bounce case, a complainant must specifically allege that the director concerned was in charge of, and responsible to conduct the company business.

In this case, several complaints were filed by the PSU firm against Esslon Synthetics, its chairman, managing director and other directors. The magistrate took cognisance of the offence, issued process to the accused. Two of the accused, Singhania and Vikram Prakash, approached the high court, which quashed Prakash?s prosecution on the grounds that he was a non-executive director. But the HC did not quash Singhania?s as it was found that the applicant in the capacity of director was responsible for business affairs and he was in-charge of the company. On appeal, the SC quashed Singhania?s prosecution, saying that he was not in charge of the transaction though he was often consulted in business matters by other directors and the essential averment in the complaints is lacking.

UP power corp appeal

Rejecting the UP Power Corp Ltd?s appeal, the Supreme Court upheld the Appellate Tribunal for Electricity?s order that permitted capitalisation of R4.521 crore over the approved cost of R925 crore for completing Feroz Gandhi Unchahar Thermal Power Station Stage-I.

In this case, UP Power Corporation Ltd vs NTPC, the PSU had taken over the project from the state electricity board in 1992, as it had been grossly delayed since 1986. Therefore, an additional expenditure was incurred for completion of the project and a revised tariff structure was sought. The CERC approved the tariff taking into consideration the capital cost at R940.70 crore. The Tribunal was of the view that additional capital was well within the approved cost which remained unexecuted on the date of vesting. Both CERC and Aptel rejected the Corporation?s contention that the additional capital expenditure incurred by the corporation could not be taken into consideration for tariff fixation without the same having been approved by the Central Electricity Authority.

indu.bhan@expressindia.com

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First published on: 06-11-2013 at 05:17 IST
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