Tax Quarterly Digest: July To September 2024

1. [UP Trade Tax Act] Because Of Refund Due From Assessment Proceedings, Can't Escape Liability Of Depositing Tax Realized: Allahabad High CourtThe Allahabad High Court has held that a registered dealer cannot withhold the tax realised by him from a purchasing dealer only because he had deposited an excess amount of tax at the time of the transaction.The Court held that he cannot escape the liability of depositing the tax realized under the U.P. Trade Tax Act, 1948 because a refund is due to him from assessment proceedings.2. CENVAT Credit Can Be Availed On Input Services Of Commercial And Industrial Construction: CESTATThe Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the CENVAT credit can be availed of on input services of commercial and industrial construction, fabrication and erection, manpower supply for construction, and Goods Transport Agency for construction materials, etc.The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that the period of dispute is from April 2008 to March 2011, and hence, the definition of “input service” as it stood prior to the amendment with effect from 1.4.2011 would apply. Rule 2(l) of the Cenvat Credit Rules, 2004 (CCR), as in force prior to April 1, 2011, defined 'input service' to mean any service used for providing an output service or used by the manufacturer in relation to the manufacture of the final product. 3. Deduction Can't Be Availed On Expenditure Incurred For Overseeing Project Of Holding Company: Telangana High Court The Telangana High Court has held that deductions cannot be availed on expenditures incurred for overseeing the project of holding a company.The bench of Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty has observed that, as per Section 37 of the Income Tax Act, 1961, the prerequisites for allowing deduction are that the expenditure should have been incurred in respect of a business carried on by the assessee and should be spent wholly and exclusively for its own business.4. Breakwater-Wall For Ship-Safety Not 'Plant And Machinery', GAIL Subsidiary Not Eligible For ITC: Bombay High Court The Bombay High Court has held that the breakwater wall or accropode that are essential certainly do not qualify as plant and machinery. The breakwater wall can hardly be called “plant or machinery." Accropodes lose their identity when a breakwater wall is constructed using accropode. The bench of Justice K. R. Shriram and Justice Jitendra Jain has observed that Explanation to Section 17 also provides that “plant and machinery” should be used for making outward supply of goods or services. The breakwater wall is used for protecting the vessel from tides while unloading the LNG received and not for making outward supplies of goods or services. Therefore, the petitioner does not satisfy the condition provided in the Explanation to Section 17 to be eligible for ITC. 5. Cellular Mobile Service Providers Not Obliged To Deduct TDS On Income Received By Distributors: Calcutta High Court The Calcutta High Court has held that the cellular mobile service providers are not obliged to deduct the tax at source (TDS) on income received by distributors/franchisees from customers.The bench of Justice Surya Prakash Kesarwani and Justice Rajarshi Bharadwaj has relied on the decision of Supreme Court in the case of Bharti Cellular Limited Vs. Assistant Commissioner of Income Tax Circle-57, Kolkata and Anr, where it was held that “Assessees would not be under a legal obligation to deduct tax at source on the profit component in the payments received by the distributors/ franchisees from the customers, or while selling/ transferring the prepaid coupons to the distributors”. 6. Admission Fee Charged From Students Forms Part Of Corpus Donation: Gujarat High Court The Gujarat High Court has held that the admission fee charged by the students forms part of the corpus donation of the trust.The bench of Justice Bhargav D. Karia and Justice Niral R. Mehta has observed that the donation is bound to have been given for material gain in securing admission; the same cannot be characterised as a donation towards a charitable purpose, and the appellant would not be entitled to have the benefit, but in the facts of the case, in the absence of any material on record, such a view cannot be taken in the circumstances. The Tribunal has committed an error by treating the admission fee charged from the students as not forming part of the corpus of the Trust.7. Income Tax Addition Can't Be Made On Cash Deposits During Demonetization Period: Delhi ITAT The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the department is precluded from making any addition under Section 68 of the Income Act in respect of the cash deposits made into bank accounts during the demonetization period.The bench of Challa Nagendra Prasad (Judicial Member) and Avdhesh Kumar Mishra (Accountant Member) has observed...

Tax Quarterly Digest: July To September 2024

Pankaj Bajpai

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