The Hindu Business Line : `Caves' and `shrines' are not buildings but plant!

THE primary question in the Navodaya case which the Kerala High Court took up was whether the assessee's studio was plant or building. The I-T Department wanted to classify the studio as building. George K. George, Standing Counsel appearing for the Department, contended that "films are at present made only by resort to outdoor shooting" and so the studio was not "a tool in the hands of the assessee".

When the case had come up before the Tribunal, its members wanted to "have a correct picture" and so visited the studio: "It was noticed that the studio is situated in a big landscape. The building is designed in such a way with the wooden partition so that it can be removed for creating different setting or scene. Walls of the studio are made up of plywood, cardboard and asbestos so that they can easily be removed and replaced for the movement of trolley carriers in different scenes.

"The floor of the studio contains asbestos roofing. In the first floor itself at the time of visit they saw a cave made of bamboo mats... Serpent shrines made of clay and caves made of bamboo mats and artificial cobweb have also been designed... for a scene in a picture Kadathanadan Ambadi."

The decision went in favour Navodaya.

Escape clause

IT IS quite possible that a judgment on income escaping assessment may contain lines that escape understanding, especially if the `so-called reasons' given by the Department were but `totally flimsy'. Here is an excerpt from Ajanta Pharma Ltd case that came up before the Bombay High Court:

"Bare reading of the reasons in support of the notice discloses that the conclusion regarding escapement of the income was on the basis that non-disclosure of the invoice-wise details of purchases of trading goods exported and the failure to co-relate the trading export sales with invoice-wise purchase of trading goods exported, whereas, the affidavit-in-reply claims non-disclosure of the materials in support of such details."

Broad sweep

THE National Federation of Insurance Field Workers case that came up before the Uttaranchal High Court challenged the validity of a CBDT notification on bringing to tax perquisites such as interest free loans, leave travel and so on.

The decision went in favour of the Department, but there are interesting observations on the rationale of entrusting to the CBDT the power to issue circulars "from time to time to carry out the purpose of the Act".

The court said: "With globalisation new concepts are coming into the economy. New terms and conditions of payment of salaries are introduced. New benefits and amenities are being introduced by multinationals to attract younger talent. Hence, one cannot exhaustively define fringe benefits. Hence, the Legislature has left it to the CBDT to prescribe and identify these benefits."

To extrapolate, provision of packaged drinking water at work in times of scarcity or allotment of parking space may one day tempt the Board to expand the definition of perks further.

Flexibly far

`AS FAR as possible' was the focus in the Mohanreddy vs Debts Recovery Appellate Tribunal case that was taken up by the Andhra Pradesh High Court. "The phrase `as far as possible' can be interpreted in various ways. Keeping in view the intent and object of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, in our view, use of this phraseology `as far as possible' in Section 29 does not impose an obligation on the Recovery Officer to meticulously follow the provisions of Second and Third Schedules... It gives him enough discretion that he has to follow the provisions of Second and Third Schedules as far as possible and may make necessary modifications... The Rules no doubt have to be followed but as far as possible with necessary modifications."

Marble margin

MR Gowri Shankar's views as the Third Member in the Sophisticated Marble and Granite case that came up before the Mumbai CESTAT are worth noting: "One factor is obviously of great significance.

It is to be noted that there have been continuing and a large number of imports of marble by various persons without import licence. That is clear from the large number of orders that has been referred to in these proceedings. If the fine of 20 per cent were sufficient to wipe out the margin of profit, how would such imports contrary to law continue unabated?

"No group of businessmen would continue to import goods to sell them in the domestic market with the full knowledge that there would be no profit and propose too incur loss and keep doing so for quite a long while... The fines determined in the past have thus failed to give effect to the provisions of law prohibiting import of the goods without a licence. It is possible that, as a result of the fines that were earlier fixed, the market price has increased, leading to a continuation of import." A good lead to follow.

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Tailpiece

Bill Taber's Oak Park Barber Shop in Indianapolis is busier with tax business than hair business, reports AccountingWeb. Bill has been cutting hair since 1959. He charges $10 for haircut ($9 for seniors and kids) but his tax preparation fees range from $38 to $58, depending on complication. For valued senior customers, there is discount.

"He took a tax class in 1984, and his second business was born. Barber Bill got the idea to combine the two after years of giving his tax advice to senior customers in the chair. He started with 20 tax returns, but now helps more than 400 customers at tax season."

That should save his customers a lot of hair tearing.

Detaxification@thehindu.co.in

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