In a case relating to Thermax, the Supreme Court has said the company’s chiller machine “is attempting to masquerade as a heat pump, to gain concessional tariff benefits”.

Thermax makes ‘modified vapour absorption chiller’ machines, which produce chilled water but can also produce hot water on demand. The company presented it as a ‘heat pump’ to claim lower excise duty (before GST).

Excise department felt that the machines were not heat pumps; the Commissioner of Central Excise (Appeals) agreed with Thermax. However, an appellate tribunal reversed the decision on January 22, 2009.

Thermax contended that it carried out substantial modification to provide heating.

The Supreme Court noted that the production of hot water is only incidental. “It is quite apparent that the product MVAC is intended to produce chilled water and cannot be called a heat pump.”

Deduction or not

Supreme Court judges Ajay Rastogi and S Ravindra Bhat had to decide whether appellant assessees are entitled to deductions for contribution to provident funds and superannuation schemes.

In Checkmate Services Pvt Ltd vs Commissioner of Income Tax, the assessing officer had contended that if the monies were deposited after the due date, “the right to claim such sums as allowable deduction for computing income was lost forever”. The appellant had lost the case before the Income Tax Appellate Tribunal and before the Gujarat High Court, which was the impugned judgment before the apex court.

The apex court tellingly said: “They (monies deposited) are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory payout. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date... They have to be deposited in terms of such welfare enactments. It is upon deposit... that the amount which is otherwise retained, and deemed an income, is treated as a deduction.”

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