Bata,banking,electricity

The court also noted that vide Notification No 143/94-CE dated December 7,1994,the product stood exempted if captively used for the manufacture of exempted footwear.

The department issued showcause notices to Bata in March 1995 seeking to levy duty and penalty of over Rs 1.89 crore on 2.51 crore canvas shoes manufactured during 1990-94 using rubberised cotton fabrics under the Central Excise Rules 1944.

Both the Commissioner of Excise and the tribunal had upheld the duty demand on the ground that the double textured rubberised fabric/unvulcanised sandwiched fabric,used in making the upper layers of the canvas shoes,was an excisable product.

Bata India’s counsel Ravindra Narain contended that the fabric would not attract duty as it was manufactured for captive consumption and was not marketable and had no commercial identity. Senior counsel V Sekhar,appearing for the revenue department,submitted that after the process undertaken by the assessee a new product emerged,which was capable of being sold and,hence the product is a commercially distinct product liable to be classified under the sub-heading 5905.10 of Schedule to Central Excise Tariff Act.

Vijaya Bank gets SC nod

The Supreme Court has held that bad debts written off in the books of accounts of the taxpayer is sufficient ground for claiming deduction. It upheld the tribunal’s judgment that held that Vijaya bank was entitled to the benefit of deduction on the ground that a provision for creating a bad and doubtful debt by debiting the bad debt amount to the profit and loss (P&L) account was sufficient to constitute a write off for claiming deductions. The issue before the court was whether it is imperative for the bank to close individual accounts of its debtors in its books or a mere reduction in the loans and advances for debtors on the asset side of its balance sheet to the extent of the provision for bad debt would be sufficient to constitute a write off.

The department had in 1994-95 disallowed a claim of Rs 7.1 crore stating that the impugned bad debt had not been written off in an appropriate manner as required under the accounting principles. However,the apex court rejected the department’s contentions that the bad debt supposedly written off by the assessee was a mere provision and the same could not be equated with the actual write off of the bad debt as per the requirement of Section 36(1)(vii)of the Income Tax Act 1961.

Additional solicitor general Bishwajit Bhattacharya argued that a write off of each and every individual account under the head ‘loans and advances’ or debtors was a condition precedent for claiming deduction under the Act and the claim of actual write off of bad debts in relation to banks was different from the accounts of the non-banking assesses. He argued that in view of the explanation inserted in Section 36 (1)(vii) of the Act vide Finance Act 2001 with effect from April 1,1989,a mere debit of the impugned amount of bad debt to P&L account would constitute a provision for bad and doubtful debt and not actual write off.

CSEB’s appeal dismissed for delay

The Supreme Court has refused to entertain the Chhattisgarh State Electricity Board’s (CSEB) appeal against payment of Frequency Linked Energy Exchange (FLEE) charges on the grounds of delay. It held that CSEB had failed to offer any tangible explanation as to why the appeal against the Appellate Tribunal for Electricity’s (ATE) order could not be filed for more than three and a half months after its preparation in September 2007.

After a dispute arose between MPSEB and its successor in Chhattisgarh over payment of FLEE charges which were introduced in June 1992,the Central Electricity Regulatory Commission in December 2005 fixed the liability on both CSEB and MPSEB to pay the charges.

While ATE held in favour of CSEB in November 2006,it had directed the Western Regional Electricity Board (WREB) to recalculate FLEE charges in relation to its post-reorganisation period in May 2007. However,CSEB filed its appeal in December 2007 along with an application for condonation of 160 days of delay. Giving reasons for the delay in filing the appeal,CSEB senior counsel Ravi Shankar Prasad argued that the board’s counsel had not received intimation of the pronouncement of the judgment and it was only in July 2007 that it came to know about such an order after WREB sent intimation for payment of the charges. Senior WREB counsel CS Vaidyanathan contended that the appeal should be dismissed as it was time barred and the court had no power to extend the period for filing of the appeal beyond 120 days.