Jurisprudentiol– Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Customs

Confiscated gold sold during pendency of appeal - sale proceeds to be paid to successful appellant - since what is returned is cash and not gold, no duty: Bombay High Court

SINCE the petitioner is seeking redemption of the confiscated gold, he cannot escape payment of fine and penalty. As regards payment of duty is concerned, duty would be payable only if the gold was actually allowed to be redeemed. In the present case, what is being given is the sale proceeds and not the gold as such. In such a case, the question of paying duty in respect of the sale proceeds would not arise. In this view of the matter, the customs authorities are liable to return the entire sale proceeds without deducting therefrom the duty but subject to deduction of fine and penalty.

Income Tax

Deemed dividend can be taxed only in hands of a person who is a shareholder of lender company and not in hands of non-shareholders; ITAT Special Bench

SECTION 2(22)(e) in the Income Tax Act is related to dividend income. From the AY 1988, the CBDT also introduced the concept of deemed dividend. And the objective was to curb the mischief of closely-held group companies making loans and advances to another concern only to benefit the shareholders having substantial interest in that. However, for the assessing officer it became a rampant practice to invoke the deeming fiction to bring all sorts of payments under the tax net. One such case was referred to the Special Bench which has in an interesting and lucidly explained decision, held that deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder.

Central Excise (and allied laws)

Public Interest Litigation instigated by Central Excise Supdt against Hyundai Motors alleging large scale evasion – Petition vexatious; launched purely with a view to wreck vengeance – dismissed – High Court

The Dramatis Personae:

1. The petitioner in this PIL claims itself to be a Trust registered under the Trust Act. It is stated to have taken up a tirade against corruption in public life.

2. The Respondents –

1. The Secretary, Department Of Revenue,

2. The Chairman, CBEC,

3. The Chief Commissioner, Central Excise Chennai Zone

4. The Commissioner of Central Excise Chennai-IV,

5. The Managing Director, Hyundai Motors India Limited.

3. The Agent provocateur :- Samuel C. Wilson, a Superintendent of Central Excise

In a public interest litigation unless a strong case is made out as regards the irregularity or illegality in the action of any party against whom such a complaint is raised and such a complaint discloses that illegality or irregularity was carried out against public interest or the interest of the nation, it would be travesty of justice if the Courts were to still countenance such a prayer of the petitioner and order any roving investigation to be made by any public authority.

See our columns Monday for the judgements