Jurisprudentiol–Thursday's cases

By Vijay Kumar

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

Authorization under Section 35 B (2) has to be signed by both Commissioners – there is drafting error in words - authorized by him in this behalf used in Section 35 B(2) – Tribunal marks copy of order to Board for taking up issue with Ministry

ANY authorization signed by the Commissioner cannot be called as proper authorization. Even if the wordings in the statute indicate “direct any Central Excise Officer authorized by him”. To our mind there seems to be an error in drafting the said sub-section, as a committee comprises of more than one person and authorization to file an appeal can be given by them only. It is a fact that the decision to file an appeal against the impugned order is taken by a Committee of Commissioners.

Income Tax

Inter-corporate deposits are not deemed dividend under Sec 2(22)(e); Receipt on sale of trademark or brand name is not exigible to capital gains tax, prior to introduction of words 'Trademark or Brand name associated with a business': ITAT

DURING the concerned year the assessee had taken unsecured loans from various companies. The Assessing Officer vide his letter dated 17-3-2004 called for assessee's objection for treating the unsecured loans as deemed dividend under section 2(22)(e) of the Act. The assessee vide its letter dated 17-3-2004 objected to the proposal of the Assessing Officer. The assessee submitted that it had accepted inter-corporate deposits which were used for the purpose of its business. Instead of taking ICDs from unknown corporate bodies, the assessee-company had taken ICDs from known corporate bodies at prevailing competitive interest rate. It was submitted that the interest paid by the company on these ICDs are offered for taxation by the recipient companies. Thus it was contended that the process of accepting and giving ICDs is a means of alternative finance and cannot be treated as loans and advances under section 2(22)(e) of the Income-tax Act. The assessee further submitted that the sub-clause (ii) provides for an exception to sub-clause (e) of sub-section (22) of section 2 of the Act. This sub-clause excludes from the scope of ‘dividend' any advance or loan made to a shareholder by a Company in the ordinary course of business, where the lending of money is a substantial part of the business of the Company. Hence, ICDs taken from abovementioned companies cannot be treated as deemed dividend under section 2(22)(e) of the Act.

Customs

Bank Guarantee - Commissioner's fiat against HDFC Bank – Circular struck down - no reasonable person instructed in law could have taken such a decision merely because petitioner was pursuing its legal remedies – High Court

COMMISSIONER of Customs, while dealing with the public, in the instant case Commercial Banks, has the duty to act fairly. His acts should not result in denying to the petitioner HDFC Bank an equal opportunity of furnishing bank guarantee like any other commercial bank which would visit the Bank with civil consequences. Circular of the nature issued in its administrative power barring the HDFC bank from supplying bank guarantees to exporters, who have the business with Air Cargo Complex would be arbitrary.

See our columns tomorrow for the judgements