Jurisprudentiol– Monday's cases

By Vijay Kumar

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

It is not open to a Tribunal under the guise of moulding relief to pass order in respect of a demand which was never made: Bombay High Court

The department was not at all happy with this payment of duty on own volition concept and issued a show cause notice dated 28.01.1993 to the appellant alleging that credit was wrongly taken on the PVC film or sheet, since it was exempt from duty by notification, and the manufacturer had no option to pay duty on an exempted product. The notice invoked Rule 57I of CER, 1944 and proposed to recover the credit so taken of the duty paid voluntarily on the PVC film/sheet.

Income Tax

Assessee is low income earner - gets interest-free loan from builder employer to buy a flat from same builder - AO treats it as gift u/s 56(2)(v) - rationale behind bringing Sec 56 to I-T Act is to bring bogus gifts under tax net and not loan transactions: ITAT

THERE is a thin line between a gift and a loan. Let's take a look at the facts of the instant case where the assessee was working as a supervisory staff with a builder. In his return, the assessee shows huge amount of loan. The loans had come from builders which were sister concerns and the assessee was working with one of them. AO finds that the total income of the assessee was meagre that he had no repayment capacity to repay the loan utilised for buying a flat from his employer only. Thus the AO takes the view that since the assessee was working with the group for several decades, hence, having regard to the long-term association, these parties gave such a huge loan to the assessee without any security and interest as a mark of gratitude irrespective of his repayment capacity and therefore, in the absence of any obligation on the part of the assessee to repay these loans, the entire transaction was of the nature of gift which was given a colour of loan.

Customs

Section 129E of Customs Act - Pre-deposit of duty and penalty - merely because goods are already seized, that would not ipso facto lead to conclusion that balance of convenience would lie in favour of appellant even in relation to penalty amount: CESTAT

As regards the penalty amounts, such an exemption has not been granted under Section 129E of the Act . The criteria to he adopted for deciding the issue relating to the pre-deposit of the penalty amount is totally different from the one in relation to the demand of duty and interest pertaining to such goods. Being so, merely because the goods are already seized, that would not ipso facto lead to the conclusion that the balance of convenience would lie in favour of the appellant even in relation to the penalty amount is concerned.

See our columns Monday for the judgements