Jurisprudentiol – Wednesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Debt Recovery:

Recovery of debts due to banks – Appeal against orders of Debt recovery tribunal - remedy of an Appeal would not oust the jurisdiction of Civil Court – High Court

The judgments of the Courts are not to be interpreted like a statute. The ratio has to be culled out from the facts and what was in issue. What has to be considered is the ratio of the judgment. It is, therefore, not possible to accept the contention that on the consideration of the judgments this Court has taken a view that the jurisdiction of the Court is expressly or impliedly barred.

Income Tax

TDS u/s 195 - assessee pays non-resident company towards demurrage charges - TDS not deducted - assessee argues it is a case of occasional shipping covered u/s 44B - since non-resident is not a party nor any materials brought on record for application of Sec 172, AO's order disallowing expenditure u/s 40(a)(i) is legally valid: Bombay High Court

IS TDS u/s 195 deductible on payments made to non-resident shipping company towards demurrage charges? The assessee company fails to do so on the ground that it is a case of occasional shipping for the non-resident which attracts Sec 44B read with sec 172, a non-obstante clause. Since Sec 172 has an overriding effect over other sections of the I-T Act, no TDS was deducted by the Assessee. AO disallows the deduction for expenditure u/s 40(a)(i). CIT(A) and Tribunal go with the assessee's line of argument. However, the High Court has held that since the non-resident company is not before the Bench, and there are no pleadings or material brought on record to show that the case is governed by occasional shipping within the meaning of Section 172 of the Act, 1961 and said section applies, the Tribunal's decision is not sustainable. The AO' order is well-reasoned and legally sound. Since the assessee fails to deduct tax at source as per the provisions of Sec 195, the disallowance made by the AO u/s 40(a)(i) is legally sustainable.

Customs

Breach of Customs barrier not relevant to adjudicate case when seized goods are proved to be of foreign origin and smuggled in nature and have not suffered customs duties – Authorities at place of seizure competent to adjudicate case – Revenue appeal allowed setting aside Tribunal's order – High Court

In May 2000, the Directorate of Revenue Intelligence, Bangalore wing seized 25 bales of raw mulberry silk of Chinese origin valued at Rs. 25 lakhs from a godown of transporters which were mis-declared as waste cloth/chindis. Subsequently, action was initiated by the Bangalore Customs authorities for demand of customs duties and imposition of penalties on the offenders i.e. consignees from whom goods were seized.

See our columns Tomorrow for the judgements