Jurisprudentiol – Wednesday''s cases

By Vijay Kumar

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

Compounded levy Scheme – Penalty under Rule 96ZO mandatory; no discretion – High Court

THE provisions for imposing penalty under Rule 96ZO (3)(ii) of the Rules are held to be mandatory and there is no discretion vested in any authority to reduce the aforesaid amount of penalty on the ground that there was no intention of evading payment of duty or commission of fraud, misrepresentation etc.

Income Tax

Income tax - Sec 2(13) - Assessees buy agricultural land with profit motive - land acquired by State Govt - enhanced compensation with interest paid - Profits are 'adventure in nature of trade'; interest on compensation to be taxed in year of receipt; interest u/s 234B is leviable: Bombay High Court

INVESTMENT in agricultural land is one of the common investments made by taxpayers who have surplus resources. What makes purchase of agricultural land attractive to investors is its exclusion from the definition of 'capital assets' as per provisions of Sec 2, sub-section 14(iii), Clauses "a" and "b" of the Income Tax Act. No tax is payable in case of capital gains arising out of compensation received on account of the acquisition of such lands. However, the intent behind purchase of agricultural land and the period of holding the same are very critical in deciding the taxability of consideration received either on sale of the land or on being acquired by the State Govt under Land Acquisition Act. Here is an interesting case which have been examined at length by the High Court, and the case finally being ruled in favour of the Revenue.

Customs

DEPB obtained by fraud – Customs has jurisdiction to issue SCN - Fraud unravels all – High Court

AS the DEPB scrips have, admittedly, been sold to third parties, the only course open to the Customs Officers is to demand repayment of DEPB credit (i.e., Customs (Import) duty) from the petitioner. Exercise of power to make such a demand is referable to Section 28(1) of the Customs Act. The impugned show cause notices, which propose a demand for repayment of DEPB credit under Section 28(1) as it was availed by resort to fraudulent over-valuation of export consignments, cannot be said to have been issued without jurisdiction.

See our columns Tomorrow for the judgements