Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Banking - Prepayment/reset charges for loans - liable to tax: CESTAT

CHARGES collected for restructuring of loans and prepayment of loans is a way of value addition. The very fact that the cost that the customer has to pay for the facilities of prepayment/reset, is named as prepayment "charge" and reset "charge", immediately conveys that the same is in the nature of fee in lieu of some service/facility. The cost of the service for the customers increases or decreases with the increase or decrease of these charges. Thus, the reset charges and prepayment charges can be considered as the cost incurred by the borrower towards value added services like restructuring of the loan and prepayment of loan. Hence, the same charges are liable for Service Tax.

Income Tax

Whether loss arising from sale and purchase of shares where actual delivery is not taken, is speculation loss, and same cannot be set off against income from house property - NO, rules HC

ASSESSEE derives income from business, from house property as also from speculative transactions. It claimed set off of loss suffered on sale and purchase of shares covered by speculative transactions u/s 43(5) against income from property and claimed deduction to the extent of brokerage paid out of income from property. AO held that Section 43(5) specifies speculative transactions where the transaction of purchase or sale including shares is ultimately settled otherwise than by actual delivery. Income or loss arising to the assessee from such transaction has to be a speculative income or speculative loss only.

Central Excise

Payment of differential duty before finalization of provisional assessment is only a pre-deposit and not a payment of duty: CESTAT

THE payment of differential duty liability by the assessee on their own does not arise at all and the duty liability is to be determined by the Central Excise Officer whereupon the assessee is required to discharge the differential duty liability. In a case where the assessee pays the differential duty before finalization of assessment on their own, it is only a pre-deposit of duty and not payment of duty, which can be done only after the determination of the duty liability by a proper officer. Such a pre-deposit does not in any way exhaust the interest liability on the assessee from the date on which the duty was required to be paid originally i.e at the time of clearance of the goods from the place of removal and the date on which the duty liability was ultimately discharged.

See our columns Tomorrow for the judgements