Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

As the pre-budgetary stock of finished fabrics/WIP stock/input stock as on 9.7.04 was exempted from duty under Notification No.30/04-CE, the benefit of captive consumption notification 67/95-CE claimed in respect of tops, yarn and grey fabrics manufactured and used/contained in the finished fabrics stock/WIP is not available - Demand of Rs.2.15 crores upheld and appeal rejected: CESTAT

SINCE the appellants have opted for Notification No.30/04, the benefit of the Notification No.67/95 is not applicable to them on the inputs used in the manufacture of exempted final products.

Income Tax

Whether when sale and purchase of shares are done in normal course of business and not with object to earn dividend, profits arising on sale of shares is to be treated as capital gains - NO, business income: AP High Court

ASSESSEE filed their returns declaring income from investment in shares, interest on income, salary and capital gains. AO held that the trading in shares were classified by the assessee into three categories (i) business income (ii) short term capital gains before 1.10.2004 and (iii) after 1.10.2004, in respect of some of the transactions, effected during the period 1.4.2004 to 31.3.2005, the assessee had admitted that it was business income, however, in view of the insertion of Section 111A with effect from 1.10.2004, the assessee had segregated certain transactions, pertaining to "trading in shares," into two categories i.e., trading carried on during the period 1.4.2004 to 30.9.2004, and during the period 1.10.2004 to 31.3.2005. Segregation of business income and short term capital gain before 1.10.2004 was accepted as the tax rate was same.

Service Tax

Penalty - Section 76, 78 - No penalty proposal in the Show Cause Notice - Receipt of Corrigendum disputed - Section 80 not considered - Matter remanded - High Court

THERE is an error and mistake in the impugned order and the reasons given for deleting penalty under Section 78 of the Act cannot be sustained. It is apparent that the respondent-assessee has invoked Section 80 of the Act and submitted that there was a reasonable cause and, therefore, penalty should not have been imposed. The factual aspects, explanation offered etc. have not been dealt with and adverted to. The Tribunal while deleting the penalty has not discussed and stated the stand of the respondent-assessee and recorded any finding on the said respect.

See our columns Tomorrow for the judgements