Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Recovery of Dues - Dues from a deceased assessee cannot be collected from his legal heir: HC

WHEN the assessee who was registered under the Act as a manufacturer and who was availing the benefit of cenvat credit dies and registration certificate is surrendered, whether the legal heirs are liable to answer the claims of the department under the Act? There is no provision, which empowers the authorities to recover due from a deceased assessee by proceeding against his legal heirs.

Income Tax

Whether when main business of assessee is to earn interest income from loans and advances, loss arising from sale and purchase of shares is covered under exclusionary clause of Explanation to Sec 73 - YES: Allahabad HC

IN assessment proceedings, AO issued notice to explain as to why the business of sale and purchase of shares may not be treated as speculation business as per Explanation to Section 73. Assessee submitted that it was also doing business of sale and purchase of shares and earning mainly interest by granting loans and advances and income from interest. As per memorandum of association, its principal business was to deal and develop real estate. AO considered the loss on sales and purchase of shares as speculation loss, which was not set off against the net profit observing that it would be set off against the speculation profit in subsequent years. CIT (A) confirmed the order of the AO. ITAT allowed the appeal of the assessee observing that principal business of the company being granting of loans and advances, and its activities were covered under the exclusionary clause of Explanation to Section 73, hence deeming provision for carrying of speculation business in respect of purchase and sale of shares was not applicable. The company was liable to set off losses against its other income by way of interest.

Service Tax

Airport Service - Details submitted by applicants does not cover amount of tickets sold prior to 01.05.2006 for journey carried out on or after 01.05.2006 - prima facie extended period has been rightly invoked as there is suppression of fact - Pre-deposit ordered of entire amount of Service Tax demanded: CESTAT

THE applicants are engaged in the services of transporting of passengers embarking in India for International journey by 'Airport Service'. The levy of service tax on the tickets issued by them for international journey came into effect from 01.05.2006. Therefore, the department was of the view that the applicants are required to pay service tax on charges collected by them for services rendered under the category of Transport of Passengers embarking in India for International Journey by Air Service from 01.05.2006 onwards.

See our columns Tomorrow for the judgements