Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Department agrees to pay refund consequent to appellate order, but later files review petition - Refund ordered with Interest and cost imposed on officers: HC

THE Customs Department agreed before the High Court to refund the excess fine and penalty, but the Department without refunding the amount filed a review petition before the High Court and ended up paying refund with interest and costs imposed on the responsible officers.

When an appellate authority allows an appeal filed against imposition of tax, duty, fine, penalty etc., it is the bounden duty of the assessing authority, as part of a democratic government, to refund the amounts covered by orders of the appellate authority, when appeals are allowed fully or partially. The same shall be refunded even without a formal request for the same. Certainly, on a request made for refund, the same shall be refunded immediately, failing which the assessing authority is bound to pay interest on the amount from the date when the refund became due. This position has been formally accepted by the Government of India also based on the decisions of the High Courts and the Supreme Court.

Income Tax

Whether when tax-exempt bonds were not available during entire period of six months after accrual of long-term capital gains, assessee cannot claim Sec 54EC benefits on investments made later in REC bonds - No, it can: HC

THE assessee filed its return of income claiming deduction u/s 54EC of the Act. On 22/3/2006, the assessee sold its factory building earning a long term capital gain of Rs.49.36lacs. The assessee sought to avail of the exemption from payment of tax on long term capital gain of Rs.43.36lacs u/s 54EC of the said Act by purchasing bonds of the Rural Electrification Corporation Limited ("REC Bonds"). To avail the exemption u/s 54EC, the assessee had to invest the sale proceeds in the REC bonds within six months from the date of the sale of the factory building i.e. on or before 21/9/2006. However, the assessee purchased the REC bonds only on 31/1/2007, since the bonds were not available throughout the period of six months commencing from the date of the sale of the factory by the respondents and even thereafter till the extended date of 31/12/2006 under the CBDT Circular (however, the bonds were available for a limited time during this period between 1/7/2006 to 31/8/2008). The AO disallowed the benefit of Section 54EC to the assessee on the ground that the bonds were purchased after the expiry of stipulated time period of six months.

Central Excise

Undervaluation - Assessee clearing job worked goods on challan cum-invoices and which were duty paying documents submitted along with RT-12 returns - allegation of suppression not sustainable: HC

IT could not have been inferred that there was any suppression and/ or intention on part of the respondent-assessee to evade duty. The findings and the conclusions arrived at by the Tribunal are based on relevant materials and documents on record. The findings are in the realm of appreciation. No perversity is demonstrated. No substantial question of law arises for the consideration of this Court.

See our columns Tomorrow for the judgements