Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Whether when shares are held for a very short period and then sold at lowest market price to sister concern, not backed by actual delivery, such transactions can be treated as sham - YES: High Court

THE issues before the Bench are - Whether speculation loss arising from sale of shares can be allowed, even when the transaction is structured in a manner only to set off the profits earned from the sale of other shares; Whether when the shares are held for a very short period and deliberately sold at the lowest market price to a sister concern not backed by actual delivery, the transaction can be considered as sham and Whether the mere fact that the assessment of the other party's to whom the shares were sold at a low price has been accepted, leads to an automatic inference that the transaction undertaken by the assessee is also genuine. And the verdict goes in favour of the Revenue.

Customs

Ocean going vessel confiscated and sold by Customs department - Buyer is not required to follow procedure under Section 46 of Customs Act: High Court

THE petitioner is engaged in ship breaking business and is a successful bidder of the tender floated by the Commissioner of Customs, Chennai for sale of confiscated vessel. The petitioners submitted that the vessel purchased by them in response to the tender notice issued by customs was a confiscated vessel as contemplated under Section 126 of the Act and therefore, the same cannot be considered to be imported goods. The petitioners are not the importers as defined under Section 2(34) of the Act as the vessel in question on being confiscated as per Section 126 of the Act was a property of Central Government and, therefore, the transaction between the petitioners and customs cannot be termed as ‘Import' and therefore the provisions of Section 46 would not be applicable.

Central Excise

In absence of any evidence to show that molasses were removed clandestinely, it has to be held that same were destroyed or damaged on account of weather conditions and rainy season - remission has to be granted in such a case - order set aside and appeal allowed with consequential relief: CESTAT

APPELLANTS are engaged in the manufacture of V.P. Sugar with molasses as its by-product. For storage of molasses, appellant have inside their factory premises 2 steel tanks and one covered masonry tank with aggregate storage capacity of 83,000 qtls. However, during crushing season 2002-2003 there being low demand/lifting in comparison to high production of molasses, stocks piled up and all the 3 tanks containing molasses became full beyond their capacity in April, 2003. Storage and disposal of molasses being fully controlled by the State Controller of Molasses, all the stocks of molasses produced were deemed to have been reserved for supply to distilleries, etc. and the appellant is not empowered to dispose of their own will even a gram of it in open market without incurring criminal liability.

See our columns Monday for the judgements