Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, ‘SAFEMA'- Sale of property affected after notice of forfeiture but before order - Sale is void: SC

THE appellant purchased a property against which notice of forfeiture was already given by Enforcement Directorate. It is true that the appellants had obtained encumbrance certificates from the Sub-Registrar prior to purchase, which show that there were no encumbrances to the subject flat. It is also true that the appellants had obtained loan from Vijaya Bank, Brigade Road Branch, Bangalore for purchase of the said flat. It is a fact that sale consideration to the tune of Rs. 26 lakhs was paid directly by the Bank to the vendors after the Bank was satisfied about the title of the vendors. The appellants had also mortgaged the flat with the Vijaya Bank as a security towards loan. But unfortunately these facts are of no help to the appellants as the sale in their favour was effected after notices under Section 6(1) were issued to the vendors. Such sale has no legal sanction. The sale is null and void on the face of Section 11.

Income Tax

Whether when lessee and lessor design lease deed in such a manner that it amounts to sale of property, Revenue is right in disallowing advance rental as revenue expenditure and also disallowing depreciation merely because deed was not registered - NO: HC

A lease deed was executed between the assessee (“the lessees”) and one Prataprai N. Kothari (“the lessor”) under which the lessor leased a factory shed to the assessee on the terms and conditions mentioned therein, for a term of thirty years, commencing from 1s March, 1982, at a rent of Rs.28,500/- payable half-yearly. The first payment of rent was to be made on 25th March, 1982 and subsequent payments were to be made on or before the 10th day of January and July each year. The issue before the Bench is - Whether when the lessee and the lessor design the lease deed in such a manner that it amounts to sale of property, Revenue is right in disallowing advance rental as revenue expenditure and also disallowing depreciation merely because the sale deed was not registered. NO is the HC's answer.

Central Excise

Service of orders of Tribunal - When an order is passed by Tribunal in presence of counsel of appellant, order shall be deemed to be communicated on same date - HC

SECTION 37C of the Central Excise Act, 1944 read with Rules 13 and 35 of Customs Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 clearly indicate that communication of the order to authorised agent of a person is sufficient communication. Thus when the order passed by the Tribunal in presence of counsel of the assessee, the order shall also be deemed to be communicated on the same date and the submission of the assessee that unless the order is received by the assessee in person, the order shall not be treated to be communicated to the assessee, cannot be accepted.

See our columns Tomorrow for the judgements