Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Appellant providing vessels to ONGC on charter hire basis - primary object is transportation of crude from place of production i.e. in High Sea to refineries and not for 'Storage and Warehousing' - such services are correctly classifiable under category of "Supply of tangible goods for use" service-Demands set aside and appeals allowed: CESTAT

THE appellant had provided shipping vessels to M/s. ONGC on charter hire basis for which they were receiving consideration. The said vessels were used during monsoon period and on call out basis for storage and transportation of crude oil from Bombay High. From the agreement for charter hire it appeared that the vessel is to be used at a particular place or site for operation and service, which indicated that the vessel is stationary and primarily not used for voyage/transport of oil. The vessel is sought to be moored to the ONGC rig and acts as a mother vessel receiving oil from the rig and pumping it to other daughter vessels which does actual transporting. The vessel used as mother vessel is required to carry out ship to ship transfer of cargo to daughter vessel. Therefore, the department was of the view that the activity undertaken by the appellant in charter hiring the mother vessel was primarily for the purpose of storage of crude oil at Bombay High and the transportation was only an incidental function to the primary function of storage.

Income Tax

Whether when assessee who was gifted plot of land from her father, constructed eight flats by demolishing her bungalow and sold four of them, such income is to be treated as business or adventure in nature of trade - NO: ITAT

THE Assessee is an individual. The AO noticed that Assessee's father owned a plot of land admeasuring 809 Sq.Yds and the same was transferred in the name of Assessee vide gift deed. The Assessee constructed a bungalow on the said land. The bungalow was dismantled to construct 8 flats. Four flats were retained by Assessee for her own use and the remaining 4 flats were sold. On the 4 flats sold, Assessee worked out LTCG on sale of land and short term loss on sale of construction of flats and offered the same for tax. The AO considered the construction of flats to be as adventure in the nature of trade and therefore the income is to be treated as "business income" and not "capital gains". He also noticed that the 4 flats retained by the assessee for her own use were on two different floors, independent units and therefore according to him the 4 flats cannot be considered to be a single unit for the purpose of claiming exemption u/s 54F and therefore held that Assessee was not eligible for deduction u/s 54F.

Customs

No cause for denial of exemption on ground that Tug was diverted into service of salvage operation of MSC Chitra in Mumbai Harbour for period of 22 days - Appeals allowed with consequential relief: CESTAT

THE applicant had imported self-propelled Tug Smit Jaguar and claimed exemption under Notification No.21/2002-Cusdt.01.03.2002, Sl.No.216, List No.12 and condition Sr.No.31. As per the condition No.31, the importer was required to obtain a Certificate from a duly authorized officer of the Director General of Hydrocarbons, in the Ministry of Petroleum and Natural Gas, Govt. of India to the effect that the imported goods are required for petroleum operations referred to in Clause (a) and have been imported under the contract referred to in that clause. The goods were cleared and exemption was granted. The applicant also executed a bond for Re-export after completion of the contract period.

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