Jurisprudentiol -Friday's cases

By Vijay Kumar

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

CHA licence suspended on basis of CBI inquiry that appellant was bribing Customs officials and getting favourable orders in matter of release of consignments - as departmental officers have been issued charge sheets, Commissioner of Customs (General) to complete inquiry proceedings under CHALR within one month: CESTAT

THE CHA licence was suspended on the basis of the inquiry initiated by CBI with regard to the allegation of bribing of certain officials of the Customs & Excise by the appellant CHA. Now, the appellant is before the CESTAT with an appeal and a miscellaneous application on the ground that after suspension of their licence there has been no progress with regard to the inquiry required to be conducted under CHALR.

It is also submitted that the CBI has closed the case and withdrawn the investigation and in these circumstances the suspension is no longer valid and should be set aside. The Revenue representative submitted that subsequent to the CBI inquiry, investigation against the departmental officers has been completed and charge sheets have been issued recently and the proceedings under Regulation 20 of CHALR would be initiated against the Customs broker also.

Income Tax

Whether when assessee engaged in real estate business lets out part of property to beat slowdown in business and to reduce interest on borrowed funds, such rental income takes the colour of business receipt - YES: High Court

THE assessee is an Individual. During AY 1983-84, it had constructed a Commercial Complex known as "Nirman Sahu Business Complex" Sitapur Road, Lucknow where the shops on the ground floor and a few residential flats were constructed at the first floor. All the units including the shop and flats were put on sale as and when there was a demand for the same. A few units were not sold out due to steep decline in market demand. However, some units were kept as Stock-in-Trade being business assets. As a prudent businessmen, a few units were let out for short period. The assessee had received the rent and the rental income was shown by the assessee under the head "Income from House Property". However, during the AY under consideration, assessee had claimed the rental income under the head of the "Income from the business". The claim was disallowed by the lower authorities including the Tribunal.

THE issue before the Bench is - Whether when the assessee engaged in the real estate business lets out part of property to beat the lull in business and to reduce interest on borrowed funds, such rental income takes the colour of business receipt. And the verdict favours the assessee.

Central Excise

Shoes received in loose form in jute bags from karigaars are put in plastic bags bearing brand name and then packed in cardboard boxes wherein details such as brand name, MRP, size of shoes, colour of shoes, etc. are affixed - Activity amounts to manufacture and appellant is liable to pay excise duty - Orders upheld and Appeals dismissed: CESTAT

THE appellants received footwear from karigaars in loose form in jute bags, plastic bags, basket, etc. Thereafter, they affixed a sticker showing information as Item No., brand name 'REGAL' and the MRP. A pair of footwear is put in plastic bags having 'REGAL' monogram and 'REGAL' brand name printed on it. Thereafter, the shoes are packed in cardboard boxes having 'REGAL' brand name printed on it and on the card board boxes also stickers are affixed which indicate item No., colour, bar code, size and MRP. The appellants also claimed that they were receiving footwear from karigaars in finished form in boxes bearing MRP. In such cases, only the size of footwear is either embossed or a sticker is affixed on the bottom sole of the footwear. After receiving the footwear, they put a sticker showing item No., date of packing and MRP on the bottom side of the sole and on the front side of the sole, they put a sticker with the brand name REGAL. Thereafter, they repack the pair of footwear in the same cardboard boxes received from the karigaars.

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