Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Construction of Residential Complex service - Construction undertaken after transfer of undivided share of land - Case of appellant is prima facie covered by Circulars dated 01.08.2006 and 23.08.2007 - Tribunal was not justified in ordering pre-deposit - Appeal restored to Tribunal: HC

THIS is an appeal by the assessee against the order of Tribunal dismissing their appeal for non-compliance with the order of pre-deposit. The appellant is engaged in construction of Residential Complexes and vide Misc order 2013-TIOL-1938-CESTAT-MAD held that the appellant has no prima facie case and ordered pre-deposit of Rs 4.5 crores and dismissed the appeal for non-compliance with the same. The assessee is before the High Court.

Income Tax

Whether when assessee being manufacturer of beer and liquor, advances loan to sister concern for setting up new line of business, such assistance can be characterised as expenditure incurred wholly and exclusively for business of assessee - NO: HC

THE assessee is a public limited company carrying on the business of manufacture and sale of beer and liquor. The case of the asessee is that it established a subsidiary company M/s.U.B.Resorts Ltd. which was also incorporated as a Company and registered with the Registrar of Companies, with a view to extend the business of the assessee-Company. In 2001, they informed the Registrar of Companies to strike off the name of M/s.U.B.Resorts Ltd. under Section 560 of the Companies Act, 1956 for the reasons that the subsidiary Company could not do any business or commercial activity as laid down in the memorandum of association and that the same had become defunct. M/s.U.B.Resorts Ltd. was a wholly owned subsidiary of the assessee. Till the financial year 1997-98, all the expenditure incurred on the executives of the subsidiary Company were absorbed by the assessee as the employees were on the rolls of the assessee Company.

The issue before the Bench is - Whether when assessee being a manufacturer of beer and liquor, advances loan to sister concern for setting up a new line of business, such assistance can be characterised as expenditure incurred wholly and exclusively for business of assessee. And the verdict goes against the assessee.

Customs

Recovery proceedings against assets of another unit of Group Company of importer is not permissible under Section 142 of Customs Act, 1962 in absence of evidence that entire import was at instance of Group Companies - Writ Petition allowed: HC

BY this Writ Petition the Petitioners, M/s Surlux Diagnostic Ltd are praying for a writ of mandamus or any writ, order or direction of that nature under Article 226 of the Constitution of India directing the Assistant Commissioner of Customs to withdraw the letter dated 29.05.2013.

Vide the letter dated 29.05.2013 addressed to the Secretary of the Chhadva Premises Coop Society Limited, the Assistant Commissioner prohibited the Society from transfer of property of rights in the Flat owned by the Petitioner in the Building.

The Petitioner is a public limited company and the Petitioner Nos.2 and 3 are the purchasers of a flat which belongs to the Petitioner No.1.

It is the case of the department that there are some dues adjudged against one M/s Surlux Medicare and these units are under common management called Surlux Group of Companies and there is interconnection among different units and that Group Companies have together defaulted in payment of the Government dues.

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