Jurisprudentiol - Monday's cases

By Vijay Kumar

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

When there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible - unless there is clinching evidence, demand cannot be confirmed solely on the basis of presumptions and assumptions - High Court

ON careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects:

(i) To find out the excess production details.

(ii) To find out whether the excess raw materials have been purchased.

(iii) To find out the dispatch particulars from the regular transporters.

(iv) To find out the realization of sale proceeds.

(v) To find out finished product receipt details from regular dealers/buyers.

(vi) To find out the excess power consumptions.

In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties.

Income Tax

Whether when there is no willingness on part of developer to perform his part of contract, it will still be treated as transfer of capital asset u/s 2(47)(v) - NO: ITAT

THE assessee company is engaged in real estate business. It had filed its return, declaring income at Rs. 2,97,79,960. A search was conducted and consequently a notice u/s 153A was issued. In response to the said notice, assessee filed his return showing the same income as was declared originally. During assessment, the AO noticed assessee along with 33 others had entered into a development agreement with a developer and as per the agreement, the land owners had handed over the possession of the entire land for development. The market value for the entire project as per the registered document was Rs. 720 crore with sharing ratio of 35% with the land owners on the built up area and undivided land. Therefore, the developer had given a total advance to all land owners at Rs. 21,26,15,000. The AO, thus held that there being a transfer of capital asset under the development agreement, assessee was subject to capital gain. Whereas the assessee submitted that the land transferred by the assessee was an agricultural land, which also remained as agricultural land at the time of transfer to the developer. Hence, the property transferred not being a capital asset as per section 2(14) of the Act, was exempt from capital gain.

The issue before the Bench is - Whether when there is no willingness on part of the developer to perform his part of the contract, it will still be treated as a transfer of capital asset u/s 2(47)(v). NO is the answer.

Customs

Furnishing Bank Guarantee by Two Star Export House - the repugnancy between clause 4.7.3 of the Handbook of Procedures and paragraph 3.10.4(v) of the Foreign Trade Policy must be resolved in favour of the Foreign Trade Policy - High Court

THE petitioner is a two star export house status holder and has filed the present petition impugning the communication dated 31.05.2013 issued by the office of Additional Director General of Foreign Trade. By the said communication, the Additional DGFT had informed the petitioner that it's entitlement under the Advance Authorization dated 09.05.2012, was limited to a sum of Rs 38,83,52,050/- instead of Rs 77,03,73,810/-. The petitioner was further advised to submit the said Advanced Authorization for endorsement of Bank Guarantee condition for the differential amount.

See our Columns on Monday for the judgements.