Jurisprudentiol-Monday's cases

By Vijay Kumar

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

Abandoned goods - Tribunal fell in error in setting aside penalty u/s 112(a) in respect of goods abandoned u/s 23(2) - Revenue appeal allowed and penalty restored: High Court

ON the basis of information that the respondent importer imported a consignment declaring the same as secondary/ defective Tin Free Sheets, whereas the actual goods were Tin Sheets, the Directorate of Revenue Intelligence searched the factory premises of the importer and seized coils/sheets weighing 68.4 Mts. The live consignment imported was also examined and found to be containing Tin Sheets and not Tin Free Sheets.

Further investigation made by the Directorate of Revenue Intelligence revealed that the importer has also imported further consignments of Tin Sheets under the guise of Tin Free Sheets in five containers and they are lying at the port for clearance. For these five containers, no bill of entry was filed. The Bill of Lading and other documents revealed that the goods are Tin Free Sheets and the total weight was declared as 117.846 MTs. These goods were identified and detained.

Income Tax

Whether undisclosed income revealed post-search inquiry can be assessed within the scope of block assessment, although the time for filing return for such assessment year has not expired as on date of the search - YES: High Court

THE assessee publishes a daily newspaper "Herald". Consequent to a search warrant issued under Section 132 of the Income Tax Act, executed on 01.11.1999 and 02.11.1999, the Deputy Commissioner of Income Tax, made block assessment for the period 01.04.1989 to 01.11.1999. Income generated by the said Unit was claimed as exempted in return for the AY 1999-2000, and in block assessment return as income of new industrial undertaking exempt u/s 80 IA. It was submitted that the search was completed on 02.11.1999 and last date of filing of the said return was 30.11.1999. Hence, following mandate of Section 158BB(1)(d) of the Income Tax Act, the said income could not have been taken into account for the purpose of block assessment. The AO made additions which were maintained by the CIT (A) as also by the Tribunal.

The issue before the Bench is - Whether undisclosed income revealed post search inquiry can be assessed within the scope of the block assessment, although the time for filing return for such assessment year has not expired as on the date of the search. And the answer is YES.

Service Tax

Notfn. 29/2004-ST - Commission earned on discounting of account receivable (invoice) is nothing but interest for lending the money - Penal interest on bills of exchange discounted is also part of interest on loan - Prima facie exempted: CESTAT

THE applicants are in the business of lending securities and earning interest on lending and borrowing business. Therefore, they are required to pay service tax under the category of Banking and Financial Institution Service. The applicants are having the arrangement for finance against the government securities held by the 'Clearing Corporation of India Ltd. (CCIL)'. The CCIL is having collateral borrowing and lending obligations. As per the obligation, any financial institution who is in need of money, pledge their securities with CCIL and CCIL asks some banking and financial company who is having surplus money with them to lend the money to the borrower for certain period of time.

See our Columns Monday for the judgements