Jurisprudentiol-Thursday's cases

By Vijay Kumar

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

Valuation - s.4 of CEA, 1944 - Appellant selling parts of pistons to their group companies - appellant, a Pvt. Ltd. Company and buyer of goods, Public Ltd. Co. cannot be called as related persons u/s 2(41) of Companies Act, 1956; they are also not inter-connected undertakings and no allegation of mutual interest has been alleged - no cause for valuation u/r 8 of Valuation Rules, 2000 - Appeal allowed: CESTAT

THE appellants are manufacturers of parts of pistons and sold the same to their group Co. on transaction value.

After introduction of Valuation Rules, 2000 the Revenue was of the opinion that since the goods were being sold to “ related persons ” the appellant is required to pay duty under Rule 8 of the same during the 01.07.2000 to 30.06.2002.

The appellant submitted that they are a Private Ltd. Company and the buyer of the goods is a Public Ltd. Co. therefore, they cannot be terms as related persons as per the definition provided in Section 2(41) of the Companies Act, 1956.

Income Tax

Whether if loan is taken from friend and repayment of same is made in cash within same FY, it can be assumed that such loan is for business exigency and not of undisclosed income - YES: HC

ASSESSEE sold certain land to these companies. AO concluded the gain on sale of lands as business income while the claim of the assessee was that it being sale/transfer of agricultural land, is not a capital asset within the meaning of Section 2(14)(iii) and is not liable to tax. AO also rejected the books of accounts by invoking provisions of section 145(3) and applied higher gross profit rate after rejecting the trading accounts.

The issues before the Bench are - issues before the Bench are - Whether lawyers holding Vakalats on behalf of their clients are under legal duty to attend the Courts/Tribunals irrespective of strike or boycott and thus, there is no reason to interfere in the order passed by the ITAT deciding the appeal ex-parte as alleged; Whether when the land sold is already converted from agricultural land to non-agricultural, it cannot be treated as agricultural land and tax will be computed on sale of the same; Whether when there was regularity of transaction with intention to make income and even within a short span of time, the lands were transferred on substantial gains, the gain arising on the same is business income and Whether assessee has introduced and recorded bogus purchases and verification of opening stock/closing stock were not open for verification in the books of accounts, books of account were rightly rejected. And the verdict goes against the assessee.

Customs

Vessel is primarily meant to be used as supply vessel and not as tug or towing vessel - classification under 8901 @nil duty is proper - Commissioner could not have added freight and insurance @21.125% as vessel had come on its own motion from Dubai - appeals allowed: CESTAT

THE Commissioner of Customs (Imports), NCH, Mumbai classified the vessel, M.V. Viva, imported by the appellant under CTH 8904 as ‘Anchor-Handling Tug/Supply Vessel' (AHTS), liable to customs duty at an effective rate of 9.356%. He also determined the value of the goods at Rs.10,29,81,975/- by holding the cost of the vessel as Rs.8,41,79,443/- and added freight @20% & cost and insurance @1.125% of the cost. Accordingly, the duty payable on the said goods was held as Rs.96,34,994/ -. Confiscation of the vessel was also ordered with an option to redeem the same on payment of fine Rs.1 crore. An equivalent penalty was imposed on the appellant and a penalty of Rs.5 lakhs on the Director of the firm.

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