SC raps Mumbai special court

LEGAL DIGEST

The Supreme Court has set aside two orders of the special court in Mumbai dealing with the securities scam and asked it to go ahead with the suit moved by ABN Amro Bank against Andhra Bank.

The suit is for the recovery of Rs 15 crore in relation to the transfer of one lakh 17 per cent NPC bonds of Rs 100. Andhra Bank has denied the allegations.

The bank wanted to submit additional facts, which was not allowed by the special court. The Supreme Court stated that the special court acted illegally and "with material irregularity" in exercising its jurisdiction.

Masala powder can be taxed separately from spices

The Supreme Court has ruled that spices and the masala powder made from them could be separately taxed each as they are different commodities.

The argument of the manufacturer in this case, AP Products vs State of AP, was that it had paid sales tax on the ingredients going into the production of the masala powder.

Therefore, it should not be charged the tax a second time. The SC ruled that the masala powder prepared after grinding the spices formed a different commodity. The spices lost their original flavour and identity and a new product was created. Therefore, it was liable to be taxed separately.

Reconsider dispute between CIL and private firm: SC

The Supreme Court has asked the Jharkhand High Court to reconsider the dispute between Coal India Ltd and Domco Smokeless Fuels Ltd over the grant of linkage facility for supply of coal for its industrial unit in Aurangabad.

The company had alleged discrimination in the allotment and breach of promise. The SC stated that the pleadings of the parties were not before it and subsequent events had changed the complexion of the dispute. Therefore, the case has to be reconsidered by the HC.

SC overturns decision in case of Hindustan Zinc Ltd

The Supreme Court has set aside the judgments of the Rajasthan High Court and the income tax appellate tribunal in the case of Hindustan Zinc Ltd in which the assessing officer rejected the valuation method followed by the company. It was engaged in the production of zinc concentrate which was utilised captively.

However, during the assessment year, the product got accumulated. Therefore, it got permission to export it. It priced the product by adopting the 'London Metallic Exchange' price as it was lower than the Weighted Average Cost by Rs 27 crore.

The assessing officer stated that if the inventory had been valued at the domestic price, the company's profit would have been higher by Rs 27 crore. The company challenged this view before the tribunal, which deleted the additions made. However, the SC held that the tribunal was wrong in deleting the additions made in the assessment.

SC sets aside HC order

The Supreme Court remarked that the Madras High court had misdirected itself and committed error while accepting the excuse of a group of income tax assessees that the money received by them were gifts from non-resident Indians through Citibank, Singapore (Commissioner of Income Tax vs P Mohankala).

According to the assessing officer, the assessees received moneys from a person who had several aliases. He added the income as deriving from undisclosed sources under Section 68 of the IT Act.

However, the HC examined the records once again and reversed their findings. The Commissioner of Income Tax appealed to the SC which set aside the HC order.