Reshuffle in CBDT Members' charge; New Member Sunita Kaila likely to get L & J;

DGCA issues guidelines for aircraft operations during low visibility conditions at IGI Airport;

Core sector grows by 6% in September;

CRPF enters most violence-torn villages in Nandigram; arrests many suspects;

3G Services + Mobile Number Portability issue: COAI lambasts Govt;

India, Russia ink 10-yr pact for joint lunar research;

FM says services + industry to log 10% growth rates this fiscal;

2007-TIOL-389-ITAT-DEL-SB.doc + Sb story.doc

No deduction of NPA as per RBI Act: "Whether, a Provision for Non Performing Assets (in short ' NPA ') debited to profit and loss account and claimed as a deduction in accordance with the prudential norms issued by the RBI in exercise of powers conferred on it under section 45JA of the RBI Act, 1934, called the Non Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998, should be allowed as deduction while computing income from business under the provisions of the Income-tax Act, 1961?" NO

No deduction for doubtful debt: Under section 36(3)( viia ) even a provision for bad and doubtful debts made by schedule bank, a non scheduled bank, a cooperative bank, a foreign bank, a public financial institution, a state financial corporation, a state industrial investment corporation etc are allowable as such within the limits prescribed therein. If the legislature intended to provide such benefit of allowing provision for bad and doubtful debts to a non banking finance company also appropriate provision would have been made in respect thereof. However, the NBFC do not find any mention in Sec. 36(1 )( viia ). This implies that the benefit of deduction in respect of provision for bad and doubtful debts is not intended to the entities other than the entities prescribed in Sec.36 ( 1)( viia ). Thus, so long as the amounts written off is in respect of provision for bad and doubtful debts or provision for NPA or so long as amount provided is not in respect of a bad debt, the same is not allowable as deduction u/s 36(1)(vii). Section 36(1 )( vii) provides for allowance of 'bad debt' and not 'any debt'. Thus, the pre condition is that the debt has turned into 'bad debt' and not anything else.

If doubtful debt is not allowed as deduction, not income when it is realised: If the deduction is not allowed in respect of provision for NPA itself, since the amount received is in respect of capital sum lent, it do not partake the character of income when subsequently such amount is realized. If on the first instance, the deduction is not allowed in respect of NPA , subsequent realization of such NPA is realizing its capital itself and hence, cannot be considered as income though treated as such under the RBI Act. The amount recovered is not an income u/s 41(4) unless in the first instance is allowed as deduction u/s 36(1 )( vii) :DELHI ITAT SPECIAL BENCH;

2007-TIOL-388-ITAT-DEL.doc

Income Tax - Assessee is into transport business - Scrutiny - AO asks for furnishing of books of accounts and vouchers - Assessee fails to do so - AO applies best judgement method and makes addition - CIT(A) reduces the per truck income formule and also percentage of profit per hired truck - Since the same issues were decided by the Tribunal in the preceding year in the case of the assessee itself, the income from owned trucks should be estimated at 10% receipts and 1% on hired trucks and depreciation on trucks to be allowed - Assessee's appeal allowed:DELHI ITAT;

2007-TIOL-387-ITAT-MAD.doc

Income Tax - The assessee after carrying out the statutory audit and also after getting the audit approved in the annual general body meeting filed the original return of income - Thereafter, the assessee passed certain journal entries, reducing the total declared income in the original return and filed a revised return and prevailed upon the A.O. to complete the assessment as per revised return - For this purpose, the assessee relied on the letter dated 19.8.1997 written by the Ministry of Company Affairs addressed to Institute of Chartered Accountants of India wherein they have clarified that the company can reopen and revise its accounts even after their adoption in the annual genera body meeting in order to comply with the technical requirement of taxation laws - This letter is not applicable to the facts of the case since there is no technical requirement of taxation law whatsoever applicable to this assessee - Without application of any requirement of laws the assessee with a sole intention to reduce the tax liability revised the approved annual accounts which affects the sanctity of the audited accounts - By revising the approved audited accounts, the assessee wants to revise it which has no legal sanction and this cannot be done at this stage: CHENNAI ITAT;

2007-TIOL-386-ITAT-MUM.doc

Income Tax - Assessee is into trading and real estate - buys bulk shares of a company and later sells part of it for loss and claims the same as business loss - AO holds assessee's case is hit by the Explanation of Sec 73 as it is speculation loss - Going by the settled laws, the assessee's business loss on sale of shares is hit by Explanation to Sec 73 - Assessee's appeal dismissed:MUMBAI ITAT;

2007-TIOL-385-ITAT-DEL.doc

Income Tax - Assessee is into manufacturing ferro alloys - sets up a sugar manufacturing plant and claims deduction for items like financial charges paid for raising funds, power and fuel, raw materails etc - AO disallows on the ground that the new business is a new line of business and the pre-operative expenses and other expenses are capital in nature - Assessee argues the new business is very much integral part of the existing business as it has the same management, interlacing of funds and unity of control - CIT(A) partly allows the assessee's appeal - As per the settled law, the actual test for determining a business as an extension of the existing business is not the nature of new line of business but the unity of control which can be clearly seen in this case besides the common balance-sheets, common top management and interlacing of funds which make it revenue expenditure - Revenue's appeal disallowed:DELHI ITAT;

CENTRAL EXCISE SECTION

instruct0213.doc

Pan Masala - machines to be brought in only after verification by excise;

CASE LAWS

2007-TIOL-196-SC-CX.doc

Central Excise - Classification - Hot air generator - Is it classifiable as 'air heater' under Heading 73.22 or Heading 84.19 - Since the Heading 72.22 clearly covers air heater there is no need to invoke HSN Explanatory Notes as HSN Explanation should be used only where there is ambiguity in classification: SUPREME COURT;

2007-TIOL-1748-CESTAT-MAD.doc + penalty story.doc

Central Excise - Credit taken wrongly reversed with interest - no penalty: CHENNAI CESTAT;

2007-TIOL-1747-CESTAT-MUM.doc

Medicaments manufactured bearing a brand name & sold earlier as an independent manufacturer - subsequently they became loan licensee & same medicaments were sold at higher price - higher price cannot be made basis for enhancing duty for the previous period, as there is no evidence by the revenue that there was any flow back for the said period or cost of production itself was less than the sale value: MUMBAI CESTAT;

2007-TIOL-1746-CESTAT-MAD.doc

Cenvat - Eligibility of capital goods credit to be determined on the date of receipt of the goods -Subsequently if final products are exempted, credit cannot be denied: CHENNAI CESTAT;

SERVICE TAX SECTION

2007-TIOL-1744-CESTAT-DEL.doc

ST - Cenvat Credit - Assessee utilises credit lying in the account to pay Central Excise duty - Revenue demands tax in cash - Going by the Rule 3(1) of the Service Tax Rules, 2002, credit to be allowed on input service falling in the same category of taxable service but this issue needs to be examined in detail - Pre-deposit ordered: DELHI CESTAT;

2007-TIOL-1743-CESTAT-MUM.doc

Whether the appellants are eligible to refund of Service Tax paid on services rendered by the Goods Transport Operators - Issue no longer res integra - Matter stands decided against the assessee by Tribunal's order in the case of J.K. Industries Vs. CCE, Indore 2006-TIOL-260-CESTAT-DEL - Appeal rejected.: MUMBAI CESTAT;

CUSTOMS SECTION

2007-TIOL-653-HC-DEL-CUS.doc + goel story.doc

Is an offence under Customs Act bailable? HC grants bail on second application: DELHI HIGH COURT;

2007-TIOL-1745-CESTAT-MUM.doc

Customs - Private bonded warehouse - Circular No. 99/95-Cus - Commissioner may deny licence if the applicant is involved in other than technical offence but grounds have to be placed before the Commissioner for a decision - Held - Decision arrived at by the Asst. Commr/ Dy. Commr is not in terms of circular 99/95 - Appeal allowed with direction to grant the licence: MUMBAI CESTAT;

ddt 13 nov.doc

Service Tax on activities undertaken at mines prior to 1.6.2007 – Board clarifies;

3G story.doc

Govt issues guidelines for 3G Services & Broadband Wireless Access services; intends to provide mobile number portability service by 2008-end;

bccl_post.doc

Selection for post of BCCL's CMD;

us_post.doc

CBDT looking for US (Technical);

mbuzz039.doc

Faze Three acquires 76% in Pana Textile GmbH;

mbuzz038.doc

RIL signs production sharing pact for deep water offshore block in Oman;

mbuzz037.doc

Pratibha Ind bags Rs 41 Cr contract from GMR at Delhi Airport;

mbuzz036.doc

IVRCL acquires an Oil & Gas E&P Company;