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TIOL wishes all Netizens a Very Happy & Fiscally Gratifying New Year; Company Secretaries can now advertise their services; CAs may get nod in few months; President appoints Justice Narayanappa Ananda and Justice Jawad Rahim as full-time Judges of Karnataka HC; Direct Taxes mop-up surpasses Rs 2.05 lakh Crore; CBDT gets Rs 200 Cr for infrastructure and HR development; WTO Dispute Settlement Body upholds US zeroing method of calculating anti-dumping duty; Mexico loses, and so does India but indirectly House Panel invites suggestions on working of UPSC (Send your feedback at psingh@sansad.nic.in) 11 states out of 17 with tiger reserves notify critical tiger habitats; |
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| Dear Member, Also sending you the following files: |
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Income Tax - Penalty u/s 271D imposed for violation of Sec 269SS by accepting cash - CIT(A) deletes the first payment received as advance for the sale of agricultural produce and the second sum as loan - Tribunal rejects Revenue's appeal - No interference called for in essentially findings of facts - Revenue's appeal dismissed: P & H HIGH COURT; Income Tax - Sec 80HHC benefits - AO deducts 90% of jobwork receipts - Assessee claims the jobwork receipts are derived from exports business - CIT(A) and Tribunal allow the claim - It was decided by this court in the case of K R M Marine Exports Ltd that the expression "turnover" shall have effect so as to exclude Section 28(iiia), (iiib) and (iiic) which refer to profits on sale of a licence granted under the Imports (Control) Order, cash assistance and duty drawback and ultimately held that even if the assets of the company have been used for the purpose of jobwork, which has a nexus with the exports income, deduction has to be allowed as per the explanation (baa) - Revenue's appeal dismissed: MADRAS HIGH COURT; 2008-TIOL-02-ITAT-MUM.doc + seaking story.doc CIT may not agree with the view taken by the AO while allowing the claim of the assessee but the view taken by the AO cannot be called to be absurd and non-plausible/ impossible view. It has been repeatedly held by various High Courts and Apex Court that if two views are possible and AO has taken one of it, such view cannot be revised u/s. 263 of the I.T. Act. "the phrase "prejudicial to the interest of the Revenue" has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, when an income Tax Officer adopted one of the courses permissible in law and it has resulted in the loss of Revenue; or where two views are possible and the ITO has taken one view with which Commissioner does not agree, it cannot be treated as and erroneous order prejudicial to the interests of the Revenue, unless the view taken by the ITO is unsustainable in law. Where the AO has made enquiries with regard to nature of the expenditure incurred by the assessee in the light of detailed explanations furnished by the assessee, the order of the AO cannot be called to be erroneous and prejudicial to the interest of Revenue. Before invoking provisions of Section 263, it is necessary for the Revenue to make out a case that assessment order is not only erroneous but prejudicial to the interest of the Revenue.: DELHI ITAT; 2008-TIOL-01-ITAT-DEL.doc + veil story.doc ++So long as the companies function through the Directors such companies cannot be treated as paper entities of another-Investing in the funds by the investment companies cannot be considered as the ground to hold such investment companies as conduits or paper entities of another- Certain considerations like opening of bank account at a convenient place, not employing the employees and investing the fund in Promoter Company are the decision taken by the respective companies and the Assessing Officer cannot intervene in such a situation to hold that for such reasons, the companies become mere paper entities.. The tribunal relied on the view re-affirmed by Hon'ble Supreme Court in the case of S.A. Builders vs. CIT . ++ However, when the Assessing Officer in the income-tax proceedings is to lift the corporate veil, he should first come to conclusion that these entities were created for the purpose of avoiding tax. ++ In the present cases, the amount advanced by IXS to these two investment companies, interest is charged at appropriate rate. The income by way of interest is disclosed in the accounts and offered for taxation. The investment in shares is duly reflected. Only those expenses are claimed which are expenses allowable as such. Thus, the formation of investment companies is tax neutral. If that be the case, even after lifting the corporate veil no purpose will be achieved in the sense that if these companies are held as conduits and if conduits are ignored, the ultimate tax liability of IXS will not alter. ++ Where the corporate veils were proposed to be lifted, the courts have examined as to whether the same was for the purpose of any tax avoidance or to avoid the welfare legislation enacted under the statute. When the transactions between the two companies are at arms' length and no controlling interest is established, the lifting the corporate veil will not serve the purpose to establish avoidance of tax or to circumvent the law ++ Having found that the investment companies, namely, FIPL and HIPL were functioning as separate legal entities in its own name and carried out its objects in terms of its memorandum of association and having found that the transactions between these investment companies and IXS were at arms' length, finding of the Assessing Officer that these entitles are mere paper or dummy entities, not correct. ++ The respective income shall be assessable in the respective hands in accordance with provisions of law as if all these entities are separate legal entities and not conduits and matter remanded to the AO to re-compute the income in accordance with provisions of law after affording reasonable opportunity of being heard.: DELHI ITAT; |
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2008-TIOL-03-HC-MUM-CX.doc + excise story.doc Central Excise - retrospective legislation: Section 110 of the Finance Act, 2000 validates only those show cause notices issued during the period specified therein which were found to be invalid on account of approval, acceptance or assessment relating to the rate of duty or on the value thereof. In other words, section 110 of the Finance Act, 2000 would not apply to those show cause notices where it is held that invoking larger period of limitation is unjustified on the ground that there is no fraud, collusion, misstatement or suppression of facts for invoking the larger period of limitation: BOMBAY HIGH COURT; TR 6 challan was not a prescribed document for availing Cenvat Credit till 15.6.2005 and was notified only by Notification 28/2005-CE(NT) dated 7.6.2005 - Strong prima facie case for waiver in the light of Clause (f) of the explanation to Rule 9(1) of Service Tax Rules, 1994, providing that credit can be taken on the challan issued by a provider of input service on or after the 10th day of September, 2004 as it is one of the eligible documents taking credit - Stay granted.: MUMBAI CESTAT; Central Excise - Cenvat credit - payment of 8% / 10% on pressmud cleared as Vermi Compost - Since pressmud is a waste product, provisions of Rule 6 are not applicable - appeal allowed - Appeal allowed: CHENNAI CESTAT; Central Excise - Cenvat Credit - demand of 8% amount on exempted goods in view of non maintenance of separated records for exempted and dutiable goods - the appellant has not established that he had followed the procedure prescribed in Rule 6 (3) of the CCR, 2001 - As the assessee had failed to maintain separate accounts, they have to pay an amount equal to 8% of the price of the exempted final products in terms of Cenvat Credit Rules - However, equal penalty imposed is reduced - Appeal partly allowed: CHENNAI CESTAT; Service Tax on movie theatres! NOTIFICATION Rules amended for furnishing of records / bank accounts details; Amendment in Panel for Review cases in UP Zone; CASE LAWS ST - Application of appeal filed not signed by appellant rather it was signed by the counsel - Registry insists on signing by the applicant - Counsel argues he has vakalatnama issued in his favour signed by the applicant - Issue referred to the Bench - It is settled law that as per the CEGAT Procedure Rules, the application has to be signed by the applicant / appellant but it is a rectifiable defect - Four weeks allowed to get the application signed by the applicant:DELHI CESTAT; Service Tax - Penalty - revenue is in appeal against the reduction of penalty by the Commissioner (Appeals) who has reduced the penalties under Section 76 and 78 after taking into consideration the facts of the case and the ratio of the decision of the Tribunal - no reason to interfere - revenue appeal is devoid of merits :CHENNAI CESTAT;
CUSTOMS SECTION NOTIFICATION Amends tariff value of only brass scraps; CIRCULAR DFIA Scheme - correlation of inputs with exports goods; Misuse of Target Plus Scheme; CASE LAWS Section 61(2)(ii) of the Customs Act requires payment of interest when goods stored in a warehouse for a period beyond 30 days - Crude oil on import stored in public bonded warehouse & later pumped to private bonded warehouse under warehouse bill of entry - as and when the crude oil was required for production, ex-bond of bill of entry was filed and the goods were cleared on payment of customs duty - for applying interest, the total period of warehousing should be taken into account. Unlike the Central Excise Act, in the Customs Act interest is also governed by the provisions of limitation - Demand for June 2001 to October 2001 issued in March 2004 - Demand time barred as each removal of the goods right from the initial warehousing till the final clearance is covered by documents & there was enough material with the department for issuing demand within the normal period under Section 28 of the Customs Act. Computation of 30 days period under Section 61 - If the interpretation of the Advocate is followed, then it would be possible for an importer to keep on shifting the goods from one warehouse to another warehouse and clearing them and later they would come up with the contention that they would not be liable for any interest as they have cleared the goods within a period of 30 days from the date of warehousing in that particular warehouse. As demand time barred, appeal allowed with consequential relief: DELHI CESTAT; |
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DDT wishes you a HAPPY NEW YEAR ; CBEC amends Service Tax Rules; Applications invited post for Technical Director in Financial Intelligence Unit- India; OCI Scheme a runaway success among Indian Diaspora; India's exports register 27% growth in November; Govt sets up panel on estimation of savings and investments; Dr Rangarajan appointed Chairman ; |
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