Mayawati Govt tables tax-free budget of Rs 1,12,472 Crore;

Railway Budget to be tabled on Feb 26 & Budget 2008 on Feb 29;

Defence Ministry to release more spectrum soon : Telecom Secy;

DoT again proposes a hike in spectrum charges;

SC to examine Election Commission's powers to run state machinery during polls

Run-up to Budget: FM meest PSU Banks' CEOs;

CBDT Press Release.pdf

Threshold limit of PAN-quoting in TCS/TDS enhanced to 95%;

CASE LAWS

2008-TIOL-75-ITAT-DEL.pdf + ranbaxy story.pdf

Income Tax - Sec 92 - Transfer Pricing - Assessee has 17 Associated Enterprises (AEs) located in several continents - supplies pharma products and services to all of them - Exports constitutes 60% of total turnover - Declares Arm's Length Price (ALP) through a note attached to the return - AO accepts the determination of ALP and makes no adjustment - CIT invokes powers u/s 263 on three counts - non-reference to the case to TPO as per Board's Instruction, treating overseas AEs of the assessee as tested party and non-examination of the audit report of central excise department - Going by the facts that the assessee's audit report does not reveal specific characteristics of the transactions, of property transferred or services provided, no information information relating to correctness of transfer pricing could be gathered nor mechanism of Arm's length price applied. ALP can be determined only if name and quantity of the product was made known.

In place of furnishing description of the international transactions, the assessee held back relevant information by recording 'numerous products and voluminous transaction' which cannot be a valid ground to deny relevant facts - if quantity and volume is not disclosed, can anybody find the price charged for goods? - The AO did not bother that basic and fundamental information to consider application of transfer pricing formulation was not available in this case - AO failed to ask for specific characteristic of transactions

Application of TNMM method: Assessee in the audit report furnished no detail whatsoever of the enterprise taken into consideration for comparison or working of their margin of profit - No calculation was available in the audit report on form 3CEB but the AO failed to note these deficiencies in the audit report - There was patent lack of application of mind by the AO to the requirement of transfer pricing regulations and also to what taxpayer had given in its report on Form 3 CEB.

Proviso to Section 92C of the Act provides where more than one price is determined by the most appropriate method then the arm's length price shall be the arithmetical mean of such prices - In this case, TNMM results in determination of net profit margins of eight comparable uncontrolled companies, the arithmetical mean of the above eight net profit margins before tax paid comparable companies, which works out to 14.88% - Going by the table furnished, the maximum net margin on sales is earned by Ohm Laboratories Inc., USA which is 11.22%, which is less than the average net margin earned by comparable overseas companies at 14.88%. The other AEs earn a margin which is lower than the margin earned by Ohm Laboratories and hence meet with the arm's length principle.

Details of job profile or of location of eight companies in the records - What constituted "Turnover" and "Total cost" of comparable and each of foreign AEs were important to see reliability of data for comparison, but the same were not disclosed - The taxpayer did not furnish details of transaction nor claimed that some or similar transaction with same profit margin were carried with all foreign AEs. It is not the case of the taxpayer that the price at which goods and service were transferred to all the 17 concerns was responsible for the margin of profit of the AEs. Influence of several other circumstance of "turnover" or "total cost" on margin of profit could not be ruled out.: DELHI ITAT;

2008-TIOL-74-ITAT-MUM.pdf

Income Tax - Assessee pays extra sum to the premise-vacating tenant and acquires tenancy right by way of perpetual lease - Claims depreciation in respect of premium paid for acquiring office premises - AO disallows and the CIT(A) upholds it - If the assessee wants to recover the premium paid to the vacating tenant, it can do it at the time of vacating the premises from the tenant stepping in but it cannot be treated as intangible asset for claiming depreciation u/s 32 of I.T. Act: MUMBAI ITAT;

2008-TIOL-73-ITAT-DEL.pdf

Income Tax - A.O. makes assessment of the income of the assessee at a higher amount then returned by making additions on account of disallowances of certain expenses which is further enhanced by CIT(A) on account of interest on loan amount and consequently levies penalty u/s 271(1)(c) - Assessee objects to imposition of penalty on the ground of non-recording of proper satisfaction by A.O. before initiating penalty proceedings - It is a condition precedent that A.O. arrives at and records his satisfaction with respect to concealment of income or furnishing of inaccurate particulars of income by the assessee in course of assessment proceedings before initiating penalty proceedings u/s 271(1)(c) and a failure to do so renders penalty proceedings and all subsequent acts, including imposition of penalty invalid - In the instant case A.O. has nowhere mentioned in the assessment order that assessee concealed his income nor can it be discerned from the language of it and only thing mentioned is 'penalty proceedings are separately issued' which is not a proper satisfaction in terms of Sec. 271(1)(c) - Appeal in favour of assessee on legal issue: DELHI ITAT;

2008-TIOL-72-ITAT-DEL.pdf

Income Tax - A survey is conducted on the premises of assessee during which a provisional P&L a/c is made and an amount surrendered on account of unexplained share application money and balance in sundry debtor's account - Assessee shows a reduced profit in the return of income and also denies any receipt of amount surrendered - A.O. makes assessment on the basis of provisional P&L a/c and surrender made at the time of survey - Assessee objects on the ground that assessment is to be made on the basis of final books of a/c - Computation of income and profits thereof is to be made on the basis of final books of accounts and P&L a/c drawn thereof and not provisional P&L a/c and A.O. can make a computation by comparing and contrasting expenses and income as shown in provisional P&L a/c with that of final books but can't overlook the latter - In the instant case since final books have been written and P&L a/c drawn thereof, it will be appropriate to start with final books to compute the correct income - Matter restored to the file of A.O. to decide accordingly - Assessee's appeal allowed for statistical purposes: DELHI ITAT;

CENTRAL EXCISE SECTION

NOTIFICATION

exnt08_08.pdf

Govt exempts from excise duty all goods exported to Punatsangechhu-I Hydro Electric Project in Bhutan;

CASE LAWS

2008-TIOL-226-CESTAT-MUM.pdf + eou story.pdf

Inputs supplied by a 100% EOU – Credit of Education Cess component cannot be denied to recipient manufacturer – Tribunal delivers a much awaited decision.

Rule 3(7)(a) of the Cenvat Credit Rules - it appears that the objective of the legislature was to restrict availment of credit of BED paid by an EOU and not to restrict availment of credit of other duties leviable under the Finance Act, 2004 (Education Cess) and National Calamity Contingent Duty Act and Additional Duties of Excise (Textile and Textiles Articles) Act, etc.

Non obstante clause in rule 3(7) of CCR, 2004 - non-obstante clause is used where contrary provisions exist - if the interpretation canvassed by the Revenue is accepted as correct, there would have been no question of utilization of education cess for payment of education cess if the taking of credit itself, according to the Revenue, is barred by Rule 3(7)(a), and the provisions of Rule 3(7)(b) would, therefore, be rendered redundant.: MUMBAI CESTAT;

2008-TIOL-225-CESTAT-MUM.pdf

Manufacture - Activity of fixing labels on imported commodities would not be covered by Note 5 to Chapter 30 as Civil Appeal against Tribunal's order in Johnson & Johnson has been dismissed by Apex Court.: MUMBAI CESTAT;

2008-TIOL-224-CESTAT-MUM.pdf

Inputs on which cenvat credit has been taken are removed as such against CT-2/CT-3 without payment of duty for onward export – No cause for reversal of Cenvat credit.: MUMBAI CESTAT;

SERVICE TAX SECTION

NOTIFICATION

stnot08_002.pdf

Commissioners' committee for Review cases in Chennai;

stnot08_001.pdf

Chief Commissioners' committee for Review cases in Chennai;

maintenance_Furnishing.pdf

Service Tax – list of records (in duplicate);

analysis.pdf (sending this file again as you got un-proof read file yesterday)

In-depth revenue analysis of certain services ordered;

CASE LAWS

2008-TIOL-228-CESTAT-MUM.pdf + stgst story.pdf

Service Tax - Export of services - Service providers are eligible for refund of un-utilised credit under Rule 5 of Cenvat Credit Rules even for exports made prior to 14.3.2006, if refund claims were filed after 14.3.2006: CESTAT;

Service Tax - Export of services - Service providers are eligible for refund of un-utilised credit under Rule 5 of Cenvat Credit Rules even for the exports made prior to 14.3.2006, if the refund claims were filed after 14.3.2006: MUMBAI CESTAT;

2008-TIOL-227-CESTAT-DEL.pdf

ST - Commercial Construction Service - Assessee builds a warehouse on behalf of Central Warehousing Corporation which had taken land on rent from the railways - Revenue demands tax - Assessee pleads since the construction was done on the railways land, it is not covered under the service tax - Since the assessee provided the service to the CWC and not the railways, and also the works contract documents were not produced by the assessee, it is prima facie not a fit case for waiver of pre-deposit : DELHI CESTAT;

CUSTOMS SECTION

2008-TIOL-87-HC-MAD-CUS.pdf + hc cus story.pdf

Customs bank guarantee is not duty payment after assessment refund provisions not to apply - It has been repeatedly held that the bank guarantee furnished in order to secure the due performance of the export obligation cannot be regarded as payment of duty. If that be so, the invocation of section 27 of the Customs Act, which provides for refund of any duty and interest, if any, paid on such duty in pursuance of an order of assessment, is misconceived, as there is no payment of duty in pursuance of an order of assessment. The bank guarantee has been furnished in order to safeguard the interest of the revenue in the event of the importer committing default in performing the export obligation cast upon him for the purpose of availment of concession in importing the capital goods. The differential duty was neither levied nor demanded.: MADRAS HIGH COURT;

2008-TIOL-02-ARA-CUS.pdf + ara data story.pdf

Data recovery – no customs duty:  imports of the DVDs and HDDs containing the damaged data, exported for recovery of the data contained therein, are exempted from basic customs duty and additional duties of customs leviable under Section 3 of the Customs Tariff Act 1985, against sr.no.3 of Notification No.94 /96- Cus . dated 16.12.96, provided the fact of re-import of the same damaged data is established. It was also agreed that the imports of the hard disc drives and the recorded DVDs (not containing any sound or visual data) containing the recovered data, are fully exempted from basic customs duty under Notification No.24 /2005- Cus . dated 1.3.05 and from additional duty of customs leviable under section 3(1) of the Customs Tariff Act by virtue of Notification No.6 /2006-CE dated 1.3.06. No additional duty of customs on the imports of DVDs, containing the recovered data is leviable under sub section (5) of section 3 of the Customs Tariff Act by virtue of sr.no.1 of Notification No.20 /2006- Cus . dated 1.3.06.

4% additional duty liable: The imports of the hard disc drives containing the recovered data, however, attract 4 per cent additional duty leviable under section 3(5) of the Act as per Notification No. 19/2006- Cus . dtd . 1.3.06 as the exemption under Notification No.20 /2006- Cus is not available in view of Para 2 of the latter notification.

Data cannot have two identities one as data and the other as medium: data recorded on a medium has to be regarded as a composite good and it cannot be given a dual identity, once as data, and then separately in terms of the medium on which it happens to be recorded. It is the nature of the data recorded, that imparts the identity to the goods and not the medium on which it is recorded. In the instant case, the data exported, albeit in a damaged condition, and the recovered data imported, have to be considered as the same goods, provided the identity of the data exported and imported is established. The identity of this data does not change because of a change in the receptacle on which it is contained. The Commissioner's stand that the exported goods i.e. damaged data on DVDs/ HDDs are different from the imported goods, viz. recovered data contained on new DVDs/ HDDs , only because the medium on which the data has been recorded has been changed, cannot therefore be accepted.: Advance Ruling Authority;

2008-TIOL-01-ARA-CUS.pdf + aircraft story.pdf

Exemption to Raw material for manufacture or servicing of air-craft – (Notification 21/2002- Cus ). Does it include consumables such as lubricants, oils and greases? Obviously, the answer should be in the negative. They are not raw-material even in the widest sense of the expression.

Additional duty exemption for the articles such as nuts, bolts, rivets, screws, clamps, couplings and angles that are used directly or indirectly in the process of servicing and repairing the aircraft engine. The real test that has to be applied is whether such items are regarded or known as parts of aircraft in common or commercial parlance or whether the persons in the aviation field consider them as such. The items in question which are imported for the specific purpose of utilization in the service/repair of aircraft engine can be legitimately treated as parts of aircraft. Nuts, bolts, screws, rivets, etc fall under Entry 54-B of Central Excise Notfn No. 6/2006 provided they are specially meant for use in aircraft engines. Decided in favour of the applicant.

Engine modules – parts of aircraft: There is no dispute that engine modules are parts of aircraft falling under Heading No. 8802. The import is for the specific purpose of repairing and delivering the aircraft engine to be attached to the aircraft belonging to the Indian airline company and that aircraft is used for operating scheduled air transport/cargo service.: Advance Ruling Authority;

2008-TIOL-223-CESTAT-MUM.pdf

Order of pre-deposit – application seeking to review earlier order of Tribunal is not permissible in the garb of modification application:MUMBAI CESTAT;

ddt 12 feb.pdf

Service Tax – list of records (in duplicate);

brunup.pdf

'Renting of immovable property' is already taxed; Will Budget 2008 levy tax on 'renting of movable property'?

ara_vacancy.pdf

ARA looking for Addl Commissioner (Sales Tax);

faqcontract.pdf

Faqs On The Forward Contracts (Regulation) Amendment Ordinance 2008 And The Policy For Fdi/Fii In Commodity Exchanges;

mubuzz334.pdf

Thermax signs licence pact with Babcock & Wilcox for utility boilers;

mubuzz333.pdf

India for Domain Names in fully localised scripts; ICANN to be assisted in developing program;

mubuzz332.pdf

Sensitive imports pick up between April-Dec, 07; Crude palm oil logs highest growth;

mubuzz331.pdf

India, Holland sign MoU in shipping and port sectors; Scholarships for Maritime officers;