Indo-USA Investment Protection pact likely to be in place by year-end: Nath;

India loses famous fiscal expert - Noted Economist Dr Amaresh Bagchi passed away this morning;

CBEC to hold DPC for 138 vacancies of Central Excise and Customs Suptds after Budget;

Private petro players also hike petrol & diesel prices;

2008-TIOL-100-HC-DEL-IT.pdf

Income Tax - A.O. imposes penalty u/s 271(1)(c) - CIT(A) deletes the penalty which is upheld by Tribunal for non-recording of valid satisfaction by A.O. before initiating penalty proceedings - Revenue contends that recording of satisfaction does not have to be express and its enough if its discernible from the order - A perusal of A.O.'s assessment order does not indicate anywhere and in any manner the reasons for initiating penalty proceedings thus it cannot be said that recording of satisfaction before initiating penalty proceedings can be discerned from the order - Revenue's appeal dismissed : DELHI HIGH COURT;

2008-TIOL-92-ITAT-DEL.pdf + gilani story 1.pdf

Validity of search u/s 132 of Income Tax Act. the question of validity of search cannot be challenged either before the CIT (A) or before the ITAT as it could be adjudicated upon only by the High Court.

Unexplained cash deposits in the bank account; the explanation of the assessee that the cash deposits in one bank were simply from the withdrawals made from the other bank account of the assessee in which the deposits were made through cheques received from different agencies being a journalist and that the balance were from personal savings and cash in hand is untenable and the same is rejected.

Clubbing the income for the assessment year 2002-03 and 2003-04 with block assessment in view of the provisions of Section 158BA ( 3) of the Act. In the instant case, the assessee was not filing regular returns of income for the assessment years prior to the block period and that what is included in the block period is the amount represented by the bank entries recorded in the bank pass book and unearthed during the course of search. The entries recorded in the bank pass book cannot be treated as entries made in the normal course as the bank Pass Book is maintained by the bank and not by the assessee and but for the seizure of bank pass book, would not have been disclosed by the assessee.

 Deduction under section 80 RR;  On examining the sample certificates placed on record by the assessee, we find that the assessee has not furnished the certificates in the prescribed form along with the return of his income, certifying that the deduction has been rightly claimed by the assessee in accordance with the provisions of this section. In the instant case, the assessee has not complied with the conditions of the proviso to section 80 RR and, therefore, the claim has been rightly denied by the CIT (A)

Allowance of expenditure: the assessee has not proved the expenses claimed during the block period by any material and relevant evidence. The assessee has also not paid any tax or self assessment tax before the search or before filing the returns at the relevant time. Hence, it is held that expenses claimed by the assessee which vary from 81% to 82% for the block period cannot be allowed and the order of the CIT (A) allowing the expenses @ 75% was not justified and the AO has rightly allowed the total expenses of Rs. 84,000/-claimed by the assessment year 2001-02 and 2002-03 only as the assessee produced the bill and confirmation from the persons who received the payments.

Credit of TDS deducted in Germany: the assessee claimed to have rendered services to DUTSCHE WELLE (Voice of Germany) from India and, hence, he was taxable as per Indian Income Tax Act and, therefore, credit for TDS deducted by DUTSCHE WELLE (Voice of Germany) from his salary in Federal Republic of Germany should be allowed to the assessee. TDS deducted in Federal Republic of Germany can be only in terms of Article 23 of Indo-German DTA Agreement. The CIT (A) was, therefore, not justified in allowing the benefit of TDS deducted on foreign remittances by Federal Republic of Germany to the assessee

Rebate under section 88 of the Act - whether allowable in a block assessment. During block assessment the assessee claimed rebate under section 88 in respect of LIC Premium paid for different years. In view of the decision of ITAT Ahmedabad Bench in the case of Naynesh D. Kapasi vs. ACIT , that rebate under section 88 of the Act falling in Chapter VIA is allowable to the assessee in a block assessment, allowed this claim of the assessee.: DELHI ITAT;

2008-TIOL-91-ITAT-DEL .pdf + gilani story 2.pdf

Validity of search: the authorization issued by JDI (Inv.) to conduct search on the bank locker of the assessee Smt. Aneesa Baitool Gilani for the purpose of searching the material contained therein, as a result of key of bank locker found during the search as well as the statement of Smt. Aneesa Baitool Gilani recorded during the search in the case of Shri Iftekar Gilani , was a valid authorization under CBDT notification dated 11-10-1990 because it was issued for a search conducted as a consequence of a valid search conducted in the case of Sh. Iftekar Gilani and hence the same was a consequential search, therefore, the warrant of authorization issued by JDI (Inv.) was a valid authorization as it was issued for search which was a consequential search. Consequently, the assessment framed against the assessee u/s 158 BC/BA, on the basis of a valid search, was a valid assessment.

Cash deposits in the bank account of the assessee. In a block assessment mere explanation of the assessee is not sufficient for justifying the investments or expenditures or income unless supported and proved by cogent evidence by the assessee; in the absence of relevant evidence in support of the explanations of the assessee such incomes or investments or expenditure could be taken as undisclosed incomes under section 158BB of the the Act in a case of block assessment; the returns filed by the assessee under section 139(4) of the Act could not be taken into account because no advance tax or self assessment tax had been paid at the relevant time even if the return was filed within the time allowed under section 139(4) of the Act.

Clubbing the income for the assessment year 2002-03 and 2003-04 with block assessment in view of the provisions of Section 158BA ( 3) of the Act. The AO was justified in Coming to a conclusion that the assessee had failed to discharge the onus to prove to the satisfaction of the AO that the entry was made in a normal course. It means that in view of the facts of the instant case and discussions with regard to relevant provisions hereinabove that under both the provisions i.e. Section 158BA ( 3) of the Act and as per Explanation 'C' to Section 158BA (2) of the Act no benefit can be given to the assessee for the regular assessment made by the AO under section 143(3) of the Act in respect of assessments for assessment year 2002-03 and 2003-04.

Valuation of flat. In the instant case undisputedly, the return "for assessment year 2002-03 was filed by the assessee after the date of the search. The return, wherein the assessee disclosed the purchase of the flat at Rs. 2.5 lakhs, stated to have been accepted by the AO during the assessment, was completed by the AO after the passing of the order of block assessment. Hence, as discussed earlier in this order, the disclosure of Rs. 2.5 lakhs by the assessee in the return for assessment year 2002-03 is of no significance because the disclosure was made neither before the search nor the return was accepted by the AO before the completion of the block assessment by the AO.

Retracted statements: admission made by the assessee in a statement is an extremely important piece of evidence which could form the basis of the block assessment; such statement made by the assessee would not become unacceptable merely because the assessee has retracted from the statement; the onus lay on the assessee to establish that the admission made in the statement was wrong and that the retracted statement was correct; the assessee must give justifiable reason and material for the retraction to be acceptable and also give cogent and material evidence to show that the admission made in the statement was under pressure or coercion and was not voluntary; even if police officials were the witnesses of the assessee's statement under section 132(4) of the Act during the search, the same has evidentiary value unless proved under coercion, threat or inducement.

Addition made on the basis of seized paper on which it was written 'bill' . On the top of the seized paper found from the residence of the assesseee it is clearly mentioned " Bill for Wood Work" and showing total of Rs 1 ,10,750 /- for the work done at the residence of the assessee. The assessee explained before the AO that it was only an estimate given by the carpenter for carrying out the wood work and the same being high was not got done by the assessee. The onus to prove this explanation to be correct was upon the assessee and the CIT (A) has wrongly held that the onus was upon the department to prove that it was not an estimate but a bill. The assessee has not discharged this onus by producing the carpenter before the AO or by producing any other cogent evidence/material to prove that it was simply an estimate and no actual work was carried out by the carpenter.: DELHI ITAT;

2008-TIOL-90-ITAT-DEL.pdf

Income Tax - Assessee shows loss from business of plying buses and shows an income from agriculture on account of sale of trees - A.O. disallows loss on the ground that income from plying buses is shown on estimate basis and treats agriculture income as income from undisclosed sources thereby making an addition - CIT sets aside the order of A.O. by allowing the loss and deleting the addition on the ground that loss is incurred only on account of higher depreciation otherwise assessee has shown higher receipts thus there is no basis for disallowing the loss and that income declared from agriculture is reasonable - Factual observations made in well reasoned order of CIT(A) have not been controverted by revenue thus does not call for any interference - Revenue's appeal rejected: DELHI ITAT;

2008-TIOL-89-ITAT-DEL.pdf

Purchase of new refrigerators - Capital expenditure: In the instant case the assessee has purchased three new vertical refrigerators for Rs. 2 ,22,880 /-. According to the assessee he claimed the same as revenue expenditure as the new refrigerators were replacements of the old ones. No evidence with regard to the existence and sale of old refrigerators were filed before the tax authorities below nor was any evidence produced to indicate that the new refrigerators were purchased for replacing the old ones. In our opinion the purchase of these three new vertical refrigerators by the assessee was acquisition of new assets by the assessee so the expenditure incurred in purchase of these three vertical refrigerators amounting Rs. 2 ,22,880 /- has been rightly treated as capital expenditure by the tax authorities below. Accordingly, the orders of the tax authorities below in this regard are upheld.

Purchase of display cabinets – capital expenditure: Expenditures incurred by the assessee in the purchase of display cabinets and in the purchase of two computers amounting to Rs. 4 ,43,520 /- and Rs. 36,225/- respectively. The assessee claimed that it replaced six display cabinets because they had become old and were less economical in consumption of electricity and replaced two computers as the same were requiring replacement and repair. The CIT (A) was not justified in treating this expenditure incurred by the assessee on the purchase of new computer as revenue expenditure and the Assessing Officer was justified in treating the same as capital expenditure. Accordingly, the order of the CIT (A) in this regard is set-aside and order of the Assessing Officer is affirmed.

Rental receipts:  since in the lease agreement and in the operation and maintenance agreement the assessee has itself clearly distinguished the rental receipts and receipts for maintenance charges, there is no question of treating the receipts from the operation and maintenance services as rental receipts and the rental income of the assessee.: DELHI ITAT;

CENTRAL EXCISE SECTION

CIRCULAR

excircular865.pdf

CBEC hikes monetary limit for adjudication Ss 11A & 33 by JCs;

notification.pdf

Issue of notifications by field formations;

CASE LAWS

2008-TIOL-269-CESTAT-MUM.pdf + Berger Paints Story.pdf

Valuation - Berger Colour Bank Dispensing System – White Base Paint cleared from factory packed in tins to depots & then sold to dealers – At dealers end, tin lid opened & colourant added from dispenser system to obtain colour of requisite shade/tint as chosen by customer – Duty paid on Section 4A valuation prima facie not proper as what is sold to customer is not factory packed paint tins – Applicability of SWAM Act does not arise - Section 4 valuation appears to be proper – Tribunal orders pre-deposit of Rs.2.5 crores.

Since there was no retail sale of the base material, the MRP indicated by the applicant in their invoices appears to be artificial price created by them in order to evade duty.: MUMBAI CESTAT;

2008-TIOL-268-CESTAT-MUM.pdf

Clearance under the job work basis cannot be equated as clearance without payment of duty, as these job worked goods were further utilized in the manufacture of dutiable final product – no cause for payment of any amount under rule 6 or reversal of credit – LB decision in Sterlite Industries 2005-TIOL-305-CESTAT-MUM-LB followed.

Reliance of the SDR on the SC decision in Chandrapur Magnet Wires [ 2002-TIOL-41-SC-CX ] is misplaced as the issue in the present case is regarding the reversal of the modvat credit availed on inputs which were used for the manufacture of job worked goods while in Chandrapur case the Hon'ble Supreme Court held that once the reversal is done it would indicate that the modvat credit is not taken – Issue is totally different inasmuch as, the claim of the revenue is that the goods, which were cleared by the respondent from the factory premises is on job work basis and would amount to exemption – Revenue appeal rejected.: MUMBAI CESTAT;

2008-TIOL-267-CESTAT-MUM.pdf

Central Excise - Valuation - Printed labels, polythene bags and corrugated boxed are part of packing materials in respect of the final product viz. canister manufactured and cleared by the appellant for packing of liquor - None of the packing materials are of durable or returnable nature and, therefore, the cost of such packing is includable in the assessable value of the canisters.

Extended period rightly invokable as the assessee did not inform the department that they were receiving the packing material from M/s. Manohar Canister P. Ltd and whether the assessable value of the Canister manufactured by them included the cost of packing materials – Appeal rejected: MUMBAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-271-CESTAT-DEL.pdf + ST ad story.pdf

Service Tax – advertising – agency commission received from broadcasting and print media – not taxable The basic point which should be borne in mind is that service tax is levied on the gross amount received by the service provider from the recipient of the service for the services rendered. In this case, the appellant is the service provider. The appellant being an advertisement agency rendered advertising service by engaging print, electronic media etc. The tax authorities should see whether the appellants had discharged duty liability on the gross amount received from their clients. In this case, the various media are not clients of the appellant namely, the advertising agency. If the media gives discount of 15% to the appellant, that amount has nothing to do with the gross amount received by the appellant from their clients to whom they rendered advertisement services. Therefore, there is no logic in demanding service tax on the discount of 15% received by the appellant from print media : DELHI CESTAT;

2008-TIOL-270-CESTAT-MUM.pdf

Cenvat Credit of Service Tax paid on the mobile phone charges – Issue squarely covered in favour of respondent by the Tribunal decision in Indian Rayon & Industries [ 2006-TIOL-1152-CESTAT-MUM ] – Revenue appeal rejected.

Mere fact that the said order is challenged before the Gujarat High Court cannot be a ground to deny benefit as there is no Stay of the said order.: DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft07pn114.pdf

DGFT amends SION rate for Silicon metal;

dgft07not080.pdf

Prohibition on export of non-basmati rice – exemption for export to Bangladesh;

dgft07not079.pdf

Export of rice – prohibition not to apply to relief to Bangladesh;

dgft07not078.pdf

Export of rice – prohibition not to apply to relief to Bangladesh;

CASE LAWS

2008-TIOL-99-HC-DEL-COFEPOSA.pdf

Offence – detention - non-supply of the Remand Order which was not a relied upon document, did not prejudice the defence or right of representation of the Petitioner. While it has to be appreciated that preventive detention curtails the Fundamental Rights of the Detenu , thereby requiring meticulous adherence to technicalities, Detention Order should not be quashed merely on the strength of factors and elements which have not undermined the substance of the Detenu's assault on the Detention Order: DELHI HIGH COURT;

2008-TIOL-266-CESTAT-MUM.pdf

CHA totally unaware of the fact of undervaluation – he has shown the value on the import documents on the basis of documents furnished to him by the importer – Commissioner(A) setting aside the penalty on CHA proper: MUMBAI CESTAT;

ddt 20 feb.pdf

Input services for export of goods – refund exemption –Govt adds three more services.;

brunup.pdf

Need for provisions for services utilised for exporting goods and services to India;

spl column.pdf

Budget should address issues relating to Rule 6 of CCR, 2004;

fcbond.pdf

FC Exchangeable Bond Scheme;

mbuzz363.pdf

WTO Chief hails opening of trade in telecom services;

mbuzz362.pdf

Mumbai contributes Rs 83300 Cr revenue to CBDT kitty;

mbuzz361.pdf

Maruti Suzuki inks agreement with Mundra Port for a mega car terminal for exports;

mbuzz360.pdf

TCS wins multi-year deal with Chrysler LLC;