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Illegal gratification to Govt servants cannot be treated as incidental to any lawful business activity - Expenditure incurred for such purpose cannot be allowed as business expenditure u/s 37 of I-T Act: Allahabad HC (Look for decision tomorrow) New rail coach factory to be set up in Kerala; Girl students to get concessional rail tickets upto graduation + Boys upto 12 th; Sr citizens (women) to get 50% concession in all classes of rail ticket; Railways to invest Rs 75000 Cr for extending rail tracks; Railways to install 6000 automatic ticket-vending machines in next two years; Rail tickets can now be booked through mobile phones; Laloo announces Rs 25000 Crore profit in current fiscal; Freight rate for petrol & diesel reduced by 5% + passenger fare also reduced for all classes; Laloo announces 53 new trains, 10 Garib Rath and extension of 16 existing trains (See 'Common Basket'): Govt blames pvt players for LPG crisis in certain parts of country; |
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| Dear Member, Sending you the following files: |
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NOTIFICATIONS Foreign Currency Exchangeable Bonds Scheme, 2008 notified; Securities lending/borrowing Scheme of Securities and Exchange Board of India; 'Benign Assessment Procedure’ for assessees engaged in diamond manufacturing and/or trading; CASE LAWS Income Tax: "Whether, the Tribunal was right in holding that surcharge is not applicable to block assessments if the search took place prior to introduction of the proviso to Section 113 with effect from 1.6.2002 ?" The proviso was inserted in section 113 to indicate that the Finance Act of the year in which the search was initiated would apply. That proviso was only clarificatory in nature. There is no question of retrospective effect. The proviso has to be read as it stands. Prior to June 1, 2002 , in several cases, tax was prescribed sometimes in the Income-tax Act and sometimes in the Finance Act and sometimes in both. This made liability uncertain. Therefore clarification was needed. The proviso is curative in nature. The proviso only clarifies that out of the four dates, Parliament has opted the date, namely, the year in which the search under section 158BC is initiated, which date would be relevant for applicability of a particular Finance Act.: MADRAS HIGH COURT; 2008-TIOL-101-ITAT-DEL.pdf + maruti story.pdf Income Tax - Assessee is a NBFC - Makes provision for bad and doubtful debts as per RBI guidelines - Revenue allows but later issues notice u/s 154 - Additions made on the ground that bad debts were in the nature of diminishing in the value of assets - CIT(A) allows assessee's appeal - In view of Explanation inserted to Sec 36(1)(vii) vide Finance Act, 2001 there is no scope of debate and controversy that the intent of the legislature was to allow only those bad debts which are written off in the books of accounts of the assessee and not the provision of bad and doubtful debts which become crysal clear from the word ''shall be'' used in the Explanation and it is settled law that the RBI guidelines cannot override provision of Income Tax Act - Revenue's appeal allowed: DELHI ITAT; Income Tax - Assessee enters into a lease agreement - gets certain plant and machinery on lease - pays interest on leased assets, incurs expenditure on civil work for installation of leased assets and pays management fee to the bank for facilitating the transaction - Revenue treats the same as capital expenditure - CIT(A) agrees with the AO on the presumption that the lessor and the lessee companies are owned by the same person and the machinery has specifically bought for the assessee who is likely to use the same on a permanent basis - As per the lease deed both the companies are independent entities in the eyes of law, and since the ownership of the assets remains with the lessor company which collects interest from the assessee it has to be treated as revenue expenditure - the management fee paid is also revenue expenditure, deductible u/s 36(1)(iii) - Revenue's appeal dismissed : DELHI ITAT; Income Tax - Assessee is a non-resident firm - has business connection in India - files return and indicates its status as 'firm' - AO applies 35% tax rate - Assessee argues they were unregistered firm and be treated as AOP - CIT(A) holds AO cannot change the status of the assessee on his own - Since there was ambiguity abotu the status of the assessee as per its return, the Revenue should have asked the same from the assessee and if it was not done, a view favourable to the assessee should have been taken - Assessee's appeal allowed: DELHI ITAT; |
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Central Excise – Cenvat Credit: "Whether the Tribunal is correct in holding that the inputs used for the manufacture of exempted intermediate product which is ultimately used for the manufacture of dutiable final product and not specified as inputs or final products under the Notification issued under Rule 57A prior to 21.10.1994 are eligible to modvat credit" - As the issue is now settled by the Supreme Court in the case of Solaris Chemtech Ltd., there is no need for this Court to direct the Tribunal to state a case. The reference case petition is dismissed: MADRAS HIGH COURT; 2008-TIOL-300-CESTAT-MUM.pdf + demand story.pdf Tribunal sets aside Rs.6 crore plus demand confirmed by CCE, Pune-I, says Department cannot blow hot & cold at the same time. Appellants had cleared imported parts & spares on the payment of duty wherein the assessable value was based on the sale price & which had a general mark-up of 30% on the landed cost. Hence, the sale price was always higher than the value plus customs duty at the time of import - Reversal of credit demanded has already been reversed by the appellant. Duty paid at the time of clearance should be treated as reversal of the alleged ineligible credit - demand is not maintainable. Entire credit availed on imported inputs has to be considered as utilized towards the payment of duty on the sale of such imported goods only - Department cannot once again demand the reversal, which has already been done. Extension of stay - No need for Tribunal to pass another order - Stay once granted will remain till appeal is decided - Demand notice during stay will be contempt - Chief Commissioners informed: CHENNAI CESTAT; Simply because it was subsequently reversed at the instance of the Revenue, the Original taking of the credit does not become wrong. Where there is no wrong taking of credit, there can be no demand of interest : CHENNAI CESTAT;
SERVICE TAX SECTION Evasion of Service Tax by the Department of Post, Madhya Pradesh Circle - reg.; Service Tax: Solve the Kashmir problem ! CASE LAWS ST - Authorised Service Station - Demand and penalty - Tax deposited before issue of SCN - Penalty under Sec 78 is not valid as the tax was paid before the issue of SCN but the case calls for imposition of penalty under Sec 76 and 77 as the assessee failed to deposit interest while depositing the tax and there was delay in paying tax despite the declaration made in the ST-3 return: DELHI CESTAT; Service Tax – Stay / dispensation of pre-deposit - Authorised service station – service tax on the first three services rendered free – appellant did not receive any consideration for the services rendered – pre-deposit waived.: CHENNAI CESTAT;
CUSTOMS SECTION Customs – valuation – royalty - cost of technical know-how is included if the same is to be paid, directly or indirectly, as a condition of the sale of imported goods: SUPREME COURT; 2008-TIOL-28-SC-CUS.pdf + SC story.pdf Customs – valuation: Royalties and licence fees related to the imported goods is the cost which is incurred by the buyer in addition to the price which the buyer has to pay as consideration for the purchase of the imported goods. In other words, in addition to the price for the imported goods, the buyer incurs costs on account of royalty and licence fee which the buyer pays to the foreign supplier for using information, patent, trade mark and know-how in the manufacture of the licensed product in India . Therefore, there are two concepts which operate simultaneously, namely, price for the imported goods and the royalties/licence fees which are also paid to the foreign supplier. the buyer/importer makes payment of the price of the imported goods. He also incurs the cost of technical know-how. Therefore, the Department in every case is not only required to look at TAA , it is also required to look at the pricing arrangement/agreement between the buyer and his foreign collaborator. For example if on examination of the pricing arrangement in juxtaposition with the TAA , the Department finds that the importer/buyer has misled the Department by adjusting the price of the imported item in guise of increased royalty/licence fees then the adjudicating authority would be right in including the cost of royalty/licence fees payment in the price of the imported goods. In such cases the principle of attribution of royalty/licence fees to the price of imported goods would apply. This is because every importer/buyer is obliged to pay not only the price for the imported goods but he also incurs the cost of technical know- how which is paid to the foreign supplier.: SUPREME COURT; 2008-TIOL-115-HC-DEL-CUS.pdf + cus hc story.pdf Departmental proceedings vs prosecution: Departmental proceedings are different from trial and so if the departmental proceedings end in favour of the accused the criminal trial is not hit by the principle of autre fois acquit. The departmental proceedings and the criminal proceedings can proceed side by side. If the departmental proceedings end in a finding in favour of the accused in respect of the allegations which also form the basis for the criminal proceedings then the departmental adjudication will remove the very basis of the criminal proceedings and in such situation the continuance of the criminal proceedings will be a futile exercise and an abuse of the process of the Court. : DELHI HIGH COURT; Misdeclaration due to wrong dispatch by foreign customer – re export of goods to be allowed – Penalty reduced: CHENNAI CESTAT; |
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Service Tax – Evasion by Postal department? More EOUs than approved? Rail Budget: Laloo sticks to 'Displease None' theory; once again reduces pax fare and freight rate; Compilation of Bank-wide consolidated R-Return; Tata Communications expands Global VPN Services to China Laloo announces 53 new trains, 10 Garib Rath and extension of 16 existing trains; Govt taking steps to educate investors for protection against fraud companies; Code of conduct proposed for Sovereign Wealth funds: EU; BoA okays 10 more SEZs; Tally up to 439; 201 already notified; |
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