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Internal consensus within power blocs arrived at for giving fresh lease of life to DEPB Scheme; Govt accepts resignation of Addl Director General, DGCEI, Bangalore Mr Somesh Arora; to be relieved on March 27; Mr Aman Singh, IRS of 1995 batch, Customs & Excise, promoted as Special Secretary in Chhattisgarh Govt; Administrative Reforms Commission suggests no SEZ on prime agri land + abolition of Ministry for Development of North Eastern region + better incentives for officers working in N-E; Sonia Gandhi hints at greater magnitude of farm loan waiver; |
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| Dear Member, Sending the following files: |
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2008-TIOL-52-SC-IT.pdf + sc it story.pdf (Kerala Road Lines Vs CIT, Cochin (Dated: March 12, 2008) Income Tax - Assessee is a transport company - enters into an agreement to purchase a piece of land - claims deduction for interest paid on delayed payment - Assessee also treats the sale of scraps generated out of demolition of buildings standing on the plot as business income - AO accepts the sale of scrap as business income but disallows the interest payment - CIT(A) also treats the interest payment as capital expenditure - Tribunal allows the benefits to the assessee u/s 37(1) but HC reverses its decision on the ground that since the assessee is a transport company and investment in real estate cannot be its business, deduction cannot be allowed for the interest payment - HC erred as the Tribunal has categorically noted that the sale proceeds of scrap have been treated as business income and, therefore, interest payment, a contractual obligation, is to be treated as revenue expenditure - Assessee's appeal allowed: SUPREME COURT; (DCIT Vs Ravi Holdings Pvt Ltd (Dated: January 17, 2008) Income Tax - Search u/s 132 - Assessee belongs to a Builders' Group - Revenue finds voluminous incriminating documents - One of the Directors admits receipt of 'on money' outside the books of account in statement recorded u/s 132(4) - AO makes additions in block assessment order - Tribunal confirms only part of additions as uniform 'on money' figure cannot be applied for all the flats located in different blocks and also allows 30% deduction for expenditure outside the books as corroborated by the documents seized - HC dismisses assessee's appeal but admits Revenue's appeal on one question but the same was dismissed later as it was related to facts - No substantial question of law involved and HC order upheld - Revenue's appeal dismissed: SUPREME COURT; ( M/s L P Hospitality Pvt Ltd Vs ACIT (Dated: March 10, 2008) Income Tax - Assessee Co. enters into an agreement with another Co. for running of its business of bar and restaurant with the total responsibility of supply of material and labour against 85% of daily receipts - A.O. restricts assessee's claim of depreciation u/s 38(2) on the ground that it did not run the business in the relevant year thus the assets are not used exclusively for the purposes of its business - Assessee contends that the assets are used for the purpose of its business as the other Co. merely acted as a caterer for supplying and servicing of food without bringing in any asset - Sec.32(1) allows for depreciation on assets owned and used by assessee for purposes of its business but such deduction is restricted by Sec.38(2) where such assets are not exclusively used for business purposes to a fair proportionate amount and in the instant case, keeping in mind the fact that the other Co. took 85% of sale proceeds and ran the business on its own utilising the assets of the assessee, it is to be safely concluded that the assessee did not utilize its assets exclusively for its business purposes thereby attracting the provisions of Sec.38(2) - Assessee's appeal dismissed: DELHI HIGH COURT; (CIT, Chennai Vs Shri Swasan Chemicals (M) Pvt Ltd (Dated: February 26, 2008) Income Tax - Assessee Co., engaged in the manufacture of plastic powder out of plastic granules, claims deduction u/s 80IB - A.O. disallows on the ground that activities undertaken by the assessee in producing plastic powder does not amount to manufacturing activity - CIT(A) & Tribunal hold that assessee is entitled to benefit u/s 80IB as the process employed by it for producing the goods is a complex process and the finished product is completely different than the raw material used, thus amounting to manufacturing activity - Tribunal has reached the correct conclusion which merits no interference - Revenue's appeal dismissed.: MADRAS HIGH COURT; |
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NOTIFICATION Excise exemption for defence ministry's Samyukta's programme extended; CASE LAWS 2008-TIOL-406-CESTAT-MUM.pdf + power story.pdf (CCE, Nagpur Vs M/s Gurukripa Resins Pvt Ltd (Dated: February 18, 2008) Revenue tries to pump up another Application on “usage of power” but without any success before the Tribunal – ROM & Miscellaneous Applications rejected. Usage of power - Supreme Court in the case of Rajasthan Chemical Works had held that usage of power in transferring raw materials prior to commencement of production also amounts to ‘usage of power' & the benefit of notification is deniable – However, in the present case, Water pumped into overhead tank is nowhere contended as being used as a raw material – SC decision distinguishable – ROM & Miscellaneous applications rejected.: MUMBAI CESTAT; (Servalakshmi Paper & Boards Vs CCE, Trichy (Dated: December 17, 2007) Central Excise – refund - duty paid on steam claimed as refund as steam is exempted under Notification 53/97 CE – post clearance adjustment of duty will not take the appellant's case out of bar of unjust enrichment – rejection of refund upheld.: CHENNAI CESTAT; (CCE, Hyderabad Vs M/s Taher Ali Industries & Projects Pvt Ltd (Dated: December 19, 2007) CE - Cenvat Credit - exempted and dutiable final products - when option is given by law, Revenue cannot force assessee to follow a particular course: BANGALORE CESTAT; (Dr Reddy's Laboratories Ltd Vs CCE, Goa (Dated: January 30, 2008) Interest would become payable only from the date of utilization of credit wrongly taken and not from the date of wrong taking thereof: MUMBAI CESTAT;
SERVICE TAX SECTION Increase in Works Contract Service Tax rate to 4% - A case of promisory estoppel? CASE LAWS 2008-TIOL-409-CESTAT-MUM.pdf + canteen story.pdf (M/s Victor Gaskets India Ltd Vs CCE, Pune I (Dated: February 29, 2008 ) Food for thought – ST paid by Outdoor Caterers for running Canteen Services in a factory is an Input Service Credit – Tribunal. The meaning assigned to “input service” is divided in two parts, first part giving the specific meaning and the second part gives the inclusive meaning of the same. In the second part, an inclusive meaning is given to “input services”, which otherwise would not have been covered in the main first part. From this, it is evident that manufacturer/output service provider can take credit of the service tax paid on business related activities, which are specified in the expanded inclusive definition of “input service”. Expression used in the said Rule 2(l) is “such as” which means that the stipulated activities that follow the said expression in the definition are only illustrations and not limitations inasmuch as the expanded part of the definition is an inclusive one and not an exhaustive list of the activities on which the input service credit can be taken by the appellants. The term “in relation to” used in Rule 2(l) ibid has to be given a wide connotation as held by the Apex Court in the case of Solaris Chemtech [ 2007-TIOL-135-SC-CX ] & Doypack Systems [ 2002-TIOL-389-SC-MISC ]. Canteen facility, although not specifically stated in the list of activities in the definition of the ‘input service' under Rule 2(l) ibid, yet it is an activity relating to the business of the appellants as this facility is being provided exclusively only to the employees of the factory of the appellants within the premises of the factory. The canteen facility is beneficial for the workers as they are served with foodstuff, etc. at concessional rates and it is they who are engaged in the business of the appellants, which is nothing but the manufacture of goods. In any case the canteen facility provided can also be said to be used by the manufacturer indirectly as the canteen facility is only for the benefit of the appellant's employees, who play a significant role in the activity of manufacture. Section 46 of Factories Act, 1948 lays down that every employer having more than 250 workers has to provide canteen facility for workers. Rule 79 of Maharashtra Factories Rules, 1963 also mandates such a requirement of provision of canteen. The appellants' factory has more than 250 workers. Since the provisions for canteen facility is a mandatory requirement, as stated above, the appellants would be subject to penal action by the State Government, if they violate the mandatory requirements. Levy of fringe benefit tax is on business expenses. The appellants have contended that they pay fringe benefit tax on canteen related expenses under Income Tax Act and as the said tax is a levy on business related expenses, the Appellants' payment of the same on the canteen related expenses would be considered as business related expenses and hence, the same would get covered under the “activities relating to business” stipulated in the inclusive definition of input service u/r 2(l) of CCR, 2004. Tribunal decisions in the case of Manikgarh Cement [ 2008-TIOL-133-CESTAT-MUM ]; Indian Rayon & Industries Ltd . [ 2006-TIOL-1152-CESTAT-MUM ]; Excel Crop Care Ltd [ 2007-TIOL-701-CESTAT-AHM ] relied upon.: MUMBAI CESTAT; (M/s Basti Sugar Mills Ltd Vs CCE, Allahabad (Dated: January 23, 2008) ST - Management Consultancy Service - Revenue alleges the service provided by the assessee to M/s ABB Alstom Power India Ltd is taxable - Since the assessee could not explain the nature of the service provided by it to the recipient, pre-deposit ordered:DELHI CESTAT; (M/s Areva T & D India Ltd Vs CCE, Allahabad (Dated: December 7, 2008) Service Tax - Assessee is a manufacturer - avails GTA service and pays service tax - takes cenvat credit for tax paid - Revenue objects - Issue is squarely covered by Tribunal's decision in Essel Propacks Ltd ( 2007-TIOL-1692-CESTAT-MUM ) - Assessee's appeal allowed:DELHI CESTAT;
CUSTOMS SECTION NOTIFICATION Clarification regarding request of firms for extension in export obligation period; Cut off date for filing application for import of Sandalwood; Customs exemption for defence ministry's Samyukta's programme extended;; Govt bans edible oils exports Basmati rice exports allowed through Mundra and Pipava ports; CASE LAWS (Suresh Bafna Vs CC & CE (A), Panaji (Dated: Febraury 28, 2008) Customs - Limitation - Assessee intimates the Customs about change in address - Revenue sends decision by post on old address which returns unserved - Commissioner (A) invokes limitation to reject appeal - Given the manner u/s 153 in which Revenue did not make proper efforts to serve the order, delay condoned and Commissioner(A) directed to count the period of limition from the date a copy of the order was made available by this court - Assessee's appeal allowed: BOMBAY HIGH COURT ; ( CC & CE, Vizag Vs M/s Ruchi Infrastructure Ltd (Dated: November 27, 2007) Import of bulk liquid cargo - Assessment should be on the basis of shore tank quantity: BANGALORE CESTAT; |
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Income Tax – Electronic Payment; Education cess collected from direct taxes scores over indirect taxes in current fiscal; What is official definition of 'minority'? India has potential to grow 600 mn tonnes mushroom; Education cess collected from direct taxes scores over indirect taxes in current fiscal ; |
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