Two Additional Judges for Karnataka High Court appointed;

FM averse to bringing down govt stake in PSU Banks;

No Duty Drawback for Iron & Steel, Rice and Cement (See 'DDT')

DGIT Cochin gets additional charge of CCIT cochin;

Stayed officers can stay put till AGT – CBDT (See 'DDT)

Rs.1204 crores utilised for the year 2007-08 under Urban Infrastructure Development Scheme for Small and Medium Towns;

What is socialism doing in our constitution (See 'DDT)

CBEC Chief Commissioners' Conference discusses at length powers of customs officer in SEZ;

ddt 1 june.pdf + relieving_officers.pdf

Under a thana (police station), no crime can take place without the knowledge or connivance of at-least one officer – FM at the Chief Commissioner's conference;

tiol top.pdf

Our Constitutional Socialism: Its Vectors and Praxis!

guest column.pdf

A few tips on art of handling Departmental visits!

Missing records story.pdf + cic_order.pdf

Papers going missing from Government records is not an uncommon happening – CPIO's plea that records are not traceable genuine, says Central Information Commission.;

acc_approvals.htm

ACC clears two critical appointments;

mbuzz660.pdf

India's exports during april, 2008 valued at Rs. 57633 Cr;

mbuzz659.pdf

Globalization is both an opportunity and a challenge. – PM at ASSOCHAM Annual General Meeting;

mbuzz658.pdf

Export risk management guide for SMEs on anvill;

mbuzz657.pdf

External Commercial Borrowings (ECBs) - Borrowers in services sectors eligible;

mbuzz656.pdf

STC mulls legal call centre JV;

NOTIFICATION

it08not066.pdf

CBDT extends section 80-IB benefits for oil refiner;

CASE LAWS

2008-TIOL-301-HC-RAJ-IT.pdf + rent story.pdf

CIT Vs M/s D M R A W A Trust ( Dated: May 6, 2008 )

Arrears of enhanced rent, on upward revision, would be liable to be included in the income of relevant previous year, in which it was received: the amount of arrears of enhanced rent, as received by the assessee, consequent upon retrospective upward revision of rent, would be liable to be included in the income of relevant previous year, in which it was received, and that on that count, the Revenue will not be entitled to initiate proceedings under, or to take recourse to, provisions of Section 147/148 of the Act, as it does not amount to income being under assessed while making assessment, as contemplated by Explanation 2 of Section 147, and that the provisions of Section 25B are clarificatory in nature, and are required to be given retrospective effect.

Enhancement with retrospective effect was made at a subsequent point of time, in all the 11 matters, and till that order for enhancement was passed by the Commissioner Income Tax, the tenant, the assessee did not have any right to receive the enhanced amount of rent, so as to entitle the Revenue to claim, that the enhanced amount of rent could be said to be the amount “receivable”, in the relevant previous year, so as to be liable to be taxed in that year, much less, so as to entitle the Revenue to find it, to be a case of escapement, and to reopen the assessment. We are also keeping in mind the principle laid down in Hope ( India )'s case, that a practical approach in the matter must also be taken. It is required to be grasped, that till the rent was enhanced by the order of Commissioner, the tenant, there was no occasion for the assessee to assume that he would receive the enhanced rent, or that enhanced rent would accrue to him in the relevant assessment year, so as to offer the same for tax, nor was there any occasion for the assessing officer to assume the same, and to assess it to tax, and obvious necessary consequence is, that for the purpose of Section 147, it cannot be said, that in making assessment, the income chargeable to tax has been under assessed.

Likewise the possibilities are not rare, rather it is required to be taken note of, that the landlords do initiate litigation for determination of standard rent, seeking enhancement of rent, and it is a notoriously known fact, that disposal of the litigation takes years, if not decades, and then appeals are multiplied, in carrying the litigation in the hierarchy of Courts. There may be cases, where the claim for enhancement may be negatived by all the Courts in succession, and is accepted by the ultimate Appellate Court. Obviously the Court may decree the enhanced rent, by determining standard rent, at least from the date of the suit, and in that event, by the time the decree is passed, much less amount is received by the landlord, a long span of years would have elapsed rendering the claim time barred, for the purpose of entitling the Revenue, for initiating the proceedings for reopening. In our view, for attracting the provisions of Section 147 or 234B , or section 271, some semblance of fault on the part of the assessee, or may be in the event of such thing, on the part of the assessing officer, would be a sine qua non. May be, that such fault may come into existence, for variety of legally accepted reasons, but then, subsequent upward revision of rent, by mutual consent of the parties, with retrospective effect, can, on no parameters, be said to be constituting one of such fault, to entitle the Revenue to initiate proceedings under Section 147/148. held that the amount of arrears of enhanced rent, as received by the assessee, consequent upon retrospective upward revision of rent, would be liable to be included in the income of relevant previous year, in which it was received, and that on that count, the Revenue will not be entitled to initiate proceedings under, or to take recourse to, provisions of Section 147/148 of the Act, as it does not amount to income being under assessed while making assessment, as contemplated by Explanation 2 of Section 147, and that the provisions of Section 25B are clarificatory in nature, and are required to be given retrospective effect. : RAJASTHAN HIGH COURT;

2008-TIOL-299-HC-DEL-IT.pdf

M/s J K Synthetics Ltd Vs CIT , New Delhi ( Dated: April 22, 2008 )

Income Tax - Sec 40(c) - Assessee's Board of Directors passes a Special Resolution to give 3% of total turnover in a particular year as commission to the Directors - AO disagrees and insists that such a payment partakes the character of remuneration - Since there is no fixed pay nor the percentage of commission payable to the Directors is fixed as it can be changed by the Board no the quantum is fixed and the net profit is also variable, such a commission paid cannot be treated as remuneration as contemplated u/s 40(c) - Assessee's appeal allowed : DELHI HIGH COURT;

2008-TIOL-213-ITAT-HYD.pdf

TCI Finance Ltd, Secunderabad Vs ACIT, Hyderabad (Dated: April 17, 2008 )

Assessing Officer cannot artificially allocate certain expenditure as having been incurred in relation to earning the income which does not form part of the total income:- The Delhi Bench of the Tribunal, in the case of Oriental Bank of Commerce in ITA No.4469/Del/03 dt.3-8-2007 ( 2007-TIOL-415-ITAT-DEL ), held that the Assessing Officer cannot artificially allocate certain expenditure as having been incurred in relation to earning the income which does not form part of the total income. He can do so only after 1-4-2007 from which date, sub sections (2) and (3) were inserted in sec. 14A by the Finance Act, 2006. In the present case also, the Assessing Officer has not given any finding that certain expenses were definitely incurred for earning dividend income. The Delhi Bench relied on the judgment of the Madhya Pradesh High Court in the case of State Bank of Indore v. CIT in 193 ITR 62. Respectfully following the decision of the Delhi Bench of the Tribunal, we delete the disallowance. : HYDERABAD ITAT;

2008-TIOL-212-ITAT-BANG.pdf

M/s Oracle Solution Services (India) Pvt Ltd Vs CIT, Bangalore (Dated: February 15, 2008 )

The CIT, while passing an order u/s 263 had excluded the telecommunication charges paid in India, while invoking clause (iv) of Explanation (2) to Section 10A. The CIT had also not treated the total turnover in the same manner as export turnover, for purposes of computing the exemption available u/s 10A.

On appeal, the ITAT holds that the telecommunication charges include rent, local charges and calls received out of India as well as calls received from out of India. The Tribunal, referring to its earlier decision on an identical case involving I Seva Systems Pvt Ltd v. ACIT for AY 2003-04 ( 2008-TIOL-29-ITAT-BANG ) , holds that the export turnover has to be reduced by telecommunication charges to the extent of 50% after excluding from the telecommunication charges rent, local call charges and call charges within India. The ITAT further holds that though the term' export turnover' has not been defined in Section 10A, the meaning in general parlance as well as that which is available in Section 80HHC is to be given to this term. The ITAT lays down the formula by which the total turnover is to be arrived at by adding the export turnover (after deducting the 50% telecommunication expenses as laid down) to the domestic turnover. : BANGALORE ITAT;

Gujarat Guardian Ltd Vs DCIT, New Delhi (Dated: January 31, 2008 )

IT – Review by CIT - the submissions made on behalf of the assessee company were self-explanatory as regards its claim for deduction on account of payment of royalty pertaining to earlier years and having regard to the said submissions, it cannot be said that the said claim of the assessee was allowed by the AO without making necessary enquiry or that there was any error in accepting the same even on merits. A possible view in the matter was taken by the AO while allowing the said claim and merely because the same was not found acceptable by the CIT , he was not empowered to exercise his jurisdiction u/s 263. : DELHI ITAT;

2008-TIOL-210-ITAT-DEL.pdf + review story.pdf

Mittal Metal Vs ITO, New Delhi (Dated: February 15, 2008 )

Income Tax - Assessee pays interest on unsecured loans to six parties - AO finds  interest paid to one of the relatives at the rate of 12% as benchmark and considers it as reasonable interest - AO after invoking provisions of section 40A(2) disallows interest paid over and above 12% - CIT(A)  held that interest paid to unrelated parties at the rate of 18 per cent cannot be disallowed but in respect of interest paid to other related parties,  the provisions of section 40A(2) will be invoked and interest paid in excess of 12% be disallowed - Held, the fair market value of the services or facilities can be reasonably estimated at 18 per cent per annum. Since interest is not paid to related parties over and above 18 per cent per annum, it cannot be said that the payment made was either excessive or unreasonable having regard to the fair market value of the services or facilities. Accordingly, nothing could have been disallowed under the provisions of section 40A(2) - Appeal allowed : DELHI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-300-HC-AHM-CX.pdf + D R Story.pdf

D R Industries Ltd Vs Union of India (Dated: March 13, 2008)

Central Excise - Equality before law means that among equals the law should be equal and should be equally administered, that like should be treated alike - Petitions challenging the constitutional validity of the proviso to sub-section (1) of the Section 35 of the CEA'44 dismissed : GUJARAT HIGH COURT;

2008-TIOL-860-CESTAT-MUM.pdf + merger story.pdf

Specialty Poly Films (I) Pvt Ltd Vs CE & CC Aurangabad (Dated: Febuary 26, 2008)

Doctrine of merger assists assessee in winning case – Tribunal holds that Commissioner(A) could not have passed an order against the assessee . : MUMBAI CESTAT;

2008-TIOL-859-CESTAT-MUM.pdf

CCE, Nagpur Vs M/s Manaksia Ltd (Dated: Febuary 27, 2008)

Refund claim rejected by the adjudicating authority on the ground that the assessment order was not challenged – such a ground was not spelt out in the SCN – question of law without putting the respondents to notice is a violation of principles of natural justice – Matter remanded to original authority as Commissioner(A) also proceeded on the findings of the adjudicating authority. : MUMBAI CESTAT;

2008-TIOL-858-CESTAT-BANG.pdf

CC & CE, Tirupati Vs M/s Lanco Industries Ltd (Dated: Febuary 7, 2008)

Central Excise – exemption under notification 67/95 CE for captive consumption of intermediate goods used in manufacture of exempted final products – the mischief of proviso to the Notification is not attracted even if the final products are exempted as long as the assessee follows the procedure of paying 10% amount on the exempted goods or maintaining separate accounts under Rule 6 of the Cenvat Credit Rules 2004. : BANGALORE CESTAT;

2008-TIOL-857-CESTAT-BANG.pdf

CC & CE, Guntur Vs M/s A P Paper Mills Ltd (Dated: January 2, 2008)

Registration granted was restored by Tribunal – Commissioner (Appeals) has considered the process of cutting, slitting of bamboos as a process of manufacturing based on earlier case law – Appeal is dismissed : BANGALORE CESTAT;

2008-TIOL-853-CESTAT-MAD.pdf

M/s Chennai Petroleum Corporation Ltd Vs CCE, Chennai (Dated: March 25, 2008)

Central Excise – duty on DM Water – the issue has already been decided in the appellant's favour in earlier decision – no duty on DM water used within the factory of production. : CHENNAI CESTAT;

2008-TIOL-852-CESTAT-MAD.pdf

M/s Carborundum Universal Ltd Vs CCE, Chennai (Dated: March 20, 2008)

Central Excise – Cenvat Credit on inputs found short – set off against other inputs found in excess can not be accepted as rightly held by the lower authorities – however, no penalty under Rule 13(2) of the Cenvat Credit Rules can be imposed as there is no suppression of facts. : CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-855-CESTAT-MUM.pdf

M/s Hansa Travels Vs CCE, Nagpur (Dated: March 27, 2008)

ST - Tour Operator - Since the period involved is prior to 2004 when the definition of tour operator meant that if a person does not hold a 'tourist permit' he is not covered under the tax net but pre-deposit ordered for the period post-2004 . : MUMBAI CESTAT;

2008-TIOL-854-CESTAT-MUM.pdf

Indoco Remedies Limited Vs CCE, Thane -II (Dated:April 09, 2008)

Even if Service Tax input credit was availed wrongly by Tarapur unit, the same was required to be restored to the company for distribution amongst other units at Goa and Andheri – Revenue neutrality without any revenue implication – Pre-deposit waived & Stay ordered. : MUMBAI CESTAT;

CUSTOMS SECTION

2008-TIOL-856-CESTAT-MUM.pdf

CC, Mumbai Vs Nandi Highways Developers Ltd (Dated: May 2, 2008)

Notification 20/99-Cus – Even integrated machine which includes cone type plant and jaw crusher is entitled for benefit in view of certificate given by the Ministry of Surface Transport.

ROM filed by Revenue saying that there is an inbuilt contradiction in the order of the Tribunal – Notification 20/99-Cus grants exemption to cone type plant while the machinery imported is an integrated machine, which includes cone type plant, and jaw crusher – Tribunal held that integrated machine is eligible for exemption notification relying upon the certificate given by the Ministry of Surface Transport – no mistake in the order – Rom rejected. : MUMBAI CESTAT;

2008-TIOL-851-CESTAT-AHM .pdf

M/s R D Metal & Co Vs CC, Kandla (Dated: April 4, 2008)

Customs – mis -declaration – cadmium dross imported though lead dross was declared - since there was mis -declaration, the impugned goods are liable for confiscation – though the goods are cleared on provisional assessment, the same can be confiscated and redemption fine can be imposed – however, considering the facts of the case, fine and penalty reduced.

Valuation - though, the price of the virgin metal has been taken into account, the value of the import consignment has been brought down to the cadmium metal content in the cadmium dross and the conversion cost of 10% has been allowed – no reason to interfere with the value arrived by the lower authority. : AHMEDABAD CESTAT;