Proviso to section 147 does not have effect of curtailing limitation period for passing order u/s 147 as prescribed u/s 153(2) (Look for 'Special Bench decision' tomorrow)

No customs duty on import of crude; HSD customs duty reduced from 7.5% to 2.5%;

Other petro products to attract 5% instead of present 10%;

Excise duty on petrol and HSD reduced by one rupee per litre;

Cabinet decides to hike petrol price by Rs 5 per litre, diesel by Rs 3 per litre & LPG by Rs 50 per cylinder

PM to address nation tonight to explain fuel price hike;

CBEC grants ACP benefits to 285 officers;

See You in Mars with APJ Abdul Kalam (See 'DDT')

ddt 4 june.pdf

Issue of pre-authenticated CT-3 to EOUs in textile and chemical sector –CBEC relaxes;

spl down.pdf

Forgetfulness pays Govt but harasses taxpayer!

rbi07cir051.pdf

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR;

mbuzz670.pdf

PSUs Hotels no more public liability - They have started making profits;

mbuzz669.pdf + rbi07cir050.pdf

Realisation and Repatriation of Export Proceeds- RBI Liberalises period ;

mbuzz668.pdf + rbi07cir049.pdf

Export of Goods and Services - Payments of Claims by Insurance Companies-Write off ;

mbuzz667.pdf + rbi07cir048.pdf

Overseas Investments – Procedure liberalised ;

mbuzz666.pdf + rbi07cir047.pdf

Hedging Exposures of domestic oil refining and marketing companies – RBI relaxes ;

mbuzz665.pdf

Jayalalithaa does not understand PNs and the movements in the stock market – Finance Ministry ;

mbuzz664.pdf

State Cabinet Minister arrested offering rupees ten lakh bribe to a CBI Officer ;

2008-TIOL-220-ITAT-AHM-SB.pdf + Goldmine Shares story.pdf

ACIT, Ahmedabad Vs Goldmine Shares And Finance Pvt Ltd (Dated: April 30, 2008 )

Legal Fiction: It is true that the deeming fiction has to be strictly construed and cannot be extended beyond its legitimate field, but what is the legitimate field? When you are bidden to assume a state of affairs you cannot boggle your mind and assume the putative state of affairs as not real. Therefore though losses were set off against other sources income, they are to assumed as not set off in absence of existence of another source and for computing the profit and gains for the purposes of determination of the quantum of deduction one has to once again notionally bring back already set off losses, etc. and set off the same against the profits and gains in a year in the deduction is claimed.

Deduction under Section 80IA: Section 80-IA(5) of the Act seeks to regard the eligible unit as a separate source of income so as to separately determine the carry forward and set off of losses in the hands of that unit. the only harmonious construction of section 80-IA(5), consistent with the object in allowing deduction only to profits and gains of the eligible business would be that-

a. the deduction under that section would be computed with reference to profits of the eligible unit, unaffected by losses suffered in other units;

b. in case of loss suffered by the eligible unit, such loss would not be set off against profits of other units / other business / other incomes in the initial year of assessment or subsequent years of eligible years of assessments ;

c. where losses of the eligible unit remained to be adjusted against that very source they are to be carried forward to subsequent year(s), and set of in the succeeding year(s), and on the balance profit alone the deduction admissible would be computed;

d. where there are no losses of the eligible unit carried forward (in view of set off against profits of that very source), it is the mandate of law that the losses of earlier years, though already absorbed against other sources they are once again be notionally brought forward and set off against profits of the eligible unit to compute eligible deduction.

e. the deduction would be limited to gross total income;

Held: in the terms that in view of the specific provisions of Section 80IA(5) of the Income Tax Act, 1961, the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years. : AHMEDABAD ITAT (Special Bench ) ;

2008-TIOL-219-ITAT-PUNE-TM.pdf + exhibit story.pdf

Styler India Pvt Ltd Vs JCIT, Pune (Dated: April 8, 2008 )

Whether on the facts and circumstances of the case, the assessee is entitled for expenditure of Rs 49 ,27,336 /-, mainly comprising Rs. 17,92,600/- expenditure under the head "Building. Repair & Renovation' and Rs 15 ,65,239 /- under the head "Exhibition / Launch Expenses" disallowed being expended prior to setting up of the business?" it is difficult to hold that the assessee did not set up business in the relevant period. The assessee had a place of business; it had qualified people who could give advice on automobile industry. There is material to show that the assessee contacted various clients who entered into agreement with the assessee in the subsequent years and paid fees for consultation. The assessee, without a doubt, did not show any consultancy receipt but merely because actual receipts were not shown, it cannot be said that the assessee did not set up its business. In fact, the business was set up and commenced when the assessee was ready to give consultancy to its prospective customers. Not only that, there is material on record to show that the assessee took steps to give actual consultancy to its customers. Of course, consultancy charges were received in the subsequent year. But merely because no actual amount was received as charges, it cannot be said that the business was not set up.

There is reference to total claim of expenditure of Rs. 49,27,336 and, thereafter, two specific expenses of Rs. 17,92,600 and Rs. 15,65,239 under the head "Building, Repair & Renovation" and "Exhibition/Launch Expenses" respectively. Even if it is held that the business was set up, the claim of the expenditure was required to be examined separately. Total expenditure of Rs.49 ,29,336 has been claimed under various heads. On the question of Rs. 17 ,92,600 claimed as building, repair and renovation expenses, these expenses appear to be of a capital nature and, therefore, cannot be allowed. The assessee has not placed any material on record to show that repair and renovation could be treated as current repairs.

It is clear from the record that the assessee had taken a stall in Auto Expo 1998 at Delhi in January 1998. All the expenses were aimed to propagate the assessee's business and no material is brought on record by the revenue authorities to show that the expenses claimed were inadmissible. I accordingly allow these expenses.: PUNE ITAT (Third Member );

2008-TIOL-218-ITAT-MUM.pdf

Safari Mercantile Pvt Ltd Vs ACIT, Mumbai (Dated: March 14, 2008 )

Income Tax - ROM applicaiton - Assessee contents that even in the case of default u/s 140A for payment of tax etc., demand notice has to be served in accordance with the statutory provision of section 156 of the Income-tax Act in the prescribed Form No. 7 before imposing penalty under section 221 of the Act – DR contents that in case of ''assessee in default” in respect of tax and interest there is no requirement of law to serve a separate notice of demand on the assessee, before levy of penalty under section 221 of the Act - The assessee has not pointed out any mistake apparent from the record regarding this finding of the Tribunal in the present Miscellaneous Application therefore there is no mistake apparent from the record in the order of the Tribunal in directing the Assessing Officer to calculate the penalty u/s 221 of the Act at the rate of 10 per cent of the tax payable - Assessee Miscellaneous Application dismissed. : MUMBAI ITAT;

2008-TIOL-217-ITAT-HYD.pdf

Makarand Gadre Vs ACIT, Hyderabad (Dated: December 31, 2007 )

Income Tax - assessee claims the status of Resident but not Ordinarily Resident - AO treats the assessee as Resident - The assessee was resident only for three preceding previous years out of the relevant 10 previous years. The assessee's physical presence in India during the preceding seven previous years was only 420 days - CIT(A) considers the assessee as resident - Tribunal goes with the CIT(A) and holds that the assessee is entitled to claim the status as Resident but not ordinarily Resident on the basis of condition prescribed in the second part of section 6(6)(a)

Business connection - income accrued or arose to the assessee in India or outside India - Assessee contends that the stock option was granted in the year 1994 even before the incorporation of the subsidiary company of Microsoft in India in1999. Therefore, the income, if any, on exercising such option is deemed to accrue outside India - Revenue contents that the assessee exercised the stock option on 24-4-2000 when he was in India - In the case before the Authority for Advance Ruling, Microsoft Corporation, USA, filed an application seeking a ruling in respect of the Stock Option Scheme - the Authority for Advance Ruling held that the gain made by the employees after exercising the stock option is taxable as salary in India - This decision of the Authority for Advance Ruling was pronounced on 18-11-1998. Therefore, it is not correct to say that the Indian subsidiary company was incorporated in India only in the year 1999 and the stock option was granted even before the incorporation of the Indian subsidiary company. The very fact that Microsoft Corporation, USA, moved an application before the Authority for Advance Ruling and the decision was rendered on 18-11-1998 in respect of the very same Stock Option Scheme said to be promoted by the Microsoft Corporation shows that the Indian subsidiary company was in existence even before that. Moreover, the decision of the Authority for Advance Ruling is binding on the assessee - the profit accrued to or received by the assessee on exercising the stock option accrued or was received in India. Therefore, even though the status of the assessee was resident but not ordinarily resident Indian, the income accrued or received in India is taxable under the Income-tax Act in India - Assessee's Appeal partly allowed . : HYDERABAD ITAT;

2008-TIOL-216-ITAT-HYD.pdf

Shri Paresh Dhanji Chedda Vs DCIT, Hyderabad (Dated: March 18, 2008 )

As a matter of fact, the liberal attitude of the tribunal has been taken for granted and the assessees are still stretching it as far as they can without realizing the tolerance threshold of the Tribunal and the level of its elasticity. : HYDERABAD ITAT;

CENTRAL EXCISE SECTION

NOTIFICATION

etariff08_30.pdf

Excise Duty on unbranded Petrol reduced by One Rupee ;

CASE LAWS

2008-TIOL-873-CESTAT-AHM.pdf + copper rod story.pdf

M/s Shilpa Copper Wire Inds Vs CCE, Surat-I (Dated: May 12, 2008)

Conversion of copper rods into Copper wire - there cannot be two definitions for manufacture, one for EOU and another for DTA unit – Liability to be restricted to duty and interest under notification 22/2003-CE: Tribunal : AHMEDABAD CESTAT;

2008-TIOL-872-CESTAT-MUM.pdf + Vivilon Story.pdf

Vivilon Textile Industries Pvt Ltd Vs CCE, Mumbai (Dated: April 22, 2008)

The clearances made to DTA purchasers after obtaining requisite permission from Development Commissioner against payment in foreign exchange, duty need not be discharged by the 100% EOU and duty is to be discharged on such clearances by the DTA purchasers.

As the duty payable is held to be not payable by 100% EOU, and as the said duty has been paid ‘Under Protest', the EOU is eligible for the refund of the duty, along with interest, subject to filing of refund claim, if any, subject to the satisfaction of Doctrine of unjust enrichment.

The clearances of EOU in this case are not provisional since the assessees have not been able to establish the same.

Since the assessments are held not to be provisional, the aspect of unjust enrichment is required to be looked into and suomoto refund cannot be sanctioned.

– Majority decision of Tribunal. :MUMBAI CESTAT;

2008-TIOL-871-CESTAT-MAD.pdf

M/s Precot Meridian Ltd Vs CCE, Coimbtore (Dated: Febuary 1, 2008)

Central Excise – stay / dispensation of pre-deposit – EOU – removal of machinery procured without payment of duty – in the absence of evidence of clearance of goods received against CT3 under bond to another unit or on payment of duty, the finding that the appellant had removed the machinery clandestinely and suppressed the facts from the department has to be held as correct – pre-deposit ordered. :CHENNAI CESTAT;

2008-TIOL-870-CESTAT-AHM.pdf

CCE, Surat-I Vs M/s Crystal Interior Products (Dated: January 8, 2008)

Central Excise – classification of different items of iron and steel used in kitchen – revenue appeal contending that the items are classifiable as furniture is merely based upon assumption and presumption - lower authorities have gone through the details of the Chapter 94, verification report by the Superintendent, the product catalogue and have rightly come to the conclusion that the goods in question cannot be held to be as furniture and have rightly been classified under Chapter 73. : AHMEDABAD CESTAT;

SERVICE TAX SECTION

2008-TIOL-868-CESTAT-BANG.pdf

M/s Nityananda Electronics Mangalore Vs CCE, Mangalore (Dated: Febuary 26, 2008)

Service Tax paid before SCN – No penalty, but interest payable : BANGALORE CESTAT;

2008-TIOL-867-CESTAT-DEL.pdf

Real Mathematic Classes Vs CCE, Jaipur (Dated: Febuary 11, 2008)

Service Tax – penalty – waiver under Section 80 of the Finance Act - the appellant failed to explain reasonable cause for not paying service tax – Commissioner's review order imposing penalty under Section 76 of the Finance Act upheld.

Section 80 dispenses with the imposition of penalty where the assessee proves that there was "a reasonable cause" for failure to pay the tax. The expression 'reasonable cause' would appear to mean something which is reasonable to a man of ordinary care or prudence. I am unable to accept the bald plea that there was a reasonable cause for the appellant for not paying the tax when the payment became due. 'Reasonable cause' cannot be construed to mean any ipse dixit on the part of the assessee . ( Para 5) : DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff08_074.pdf

Nil Duty for Petroleum crude Oil; Customs Duty on Petrol and Diesel reduced from 7.5% to 2.5%; Other Petro Products to attract concessional rate of 5% Customs Duty;

ctariff08_073.pdf

Provisional anti dumping duty rescinded;

ctariff08_072.pdf

Anti dumping duty imposed on Nylon Tyre Cord Fabrics exported by “junma Tyre”, China ;

CASE LAWS

2008-TIOL-869-CESTAT-MUM.pdf

CC, Mumbai Vs M/s Forever Living Products (India) Ltd (Dated: Febuary 25, 2008)

Aloe vera Gel, Aloeberry Nectar and Forever Freedom imported by the respondents are Vegetable juices rightly classifiable under CTH 2009.80/2009.90 of the Customs Tariff – Revenue appeals seeking classification under heading 2202.90 rejected. : MUMBIA CESTAT;