SAD refunds – Ministry's ‘unfinished business' – Reminder to Board (See 'DDT')

CBDT to celebrate Income Tax Day on July 24th (See 'DDT')

Govt gives nod to allotment of coal blocks to major corporates;

Congress-led Govt in J&K falls on floor; CM resigns;

Income Tax Addl Commissioner Raja Sekhar Reddy Lakkadi of 1989 batch goes to Civil Aviation Ministry on deputation as Director;

Mr Ashok Kumar, IAS of 1974 Batch, takes over as Secretary in newly-created Deptt of Pharmaceuticals;

PM leaving for Japan today to attend G-5 & G-8 meets;

IMF asks India to tighten money supply to curb inflation;

ddt 7 july.pdf + Committee for best practices.pdf

Service Tax – Vivisection of composite contract – the Daelim Dilemma continues ;

tiol exclusive.pdf

Tax collection: Has Mr Chidambaram reverted to British-Nehru principle that citizen is always wrong?

guest.pdf

The Sword of Summons;

mbuzz777.pdf

Investments in textiles to create 17.37 million new jobs by 2012;

mbuzz776.pdf

Export Inspection Council gets ISO 9001;

mbuzz775.pdf

Calicut Airport Customs seizes fake Indian passports, driving licence and visa papers ;

Transfer of Vice Presidents & Members.pdf

ITAT rotates Vice-Presidents and Members at All India level;

2008-TIOL-08-ARA-IT.pdf + ara story.pdf

M/s Cushman & Wakefield (S) Pte Ltd ( Dated : July 4, 2008 )

Income Tax - Applicant is Singapore-based company and deals in full range of real estate services - belongs to a Group which follows a policy of making referrals of clients to Group companies and get paid @ 30% for the same - seeks advance ruling - Revenue pleads the fee paid for making a reference is too high and appears to be a tax avoidance arrangement - also contends that the payments made by the assocated enterprise in India qualifies as royalty as well as FTS - Counsel for the applicant argues the applicant has no PE in India nor any business connection as per provisions of Sec 9(1)(i) - Held, the assessee has no PE in India and the income does not arise in India either directly or indirectly as the applicant has not activities in India except merely making a reference to the Indian associate company

Royalty Income: For a consideration to qualify as royalty income u/s 9(1)(vi) it should be received for imparting technical knowhow and the like and the referral fee does not qualify as one of such activities nor there is any intellectual property involved in it and the consideration for the referral, does not answer the description of ‘royalty';

FTS: income shall be deemed to accrue or arise in India under section 9(1)(vii) of the Act by way of FTS, if it is paid by the persons specified in the sub-clauses (a) to (c). The relevant sub-clause (b) of the clause (vii), provides that where FTS is paid by a person who is a resident in India, the income shall be deemed to accrue or arise in India. It excludes, from the deeming provision of FTS, such fees which are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purpose of making or earning any income from any source outside India. In the instant case, this exception is not attracted;

it also does not meet the description of managerial or consultancy services as per Article 12(4)(b) of the DTAT as it lays down that such services can be FTS only if they ‘make available' technical knowledge, experience, skill, know-how or processes , which enables the person obtaining the services to apply the technology but in the instant case, no expertise, or know-how has been ‘made available' to the Indian company by reason of rendering service of the said description. : ADVANCE RULING AUTHORITY;

2008-TIOL-301-ITAT-HYD.pdf

DCIT, Hyderabad Vs Shri P Narsing Rao ( Dated : April 17, 2008 )

Undisclosed income based on the cash flow statement accepted by except a part – no reason why the AO cannot accept a part of the whole which otherwise he has accepted . The Assessing Officer accepted the undisclosed income declared by the assessee on the basis of the cash flow statement which also included the availability of cash of Rs.3,62,425. If this was the case, we see no reason why the Assessing Officer cannot accept a part of the whole which otherwise he has accepted. In our view, the CIT(A) was justified in deleting the addition.

Income subject to advance tax and TDS cannot be undisclosed income: The CIT(A) has observed that the income declared in the regular income was subjected to advance tax and TDS before the date of search. Further, the said income included mainly salary income which the assessee was declaring all along. Therefore, there was no reason to believe that the assessee would not have disclosed this income even if the return was not filed belatedly. Similar view has been expressed by the Tribunal in the case of Shri K. Giridhar in ITA No.145/Hyd/04 dt. 30-11-2007. Respectfully following the same, we uphold the order of the CIT(A). : HYDERABAD ITAT ;

2008-TIOL-300-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Intercontinental Consultants & Technocrats Pvt Ltd ( Dated : January 25, 2008 )

Income Tax - deduction u/s 80HHB and  80HHBA - AO disallows claim on the ground that assessee's role in the relevant works are of consultancy and supervisory nature which cannot be treated as an integral part of execution of any project – CIT(A) allows deductions - Revenue appeals against the direction to allow deduction u/s 80HHBA and files no appeal against the deduction u/s 80HHB - Held, since the assessee's involvement was into supervising day to day work of contractors and its engineers were to ensure strict compliance it cannot be said that their work was not an integral part of the project - Benefits allowed - Revenue's appeal dismissed : DELHI ITAT ;

2008-TIOL-299-ITAT-HYD.pdf

ACIT, Hyderabad Vs M/s BBL Foods Pvt Ltd ( Dated : May 23, 2008 )

No penalty for Genuine transactions: if the transactions are genuine, and more so, amongst close relatives or associates, no penalty should be levied u/s 271D of the Act. In the instant case, the Assessing Officer himself has admitted about the genuineness of the transactions and in terms of the judgment of the Jharkhand High Court, it would be harsh to restore the penalty rightly deleted by the CIT(A) : HYDERABAD ITAT ;

CENTRAL EXCISE SECTION

2008-TIOL-1062-CESTAT-KOL.pdf + power story.pdf

M/s BPCL Vs CCE, Patna (Dated : April 22, 2008)

Central Excise – Stay / Dispensation of pre-deposit – manufacture – additives added to the ordinary petrol to make “Branded Petrol” – prima facie the Commissioner's findings are reasoned in holding that the Branded Petrol is excisable – Pre-deposit ordered. : KOLKATA CESTAT;

2008-TIOL-1061-CESTAT-MUM.pdf + godrej story.pdf

Godrej Industries Vs CCE, Mumbai II (Dated : May 30, 2008)

Supplementary invoices – Bar in availing Cenvat credit on the ground that the duty became recoverable on account of fraud, collusion, suppression not applicable when it is a case of Stock Transfer between units

Bar in terms of rule 9(1)(b) of Cenvat Credit Rules, 2004 operates only in a case of sale – Tribunal decision in M/s Karnataka Soaps and Detergents Ltd vs. CCE, Mysore/Bangalore [ 2005-TIOL-647-CESTAT-BANG ] relied upon. : MUMBAI CESTAT;

2008-TIOL-1060-CESTAT-MUM.pdf

M/s Crompton Greaves Ltd Vs CCE, Mumbai-III (Dated : February 11, 2008)

Central Excise – Stay/dispensation of pre-deposit - Cenvat Credit – manufacture of both dutiable and exempted goods – amount collected is not required to be deposited with the Government – pre-deposit waived. : MUMBAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1058-CESTAT-DEL.pdf

Alstom Projects India Ltd Vs CST, Delhi (Dated : June 19, 2008)

Works Contract is not liable to Service Tax under Consulting Engineer Service as the Contract cannot be vivisected - pre-deposit of tax and penalties waived;- Tribunal in the case of Daelim Industrial Company held that Works Contract is not liable to Service Tax under Consulting Engineer Service as the Contract cannot be vivisected. The said decision was upheld by the Supreme Court. The Tribunal in the case of L & T Ltd. Vs . Commissioner of Central excise, Vadodara and Kehems Engineering Pvt. Ltd. Vs. Commissioner of Central Excise waived pre-deposit of duty and penalty on identical issue. The main contention of the Revenue is that Works Contract is divisible into different identifiable activities and the appellant is liable to pay service tax on Consulting Engineers Service on the basis of Cost Centres. The contention of Revenue is that after 46 amendment' of Constitution of India, it is permissible to levy sales tax on the material used in Works Contract, which would apply to levy of service tax, would be looked into in detail at the time of appeal hearing. In view of the above discussions, we find that the Applicant made out a prima facie case for waiver of pre-deposit of entire amount of tax and penalties. Accordingly, the pre-deposit of tax and penalties is waived till the disposal of the appeal. :DELHI CESTAT;

2008-TIOL-1057-CESTAT-DEL.pdf

Instrumentation Ltd Vs CCE, Jaipur (Dated : April 25, 2008)

Service component in a composite contract liable for Service Tax :- We find that the detailed contract has been entered into with their clients, indicating rates, terms and conditions for various items of supply of goods (their manufactured and bought out items) and for their different services undertaken. The contract also clearly indicates "prices mentioned about a firm and FOR Obra inclusive of freight, P&F but exclusive of taxes, duties and insurance". On a specific enquiry it was admitted that the value mentioned in the contract is being adopted for the purpose of paying excise duty in respect of goods manufactured by them and used for the turn key project. We are also informed that the same value is being adopted for the purpose of paying VAT. Therefore, we are not able to prima facie agree with the contention that the price break-up given is only for the purpose of progressive release of payments. Therefore, the service component of the contract may attract service tax as held by the Commissioner. :DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08cir016.pdf + dgft08cir015.pdf

Benefits under EPCG Scheme & Served From India Scheme: DGFT issues clarification related to EO;

CASE LAWS

2008-TIOL-1059-CESTAT-KOL

M/s Royal Enterprises Vs CC, Kolkata (Dated : March 5, 2008)

Customs – valuation – imports – the appellant accorded free consent for enhancement of value without show cause notice - If the appellant waived its entire right for causing appearance and did not contradict the evidence relied in adjudication, it has no option to resile when free consent was accorded – however, redemption fine imposed is reduced as there is no malafide intention of under-valuation. :KOLKATA CESTAT;