Is a German Limited Partnership firm entitled to lower tax rate on royalty in India? (Look for ITAT decision tomorrow)

Cabinet gives nod to allow FM Broadcasting Cos to create subsidiaries and transfer shares + to set up National Biofuel Coordination Committee + seamless navigation over Indian airspace; (See 'Common Basket')

CCEA gives nod to hike salaries of President, V-P and Governors of States to Rs 1.5 lakh, Rs 1.25 lakh and Rs 1.10 lakh respectively;

Union Cabinet approves extradition treaty between India and Iran + gives nod for increase in number of posts in CPOs + purchase of Electronic Voting Machines for LS polls 2009 + nod to enhance India's quota in IMF;

You need government’s permission to sell land! (See 'DDT')

Doing Business 2009 - Sri Lanka tops the Region - good rules are a better basis for healthy business than 'who you know' (See 'DDT')

Scrutiny of FBT Returns + Processing of Returns - Clearance of backlog - CBDT instructions (See 'DDT')

Delhi DRI seizes 6 kg heroin booked through DHL and concealed in DVD packages declared as devotional music;

ddt 11 Sept.pdf

Scrutiny of FBT Returns – CBDT issues instructions;

cobweb.pdf

Billion-dollar unclaimed funds in our system - A saga of unjust enrichment - Urgent need for a National Trustee;

mbuzz956.pdf

Cabinet gives nod to allow FM Broadcasting Cos to create subsidiaries and transfer shares;

mbuzz955.pdf

Cabinet allows seamless navigation over Indian airspace;

mbuzz954.pdf

Union Cabinet approves proposal to set up National Biofuel Coordination Committee;

mbuzz953.pdf

Oil PSUs directed to adopt at least one flood-hit district in Bihar for relief;

ORDER

cbdtorder125_2008.pdf

CBDT reshuffles charge of Members;

cbdtorder124_2008.pdf

CBDT issues transfer order of 3 Addl/JCITs;

CASE LAWS

2008-TIOL-167-SC-IT.pdf + hhc story.pdf

M/s Mysodet P Ltd Vs CIT, Bangalore ( Dated: September 3, 2008 )

Section 80A governs Section 80HHC which deals with deductions in respect of profits retained for export business. The headnote to Section 80HHC refers to deduction in respect of profits retained for export business. It is not profits retained from export business. Moreover, prior to 1.4.86 Section 80HHC referred to deduction in respect of export turnover. That phraseology has been changed later on.

Based on the above, the Supreme Court noted that eligibility for deduction is contemplated by Section 80HHC ( 1) whereas quantum of deduction is determined under Section 80HHC (3). In the matter of determining the quantum of deduction, the "principle of proportionality" applies.: SUPREME COURT;

2008-TIOL-415-ITAT-MUM.pdf + epbx story.pdf

Avaya Global Connect Ltd Vs ACIT, Mumbai ( Dated : July 29, 2008 )

Income tax – Transfer of business division to another company and levy of capital gains tax - If all the conditions prescribed in s. 2 (19AA) are not satisfied then divulging a business division to another company cannot be regarded as demerger to avail benefit of exemption from capital gains tax under s. 47 (vib) of the Act – However, transfer of one division of a company to another by a scheme of amalgamation under Competent Court's directive cannot be regarded as a slump sale – Provisions of s. 2(42C) and s. 50B are not applicable in such instances

Sale of a business division as a going concern - Provisions concerning computation of capital gains in s.48 contain three basic elements viz., cost of acquisition, cost of improvement and date of acquisition for working out the capital gains - In the case of sale of a going concern, these essential ingredients are not ascertainable and, therefore computation provisions under s. 48 of the Act would be incapable of computing the capital gains – Capital gains tax cannot be levied on sale of a going concern in such instances – Appellant's appeal allowed

Income tax – Sale of equipment to leasing company and lease back by the appellant with right to sub lease the same to end customer – Differential income earned by the appellant i.e. difference in lease rentals received and lease rentals paid is income from business and not income from other sources – Appellant's appeal allowed

Income tax – Expenditure incurred on computer software is not capital in nature – Decision of Spl. bench in Amway India Enterprises [ 2008-TIOL-97-ITAT-DEL-SB ] followed – Appellant's appeal rejected

Income tax - Burden to show that the write off of obsolete stock was not bonafide is on the Revenue – once the accounting policy of the appellant which was generally accepted in the commercial world, was not doubted by the Revenue, the loss resulting on account of its application could not be disallowed merely on the ipse dixit of the Assessing Officer – Appellant's appeal allowed

Income tax – Reorganization of business in view of competition within associate companies – Payment made in terms of non-compete agreement by the appellant to its associate company – Additional ground taken before the lower authorities should be examined – Matter remanded to the CIT(A) :MUMBAI ITAT;

2008-TIOL-414-ITAT-DEL.pdf

ITO, Meerut Vs Shri Samay Singh ( Dated : June 25, 2008 )

Income Tax - Assessee receives interest on enhanced compensation paid in particular year - AO denies giving full credit to the assessee on TDS - CIT(A) directs the AO to give credit for the TDS in all the cases in the light of decision of his predecessor - Held, in view of settled laws that interest on enhanced compensation is to be assessed on accrual basis from year to year, the AO was not justified in not giving full TDS credit to the assessees - Revenue's appeal dismissed : DELHI ITAT;

2008-TIOL-413-ITAT-MUM.pdf

Mr Rajesh Kapila Vs ACIT, Mumbai ( Dated : May 14, 2008 )

Income Tax Act – Section 80IB – denial of deduction for not employing minimum number of workers - assessee produced the details of plant and machinery installed at Daman unit as also work stations which need to be manned for conducting manufacturing activities at the respective stations before AO. The assessee also furnished list of casual workers and the said records were certified, by the Labour Inspector at Daman. The report of the Auditor also made an observation that the number of employees was more than 10 and the claim of wages under profit and loss account in respect of such casual workers had been allowed by the department. The only reliance by the AO was the attendance register which was found during the course of survey and also the initial statement of Mr. M. Misal. When the cross examination was allowed before the CIT(A), Mr.Misal had made a statement that he did not take into consideration of the casual labourers. The assessee filed the details of the payments made to casual workers and also the names of the casual workers employed. Held, the denial of deduction on this reason was not justified.

Section 80IB - manufacture - in order to qualify as a manufacturer or processor, it is not essential that the entire manufacturing/processing activities to be carried out by the assessee himself at his own premises. It would suffice if the assessee carried out some activities at its unit and get its some other activities done through outside agency on contract, the only requirement is that the activity carried out by the third party should be on the basis of contract other than the a contract of purchase.

Income Tax Act – Income from house property – Held, that where the firm used the individual property of the partner in its business, it would be sufficient for enabling the owner/partner to claim the benefit of Section 22 of the Act.

Doctrine of precedents - the dismissal of SLP does not clothe that decision under special leave to appeal with the authority of a decision of the Supreme Court. The dismissal of the SLP in the exercise of discretionary jurisdiction cannot be construed as an affirmation by the Supreme Court of the decision against which the special leave to appeal was sought.

Interest u/s 234B - when an assessment has been framed under section 153A, levy of interest u/s.234B would get attracted only when the interest is required to be enhanced in view of the increase in the income determined. In the case of the assessee, where there is no assessment u/s. 143(1), there is no case for enhancement of interest under section 234B therefore, the interest charged had to be deleted.

Interest u/s Section 234D is a machinery provision and will be applicable to all regular assessments made after 1.6.2003 :MUMBAI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-1480-CESTAT-AHM.pdf

M/s Amtrex Hitachi Appliances Ltd Vs CCE, Vapi (Dated: July 23, 2008)

Central Excise - valuation under Section 4A of the Central Excise Act - different MRPs are allowed for different packages sold in different areas - explanation 2(b) of Section 4A - demand based on highest MRP is set aside. :AHMEDABAD CESTAT;

2008-TIOL-1479-CESTAT-MUM.pdf

M/s Skoda Auto India Pvt Ltd Vs CCE, Aurangabad (Dated: May 16, 2008)

Central Excise - refund of duty paid on the vehicles cleared as Taxi under Notification 6/2002 - relevant date is date of payment of duty which is 5th of subsequent month in terms of rule 8 of the Central Excise Rules, but not the date of invoice -  since there is no finding on this issue by the Commissioner (Appeals), matter remanded. :MUMBAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1484-CESTAT-MAD.pdf  + chennai port story.pdf

M/s Chennai Port Trust Vs CST, Chennai (Dated: June 26, 2008)

Service Tax – Stay/Dispensation of pre-deposit – Business Auxiliary Service – the activities of Port Trust as an agent of the Southern Railway in the matter of billing the cargo owners, collecting the cheques and depositing the same with the RBI amounts to providing services to the cargo-owners on behalf of their client viz. the Southern Railway - Prima facie, the activity is covered under clause (vi) of Section 65(19) – pre-deposit ordered. :CHENNAI CESTAT;

2008-TIOL-1483-CESTAT-DEL.pdf

M/s Hero Cycles Ltd Vs CCE, Ludhiana (Dated: August 31, 2008)

ST - Intellectual Property Service - Assessee receives technical knowhow from a Japanese company and pleads it has not been using any trademark or design - As per contract the assessee has been receiving IPR Service against royalty payment - not a fit case for total waiver of pre-deposit :DELHI CESTAT;

2008-TIOL-1482-CESTAT-AHM.pdf

CST, Ahmedabad Vs M/s Poonam Grover Associates (Dated: August 7, 2008)

ST - Real Estate Agent - Assessee does the job of furniture-making as per specification of the buyer - SCN demands tax under real estate agent - Revenue for changing the category to interior decorator - At this stage Revenue cannot make out a case beyond the scope of SCN - Appeal rejected :AHMEDABAD CESTAT;

2008-TIOL-1481-CESTAT-AHM.pdf  + manufacture story.pdf

M/s PSL Corrosion Control Services Ltd Vs CCE & C, Daman (Dated: August 4, 2008)

Service Tax - Business Auxiliary Service - the activity of anti-corrosion coating on steel bars would amount to production of goods on behalf of clients and is taxable under Business Auxiliary Service -   Every production may not necessarily amount to manufacture but every manufacture would be covered by the expression 'production' - what is excluded from the definition is only production which amounts to manufacture under Section 2(f) of the Central Excise Act, 1944

CENVAT - the appellant would be eligible for CENVAT Credit on the materials used for anti-corrosion coating.

The activity of the appellants is within the knowledge of the department and there was no suppression of facts. :AHMEDABAD CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff08_104.pdf

Govt extends anti-dumping duty on steel and fibre glass tapes and components upto April, 2009;

dgft08pn077.pdf

Amends Public Notice 27(RE-2005) to replace the period to four years from three years;

CASE LAWS

2008-TIOL-1478-CESTAT-MAD.pdf

M/s Ford India Private Ltd Vs CC, Chennai (Dated: April 28, 2008)

Customs – reimport of fuel injection pumps and injectors in the form of diesel engine assemblies - items exported are classified under SH 8413.81 and engines are classified under SH 8408.20 – the goods imported do not merit consideration as “reimports” of the fuel injection pumps and injectors exported by the party - the benefit of the Notification 94/96 Cus has been rightly denied to the appellants on the ground of non-fulfilment of one of the substantive conditions stipulated under the first proviso to the Notification.

Demand under Section 28 of the Customs Act without reviewing the assessment is acceptable in view of the settled case law in case of Jain Shudh Vanaspati Ltd and M/s Venus Enterprises.: CHENNAI CESTAT;