Latest ITAT decision on Transfer Pricing goes in favour of Sony India + CESTAT Kolkata Bench - Space for the BAR (See 'DDT')

MoC sets up Rs 10 Cr venture capital fund to support young designers ;

Government expects strong FDI in 73 billion dollars market of telecom equipment

USD 73 bn investment required in telecom sector by 2012;

SC, HCs' rulings in Hindi: Law Commission to send report to Govt soon;

Meet to discuss ways to save India's endangered film, video and sound heritage

Two-day bank strike begins today;

Govt appoints Arun Ramanathan as Finance Secretary along with charge of Financial services;

ddt 24 Sept.pdf

Excise duty and sales tax being indirect taxes cannot form part of the 'turnover' – ITAT – Yesterday's order with you today – the TIOL way;

spl down.pdf

Hyderabad Open House: Trade's questions and Revenue's answers;

Office Memorandum.pdf

Travelling Allowance Rules-Implementation of the Sixth Central Pay Commission;

RBI Notifi For NBFCs.pdf

Monitoring Framework for non-deposit taking NBFCs;

mbuzz1000.pdf

Government expects strong FDI in 73 billion dollars market of telecom equipment;

mbuzz999.pdf

USD 73 bn investment required in telecom sector by 2012;

mbuzz998.pdf

Meet to discuss ways to save India's endangered film, video and sound heritage;

mbuzz997.pdf

CERC asks generating companies to submit information on technical details in advance;

mbuzz996.pdf

MoC sets up Rs 10 Cr venture capital fund to support young designers ;

CIRCULAR

it08cir08.pdf

Compulsory filing of e-return of income for assessment year 2008-09-furnishing of return by representative assessee of non-residents – reg.;

CASE LAWS

2008-TIOL-182-SC-IT.pdf

CIT-IV, Delhi Vs M/s HCL Comnet Systems & Service Ltd ( Dated : September 23, 2008 )

Income Tax Act – Section 115JA – Book Profits – Provision for Bad and Doubtful Debts – Held, Item (c) deals with amount(s) set aside as provision made for meeting liabilities, other than ascertained liabilities. Assessee's case would, fall within the ambit of Item(c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained liability, i.e., it should be for an unascertained liability. All the ingredients should be satisfied to attract Item (c) of the Explanation to Section 115JA.

Held, there are two types of "debt". A debt payable by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the assessee has to receive from others.

Held further that "debt" under consideration is "debt receivable" by the assessee. The provision for bad and doubtful debt, therefore, is made to cover up the probable diminution in the value of asset, i.e., debt which is an amount receivable by the assessee. Therefore, such a provision cannot be said to be a provision for liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability.: SUPREME COURT;

2008-TIOL-180-SC-IT.pdf

CIT, Delhi Vs Pranoy Roy ( Dated: September 17, 2008 )

Income Tax Act – Interest under Section 234A - Return of income was filed on 29th September 1996, i.e., after a delay of about 11 months, however, taxes due were paid on 25th September 1995, i.e., before the due date of filing of the return – AO levied interest u/s 234A – High Court in its order reported in 254 ITR 755(Del) quashed levy of interest – Appeal filed by revenue before Supreme Court dismissed and the findings recorded by the High Court as also the interpretation of Section 234A of the Act as it stood at the relevant time affirmed.: SUPREME COURT;

2008-TIOL-465-HC-MUM-IT.pdf + capital gain story.pdf

Prakash Vs ITO, Nagpur ( Dated: September 12, 2008 )

Capital gains Tax – exemption – purchase/construction of a residential property has to be in the name of the assessee only – investment in some other's name not allowed :- the assessee, who is the owner of the original asset, need to, within a period of one year before or two years after the date on which the transfer took place, purchased or within a period of three years after that date construct a residential house (new asset).

The scheme and purpose of Section 54F , which was inserted by the Finance Act, 1982 with effect from 01.04.1983 i.e. from the Assessment Year 1983-84 is with a view to encourage house construction. The object, therefore, is to give all benefits under this Section to the assessee on conditions as elaborated in the section. No such benefit is available to a person other than the assessee. It also means the assessee must comply with the conditions strictly as per this provision in all respects. The amount of capital gain arising from the transfer of the original asset which was not charged to taxes shall be allowed to be income chargeable under the head “capital gain” relating to long term capital assets of the previous year in which such residential house is so purchased or constructed. Furthermore, if an assessee transfers newly acquired residential house within three years of its purchase or construction, then the amount of capital gain arising from the transfer of original asset, which was not charged to tax, shall be deemed to be the income of the year in which the new asset is transferred and the said income shall be charged to tax under the head of capital gains relating to the long term capital assets.: BOMBAY HIGH COURT;

2008-TIOL-464-HC-RAJ-IT.pdf

CIT, Udaipur Vs M/s Hiltop Palace Hotel P Ltd ( Dated: September 11, 2008 )

Income Tax - Assessee files return after claiming deductions u/s 80I and 80HHD - AO makes adjustments by excluding interest income out of business income - CIT(A) and Tribunal delete additions - Held, AO is competent to make adjustments in the return only to the extent provided in Clause (iii) of Sec 143(1)(a)(i) and that is the relief claimed on the basis of prima facie inadmissible accounts - if inadmissibility is a debatable issue, AO has no jurisdiction to make adjustments - Revenue's appeal dismissed : RAJASTHAN HIGH COURT ;

2008-TIOL-439-ITAT-DEL.pdf + sony story.pdf

M/s Sony India (P) Limited Vs DCIT, New Delhi ( Dated : September 23, 2008 )

Income Tax – Assessee is wholly owned subsidiary of Sony Japan – engaged in assembly and distribution of colour televisions and audio products - also distributes high-end electronic goods (DVDs and HandyCams) projectors and spare parts of these goods imported from its associated enterprises (AEs).  Most of the revenues are generated from assembly and sale of colour televisions and trading of other electronic goods – files return and discloses imports from AEs at Arm's Length Price by applying transaction Net Margin Method (TNMM) – AO refers the case to TPO – ‘adjustments' u/s 92CA by determing higher ALP – AO makes additions - CIT(A) grants partial relief

Held, the proviso to Sec 92C(2) has two limbs and the benefit of the second limb is available to all taxpayers irrespective of the fact that the price of international transaction disclosed by them exceeds the margin provided in the provision. It offers an 'option' to the taxpayer which is not in excess of 5% of the mean.  It is the choice of the taxpayer to take ALP with a marginal benefit and not the arithmetical mean determined as the Most Appropriate Method. 

As regards the first limb where more than one price is determined by the Most Appropriate Method, there is no option or any sort of concession allowed to the taxpayer.  The ALP so determined may be accepted or contested by the taxpayer or by any aggrieved person in accordance with the statutory provisions.  It is statutory levy without any option.

Both in the first as also in the second limb, implications of determined Arm's Length Price are the same except for the marginal benefit allowed to the taxpayer under the second limb.  The second limb is applicable even to cases where the taxpayer intends to challenge ALP taken as arithmetic mean and determined through the Most Appropriate Method.  The second proviso is intended to give marginal relief to all taxpayers as determination of Arm's Length Price is not an exact science but is an approximation. :DELHI ITAT;

2008-TIOL-438-ITAT-MUM.pdf

M/s Caribjet Inc Vs ADIT, Mumbai ( Dated : August 4, 2008 )

Income Tax - Interest u/s 234B - since the tax was deductible u/s 195, interest u/s 234B cannot be charged as issue was settled by the Special Bench decision in Motorola Inc case ( 2005-TIOL-103-ITAT-DEL-SB ) :MUMBAI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-181-SC-CX.pdf + sc cx story.pdf

CCE Vs M/s Shanmugananda Soapnut Works (Dated: September 17, 2008)

Central Excise – Classification: When excisability is in issue, the Department should insist on the examination of the process undertaken by the assessee in the manufacture of a given product:

Excisability - Shikakai powder: The show cause notice has not even alleged that the assessee is engaged in the manufacture of Shikakai powder by crushing shigekai pods and ' Reeta ' being mixed and, consequently, the entire adjudication stands derailed. Further, it may be stated that mixing of ' Reeta ' has been held to constitute manufacture in numerous judgments. But, in this case, the respondent-assessee has specifically averred that they are merely powdering shigekai pods and that they do not add any herbal material thereto. Lastly, the adjudication authority has not insisted on examining the process undertaken by the assessee in conversion of the pods into powder.:SUPREME COURT;

2008-TIOL-1559-CESTAT-MUM.pdf + interest story.pdf

Notional interest on Advances is includible in Assessable value when the assessee himself admits that a lower price has been arrived at by keeping in consideration the interest derivable from such advances: MUMBAI CESTAT;

2008-TIOL-1558-CESTAT-MAD.pdf

M/s Electromags Vs CCE, Chennai (Dated : July 18, 2008)

Central Excise – demand of interest on CENVAT credit taken but reversed before utilization – in view of the P&H Curt order in M/s Maruti Udyog case, no interest is payable.: CHENNAI CESTAT;

2008-TIOL-1557-CESTAT-MAD.pdf

CCE, Chennai Vs M/s Anabond Ltd (Dated : July 17, 2008)

Central Excise – valuation – Section 4 or 4A – the product in the form cleared from the factory is exempted from the declaring MRP under Rule 34(b) of packaged commodity rules – valuation under Section 4 is upheld – revenue appeal has no merit.: CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1555-CESTAT-MAD.pdf

M/s Kannappa Corporation Vs CCE,(ST), Trichy (Dated : June 20, 2008)

Service Tax – Stay/Dispensation of pre-deposit – the appellants paid the service tax before issue of the notice - As per Section 80 of the Finance Act, the authorities are competent to waive the penalties in appropriate cases where the authorities are satisfied that the violation was not deliberate but in the circumstances such as occasioned by interpretation of the provisions - the appellants have made out a prima facie case against the penalties imposed in the impugned order.:CHENNAI CESTAT;

2008-TIOL-1554-CESTAT-DEL.pdf

M/s American Express Bank Limited Vs CST, New Delhi (Dated : August 14, 2008)

Credit Card Service – transaction between banks and merchant establishments – whether taxable prior to 1.5.2006 – full waiver of pre-deposit granted: we are not prima facie convinced that during the relevant period the term 'customer' will include such merchant establishments. We also find support for such view in the circular of the Board issued on 09.07.2001 at the time of introducing the Service Tax on Banking and other financial services. We prima facie, find that from 01.05.2006 the services rendered by the Bank to both the card holders and the merchant establishments have been specifically and comprehensively, brought under service tax.

We are also of the view that in the given facts and circumstances of the case, extended period may not be invokable .:DELHI CESTAT;

2008-TIOL-1553-CESTAT-DEL.pdf

M/s Goyal Knitwear Pvt Ltd Vs CCE, Ludhiana (Dated : May 26, 2008)

ST - Business Auxiliary Service - Assessee receives service from foreign commission agent - Revenue raises demand - Pre-deposit ordered and matter remanded :DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08not045.pdf

Avian Influenza scare: Govt once again bans import of livestock and livestock products;

CASE LAWS

2008-TIOL-1556-CESTAT-MAD.pdf

M/s A Ramdas & Co Vs CC, ACC, Mumbai (Dated : January 21, 2008)

Customs – condonation of delay – Tribunal cannot entertain the appeal against the order of dismissal by the Commissioner (Appeals) on the ground of time bar. : CHENNAI CESTAT;