Excise Duty payment on LPG Bulk Movements on stock transfer to Bottling Plants - SC confirms Board Circulars are binding on Department (See 'DDT')

Today is UNO day - Partnership is the way of the future, says Secy General (See 'DDT')

CESTAT President goes for major reshuffle of Members; Mr S S Kang goes to Kolkata; Mr S L Peeran moves to Mumbai (See 'Common Basket')

Diwali gift to Exchequer from Kolkata Service Tax Commissionerate: Rs 60 Cr recovered from Coal India for providing 'Management Consultancy Service';

Six States - Uttrakhand, Rajasthan, Orissa, Bihar, Chhattisgarh and MP - to have AIIMS in next three years: Ramdoss;

ACC approves appointment of Lakshmi Venkatachalam, IAS (KN:78) as DG (Shipping) and A P Joshi, IAS (KN:78) as Addl Secy, Dept of Atomic Energy;

Downturn in US Economy to continue till first half of 2009: IMF;

ddt 24 oct.pdf

Open Up Advance Ruling to all resident assessees – Parliamentary Committee;

cestat transfer.pdf

CESTAT President goes for major reshuffle of Members; Mr S S Kang goes to Kolkata; Mr S L Peeran moves to Mumbai;

mbuzz1098.pdf

Govt proposes to extend Bharat Stage-IV emission norms in 11 cities;

mbuzz1097.pdf

Great Indian Laughter Challenge-2: Use of offensive words - Govt raps Star One;

mbuzz1096.pdf

Conviction rate in CBI cases is above 65 %: Minister;

ORDER

CBDT Order 140_2008.pdf

CBDT issues transfer order of 6 CCITs

NOTIFICATION

it08not099.pdf

Income-tax (Ninth Amendment) Rules, 2008 Investment in shares of National Skill Development Corporation as per rule 17C notified;

it08not098.pdf

Income-tax (Eighth Amendment) Rules, 2008 CBDT notifies Form for claiming deduction under sub-sec 11C of Sec 80-IB;

CASE LAWS

2008-TIOL-509-ITAT-MUM-SB.pdf + spl bench story.pdf

ITO, Mumbai Vs M/s Daga Capital Management Pvt Ltd ( Dated : October 20, 2008 )

No deduction is allowable, against the income from taxable business, in respect of any expenditure in relation to income which does not form part of the total income - S ection 14A has been inserted so as to clarify the intention of the Legislature that no deduction is allowable, against the income from taxable business, in respect of any expenditure incurred by the assessee in relation to income which does not form part of the total income.

WHETHER SECTION 14A HAS OVERRIDING EFFECT OVER ALL OTHER SECTIONS ALLOWING DEDUCTIONS: Since the provisions of section 14A are special in nature and deal with the disallowance of expenditure in relation to exempt income, all such expenses cannot be allowed as deduction if these relate to the exempt income notwithstanding the fact that there are separate provisions for allowing such deduction.

SUB-SECTIONS (2) AND (3) OF SECTION 14A - WHETHER RETROSPECTIVE OR PROSPECTIVE: It is vivid that subsections (2) and (3) are procedural in nature and hence retrospective.

Sec. 14A talks of the relation between the expenditure and the exempt income: We do not have even an iota of doubt in our mind that the intention behind using the expression "in relation to' in section 14A is to encompass not only the direct but also the indirect expenditure which has any relation to the exempt income. We, therefore, hold that all the direct and indirect expenses are disallowable under section 14A , which have any relation with the income not chargeable to tax under the Act.

Unless there is a direct and proximate connection between the exempt income and the expenditure, section 14A will not apply: First the onus to prove that the expenditure was incurred in the taxable business operations and not the exempt income is upon the assessee and secondly, the apportionment of the expenses is permissible for making disallowance u/ s.14A . The discussion about the apportionment of direct or indirect expenditure towards taxable and exempt income has become academic in view of rule 8D which prescribes mechanism for working out the disallowance u/ s.14A .

Section 14A has no application on the incidental exempt income: We hold that the provisions of section 14A of the Act are applicable with respect of dividend income earned by the assessee engaged in the business of dealing with shares and securities, on the shares held as stock-in-trade when earning of such dividend income is incidental to the trading in shares.

In the result, all the appeals are allowed for statistical purposes, by majority view.:MUMBAI ITAT
( SPECIAL BENCH );

2008-TIOL-508-ITAT-DEL.pdf

M/s Bonanza Portfolio Ltd Vs ACIT, New Delhi ( Dated : May 16, 2008 )

Income Tax - Section 36(1)(vii) and Section 36(2)(i) – Assessment Year 2001-2002 - Allowability of Bad Debt in Stock Brokers case - Interpretation of words "taken into account in computing the income" under section 36(2)(i) – Assessee Stock Broker purchasing shares on behalf of brokers debiting the client account by amount of purchase price of shares and brokerage and crediting a) brokerage account by brokerage amount and b) Stock Exchange/Clearing Account by purchase price of shares – Brokerage amount further taken to Profit and Loss Account –Revenue's contention that since only brokerage amount is credited to P&L account, whole debt "written off" by assessee comprising of brokerage and other debt (purchase price of shares etc) is not "taken into account" in computing assessee's income – Assessee's contention that brokerage earned on purchase dealings being based on purchase value/transaction – Automatically "taken into account" for computing brokerage income – Further, Assessee contended that "taken into account" is different from "offered to taxation" and "subjected to taxation" – Assessee alternatively contended that even if "part of debt" is "taken into account" in computing income, whole debt is eligible for claim u/s 36(1)(vii) read with section 36(2)(i) – Assessee's contentions upheld by ITAT – Further, Del ITAT on basis of DHC ruling in Morgan Securities held "write off" is sufficient to claim bad debt u/s 36(1)(vii) and post 1989 amendment, assessee is no more required to establish the "debt" as "bad" – Addition made by Assessing Officer as confirmed by CIT-Appeals deleted

Income Tax Act, 1961 – Explanation to section 73(1) – Deemed Speculative Transaction – Assessee's contention that share sale/purchase transactions on which loss has accrued pertains to clients and are in nature of "forced transactions" – Hence subject explanation not applicable as assessee not transacted any business of share sale/purchase in its own capacity – Also, assessee disputing Assessing Officer's disallowance of general admin expenses on proportionate basis under subject explanation including the formulae adopted - Revenue's contention that assessee not providing details for which clients transactions were done and later on adopted by assessee in business interest – ITAT upholding disallowance made by AO since assessee did not provide specific details, subject transactions cannot be said to have been executed for clients – However, ITAT proceeding sub silentio on applicability of subject explanation to "indirect costs" being general expenses (other than loss arising directly from share sale/purchase transactions) upheld the estimated disallowance of general costs subject to change in formulae adopted by AO – Held Proportionate disallowance to be computed on basis of ratio of "turnover of trading transactions" to "turnover of total share transactions" - Part Relief Allowed

Income Tax Act, 1961 – Section14A – Disallowance for expenses on exempt income – AY 2001-2002 – ITAT without taking full cognizance of Del ITAT ruling in Vidyut case as relied by assessee, on basis of Mum ITAT ruling in Citi Corp case – held that section 14A(2) and 14A(3) inserted by Finance Act, 2006 are retrospective and not prospective in nature – ITAT remanded the matter back to AO's file for fresh determination of disallowance of expenses u/s 14A as per amended law

Income Tax Act, 1961 – Explanation to section 73 – Deemed Speculative Transaction – Gains on mutual fund units held in "investor capacity" – The Tribunal relying on its earlier Third Member ruling in Jindal Exports Limited case held that subject explanation will not apply to transactions on "capital" account conducted in investor capacity – Allowed Assessee's claim that subject transactions are normal capital gain transactions :DELHI ITAT;

2008-TIOL-507-ITAT-BANG.pdf

M/s Efficient Management Services Pvt Ltd Vs DCIT, Udupi ( Dated : August 29, 2008 )

Income tax - bad debt - assessee writes off principal sum and interest in its books of account - AO disallows on the ground that adequate steps to recover the same not taken - CIT(A) accepts the assessee's contention that after the amendment in the law the AO cannot ask for detailed reasons and once a sum is written off in the books it is allowable deduction but he did not agree that even the principal sum was also allowable - Held, since the principal business of the assessee is to finance and the Revenue has taxed the assessee as 'business income', the deduction for loss of principal sum cannot be disallowed - Assessee's appeal allowed : BANGALORE ITAT;

2008-TIOL-515-HC-DEL-IT.pdf

CIT, Delhi-VI Vs United Hotels Ltd ( Dated: October 3, 2008 )

Income Tax - Sec 37(1) - Assessee runs a five-star hotel - agrees to pay certain sum to a company for availing certain flying hours annually on charter hire basis of a Jet aircraft for use by its Directors, executives and hotel guests - Assessee fails to utilise the services but committed to pay the sum agreed upon - claims deduction - AO disallows as the services were not utilised - Since the assessee was bound by the condtions of the agreement, such expenditure was incurred for the business purposes and it cannot be disallowed

Sec 40A(2) - it can be invoked only if the Revenue discharges its burden of proving that the expenditure so incurred was excessive or unreasonable in regard to fair market value - Since the AO fails to do so and the rates availed by the assessee were discounted, the provision of Sec 40A(2) cannot be invoked to disallow the expenditure:DELHI HIGH COURT;

2008-TIOL-514-HC-DEL-IT.pdf

CIT, New Delhi Vs Dawn View Farms Pvt Ltd ( Dated: October 16, 2008 )

Income tax - Assumption of jurisdiction under Section 158BD of the Act - If the Assessing Officer of the person who is searched is satisfied that there is any undisclosed income belonging to any person, other than the person w.r.t whom search was made under Section 132, no further steps can follow - AO must record satisfaction to the effect that there is undisclosed income belonging to any person, other than the person in respect of whom the search was made under Section 132 – No such satisfaction recorded in the instant case – Tribunal order concluding that proceedings under s. 158BD/BC are without jurisdiction upheld:DELHI HIGH COURT;

cbecorder331_2008.pdf

Gautam Bhattacharya is JS (TRU-II);

CENTRAL EXCISE SECTION

2008-TIOL-516-HC-MUM-CX.pdf + Sarla story.pdf

Sarla Performance Fibers Ltd Vs CCE & CC ( Dated : August 20, 2008 )

100% EOU – Education Cess payable by EOUs on DTA clearances – CESTAT order confirming that the Education Cess under Section 93 of the Finance Act 2004 is payable in addition to the aggregate duties of Customs leviable under the proviso to Section 3 of the Central Excise Act is set aside – The Tribunal has not approached the question from the perspective that the goods cleared in DTA are to be treated as imported goods for the purpose of levy of excise duty – matter remanded. :BOMBAY HIGH COURT;

2008-TIOL-1741-CESTAT-DEL.pdf + ctv story.pdf

Daeynx International Pvt Ltd Vs CCE, Noida (Dated: July 4, 2008)

Merely because a particular CTV Model no. 21HT 1532 is sold to the Hotel industry but not in retail, it cannot be said that they are exempted under rule 34 of the SWAMs Rules, 1977 so as to be assessed u/s 4 of the CEA'44 - Televisions rightly assessable u/s 4A of the CEA'44

A reading of rule 34(a) of SWAMs Rules shows that if a package is marked unambiguously indicating that the goods having specially packed for the use of any industry, no MRP is required to be affixed.

However, in the present case, it is not the Revenue's stand that CTVs being manufactured by the first appellant and supplied to second appellant, who in turn, have sold the same to hotel industry have been specifically marked indicating that the same are packed for the exclusive use of any industry.

The Revenue's case is based upon the fact that a model No.21HT 1532 is meant for hotel industry only, as clarified by the representative of M/s Philips Electronics India Ltd.

Be that it may be, the fact remains that there is no clear indication in any unambiguous term, on the package of the CTVs, indicating that the goods have been specifically packed for the hotel.

Such type of indication, we clearly come across, in respect of goods specifically packed for airlines and consumption of the air passengers on board.

The exemption from marking of MRP in terms of the Rule 34(a) of the Standard of Weights and Measures (Packaged Commodities) Rule is not in respect of packages, which may be having some model number indicating supply and use in a particular industry but is in respect of goods which in unambiguous terms indicates that the same have been manufactured for a specific industry.

Inasmuch as CTV's manufactured by the appellant did not specifically carry any marking to the effect that the same were specifically manufactured for hotel industry, the provisions of Rule 34(a), referred supra, were not applicable to the same.

As such, fixation of MRP and clearance of goods on that basis and payment of duty on the basis of MRP was in accordance with the provisions of law.

Tribunal decision in Philips Electronics (I) Ltd. 2007-TIOL-815-CESTAT-MUM relied upon

Apex Court decision in Jayanti Food Processing (P) Ltd. 2007-TIOL-150-SC-CX referred.:DELHI CESTAT;

2008-TIOL-1740-CESTAT-MUM.pdf

Asian Paints Ltd Vs CCE, Mumbai III (Dated: June 20, 2008)

Central Excise - Stay/Dispensation of pre-deposit - valuation - provisional assessment of goods cleared to sister unit - at the time of finalization, the duty short paid is required to be adjusted against duty paid in excess and it is the differential duty if any which is required to be paid. The revenue's contention that as excess duty has already been recovered from customer who has taken the credit of the same, it cannot be adjusted against short payment is incorrect. :MUMBAI CESTAT;

2008-TIOL-1739-CESTAT-MAD.pdf

M/s Rane Brake Linings Ltd Vs CCE, Chennai (Dated: August 1, 2008)

Central Excise – refund – unjust enrichment – refund of excess duty paid on account of price variation – matter remanded to verify the question of fact whether the incidence of duty was passed on at the time of clearance of goods. :CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1737-CESTAT-MUM.pdf

SSV Coal Carriers Pvt Ltd Vs CCE, Nagpur (Dated: July 29, 2008)

ST - Cargo Handling Service - Assessee provides loading and transportation of coal to M/s Western Coalfields Ltd - Revenue demands tax - In view of the tribunal's decision in the case of Sainik Mining & Allied Services Ltd, prima facie, the Commissioner made wrong distinction between the two cases - pre-deposit waived off and stay granted : MUMBAI CESTAT;

2008-TIOL-1736-CESTAT-BANG.pdf

Phase 1 Events & Entertainment Pvt Ltd Vs CST, Bangalore (Dated: July 21, 2008)

ST - Event Management Servcie - Assessee organises a festival to promote friendship between two countries - Revenue raises demand - Assessee argues that since the assessee was one of the members of the festival organising committee which asked it to organise the event, there is no client-service provider relationship - Lower authorities drop the demand but Commission revises the demand and imposes penalty - held, the fact that the assessees themselves are a member of the organising committee, it cannot be said that there is a client-service provider relationship - Order-In-Revision set aside and OIO upheld : BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff08_112.pdf

Notification 69/2008 rescinded;

ctariff08_111.pdf

Definitive anti-dumping duty on import of fully drawn yarn from H K Corpn of Korea imposed;

dgft08not050.pdf

DGFT amends import policy for tiles, marble blocks, marble travertine;

dgft08not049.pdf

Import of security printing paper by govt press allowed without licence;

dgft08pn097.pdf

Ravi Energie enlisted in Appendix-5 of HBP .( Vol-1) and added at Sl.No.100;

CASE LAWS

2008-TIOL-1738-CESTAT-MUM.pdf

M/s General Motors India Pvt Ltd Vs CC, Mumbai (Dated: August 8, 2008)

Customs - valuation - related person - onus to prove that the relationship between the importer and the exporter has influenced the price of the imported goods has not been discharged by the Revenue - In the past the department has examined the relationship between the appellant and the supplier and accepted the transaction value which shows that the relationship has not influenced the value of the imported goods.

Licence fee - the licence fee is not paid for manufacture of the components or the capital goods themselves and therefore the fee cannot be related to imported goods - The licensce fee is also not a condition of sale of the imported goods for the reason that the appellants are at liberty to procure the components from other sources also - not includible in value. : DELHI CESTAT;