Tremor in CESTAT - Almost all Judicial Members Transferred (See 'DDT')

Govt to roll out 'Tracing the Roots' scheme for PIOs, NRIs;

Madras HC addl judge Justice K Kannan transferred to P&H High Court;

Rohtak Excise slaps Rs 92 Cr service tax demand on Haryana Vidyut Prasaran Nigam for not paying tax on 'wheeling charges';

SBI logs 40% growth in second quarter;

Menon Panel proposes reclassification of crimes;

India can recycle 1.82 mn tonnes hazardous wastes annually: Govt;

EGoM on SEZ decides to relax size of SEZ from 5000 hectare;

Tamil issue in Lanka: Karunanidhi says his party not to trigger any crisis in UPA Govt;

ddt 27 oct.pdf

Tremor in CESTAT – Almost all Judicial Members Transferred;

topguest.pdf

Is GST heading to a blind alley?

editorial.pdf

Recession is home faster than PM and FM talking about!

guest.pdf

SC Larger Bench decision: Throwing the baby out with bath water?

cic story.pdf

Reasons for not addressing applicant's request for transfer from Bhandara to Nagpur not 'information' under the RTI Act; DRI is an exempted organization u/s 24(1) and information sought is not related to corruption or human rights violations: CIC

mbuzz1105.pdf

Govt to roll out 'Tracing the Roots' scheme for PIOs, NRIs;

mbuzz1104.pdf

Menon Panel proposes reclassification of crimes;

mbuzz1103.pdf

Rohtak Excise slaps Rs 92 Cr service tax demand on Haryana Vidyut Prasaran Nigam for not paying tax on 'wheeling charges';

mbuzz1102.pdf

India can recycle 1.82 mn tonnes hazardous wastes annually: Govt;

2008-TIOL-202-SC-IT.pdf + SC IT story.pdf

Krishak Bharati Cooperative Ltd Vs JCIT (Dated: October 21, 2008)

Income tax - Sec 80-I benefits - Assessee is into manufacture of urea and ammonia - receives service charges for producing heavy water for Dept of Atomic Energy - claims deduction u/s 80-I - Revenue disallows - Tribunal and HC agree with the AO - Held, this case is a stand-alone case. It is a unique matter. Heavy Water Plant is a national asset. In the changed scenario, when civil nuclear installations are going to play an important part, particularly in the context of electricity generation, one needs to examine the process in detail of manufacture of Heavy Water. Ownership of the HWP vested during the assessment year 1993-94 in the Heavy Water Board. However, since the assessee did not place all the records before the Tribunal, the issue could not be examined properly. Issue remanded and assessee directed to place all the records before the Tribunal and a cost of Rs 25000 imposed : SUPREME COURT;

2008-TIOL-516-ITAT-AHM-SB.pdf + spl bench story.pdf

Gujarat Gas Financial Services Ltd Vs ACIT, Ahmedabad ( Dated : September 19, 2008 )

INTEREST FROM INTER CORPORATE DEPOSITS: interest on inter corporate deposits is not an interest on loan or advance and therefore would not be includible in the chargeable interest under the Interest Tax Act.

INTEREST ON DELAYED PAYMENT FROM DEBTORS: interest from delayed payment from debtors is not on account of interest on loans and advance and hence is not liable to interest tax. Unless the amount which is sought to be chargeable as the chargeable interest has any necessary relationship with loans and advances, such an attempt to understand the amount alone would not satisfy the requirement of justification. Interest on delayed payments would not be an interest on loan or advance and therefore would not be includible in the chargeable interest under the Interest Tax Act.

Administrative and other expenses :There is no dispute and there cannot be any doubt, that some expenditure is incurred for making or earning the income from dividend. In case of mixed accounting the expenditure is not identified as such, which directly relates to earning of dividend. But that cannot be a ground to say that no expenditure is incurred for earning dividend income or that no expenditure could be related to that income. Upon hearing both parties and considering material available on record, interest of justice will be served if 10% of the expenditure is allocated for earning dividend and disallowed u/s 14A of the Act.

Provision made for non-performing assets as per the directives of the RBI. Merely because the RBI has directed the assessee to provide for non-performing assets, that direction cannot override the mandatory provisions of the IT Act contained in s.36( 1)(viia) which stipulate for deduction not exceeding 5 per cent of the total income only in respect of the provision for bad and doubtful debts which are predominately revenue in nature or trade related and not for provision for non-performing assets which are of predominately capital nature.

Disallowance of consultancy fees of Rs.15 ,77,350 /- paid to Ernst & Young. The assessee is subsidiary of Gujarat Gas Company. The report was prepared by a firm of Chartered Accountants, Earnst & Young on the direction of GGCL for amalgamation and merger for efficient and effective functioning of GGCL and group companies. The charges bill was originally prepared in the name of GGCL, though later on the name of appellant company has been inserted by hand showing C/o. GGCL. As this study was not commissioned by the assessee company, this expenditure does not relate to them and has nothing to do with the assessee. It could not be said to have been incurred wholly and exclusively for the carrying on business of the assessee. These finding were not successfully challenged or shown to be wrong in law therefore, considering the reasons given by AO and the CIT( A) the Tribunal was of the opinion that the revenue authorities are justified in disallowing the claim. : AHMEDABAD ITAT ( SPECIAL BENCH );

2008-TIOL-515-ITAT-AHM-SB.pdf

DCIT, Ahmedabad Vs M/s Zaveri & Co Exports ( Dated : September 12, 2008 )

Income tax - what treatment to be given to DEPB benefits while computing deductions u/s 80HHC(3)? - Matter remanded to the AO's file as the law has been amended vide Finance Act, 2005 by insertion of Clauses (iiid) and (iiie) in Sec 28 as well as by insertion of provision to Sec 80HHC(3) with retrospective effect from 1/4/1998, including DEPB receipt as part of the business income and profit for the treatment to be given to such receipt while calculating deduction u/s 80HHC(3) : AHMEDABAD ITAT ( SPECIAL BENCH );

2008-TIOL-514-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Dune Leasing & Finance Ltd ( Dated : September 26, 2008 )

Income tax - When the assessee follows mercantile system of accounting AO cannot adopt different approaches in respect of the expenditure and income – Interest expenditure to be deducted, if interest income is taxed – No infirmity in CIT(A) order – Revenue appeal has no merits

Income tax - AO cannot reopen the accounts of a company, which have been audited and certified by the statutory auditor and filed before the Registrar of Companies to which he has not taken any objection under the Companies Act - No adjustment is permissible in the book profit in respect of aforesaid amount under any of the clauses (i) to (vii) of the Explanation to section 115JB – CIT(A)'s direction to reduce the amount from book profit not tenable – Likewise interest income cannot be added to the book profit – Interest under s. 234B accordingly ordered to be recomputed :DELHI ITAT;

2008-TIOL-513-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Hinduja Finance Corporation Ltd ( Dated : April 30, 2008 )

Income Tax Act – Section 145 – Change in method of valuation - Asseessee paid an advance during AY 94-95 which was shown as advance paid towards Bangalore property in its balance sheet. In AY 1995-96 assessee company purchased the said land and conducted certain development and civil work at the premises. Further certain development expenses were also incurred in AY 96-97 to 98-99. The said investment was classified as capital work-in-progress. During AY 2000-01 assessee reclassified the said capital work-in-progress into stock in trade and consequently valued the same at cost or market value whichever is less and thus claimed a loss which was diallowed by the AO – CIT(A) held that the motive of the assessee at the time of purchase of the property in question at Bangalore was to enter into real estate business and the activities of the assessee subsequent to the purchase of property were clearly in furtherance to the said object – On further appeal by revenue held, that facts reveals that though the assessee was showing the investment in the said project as capital work-in-progress but the asset owned by the assessee was its trading asset on development of which the assessee intended to make profits as its second line of business, therefore the reclassification of the said asset as stock-in-trade as against work-in-progress shown by the assessee from year to year is bonafide change and merits to be accepted in entirety

Income Tax Act – Explanation to section 73 – Held, that in case where the shares are being held as investment, the provisions of Explanation to Section 73 are not applicable to such transactions :MUMBAI ITAT;

2008-TIOL-512-ITAT-MUM.pdf

M/s Boon Catering Company Pvt Ltd Vs DCIT, Mumbai ( Dated : July 29, 2008 )

Income tax – Block assessment order u/s 158BC was passed without issuance of notice u/s 143(2) within one year from the end of the month in which the return of income is filed – AO rejects the claim of the assessee that the notice is bad is law – CIT (A) also confirms the action of the AO – Assessee argues that as per the order of the Gauhati High Court in the case of Smt. Bandana Gogoi notice u/s 143(2) is mandatory even in the block assessment.

Held, that as per the jurisdictional HC order in the case of Shirish Madhukar Dalvi Vs. ACIT and the decision of Lucknow Special Bench in the ase of Nandkishore & Sons Jewellers, the non-issuance of notice u/s 143(2) in the block assessment proceedings would only be a case of deviation from rule of law resulting in irregularity which is curable and not invalid - the notice issued after u/s 143(2) even after expiry of 12 months from the end of the month in which the return of income is filed does not make assessment invalid - Revenue's appeal allowed. :MUMBAI ITAT;

CENTRAL EXCISE SECTION

NOTIFICATION

exnt08_46.pdf

CBEC vests central excise powers in Commissioner of Customs (Import & General), Delhi for adjudicating cases related to M/s A Square Automation Ltd;

CASE LAWS

2008-TIOL-1754-CESTAT-MUM.pdf + refund story.pdf

M/s Mhatre Engineering Pvt Ltd Vs CCE, Belapur (Dated: May 23, 2008)

Refund of Duty paid in excess due to calculation error – when the purchaser has categorically informed that they have not availed Cenvat credit of the component of excess duty and not paid the supplier and which fact has been certified by jurisdictional Superintendent, no question of unjust enrichment – Tribunal.

Purchaser's submission that they have paid the appellant only the correct amount due viz. excluding the excess duty paid has also been fortified by the Chartered Accountant who has certified that the appellant has not received the excess duty paid by them from their purchaser.

AS the above certificates have not been controverted by the Revenue, it is proved that the appellant has not received the excess amount from the suppliers and it could not be held that the appellant is unjustly enriched and which is the law laid down by the Madras High Court in the case of Southern Agrifurane Inds. Ltd. [Also see 2004-TIOL-742-CESTAT-MAD ]. : MUMBAI CESTAT;

2008-TIOL-1753-CESTAT-AHM.pdf

M/s Welspun Gujarat Stahl Rohren Vs CCE, Vadodara (Dated: September 30, 2008)

Central Excise - refund of duty on account of change in exchange rate for supplies made against international bidding - Once invoice shows the amount of duty paid and the buyer takes credit, it is conclusive documentary evidence to show that duty element has been passed on to the buyer - If the buyer does not reimburse the duty or the seller is not able to recover it for whatever reason, the remedy is not available under Central Excise Law - Remedy is definitely not making a refund claim under Section 11B. :AHMEDABAD CESTAT;

2008-TIOL-1752-CESTAT-MAD.pdf

CCE, Chennai-III Vs M/s Titan Industries Ltd (Dated: August 7, 2008)

Central Excise – refund – unjust enrichment is not applicable to refund arising out of finalization of provisional assessment prior to enactment of Rule 9B(5) of the Central Excise Rules, 1944 :CHENNAI CESTAT;

2008-TIOL-1751-CESTAT-AHM.pdf

M/s Sterlite Technologies Ltd Vs CCE, Vapi (Dated: September 22, 2008)

Central Excise - remission of duty - reversal of Modvat Credit in respect of inputs - If the adjudicating authority was required to choose from Larger Bench decision of the Tribunal and the circular, it goes without saying that only and only option with him was to follow Larger Bench decision settling the disputed issue. :AHMEDABAD CESTAT;

2008-TIOL-1748-CESTAT-AHM.pdf

CCE, Ahmedabad II Vs M/s Riddhi Siddhi Gluco Biols Ltd (Dated: September 22, 2008)

Central Excise - classification of starch - Tribunal cannot consider the classification of the item under dispute under totally new CETH namely, 35.05 while the dispute between the parties, earlier was between the contentious headings 3809 and 1103 - Miscellaneous application of revenue is dismissed :AHMEDABAD CESTAT;

SERVICE TAX SECTION

2008-TIOL-1750-CESTAT-DEL.pdf

CCE, Ludhiana Vs M/s Pannu Property Dealers & Ors (Dated: October 1, 2008)

ST - real estate service - on being pointed out, assessee deposits service tax with interest - Revenue imposes penalty under Ss 76 and 78 - Commissioner (A) confirms demand but sets aside penalty - Held, penalty under Sec 78 can be imposed where mens rea is and in case of sec 76, it is failure to pay tax without mens rea. Imposing penalty under both the Sections is too harsh, and if penalty under Sec 78 is levied, it does not call for penalty under Sec 76 - Revenue's appeal set aside: DELHI CESTAT;

2008-TIOL-1749-CESTAT-DEL.pdf

M/s Amit Sales Vs CCE, Jaipur-I (Dated: October 1, 2008)

ST - valuation - Clearing & forwarding service - assessee collects service charges under two heads - 'commission' and 'reimbursement of expenses' like godown rent, loading and unloading charges, stionary, printing etc - Assessee refers to various decisions of the Tribunal where such reimbursements have been allowed - Held, the value for the services should be the gross amount charged and should be determined strictly as per Section 67 of the Finance Act, read with the Rules. The bench is , prima facie, of the view that the decisions rendered require re-consideration. Matter referred to the Larger Bench : DELHI CESTAT;

2008-TIOL-1747-CESTAT-DEL.pdf

M/s Balaji Cable Network Vs CCE, Jaipur (Dated: August 1, 2008)

ST - Cable Operator Service - Three cable operators providing service from the same premises - Revenue treats them as one service provider and demands tax - Since the assessees received payment on account of MSO service and the demand is raised on the sum disclosed by the partner of the appellant, pre-deposit ordered and the case remanded as the Commissioner (A) had rejected the case because of non-compliance with Sec 35F : DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08pn098.pdf

Export of jewellery: DGFT amends value-addition norms;

CASE LAWS

2008-TIOL-1755-CESTAT-AHM.pdf + ship story.pdf

M/s Shree Gautam Ship Breaking Inds Pvt Ltd Vs CC, Jamnagar (Dated: September 19, 2008)

Customs – Encashment of Bank Guarantee after finalization of provisional assessment - Furnishing of security in the shape of bank guarantee to be treated as payment of duty in anticipation of the finalization of the duty liability, and the same cannot be regarded as pre-deposit within the meaning of Section 129E of the Customs Act – Refund claim hit by limitation and bar of unjust enrichment :AHMEDABAD CESTAT;

2008-TIOL-1746-CESTAT-MAD.pdf

CC, Chennai Vs M/s Saffire Litho Graphers (Dated: May 7, 2008)

Customs – Import of second hand printing machines and confiscation thereof – Part consignment ordered for confiscation and part consignment released - Impugned order set aside by an earlier order of the Tribunal and remand order with regard to release part consignment set aside by the High Court – Effect of High Court order restores part consignment to the appellants – No evidence to show that the High Court order is further appealed by Revenue : CHENNAI CESTAT;