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TIOL launches a NEW Column from today (See 'Azadi Bachao' by Shiva Kant Jha) Income Tax Department revamps Review and Inspection (See 'DDT') CBDT Instructions on Inspections (See 'DDT') PM leaves for Washington to attend G-20 Summit on financial crisis ; Govt approves eight new Tiger Reserves; to spend Rs 32 cr during XIth Plan; The 'tumbling effect' of recession: After a sojourn of 21 weeks into double digits, Inflation back to single digit - 8.98 % ; WB pledges USD 100 bn support to DCs to tide over financial crisis; Present financial crisis is a result of questionable use of ample flow of liquidity: WTO Chief; |
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| Dear Member, Sending the following files: |
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Income Tax Department revamps Review and Inspection; The shadow of Ratan Melting on Azadi Bachao! Our exports are down but not out; Let's focus on halting the decline! Sanitation Policy unfolded; Govt to carry out ratings of cities; also to give awards to achievers; Exim Bank's Line of Credit of USD 25 million to the Government of the Syrian Arab Republic; Mumbai Airport Customs seizes drugs; arrests three persons in two cases ; OECD forecasts protracted economic slowdown in US, Japan and Euro area; Justice Arijit Pasayat calls for eradication of corruption if India has to become developed country; India urges IMO Council to support UN Force to countervail Somalian pirates; WB pledges USD 100 bn support to DCs to tide over financial crisis; Present financial crisis is a result of questionable use of ample flow of liquidity: WTO Chief ; |
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CBDT issues transfer order of 21 ACITs; INSTRUCTION CBDT Instructions on Inspections; Income Tax Department revamps Review and Inspection; CASE LAWS CIT Vs Reebok India Co ( Dated : July 31, 2008 ) Income tax - TDS u/s 194C - assessee markets footwear and sports goods - outsources manufacturing to jobworkers who work as per technical specifications and designs provided by the assessee - AO treats it as works contract and takes a view that TDS u/s 194C is deductible - CIT(A) and Tribunal, after examinging facts and the agreement details, consider it as sale simpliciter - Since the lower authorities have treated it as sale of goods, there is no substantial question of law involved - Revenue's appeal dismissed : DELHI HIGH COURT; CIT, Jodhpur Vs Neha Proteins Limited ( Dated : April 29, 2008 ) Income tax - Assessee computes income after setting off interest earned on share application money against public issue expenses which are to be amortized in future - AO disallowes set off - CIT(A) upheld AO's order - Tribunal, partly allowing assessee's appeal, allowed set off - Held, Tribunal was right in holding that interest accrued on the share application money is not taxable as Income from other source, and was required to be set off or adjusted, against the public issue expenses - Revenue's appeal dismissed : RAJASTHAN HIGH COURT; CIT & Anr Vs McDowell & Co Ltd ( Dated : March 7, 2008 ) ITAT Rectification of Mistake - erroneous understanding, erroneous findings, erroneous application of provisions of law not 'a mistake apparent' High Court: Application of the principles laid down by the superior Courts to the facts of the case before the Tribunal on erroneous understanding of such principles, recording of an erroneous finding by it based on the facts on record, arriving at a conclusion on erroneous application of provisions of law to the facts of the case, etc., cannot be held to be 'a mistake apparent from the record warranting any rectification by the Tribunal in exercise of its power under s. 254(2) of the IT Act, by reconsidering the application of principles of superior Courts to the facts of the case or by reconsidering its findings recorded, or by reconsidering the application of the relevant provisions of law to the facts of the case as is done by the Tribunal in the instant case. Such an exercise of power under s. 254(2) of the Act amounts to review of its earlier order on merits but not 'rectification of mistake apparent from the record' and such review would certainly be beyond the scope of s. 254(2) of the IT Act. : KARNATAKA HIGH COURT; 2008-TIOL-551-ITAT-MUM.pdf + perroy story.pdf DDIT, Mumbai Vs M/s Preroy A G ( Dated : October 27, 2008 ) Income tax - India-Swiss tax treaty - assessee is a non-resident - provides strategic consultancy service - service recipient makes payments for the same - assessee claims exemption under the treaty - AO holds the services provided are in the nature of royalty and is taxable - assessee also claims it has no PE in India and even its business income cannot be taxed - CIT(A) agrees with the assessee - Held, all of them - the assessee, the AO and the CIT(A) - proceeded on a wrong footing; first, an income is to be adjudicated whether it is taxable as per domestic law and then, an exemption is to be claimed as per the tax treaty. Since the nature of services provided can be decided for lack of information, the case remitted for examining the correspondence between the assessee and the service recipient to decide whether it is fee for technical services or mere advisory in nature :MUMBAI ITAT; Diwan Rahul Nanda Vs DCIT ( Dated : June 23, 2008 ) Income tax Expenditure incurred by company for renovation/refurbishing of leased out flats to whole time directors having substantial interest in the company is taxable in the hands of the directors When Directors secured the benefit by way of repairs and renovations to their own apartments at company's expense such amounts to be treated as value' of benefit within the meaning of section 2(24)(iv) Assessee having neither filed a return of income nor paid any TDS or advance tax on this amount prior to the search, amount to be considered as undisclosed amounts within the meaning of section 158BC:MUMBAI ITAT; 2008-TIOL-549-ITAT-BANG.pdf + tejas story.pdf M/s Tejas Networks India Ltd Vs ACIT, Bangalore ( Dated : June 8, 2007 ) Income tax Research and development carried out for developing enhanced and improvised versions of optical transmission telecom equipments R & D undertaken by the appellant is a continuous process to develop and improvise new products Prototypes developed in this regard are given to a third party for manufacture and the appellant's sell the manufactured product Benefits from prototypes are not of enduring nature and expenditure thereof to be regarded as revenue in nature and not capital expenditure Expenses incurred for R & D are available as deductions in terms of s. 35 (1) (iv) even if the same is held to be capital in nature : BANGALORE ITAT; DCIT, Chennai Vs Shri Amarnath Reddy ( Dated : March 11, 2008 ) Stock to be valued at cost or market value, whichever is less on the valuation date Prudential accounting principle to be followed in accounting matters and not for valuation of stock Assessee is trading in shares. As on 31st March, he valued closing stock at Rs. 6,46,36,684 as against its cost of Rs. 11,52,00,401.According to the assessee, market value was arrived at on the basis of since realized price since market was heavily falling in the Month of March, 2000. Thus assessee adopted the value of closing stock at the price at which the stocks were sold in the first months of the subsequent year since it was an accepted accounting practice and supported by AS-2 issued by ICAI. However AO ascertained the market value of shares as on 31.03.2000 from the website of NSE which worked out to Rs. 13,43,22,426 and adopted this as the value of closing stock. On appeal it was held that though the norms of prudential accounting has to be followed at the time of finalization of accounts, the market value of the assets cannot be underestimated on the basis of events which happened at a date later than the date of valuation. Since the stock has to be valued at cost or market price which ever was lower, the cost of shares Rs. 11,52,00,401 was compared with the market value as per NSE website ir. Rs. 13,43,22,426 and lower of these two sums, was adopted as the value of closing stock. Appeal by assessee and revenue dismissed.:CHENNAI ITAT; |
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2008-TIOL-1857-CESTAT-MUM.pdf + kay story.pdf M/s Kay Boyvet Engineering Pvt Ltd Vs CCE, Pune-II (Dated:September 17, 2008) Undervaluing manufactured items and overvaluing bought out items, raising escalation bills but no proof submitted that these were not honoured - Cost Auditor's marathon efforts rewarded - Two crores pre-deposit ordered by Tribunal. : MUMBAI CESTAT; M/s Shyam Forgings Pvt Ltd Vs CCE, Ghaziabad (Dated: August 7, 2008) Central Excise - refund of excess duty paid - suo moto taking of credit in CENVAT account is not permissible - all claims should pass through the doctrine of unjust enrichment - matter remanded. : DELHI CESTAT; M/s Elango Industries Vs CCE, Trichy (Dated: August 7, 2008) Central Excise allegation of clandestine manufacture and clearance overlapping period in notice issued by the Commissioner and another notice issued by the DGAE Commissioner in adjudication deducted the demand for overlapping period in view of settlement of case in KVSS for the first notice since the clearances were to different set of buyers, such deduction is not allowed - the show-cause notice of DGAE (CE) on a basis different from the formula accepted by both sides for the purpose of settlement under the KVS Scheme cannot be sustained insofar as the overlapping period is concerned matter remanded for passing a fresh order. : CHENNAI CESTAT; 2008-TIOL-211-SC-CX.pdf + sc cx story.pdf CCE, Mumbai Vs M/s National Organic Chemical Industries Limited ( Dated: November 6, 2008 ) Central Excise - Exemption for captive consumption emergence of by products, no reason to deny credit - methane and ethane automatically emerging during cracking of naphtha: The Tribunal's finding that the ethylene and propylene used as refrigerant has been used in or in relation to the manufacture of the same goods. The inevitable and automatic emergence of ethane and methane, therefore, by itself is no ground for denying the exemption contained in the notification. The Tribunal came to the categoric finding that the respondent could not have manufactured ethylene and propylene without manufacturing its by-products ethane and methane. The Tribunal held that in any technology the emergence of ethane and methane was inevitable and hence while it is no doubt correct to say that the ethylene and propylene have been used in or in relation to the manufacture of ethane and methane, the identical quantity of the same goods has simultaneously been used in the manufacture of ethylene and propylene. The emergence of ethane and methane, therefore, cannot be a ground to deny the benefit of exemption to the respondent :SUPREME COURT; M/s Kohinoor Printers Pvt Ltd Vs CCE, Pondy (Dated: August 1, 2008) Central Excise CENVAT Credit - duty paid by the sister unit on goods cleared after conversion is eligible for CENVAT Credit and the same cannot be denied on the ground that the goods are exempted under Notification No 214/86 CE. : CHENNAI CESTAT;
SERVICE TAX SECTION 2008-TIOL-1860-CESTAT-MUM.pdf + sodexho story.pdf Sodexho Pass Services India Pvt Ltd Vs CCE (ADJ), Navi Mumbai (Dated: September 2, 2008) Sodexho Pass Services gets relief from Service Tax liability for the period prior to 01.05.2006 Finding a prima facie case, Tribunal grants waiver of pre-deposit and Stays recovery. Applicants are issuing meal and gift vouchers to corporate clients and were receiving service charges - very same services as has been done by applicant is included in the Business Support Services' and has been introduced with effect from 1.5.2006 under sub section 104C of Section 65 of the Finance Act, 1994. Once the services are brought under Service tax net from a particular date, it is presumed that these services were not covered in earlier services and are liable to be taxed from the date of introduction. ( Trumac Engg. [ 2008-TIOL-198-CESTAT-AHM ] ; Cameo Corporation Service [ 2008-TIOL-1084-CESTAT-MAD ] ). Prima facie case made for waiver of pre-deposit of the amounts involved. : MUMBAI CESTAT ; Gangadharan Bulk Movers Pvt Ltd Vs CCE, Nagpur (Dated: October 8, 2008) ST - cargo handling service - Assessee has a composite contract with Western Coalfields but does separate billing for loading and unloading and transporation - In view of the Board Circular that loading and unloading even in mining area is covered under the service, waiver of pre-deposit not granted : MUMBAI CESTAT ; M/s Pataka Industries P Ltd Vs CCE, Bolpur (Dated:September 17, 2008) ST - Non-trading private companies even though they are registered as SSI are not entitled to exemption under Notification No 43/97 - Assessees' appeals dismissed : KOLKATA CESTAT ; CCE & CC, Vadodara Vs M/s Aman Associates (Dated: October 13, 2008) ST - C & F Service - Assessee procures orders, propagates and advertises the product for the principal - Revenue raises demand - Since the assessee was not physically dealing with the goods nor storing them, mere procurement of orders on commission basis is not covered under the notified servcie : AHMEDABAD CESTAT ;
CUSTOMS SECTION NOTIFICATION Adjudicating authority notifed for Mr S M Asif ; Adjudicating authority notifed for M/s Parth Marketing ; Adjudicating authority notifed for Tini Pharma Ltd ; Adjudicating authority notifed for M/s KDL Biotch Ltd ; Adjudicating authority notifed for Vishal Hira Merchants Pvt Ltd ; Adjudicating authority notifed for B N Industries ; Adjudicating authority notifed for Park Organics Ltd ; Adjudicating authority notifed for Navyuga Engg Co ; Kishangarh in Ajmer notified for export / import goods ; CASE LAWS 2008-TIOL-06-ARA-CUS.pdf + ara story.pdf M/s Paradise International (Dated: October 14, 2008) Advance Ruling After applying for Advance Ruling, the applicant forms a new Company it is the new company which should seek Advance Ruling: if a new joint venture company has been formed for the purpose of manufacturing the Flash Lights and the imports are to be made in connection therewith, the newly formed entity can only file the application seeking advance ruling. It is no longer open to the applicant to maintain this application. The onus of proving the non-resident status of joint venture partner rests with the resident applicant: it is for the applicant to establish that Shri Rajesh Aggarwal is a non-resident. Since complete details of passport to determine residency status of Shri Rajesh Aggarwal has not been produced, it may be concluded that Shri Aggarwal is a resident and not a non-resident as claimed and that the company Dynamic Exports (P) Ltd. cannot be considered to be a non-resident as its affairs were controlled and managed by a resident Indian. This constitutes another ground in addition to the one mentioned for concluding that the proposed joint venture is not an eligible applicant within the meaning of Section 28E (c)( i )(b) of the Customs Act, 1962. : ADVANCE RULING AUTHORITY ; M/s Hint Transformer Co Vs CC (Import), Nhava Sheva, Mumbai (Dated: March 28, 2008) Customs Re-export of goods after repair - Delay in granting "let export order" by Customs authorities is a technical fault and cannot be regarded as non-compliance of the order providing extension of time for re-export Impugned order unsustainable and liable to be set aside : MUMBAI CESTAT ; 2008-TIOL-1852-CESTAT-BANG.pdf CC, Cochin Vs M/s Enkay Textiles, New Delhi (Dated: July 22, 2008) Customs Import of goods Importer mis-declared the description & value of goods Relinquishment of title of goods does not absolve importer from payment of penalty Goods liable for confiscation & penalty Commr (A) order set aside and order of the original authority restored : BANGALORE CESTAT; |
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