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Cabinet approves setting up of Ghani Khan Choudhary Institute of Engineering & Technology in Malda, WB; also approves Regional Centre for Biotechnology Training and Education under UNESCO's auspices at Faridabad; Cabinet gives nod to DTAA with Tajikistan; Cabinet approves notifications changes in Trade Marks (Amendment) Bill, 2007; Cabinet approves for pay revision of CPSE executives; Inflation further down to 8.9 percent; OECD supports EC food-facility plan for developing-country farmers; Cabinet nod to Headquarters Agreement between India and South Asian University; Impact of financial crisis on SMEs: Govt to take steps to minimise it; Promotion of three HC Judges: SC collegium rejects Govt plea for reconsideration; US Customs seizes opium worth USD 7 lakh at George Bush airport; Pax coming from Turkey arrested; |
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| Dear Member, Sending the following files: |
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ddt 20 nov.pdf + cvdletter.pdf Customs Compounding of Offences – Rules Amended – Compounding only if duty, penalty and interest paid; Deepening recession and cash crunch: SEZ developers have better chances of turning into agriculturists! Revision of pay of the Chairpersons and Members of the Regulatory Authorities/Bodies consequent to the implementation of the Sixth Central Pay Commission recommendations.; Cabinet gives nod to DTAA with Tajikistan; Cabinet approves notifications changes in Trade Marks (Amendment) Bill, 2007; Cabinet approves for pay revision of CPSE executives; Cabinet nod to Headquarters Agreement between India and South Asian University; OECD supports EC food-facility plan for developing-country farmers; Women empowerment in rural India is silent revolution: Aiyar; Impact of financial crisis on SMEs: Govt to take steps to minimise it; |
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2008-TIOL-20-ARA-IT.pdf + aar story.pdf Mr Mustaq Ahmed (Dated: November 19, 2008) Income derived out of the purchase and export activities attracts charge to Income Tax as the income is received in India and has accrued in India. “Income is said to be received when it reaches the assessee; when the right to receive the income becomes vested in the assessee, it is said to accrue or arise” - there is no doubt and it is not in dispute that the income arising from the sale proceeds of exported goods has actually been received in India. The applicant's banks at Chennai have been crediting the amounts received from the importer/buyer to the account of the applicant. That apart, even the test of actual accrual of income in India has been satisfied in the present case. In CIT vs. Ashok Bhai Chiman Bhai it was observed by Shah, J. that “income is said to be received when it reaches the assessee; when the right to receive the income becomes vested in the assessee, it is said to accrue or arise”. Going by the facts disclosed from the documents filed by the Revenue, a reasonable inference can be drawn that the right to receive the payment has arisen in India on account of export sales of gold jewellery to the importers abroad (Singapore). It may be that the companies controlled and managed by the applicant in Singapore are the buyers/importers, but that does not make any difference in law as those Companies have distinct legal personalities.: ADVANCE RULING AUTHORITY; 2008-TIOL-572-ITAT-DEL.pdf + att story.pdf M/s AT & T Communication Services India Pvt Ltd Vs DCIT, New Delhi (Dated : October 03, 2008) Income tax - Sec 40(a)(i) - Assessee is into network design and management communication business - avails certain services provided by a Group company based in Singapore - makes payment for the same - bill for the services received at the time of finalisation of audit - TDS deducted and deposited - AO invokes provisions of Sec 40(a)(i) as the TDS was not deducted on the payments made to a company outside India and not deposited during the financial year - CIT(A) agrees with the AO's order - Held, as per the agreement the liability on the assessee had crystallised during the FY but the bill for payment was raised just before the finalisation of the audit and TDS was also deposited at the same time, as per provisions of Sec 40(a)(i), deduction for such payments cannot be allowed in the previous year when the tax was paid in the current year - CIT(A) order upheld and the assessee's appeal dismissed: DELHI ITAT; M/s Morgan Grenfell Investment Trust Vs ITO, Mumbai (Dated : August 21, 2008) Income Tax Act – Section 147 – Held, that the claim of assessee for carry forward of the loss was under section 74 of the Act and as per the provisions applicable, the assessee was entitled to set off of the losses in the subsequent year against any income under the head 'capital gains'. Thus, no fault could be found with the computation of the assessee. Since a wrong provision (i.e section 70) was applied by the AO in coming to the conclusion that there was escapement of income in terms of section 147, it was a case of non-application of mind on the part of the AO – Held thus, that initiation of re-assessment proceeding was void, ab initio: MUMBAI ITAT; M/s Microchip Technology Designs (India) Pvt Ltd Vs ACIT, Bangalore (Dated: August 29, 2008) Income tax - Sec 10A benefits - Held, in case certain expenses are excluded from the export turnover, the same has to be excluded from total turnover for computing eligible profit u/s 10A - Assessee's appeal partly allowed: BANGALORE ITAT; M/s May (India) Laboratories Vs ACIT, Chennai (Dated : June 13, 2008) Assessment order neither erroneous nor prejudicial to the interests of revenue – Revision order cancelled. CIT passed order under sec. 263 revising the assessment since AO failed to examine the validity of change in accounting policy relating to accounting of export incentives. On appeal, assessee contended that as per sec. 145 it is incumbent upon the assessee to compute the income in accordance with either cash or mercantile system of accounting and when the entire accounts ere maintained on mercantile basis, it was necessary to bring accounts of export incentives also on mercantile basis. Tribunal held that assessment order is neither erroneous nor prejudicial to the interests of revenue and further the issue got merged with the order of CIT(A). Order under sec. 263 quashed. Appeal by assessee allowed.: DELHI ITAT; M/s KDL Biotech Ltd Vs ITO, Mumbai (Dated : September 10, 2008) Income tax – AO passes assessment order, ignoring revised return filed within stipulated time-frame on the ground that the change in method of accounting system was without any reasonable cause – CIT (A) confirms the order – Assessee argued that 1) the revised return was filed within the time allowed by the law and is a valid return and cannot be ignored; 2) the change in accounting policy which is as per industries accounting practices and in consonance by the guidelines by ICAI cannot be rejected without assigning any reason. Held that the revised return filed within the prescribed period cannot be ignored and is to be accepted. Further merely because the profit of current year has been lower due to change, cannot be a reason for disallowing the claim of the assessee. Moreover, the assessing officer as well as the CIT (A) could not show that the change in method of accounting is neither commercially practised nor it is recognized accounting policy. Hence the appeal of the assessee is allowed. Deduction u/s 35(1)(iv) – the assessing officer disallowed the claim of the assessee regarding the research and development expenses incurred by the assessee of Rs. 73,47,000/- on the basis that the assessee has claimed on 1/6 of the amount as revenue in the profit and loss account prepared – Assessee argued that the expenses incurred are covered u/s 35(1)(iv) of the Act and are allowable in the year of its occurrence – CIT (A) confirmed the stand taken by the assessing officer. Held that none of the revenue authorities ever doubted the applicability of provisions of section 35(1)(iv) of the Act and the claim of the assessee cannot be rejected merely due to different treatment given in the books of account of the assesseee.: DELHI ITAT; |
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CBEC issues transfer order of three Commissioners;
2008-TIOL-1897-CESTAT-BANG.pdf M/s Goetze (India) Ltd Vs CCE, Bangalore (Dated: July 24, 2008) Central Excise – Excess duty paid shall be adjusted against short payment when provisional assessments are finalized - Demand of excess duty liable to be set aside: BANGALORE CESTAT; M/s Chandan Tobacco Co Vs CCE, Vapi (Dated: October 8, 2008) Central Excise - Stay/Dispensation of pre-deposit - demand of duty on alleged clandestine production and clearance of Gutkha - the demand was based on assumptions and presumptions - prima facie case for waiver of pre-deposit.: AHMEDABAD CESTAT;
SERVICE TAX SECTION 2008-TIOL-1894-CESTAT-MUM.pdf + bajaj story.pdf Bajaj Allianz General Insurance Co Ltd Vs CCE, Pune (Dated: October 21, 2008) “Whether the service tax is payable on a premium in terms of the insurance policy covering the future period at revised rate if the rates are revised by law, during the operation of policy already issued and Service tax liability discharged?” The Finance Act, 2004, increased the rate of service tax to 10% from the earlier rate of 8% and in addition Education cess @2% was also imposed from 10.09.2004. Differential service tax demand was raised of Rs.5.36 crores and Education Cess of Rs.53.59 lakhs as the appellants had received advance premium from their customers at the time of issuance of the general insurance policy prior to 10.09.2004. In the matter of Stay application [ 2007-TIOL-393-CESTAT-Mum ], the Bench observed - “We find that prima facie case for waiver has been made out as in the case of the same assessee, for a prior period when the service tax was enhanced from 5% to 8% the Commissioner (Appeals) had taken a view that the amendment would not affect the policies taken prior to that date. Thus it shows that the department had taken a stand which it subsequently changed. In such a view of the matter prima facie case for waiver has been made out and we accordingly waive pre-deposit of the service tax and penalty and stay recovery thereof pending the appeal.” Matter heard finally on 30.09.2008 and 01.10.2008. Tribunal relied on following provision contained in section 64VB of the Insurance Act, 1938 - “No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed is made in advance in the prescribed manner. For the purpose of this section, in the case of risks for which premium can be ascertained in advance the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.” Tribunal's observations - It can be noticed from the above reproduced provision of the Insurance Act, that the insurer's risk was covered only, after the premium payable is received by insurance company or a guarantee that it will be paid. This would indicate that the insurer is expected to render the services on the day when the premium is received by him. It is also to be noted that the insurance business is covered by the provisions of Insurance Act and, hence, the appellants herein has to issue policy in consonance with the provisions of the Insurance Act. Appellant cannot assure the coverage of risk of an insurer, unless the premium payment is received in advance. In other words, the services rendered by the appellants as a general insurance company will take place on the date when the appellant receives the insurance premium on the policy. It is undisputed that the appellant has discharged the service tax liability as was prevalent at the relevant period on the amount of premium received. The services rendered by the appellants would be akin to the services rendered by the banking and other financial services and more specifically the hire purchase contracts. We find that the Tribunal in the case of Art Leasing Ltd. was considering an identical situation in respect of the hire purchase scheme. The facts in the case of Art Leasing Ltd. though may be of hire purchase agreement/contract, wherein the hire purchaser receives the payment subsequently by an EMI (Equated Monthly Installments) but Service Tax liability is discharged on the date of signing the hire purchase contract as per the prevalent rate of service tax, the analogy/logic, will be also applicable in this case, as the CBEC vide Circular dated 02/05/95, clarified as under:- “Premium on insurance – The question of collection is at issue here in the following categories of premium paid on insurance – Premium paid in advance ie. Payment of premium has been received, where as the risk is covered after 01/07/1994 Payment of premium in installments i.e some installments of the premium have already been received prior to 01/07/1994 while some more are to be received later. The policy has expired before 01/07/1994, but premium are paid after 01/07/1994. Decision : Service Tax provisions have been made applicable with effect from 01/07/1994 vide Notification no. 1/94-Service tax dated 28/06/1994. Thus taxable service provided on or after 01/07/1994 alone will attract service tax. Thus, the policies covering the risk from 01/07/1994 and delayed payment after 01/07/1994 for earlier period would not attract service tax.” Since an identically worded circular in respect of banking and other financial services is interpreted by the Tribunal in the case of Art Leasing Ltd. , the same reasoning will also apply in this case. To our mind, the enhanced rate of Service Tax is not applicable to the policies, which were issued prior to the enhancement of the rate. the Tribunal has followed the decision of Art Leasing Ltd. , in LFC Hire Purchase Company Ltd. , and came to the very same conclusion. We are not impressed by the proposition of the Revenue that the amount, which is received as premium by the appellant was an advance payment and, hence, this has to be appropriated as per the clarification by the Board vide its Circular dated 05/11/2003 as the two decisions of the Tribunal in an identical circumstances on enhanced service tax liability held that enhanced rate is not applicable for the amounts subsequently collected as EMI . In this case, the appellant is on a more strong footing, as the premium is received in advance and no further amount is collected, as in the cases of Art Leasing Ltd. 2007-TIOL-1493-CESTAT-Bang and LFC Hire Purchase Company Ltd. 2008-TIOL-1347-CESTAT-Bang Order of the Commissioner set aside and the appeal allowed.: MUMBAI CESTAT; M/s Alfa Laval Separation, Sweden Vs CCE, Pune - I (Dated: September 18, 2008) ST - Appeal memo - Commissioner(A) dismisses the petition as the appeal memo was not signed by the principal officer or the designation etc not revealed of the person who signed it - Such defects are curable and the matter remanded : MUMBAI CESTAT; M/s Pratap Jadhav & Associates Vs CCE, Pune-III (Dated: October 10, 2008) ST - enhancement of penalty under Sec 76 - Since the assessee had a valid reason for failure to deposit the tax which was later deposited with interest, it is not a fit case for enhancing penalty - Order set aside: MUMBAI CESTAT;
CUSTOMS SECTION NOTIFICATION Customs Compounding of Offences – Rules Amended – Compounding only if duty, penalty and interest paid; Corrigendum of Notification No.59; DGFT export Of cement allowed to Maldives ; DGFT export of edible oils permitted in branded consumer packs and export of fish oil allowed freely; Two EOU rice millers allowed to export rice; Relaxation of ban for export of non-basmati rice by two 100% EOU units – regarding monitoring of export quantity.; CASE LAWS 2008-TIOL-1898-CESTAT-MAD-LB.pdf + Skycell Communications story.pdf CC, Chennai Vs M/s Skycell Communications Ltd (Dated: October 10, 2008) Customs – Exemption for import of software for operating telecom equipment – Explanation added to Notification 11/97-Cus to exclude software used for performing specific functions other than data processing from the ambit of ‘computer software' had the effect of imparting a technical meaning to ‘computer software' - A restrict ion prejudicial to importers of computer software cannot be given retrospective effect:CHENNAI CESTAT (LARGER BENCH); Shri Suresh Rajaram Newagi Vs CC, Mumbai (Dated: May 30, 2008) Customs – Import of consignments and storage in warehouse of Mumbai Port Trust – Allegations against Asst. Superintendent of MPT for abetting clandestine clearances of imported goods - Statements of the appellant cherry picked and put together in the SCN to show that he did not discharge his duties properly – Adjudicating authority himself held that the allegations of any manipulation are mere conjectures and not supported by any concrete evidence – In the absence of mens rea penalty imposed on appellant liable to be set aside:MUMBAI CESTAT; |
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