Two Addl. Judges promoted as full time Judge in P&H High Court;

Mumbai Airport Customs seizes 25 kg ketamine heading for Malaysia;

Promotion from CIT to CCIT; Naresh Kumar is last name in final list;

PM office is working on special package for reviving economy; announcement likely next week;

ICAI signs MOU with Institute of Chartered Accountants in England & Wales;

Govt authorises Naval warships to chase Somalian pirates' vessels;

ddt 21 nov.pdf

SAD Refunds – Really SAD State of affairs;

Child Care.pdf

Child Care Leave in respect of Central Government employees as a result of Sixth Central Pay Commission - clarification regarding;

Travelling Allowance.pdf

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

mbuzz1188.pdf

Chennai Customs seizes 181 Pcs of Red Sander Logs heading to Malaysia ;

ORDER

CBDT Order 152_2008

CBDT issues transfer order of 14 CITs;

CBDT Order 151_2008

CBDT transfers 7 Joint/Addl. Commissioners;

CASE LAWS

2008-TIOL-21-ARA-IT.pdf + burmah story.pdf

Burmah Castrol PLC (Dated: November 19, 2008)

Income tax - non-resident Co - acquires stocks - pays interest for delayed offer as per SEBI diktat - long-term capital gains - rate applicable u/s 112(1) - assessee claims 10% rate - Held, 10% rate benefit cannot be denied to non-resident as decided by the Authority in the case of Timken SAS, France ( 2007-TIOL-13-ARA-IT ) where it was ruled that the proviso to section 112(1) applies to all the clauses of sub-section (1) and a non-resident or foreign company is not disentitled from invoking the proviso to section 112(1) on the ground that it is not eligible to get the benefit of the 2nd proviso to section 48. It was observed that the applicability of the 2nd proviso to section 48 is not a condition precedent for availing the benefit of lesser rate of tax of 10 per cent under the proviso to section 112(1). The proviso to section 112(1) is a special provision in respect of shares and a non-resident foreign company can avail of the reduced rate under the said proviso at par with the residents in addition to the protection afforded by the first proviso to sec. 48. The eligibility to avail of the benefit of indexed cost of acquisition (under the second proviso to section 48) is not the sine qua non for applying the reduced rate of 10% prescribed by a proviso to section 112(1), the second proviso to section 48 being only a mode of computation of capital gains.

Interest Payments: Assessee pays interest to shareholders for delayed offer as per SEBI direction - cost of acquisition - assessee seeks advance ruling - the expression 'cost of acquisition' need not be construed in narrow sense to mean only the price of shares acquired - all such expenses linked to the acquisition of assets prior to transfer to be added to the cost of acquistion - Ruling in both cases goes in favour of the applicant : ADVANCE RULING AUTHORITY;

2008-TIOL-576-ITAT-DEL.pdf + lavlin story.pdf

SNC-Lavalin International Inc Vs DDIT, New Delhi (Dated : August 29, 2008)

Double Taxation treaty with Canada - Consultancy for National Highway Authority of India- fees to be treated as for included services; taxable at 15%; When the payment is for development and transfer of a technical plan or technical design, it need not be coupled with the condition that it should also make available technical knowledge, experience, skill, know-how, or process etc. The words 'make available" goes with technical know-how, experience, skill, know-how or process etc. but do not go with "constraints of the development and transfer of a technical plan or a technical design". The second limb in clause (b) of sub article (4) of Article 12 of DTAA can be invoked when the amount is paid in consideration for rendering of any technical or consultancy services and if such services consists of the development and transfer of a technical plan of a technical design also. In a way, the condition of making available technical knowledge is not sin qua non for considering the question as to whether the amount if fees for included services or not particularly when the payment is only where the technical or consultancy services consists of development and transfer of a technical plan or technical design only. This will be considered as "fees for included services within the meaning of Article 12 (4) of the Act and hence, in terms of Article 12(2), tax rate should be charged.”

The tax payable by the assessee does not exceed the tax deductible at source – no interest : Interest u/s 234B is chargeable provided the assessee, who is liable to pay advance tax u/s 208 has failed to pay such tax. Thus, the pre-condition for levy of interest u/s 234B is the liability to pay advance tax u/s 208. Under Section 208 of the Act, advance tax shall be payable where the amount of such advance tax payable as computed in accordance with provisions of Chapter XVII is Rs.5000 /- or more. The advance tax will be computed as per Section 209 on the Act. Under section 209, the assessee is to estimate his current income and find out the tax payable therein as per sub clause (1) of Section 209 (1) Under clause (d) of sub section (1) of Section 209, the income-tax calculated under clause (a) is to be reduced by amount of income-tax, which would be deductible at source during the said financial year. Thus, the assessee can take credit of the tax deductible at source. Whether the tax is deductible @ 15% or 20% is to be decided by the payer and not the payee i.e. the assessee. Therefore, the tax payable by the assessee does not exceed the tax deductible at source. In such a situation, the assessee is not required to pay any advance tax. In that view of the matter, interest u/s 234B is not chargeable. Section 191 only requires that if the tax is not deducted at source, such income tax shall be payable by the assessee directly. Section 191 only requires the assessee to pay the tax. Thus, the liability, which extends to payment of tax u/s 191 do not extend to payment of interest u/s 234B . : DELHI ITAT;

2008-TIOL-575-ITAT-BANG.pdf

M/s Syndicate Bank Vs ACIT, Udupi (Dated : August 08, 2008)

Order passed by AO giving effect to the order of appellate authorities is an appealable order.

Computation of income under sec. 115JA – Provision for doubtful debts, Interest payable and provision for exchange loss - Expl. © below 115JA(2) does not apply. – provision for frauds and provision for NPAs under investments can be added back.

Provision for doubtful debts cannot be added back by invoking Expl. © below 115JA(2) in view of the decision of ITAT Special bench, Kolkota in the case of Usha Martin Industries ltd. reported in 104 ITD 249. 

Interest payable as agreed by assessee under Portfolio management Services is an ascertained liability and cannot be  added back by invoking Expl. © below 115JA(2).

Provision for exchange loss in London branch relating to Non-performing assets cannot be added back by invoking Expl. © below 115JA(2) following Delhi High Court decision in CIT Vs Woodward Governor India P. Ltd. ( 294 ITR 451 ).

Provision made to guard against frauds can be added back by invoking Expl. © below 115JA(2) since the liability is only contingent in nature.

Provision for NPAs under investments added back since it is not an ascertained liability and is only to guard future loss. Tribunal upheld the addition.

Issues conceded by the assessee before CIT in 263 proceedings cannot be agitated before ITAT in appeal.

Appeal by assessee partly allowed. : BANGALORE ITAT;

2008-TIOL-574-ITAT-BANG.pdf

M/s L M Glasfiber (India) Pvt Ltd Vs ACIT, Bangalore (Dated : September 19, 2008)

Income Tax Act – Rate of Depreciation – Held, that the vehicles acquired by the assessee had not been used in the business of running them on hire, but for that reason, depreciation at the rate of 50% cannot be denied because entry no.3(vi) covers the case of commercial vehicles acquired between the period 1.4.2001 and 31.3.2002 and put to use in this period for the purposes of any business or profession. There is no condition in this entry that the commercial vehicle shall be used in the business of running it on hire.

Income Tax Act – Section 32 – On 31.3,2003, the assessee made a journal entry in its books of account debiting the asset account (technical knowhow) and crediting the parent company. AO took the view that since the adverse fluctuations were quantified and capitalized only on 31.3.2003, the assessee can be taken to have used the technical knowhow only for a period of less than 180 days and would, therefore, be entitled to depreciation only to 50% of the amount calculated at the prescribed rate of depreciation for the technical knowhow in accordance with the second proviso to Sec. 32(1) of the Act – Held, the payment was made during the year but at the time of making the payment, the account of the parent company was debited and the payment was credited in the books of account and since this was an erroneous accounting entry, the same was corrected by a journal entry made on 31.3.2003 debiting the intangible asset account (technical knowhow) and crediting the parent company's account, this does not mean that the technical knowhow was put to use only for a period of less than 180 days during the year under appeal.

Income Tax Act – Business Loss – Section 37 – Held that the purchase of a crane was a capital expenditure and if the crane had been supplied to the assessee, the cost thereof would represent a capital expenditure in the assessee's hands. The expenditure would have been in the capital field, not in the revenue field. It cannot be considered as an expenditure incurred in the course of carrying on of the assessee's business. Consequently, if the advance made for purchase of the crane becomes irrecoverable, it would represent a capital loss for the assessee and not a revenue loss allowable u/s 28 of the Act. : BANGALORE ITAT;

2008-TIOL-573-ITAT-BANG.pdf

M/s Infineon Technologies India Pvt Ltd Vs ACIT, Bangalore (Dated : October 7, 2008)

Income Tax - Assessee, 100% EOU established under the STP scheme, claimed deduction u/s 80HHE in the original return for AY 1999-2000 but subsequently revised return claiming deduction u/s 10B instead of 80HHE - AO rejected the claim for AY 1999-2000 on the ground that assessee failed to file a declaration u/s 10B(5) to exercise the option and for AY 2003-04 & 2004-05 on the ground that it has been rejected in earlier assessment years - CIT(A) upheld AO's action - Held that legality of a claim has to be seen in the year in which it is preferred and if in an earlier year the assessee waived his right then he cannot be stopped to claim the benefit in the subsequent years - Appeal for AY 2003-04 & 2004-05 allowed accordingly.

For AY 1999-2000, assessee's claim partly allowed as it was held that the assessee is entitled to claim deduction u/s 10B but as the revenue had already accepted its return of claiming deduction u/s 80HHE, the return could not be revised - Appeal for the A.Y. 1999-2000 is partly allowed and appeals for AY 2003-04 and 2004-05 are allowed. : BANGALORE ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-1905-CESTAT-MAD-LB.pdf + Lakshmi Automatic Loom Works Ltd story.pdf

M/s Lakshmi Automatic Loom Works Ltd Vs CCE, Trichy (Dated: Octoberr 10, 2008)

Inputs on which credit taken could not be cleared to EOUs without reversal of Credit or payment of duty – Clearance to EOU cannot be equated with export under bond: The inputs cleared as such by the appellants to 100% EOUs cannot be deemed to have been manufactured by the appellants; the supplies (which are deemed exports) cannot be treated on par with export under bond for the purpose of Rule 57F. There is no warrant or justification to extend the instructions dated 31-12 1996 issued by the Ministry/Board to cover supplies to 100% EOU which are treated as deemed exports for certain purposes under EXIM Policy. The appellants are not entitled to remove the inputs without reversal of the credit or payment of equivalent amount of duty

A submission has been made that the supplies have been made on the basis of CT-3 certificate issued by jurisdictional Central Excise authorities in-charge of 100% EOUs and therefore, should be deemed to have been utilised by the 100% EOUs for the manufacture of final products by the recipients and they were ultimately exported.

“The dispute here is not whether the 100% EOU can procure inputs duty-free or not or whether the recipient 100% EOU has utilised the input received from the appellant and whether the final products of the recipient 100% EOUs were exported or not. There can be no dispute that any EOU is entitled to procure inputs duty free. Such procurement is permissible only subject to fulfillment of the conditions of the exemption Notification. The dispute relates to the legality of clearance of the cen-vated inputs (which can include imported inputs, as in the present case) by the appellants without reversing the credit and without payment of duty. Therefore, the said submission is not relevant”. :CHENNAI CESTAT (LARGER BENCH);

2008-TIOL-1904-CESTAT-MUM.pdf + vikram ispat story.pdf

M/s Vikram Ispat Vs CCE, Khandeshwar, Navi Mumbai (Dated: November 7, 2008)

Dispute in availment of Cenvat credit on input services by a manufacturer – whether appeal required to be filed in form EA-3 or ST-5–Tribunal passes a cautious order while discharging notices issued by Registry.

The Bench after considering the submissions discharged the show-cause notices by observing as under – the issue involved is regarding denial of Cenvat credit on input services and, therefore, an appeal in ST-5 format appears to be maintainable more-so when an appeal in ST-4 form was admitted by Commissioner(Appeals) .

It is however made clear that no view is being expressed on the merits of the case as to whether a demand relating to denial of credit on input services is required to be raised under section 11A of Central Excise Act, 1944 or section 73 of the Finance Act, 1994. : MUMBAI CESTAT;

2008-TIOL-1903-CESTAT-AHM.pdf

CCE, Vapi Vs M/s Sun Pharmaceutical Inds Ltd (Dated: September 01, 2008)

Central Excise–Valuation of physician samples when sold to wholesale distributors for free distribution to the doctors – Assessable value to be arrived in terms of s. 4 (1) (a) – Issue decided by Tribunal in assessee's own case – No merit in Revenue appeal : AHMEDABAD CESTAT;

2008-TIOL-1902-CESTAT-MAD.pdf

CCE, Chennai Vs V T Dyers & Screen Printers (Dated: August 23, 2008)

Central Excise – Assessee not absolved from penal consequences of not paying duty consignment wise when fortnightly payment facility is suspended – As duty liability was met from deemed credit and from PLA assessee does not have a subsisting liability to discharge duty on the impugned clearances – Penalty imposed by original authority is restored : CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1904-CESTAT-MUM.pdf + vikram ispat story.pdf

M/s Vikram Ispat Vs CCE, Khandeshwar, Navi Mumbai (Dated: November 7, 2008)

Dispute in availment of Cenvat credit on input services by a manufacturer – whether appeal required to be filed in form EA-3 or ST-5 –Tribunal passes a cautious order while discharging notices issued by Registry.

The Bench after considering the submissions discharged the show-cause notices by observing as under – the issue involved is regarding denial of Cenvat credit on input services and, therefore, an appeal in ST-5 format appears to be maintainable more-so when an appeal in ST-4 form was admitted by Commissioner(Appeals).

It is however made clear that no view is being expressed on the merits of the case as to whether a demand relating to denial of credit on input services is required to be raised under section 11A of Central Excise Act, 1944 or section 73 of the Finance Act, 1994. : MUMBAI CESTAT;

2008-TIOL-1901-CESTAT-DEL.pdf

CCE, Rohtak Vs M/s Super Travels (Dated: October 23, 2008)

ST - Tour Operator's Service - Assessee enters into contract with certain companies for ferrying staff from home to office and vice versa - Revenue raises demand by treating contract carriage as tour operator - It is established law that unless a vehicle is registered as 'tourist vehicle' it cannot be treated so and no service tax is leviable :DELHI CESTAT;

2008-TIOL-1900-CESTAT-AHM.pdf

M/s Shree Dharmbhakti Travels Vs CCE, Rajkot (Dated: September 26, 2008)

ST - Rent-a-Cab Service - Assessee is paid on km basis for carrying staff of the clients - Case remanded for more detailed examination of the contract : AHMEDABAD CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff08_123.pdf

Anti Dumping Duty Reimposed on Acrylic Fibre originating in or exported from Korea/Thailand;

dgft08cir041.pdf

Debit of advance authorization/ DFIA in freely convertible currency – DGFT clarifies;

dgft08cir039.pdf

Exports - edible oil in small consumer packs and fish oil;

CASE LAWS

2008-TIOL-1899-CESTAT-MAD.pdf

CCE, Tiruchirapalli Vs Super Spinning Mills Ltd (Dated: August 12, 2008)

Customs – 100% EOUs – demand of duty foregone on imported cotton under Notification 53/97 Cus – for such a demand of duty, the ingredients of clause (d) of sub-section (1) of Section 72 should be alleged and proved - The claim of the revenue that the Show Cause notice was erroneously issued under Section 28(1) cannot be accepted. :MUMBAI CESTAT;