US Secretary of State Condoleezza Rice is in town; to consult Pranab and Advani on terror issue;

Bombay High Court dismisses billion dollar Vodafone capital gains case; also imposes costs on telecom major;

RBI gets PM's nod to go ahead with cut in interest rate;

Deepak Sandhu of PIB appointed as Media Adviser to PM;

India is Angry! (See 'DDT' for how commonman reacting to Mumbai terror attack in virtual world);

Economic slowdown: PMO to announce incentive package by weekend;

Somali pirates fire on US cruise ship in hijack bid;

Mumbai Airport Customs seizes Titan watches worth Rs 15 lakh; Pax coming from Dubai arrested;

ddt 3 Dec.pdf

Guidelines for compounding of offences under Customs;

2008-TIOL-222-SC-MISC-LB.pdf + offence story.pdf

State of Kerala Vs Orison J Francis & ANR (Dated: November 4, 2008)

Offence – complaint – when can a Court interfere at the threshold stage – guidelines reiterated:

(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge: SUPREME COURT OF INDIA;

vodafone.pdf

Bombay High Court dismisses billion dollar Vodafone capital gains case; also imposes costs on telecom major;

spl down.pdf

No compulsory tax audit licence - One time fee of Rs 25,000;

rbi_notification.pdf

3 per cent interest subvention scheme for short-term crop loans in 2008-09;

mbuzz1219.pdf

Interpol Red Corner Alert: CBI arrests narco smuggler wanted in South Africa;

mbuzz1220.pdf

No definite trend in poaching of elephants and tigers: Govt;

INCOME TAX

ORDER

cbdtorder162_2008.pdf

ACITs' transfer order: Retention order on various grounds;

cbdtorder161_2008.pdf

ACITs' transfer order: Retention on compassionate ground;

cbdtorder160_2008.pdf

Promotion from ITO to ACITs: Transfer order amended;

CASE LAWS

2008-TIOL-588-HC-DEL-IT.pdf  + penalty story.pdf

Subodh Kumar Bhargava Vs CIT ( Dated: November 26, 2008 )

Income Tax – Penalty proceedings initiated on 31.07.2003 – order passed on 17.02.2004 – hit by limitation: Penalty can only be imposed under Chapter XXI by following the procedure prescribed in Section 274 of the Act which stipulates that no order imposing a penalty can be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. Thus, in any eventuality, before an order imposing a penalty can be passed, the assessee has to be heard or has to be given a reasonable opportunity of being heard. This can only happen when action for imposition of penalty is initiated and the assessee is put to notice with regard to such action so that he may present his point of view in opposition to such action. The only difference between the first part and the second part is that while in the first part, the action for imposition of penalty is initiated in the course of some other proceedings, under the second part, the other proceedings are of no relevance and the only thing to be considered is the point of time as to when the action for imposition of penalty is initiated; DELHI HIGH COURT;

2008-TIOL-587-HC-DEL-IT.pdf

CIT, New Delhi Vs EDS Electronics Data Systems (India) Pvt Ltd ( Dated: September 29, 2008 )

Income tax - software development - assessee enters into agreement with a non-resident company for supply of skilled manpower - makes provision for payment to expats and claims deduction - Revenue disallows on the ground that the RBI permission for remittnace to the non-resident company was approved in the subsequent year and the accrual of liability did not take place in the current year - Tribunal allows the appeal - Held, since the RBI approval was not a pre-condition for entering into contract with the non-resident company and the assessee was following mercantlile system, the accrual of liability did take place in the same year and cannot be disallowed as the liability is not in doubt - Revenue's appeal dismissed: DELHI HIGH COURT;

2008-TIOL-586-HC-DEL-ITpdf

CIT, Delhi-II Vs Monnet Industries Ltd ( Dated: November 21 2008 )

Income tax - assessee is into manufacturing and trading of ferro alloys - sets up a sugar plant away from the existing plant - funds, manpower and management is common - assessee treats it as an extension of existing business and claims deduction for pre-operative expenses - AO disallows the deduction on the ground that the sugar plant is a new business and cannot be considered as an extension of ferro alloys business and test production cannot be considered as commercial production - CIT(A) allows - Tribunal finds that there was unity of control, interlacing of funds and common personnel to run both the business and dismisses the Revenue's appeal - Held, since the Tribunal has given a finding of facts that there was a common Board of Directors controlling the ferro alloys plant, as well as, the sugar plant which, operated from the head office located at Delhi, funds for the two plants were common and hence, there was inter-mingling and interlacing of funds, as also the fact, that even though the two divisions were geographically located at different sites, marketing of the final products was carried out under the supervision and control of the same set of executives at the head office, there is no doubt that both the businesses of sugar plant and ferro alloys were in the same fold of business and the interest paid on borrowed capital is to be allowed as revenue expenditure u/s 36 (1)(iii) - Revenue's appeal dismissed: DELHI HIGH COURT;

2008-TIOL-585-HC-DEL-IT.pdf

CIT, New Delhi Vs Hughes Software Systems Limited ( Dated: November 7, 2008 )

Income tax - assessee enters into an agreement to set up a digital radio cellular network system in Indonesia - Since the assessee did not the necessary expertise it outsources the project to parent company in the USA - suffers losses in the first phase of project but makes profits in the second phase - deducts direct expenses from the income received - AO disallows on the ground that the income received was net sum - CIT(A) allows deduction of direct expenses but disallows indirect expenses - Held, since the Tribunal has found that the Revenue could not controvert the findings of the CIT(A), there is no perversity in the order - Revenue's appeal dismissed: DELHI HIGH COURT;

2008-TIOL-584-HC-AHM-IT.pdf

CIT Vs Concord Pharmaceuticals ( Dated : August 05, 2008 )

Income tax - appeals - Tribunal dismisses Revenue's appeals on the basis of low tax effect as prescribed by the Board through Instructions from time to time - Revenue pleads the Board has also carved out exceptions and in cases of interpreation of laws, the appeal can be filed

Held, where substantial question of law of importance is involved or where question of law is repeatedly arising or where the issue is covered by the judgment of territorial High Court or the Supreme Court, the Tribunal will have to decide the appeal on merits and in terms of the law declared by the Supreme Court or by the territorial High Court. Tribunal is also required to hear an appeal if objections are raised in the appeal memo, or at the time of hearing specific contention is raised by the DR that a particular appeal is covered by an exception. Despite such objections raised if the tribunal dismisses an appeal only on the ground of low tax effect, then such orders would be invalid and unsustainable. Tribunal needs to consider broad parameters while applying the Board Circular to the facts of the case at the time of deciding appeal. The present bunch of appeals are dismissed as no objections were raised by the DR and no contention was put forth before the Tribunal to decide the appeals on merit: AHMEDABAD HIGH COURT;

CENTRAL EXCISE SECTION

2008-TIOL-223-SC-CX.pdf + revenue story.pdf

CCE, Allahabad Vs M/s Surcoat Paints Pvt Ltd (Dated: September 17, 2008)

Central Excise - When Revenue has accepted the order in a particular case, it is precluded from challenging the issue in the case of another assessee; - Since the Revenue has accepted the decision given by the Tribunal in Agra Leather Goods case, the Revenue is precluded from challenging the similar order passed in respect of another Unit. Since the order passed in Agra Leather Goods Case has attained finality, the present appeal deserves to be dismissed on this ground alone and accordingly it is dismissed: SUPREME COURT OF INDIA;

2008-TIOL-1975-CESTAT-MAD.pdf

M/s Shah Yarn Tex (P) Ltd Vs CCE, Coimbatore (Dated: September 5, 2008)

Central Excise – CENVAT Credit - where duty is demanded on final product, the assessee should, in the normal course, be allowed to utilise input-duty credit to pay such duty - It is trite law that a substantive right is not to be denied on the ground of infraction of procedural provision: CHENNAI CESTAT;

2008-TIOL-1974-CESTAT-BANG.pdf

M/s Eubiotics Pharmaceuticals Vs CCE, Hyderabad (Dated: August 1, 2008)

Central Excise – Appeal – COD application dismissed by Commissioner (A) without following principles of natural justice – Matter remanded with a direction to follow principles of natural justice: BANGALORE CESTAT;

2008-TIOL-1973-CESTAT-AHM.pdf

M/s Shreeji Colourchem Industries Vs CCE & C, Vadodara (Dated: November 6, 2008)

Central Excise - CENVAT Credit - credit availed by the appellants, who are sister units on the strength of endorsed invoices against which the goods were originally consigned to their buyers -  plea of the appellants that the goods were rejected by the buyers and hence returned to the units was rejected by the department and credit denied - however, no cogent evidence was adduced by the revenue to establish that the goods were not actually received by the units.

Limitation - department had already issued show cause notices and adjudicated in respect of the same invoices - second show cause notice in respect of the same invoices is barred by limitation: AHMEADABAD CESTAT;

SERVICE TAX SECTION

2008-TIOL-1979-CESTAT-DEL.pdf

M/s Gaurav Krishna Ispat (I) Pvt Ltd Vs CCE, Raipur (Dated: October 17, 2008)

ST - assessee avails cenvat credit on GTA service on basis of TR-6 challan - Revenue says before 16.6.05, TR-6 challan was not a valid document for availing credit - In view of Tribunal's decision where it was held that TR-6 was a valid document, the assessee's appeal is allowed: DELHI CESTAT;

2008-TIOL-1978-CESTAT-DEL.pdf

NIIT Ltd Vs CST, Delhi (Dated: November 10, 2008)

ST - Coaching and training institute - assessee is into computer training and enabling trainees to take jobs or self-employment - Revenue denies exemption notification no 24/2002-ST - In view of Tribunal's decision in Doon Institute case, waiver from pre-deposit granted: DELHI CESTAT;

2008-TIOL-1977-CESTAT-DEL.pdf

CCE, Chandigarh Vs M/s Shresth Colonisers Pvt Ltd (Dated: November 10, 2008)

ST - construction of residential complex - Commissioner (A) says no service tax is leviable on sale of flats in view of Guwahati HC decision - No question of stay of Commissioner's order - case tagged with other cases for early hearing: DELHI CESTAT;

CUSTOMS SECTION

PUBLIC NOTICE

dgft08pn11.pdf

DGFT amends application Form for import of restricted items;

CASE LAW

2008-TIOL-1976-CESTAT-MAD.pdf

M/s Tower Steels (I) Ltd Vs CC, Trichy (Dated: September 4, 2008)

Customs – mis-declaration of goods imported as LMS – the importer has to be given an opportunity of establishing that the material imported was actually used for melting purpose to avail the benefit under Notification 17/2001 Cus dated 01.03.2001 – matter remanded: CHENNAI CESTAT;