Income tax show cause notice is not non-est; Acquisition of controlling stake in Indian Co is certainly subject to Indian municipal laws, including I-T Act (See Direct Tax Basket);

After firing at IGI Airport Govt decides to further tighten the security;

Step-motherly Treatment for Service Exporters (See 'DDT');

War against terror outfits: House of Commons passes Motion to commit UK's support to India;

A New Central Excise Commissionerate in Guwahati (See 'DDT');

Govt finalises mega economy stimuli package; Central excise, Service tax and Customs benefits all set to be unfolded tomorrow;

ISI Headquarters at Hyderabad? (See 'DDT');

Advani likely to support Federal Investigating Agency proposal;

Union Minister Jaipal Reddy Seeks Total Exemption From Excise Duties On Buses (See 'DDT');

PM reviews security scenario on borders and airports with top officials;

DDT Dec 5.pdf

Resurrection Again – Anti Dumping Duty on Sulphur Black;

mbuzz1227.pdf

Nath invites Russian CEOs to invest in energy, telecom, IT, pharma and textiles sectors;

mbuzz1226.pdf

Publication of Indian editions of foreign magazines: Govt issues detailed guidelines;

mbuzz1225.pdf

OECD nations fear ageing population may lead to contraction of higher education systems;

2008-TIOL-602-HC-MUM-IT.pdf + Vodafone Story.pdf

Vodafone International Holding B.V. Vs Union of India (Dated: December 3, 2008)

Income tax - withholding tax - assessee buys controlling stake in Indian telecom company from Hong Kong-based holding company - Revenue issues SCN for capital gains - Jurisdiction challenged - Held,

++ Petitioner has not been able to demonstrate the show cause notice to be totally non-est in the eyes of law for absolute want of jurisdiction of the authority to even investigate into the facts, by issuing a show cause notice.

++ Revenue has made out a strong prima facie case that the transaction entered upon by the Petitioner amounts to transfer of a capital asset and not merely a transfer simplicitor of controlling interest ipso facto in a corporate entity, especially in the light of the fact that the interest in Telecom License is jointly held with the Essar Group complied with the use of Brand & Goodwill and non-complete rights given by HTIL. There is a right to enter into Telecom Business in India, with a control premium.

++ It will be too simplistic to answer away all the above facts and circumstances, by a submission of the Petitioner that what was transferred was only shares of an unknown Caymon Island Company, which is a shell company and the same was not even considered in the enterprise value of HEL.

++ The very purpose of entering into agreements between the two foreigners is to acquire the controlling interest which one foreign company held in the Indian company, by other foreign company. This being the dominant purpose of the transaction, the transaction would certainly be subject to municipal laws of India, including the Indian Income Tax Act.

++ The Petitioner has admitted that HTIL has transferred their 67% interests in HEL qua their shareholders, qua the regulatory authorities in India (FIPB), qua the statutory authorities in USA and Hong Kong and the Petitioner has also admitted acquiring 67% held by HTIL in HEL. This being the case, a different stand cannot be taken before the tax authorities in India and a different stand cannot be put forth by either HTIL or the Petitioner.

++ A perusal of the show cause notice, the chronological list of dates and events, clearly reveals that the present case involves investigation into voluminous facts and perusal of numerous lengthy and complicated agreements. Based on the above, the question of chargeability of the transaction to tax and also the question of duty to deduct tax at source, can be determined. In the present case, the show cause notice, cannot be termed extraneous or irrelevant or erroneous on its face or not based on any material at all.

++ When the Petitioner has challenged the constitutional validity of the Amendment to Sections 191 and 201 of the I.T.Act by the Finance Act, 2008, then the same must be in context of certain facts pleaded and proved by evidence in the form of documents on record and not in vaccum or in the abstract. The present Petition totally lacks particulars as to the nature of agreement dated 11th February, 2007 and all other agreements preceding or following the same entered into by HTIL and/or the Petitioner. The essential facts supported by the necessary documents as proof of such facts, have been conveniently kept away from this Court.

++ Another important aspect is where the question involved is one of determination of taxability of a transaction or when the question involved is whether the activity comes within the purview of the tax net the same has to be gone into only by the concerned authorities and cannot be determined on the basis of affidavits and counter affidavits in a proceeding under Article 226 of the Constitution of India.

++ the Petitioner is fully safeguarded under Section 195(2), 195(3) and Section 197 of Income Tax Act. As held by the Supreme Court in Transmission Corporation case, (1999) 239 ITR. Petitioner’s rights are adequately safeguarded, and the only thing required to be done is to file an application before the Assessing Officer under those provisions: BOMBAY HIGH COURT;

2008-TIOL-600-HC-RAJ-IT.pdf + Octroi Story.pdf

CIT, Udaipur Vs M/s Secure Meters Ltd (Dated : November 20, 2008)

Income Tax - Octroi, sales Tax and Excise Duty not includable in total turnover for computation of amount deductible under Section 80HHC; just as commission received by an assessee is relatable to exports, and yet it cannot form part of “turnover”, excise duty and sales tax also cannot form part of the “turnover”, and were not includable in the “total turnover”. It was held, that otherwise, the formula becomes unworkable. Moreover, excise duty and sales tax are indirect taxes, and they are recovered by the assessee on behalf of the Government. Therefore, if they are made relatable to exports, the formula under Section 80-HHC would become unworkable.

Expenses incurred in relation to issue of debentures to be allowable as Revenue expenditure: It is irrelevant to consider the object, with which the loan was obtained. Admittedly the debentures when issued are a loan, and therefore, whether it is convertible, or non convertible, does not militate against the nature of the debenture, being loan, and therefore, the expenditure incurred would be admissible as revenue expenditure: RAJASTHAN HIGH COURT;

2008-TIOL-599-HC-DEL-IT.pdf

CIT-V Vs Natraj Stationery Products (P) Ltd (Dated : November 21, 2008)

Income tax - sec 80IB - assessee is a small manufacturer registered as SSI unit - begins production in 1994 but claims deduction after many years when it makes profits - AO disallows on the ground that the assessee is not into infrastructure sector and the claim is not admissible for the period concerned - Tribunal allows the appeal - Held, the assessee is entitled to deduction under Section 80-IB (3)(i), as the provision of which are pari-materia with the provisions of Section 80-IA (2)(iv) as obtaining in the initial year. The Tribunals direction to the Assessing Officer to ascertain as to whether the respondent/assessee had fulfilled the conditions set out in Section 80-IA (2) (iii) of the Act as applicable in the initial year, that is, whether the respondent/assessee produces or manufactures any article or thing not being an article or thing specified in the 11th Schedule to the Act, in order to be eligible for deduction under Section 80-IB for a period of ten years commencing from the assessment year 1994-95, provided the other condition, such as, employment of requisite number of persons is also satisfied by the respondent/assessee; cannot be faulted with: DELHI HIGH COURT;

2008-TIOL-598-HC-P-H-IT.pdf

M/s Poonam Industries Vs CIT, Jalandhar (Dated : October 22, 2008)

Income tax - condonation of delay - partner of the firm pleads illness for delay in pursuing the appeal filed before the CIT(A) - having examined the facts and documents submitted, the petition dismissed - Tribunal also goes with the CIT(A) - Held, though a party is required to explain each day’s delay and to show that it was prevented by sufficient cause in filing the appeal in time, power to condone delay has to be exercised in a pragmatic manner to advance substantial justice. The plea of illness is admittedly not fake. Even if the other partner had appeared in another income tax case, the same could not be conclusive against genuineness of the reason given by the assessee. Every partner may not be aware of all the affairs of the firm. No harm would be done to either party if the matter is heard on merits. Assessee's appeal allowed: PUNJAB & HARYANA HIGH COURT;

2008-TIOL-604-ITAT-DEL.pdf

ACIT, Dehradun Vs M/s Enron Oil & Gas Ltd (Dated: October 17, 2008)

Income tax - production of crude oil - joint venutre - production sharing contract - assessee claims deduction for foreign exchange losses - AO treats it as notional and disallows it - In view of the Apex Court decision on the same issue, decided in favour of the assessee itself 2008-TIOL-163-SC-IT, the Revenue concedes the case in favour of the assessee in this case as well: DELHI ITAT;

2008-TIOL-603-ITAT-BANG.pdf

Tata Coffee Ltd Vs ACIT, Bangalore (Dated: October 31, 2008)

Income Tax - AO computes long term capital gain on sale of rosewood and silver-oak - Assessee contends that fair market value as on 1/4/1981 in respect of rosewood and silver oak is ascertainable from the certificate of Principle Chief Conservator of Forest and hence the long term capital gain should not be estimated but be computed as per the provisions of law by adopting the fair market value as per the certificate of Principle Chief Conservator of Forest - CIT(A) upholds AO order on the ground that the assessee could not produce the Government Notification stated to have been issued in respect of value of silver oak trees - Held, Principle of consistency is to be followed unless some specific distinguishing features are pointed out. Following the decisions of this Tribunal in the case of the assessee for the earlier asst. years and in the light of the ratio laid down by the Kerala High Court in Pullangode Rubber and Produce Co. Ltd the AO was justified in estimating long term capital gain at 30% of the sale value. No further deduction in respect of indexation or expenses is to be allowed

On the issue that fair market value as on 1/4/1981 should be adopted in respect of property at Mangalore - Held, Once the assessee has exercised the option for adopting the fair market value, then such option is to be given due weight. Issue set aside to the file of the AO and the AO will consider the option exercised by the assessee. Assessing Officer will be free to ascertain the fair market value and may not be bound by the fair market value as shown by the assessee: BANGALORE ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-596-HC-AHM-CX.pdf

CCE, Ahmedabad-II Vs Maize Products (Dated : August 25, 2008)

CENVAT Credit – CENVAT availment on common inputs used in dutiable and exempted goods - Demand of 8% of price of final products highly disproportionate to credit availed - No infirmity in Tribunal’s direction to original authority to re-determine credit availed on common inputs to be reversed by the assessee – No substantial question of law arises for determination: GUJARAT HIGH COURT;

2008-TIOL-1993-CESTAT-MAD.pdf

CCE (LTU), Chennai Vs M/s Brakes India Ltd (Dated: October 3, 2008)

Central Excise – CENVAT Credit – Credit on mobile phones used by the members of the staff is allowed - The definition of ‘input service' given under Rule 2 of the said Rules is wide enough to include service received directly or indirectly and used in or in relation to manufacture of excisable goods or providing of output service: CHENNAI CESTAT;

2008-TIOL-1992-CESTAT-MAD.pdf

CCE, Chennai Vs Dunlop India Ltd (Dated: September 24, 2008)

Central Excise – samples – no duty need be paid on tyres and tubes drawn for test purpose - non-marketability and non-dutiability of the materials is beyond question: CHENNAI CESTAT;

2008-TIOL-1991-CESTAT-MAD.pdf

CCE, Pondicherry Vs Sisco Latex Pvt Ltd (Dated: September 30, 2008)

Central Excise - SSI exemption and brand name - respondents contend it as a house mark but not a brand name – matter remanded to the original authority to pass speaking order after examining the respective claims: CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-601-HC-KAR-ST.pdf + Konkan Story.pdf

CCE, Mangalore Vs M/s Konkan Marine Agencies (Dated: March 13, 2008)
Service tax – Services provided in a port in relation to handling of export cargo excluded from levy of service tax – Statute bars levy of service tax on handling of cargo for exports – Revenue’s appeal devoid of merits, dismissed in limine: KARNATAKA HIGH COURT;

2008-TIOL-1989-CESTAT-MAD.pdf

M/s Bharat Sanchar Nigam Ltd Vs CCE, Salem (Dated: October 28, 2008)

ST – Cenvat Credit - First stage Dealer – Registration is only procedural – Credit cannot be denied on a procedural ground: CHENNAI CESTAT;

2008-TIOL-1988-CESTAT-KOL.pdf

CC & CE, BBSR-I Vs M/s Sanfin (Dated: September 23, 2008)

ST - Business Auxiliary Service - assessee provides promotion and marketing service for a bank which was earlier held to be BAS - Change in provisions of Sec 65(47) of the Finance Act where revised definition of 'franchise' does away with requirement of payment of fees - held, since the bank, the franchiser, not receiving any sum from the assessee, their services of processing loan documenters whether the same are ultimately sanctioned or not, is covered under BAS and no deduction of expenditure can be claimed as the tax is to be calculated on the gross receipts - Revenue's appeal allowed: KOLKATA CESTAT;

2008-TIOL-1987-CESTAT-BANG.pdf

CCE, Mangalore Vs Shri V S Patil (Dated: July 24, 2008)

Service Tax – Discontinuation of payment of service tax by rent-a-cab service provider – No malafide intention to evade service tax - Imposition of penalty @ 25% of duty would meet ends of justice: BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08cir045.pdf

Clarification on export of "Military Stores";

CASE LAWS

2008-TIOL-07-ARA-CUS.pdf + AAR Story.pdf

M/s Agilent Technologies India Pvt Ltd (Dated: November 18, 2008)

Advance Ruling - Agilent PSA Series spectrum are rightly classifiable as other instruments and apparatus, specially designed for telecommunications covered by 9030 40 00 of the Customs Tariff- The E4443A and E4447A thus, in addition to having the capabilities of a general purpose spectrum analyzer, also possess features that make them specially suited for use in telecommunication. In particular, they can measure adjacent channel interference and harmonic distortion which are functions performed by the instruments, cross-talk meters and distortion factor meters specifically mentioned in 9030 40 00: AUTHOTIRY FOR ADVANCE RULING;

2008-TIOL-597-HC-P-H-CUS.pdf

CC, Amritsar Vs Shri Gurdip Singh (Dated : October 22, 2008)

Customs – Mis-declaration of exports to claim higher export benefits - M ere omission to mention s.112 in SCN will not vitiate levy of penalty unless it is shown to be prejudiced to assessee – Question of legality of levy of penalty on firm not under consideration issue left open to be considered by appropriate authority – Impugned order of Tribunal set aside and matter remande: PUNJAB & HARYANA HIGH COURT;

2008-TIOL-1990-CESTAT-MAD.pdf

CC, Chennai Vs Texonic Instruments (Dated: September 29, 2008)

Customs – classification – computer connectors are classifiable under Chapter sub-heading 8473.30, but not under 8536.90 – no reason to interfere with the order of Commissioner (Appeals): CHENNAI CESTAT;