Simplification of tax laws key to shoring up revenue: Justice Sudhakar (See 'Common Basket');

FEMA - Foreign Travel – Mode of payment in Rupees (See 'DDT')

UNSC declares Mumbai terror attack mastermind as terrorist and bans Jamaat-ud-Dawa;

Inflation on slide, comes down to 8% now;

Cabinet all set to approve today bill to set up National Investigation Agency;

Auto LPG rate cut by Rs 3 a litre by Oil Marketing Cos

World Bank scales down India's growth rate to 5.8%;

ddt 11 dec.pdf

Classification of bura, makhana, mishri, hardas and battasas (patashas). – Board issues Section 37B order;

cobweb.pdf

Vodafone capital gains issue: Lasting solution lies only a 'fone' away for Revenue!

tiol top.pdf

Simplification of tax laws key to shoring up revenue;

2008-TIOL-226-SC-CT.pdf + up trade story.pdf

CTT, UP Vs S S Ayodhya Distillery (Dated: December 2, 2008)

UP Trade Tax - If an entry contained in a notification imposing tax is ambiguous, the assessee cannot suffer therefor ; As paddy and rice are considered to be the separate commodities, paddy husk cannot be treated to be rice husk ; ‘A Class Book of Botany' was referred to which indicated that on removing the husk, a brownish membranous layer is seen adherent to the grain and that this layer is made up of the seed coat and the wall of the fruit fused together. If, according to the Government of Uttar Pradesh, rice husk is this cover which further requires husking, no exception thereto can be taken. When a paddy is dehusked , it becomes paddy husk and when the rice is dehusked , it becomes rice husk . There are many other fruits which have two layers; for example Pista , Cashew Nut and Ground Nut etc. One may only remove the outer cover and take the fruit or grain with the inner cover but one may like to take out the inner cover also which will depend upon the taste of the person concerned. Some persons may like to take `brown rice' but some other may like to take `white rice'.: SUPREME COURT;

mbuzz1243.pdf

Indo-German pacts signed for development of Projects worth Rs 3300 Cr;

mbuzz1242.pdf

UNSC declares Mumbai terror attack mastermind as terrorist and bans Jamaat-ud-Dawa;

mbuzz1241.pdf

Govt issues Fert Special Bonds for Rs 10,000 Cr;

mbuzz1240.pdf

Access to medicines has improved since 2001 Doha Declaration: Lamy ;

2008-TIOL-613-ITAT-MUM.pdf + kpmg story.pdf

DCIT, Mumbai Vs M/s KPMG India Pvt Ltd, Mumbai (Dated: October 24, 2008 )

Income tax - on assignment basis assessee requisitions services of experts and professionals from its own global network - payments made for their services - No TDS deducted - AO disallows - Disallowance u/s 40(a)(i) upheld as assessee failes to comply with Sec 195

India-Australia DTAA - royalty - assessee hires expert from its office in Australia for services like review of corporate finance procedure, quality check and risk analysis - AO treats payments made for such services as royalty - CIT(A) agrees with the AO - Held, the term “commercial knowledge” is larger than “professional knowledge”. Commercial knowledge may be available in the general public domain and it could be also used without any professional or skill intervention. But a professional service is tampered by individual skills and expertise and it could be more tailor-made to suit the requirements of the customer and includes giving advise or analysis. Since the assessee has not supplied any scientific, technical or industrial information, it is a professional service in the nature of advice. There is no supply of commercial knowledge.

Coming to rendering of any service in sub clause (g), the assessee has not made available any technical knowledge, experience or skill and thus the same cannot be brought under this clause or rendering any service.:MUMBAI ITAT;

2008-TIOL-612-ITAT-DEL.pdf

M/s Sara Services Engineers Pvt Ltd Vs ACIT, New Delhi (Dated: September 19, 2008 )

Income Tax - Assessee receives interest on amount advanced to 3 parties in respect of jobwork to be done by 2 of them and to the third one for purchase of land to be used for business purposes - AO disallows the amount - CIT(A) deletes disallowance - Held, monies were lent to three different parties, for the purpose of the business and thus allowed. Disallowance of Service charges incurred after export of goods were justified but assessee's claim to provide additional evidence is admitted and matter is restored to AO

Leave to raise additional ground that profit on sale of DEPB licences constitutes export earning, eligible for deduction u/s 80HHC allowed for statistical purposes since it was not raised before CIT(A)—With regard to default in submitting Auditor's report, held that on the date of filing of the return (2004), there was no obligation on the assessee to file the audit report since the obligation was cast by IT rules 2005—CIT(A) ought to have entertained the form filed by the assessee - Appeal of Revenue dismissed and appeal of the assessee treated as allowed for statistical purposes :DELHI ITAT;

2008-TIOL-611-ITAT-MUM.pdf

Maharashtra Hybrid Seeds Co Ltd Vs ACIT (Dated: July 25, 2008 )

Income Tax - Assessee sells certain assets like motor car, Godrej furniture etc. installed for scientific research - claims long term and short term Capital loss - Held, the claim of loss on the basis of indexation is not for the purpose of real tax but it is a notional claim. Such claim is not allowable.

Disallowance of debit balances written-off - Held, there is no material on record which shows that the amount is recoverable, that such claim of the assessee which has been written off in the books of account as bad debts are allowable.:MUMBAI ITAT;

2008-TIOL-610-ITAT-MAD.pdf

M/s California Software Co Ltd Vs ACIT, Chennai (Dated: August 29, 2008 )

Relief under sec. 10B – Export turnover - telecommunication charges incurred in Indian rupee are not to be deducted from export turnover.

Relief under sec. 10B – Export turnover - expenses incurred in foreign currency for the payment of technical qualified employees outside India - to be deducted from export turnover.

Relief under sec. 10B – computation - expenses deducted from export turnover need not be deducted from total turnover.

Loss on account of exchange fluctuation – not allowed as deduction since the same was arrived at as a result of the restatement of the value of the 'current assets' and 'liabilities' in the Balance Sheet.

Income - Receipt from the employees who left the job and made the payment in lieu of notice period has to be treated as revenue in nature.

For computing the relief under sec. 10B, certain expenses need to be deducted from Export turnover. On appeal, after detailed analysis of the legislative history of the provisions of tax concession brought into the statute for export promotion from time to time, it was concluded that there was 'outflow' as well as 'inflow' of foreign exchange and it was the 'net inflow' of the foreign exchange which formed the basis for the quantum of such tax relief in all such calculations. Hence it was held that the 'consideration' received by an exporter in 'convertible foreign exchange' has to be reduced by only those expenses which were incurred by the 'exporter' in foreign exchange. If this was the intention of the legislature, then it has to be inferred that the condition of 'incurred in foreign exchange' was also applicable to the expenses incurred on freight, telecommunication charges and insurance and consequently, the conjunction "or" appearing in clause (iii) of the Explanation below sub-section (9) of section 10-B.should be read as "and". In view of the above, it was held that the expenses incurred in Indian rupee are not to be deducted from export turnover.

The expression 'technical services outside India', appearing in the definition of 'export turnover' as appearing in clause (iii) of the Explanation below sub-section (9) of section 10-B refers to the 'technical services provided outside India' for the development or production of computer software which is eligible for the said tax incentive. Since the expenses incurred in foreign exchange on such 'technical services outside India', resulted in 'outflow' of foreign exchange, it had to be deducted from the 'consideration' in respect of the 'export' received in, or brought into, India by the assessee-exporter in convertible foreign exchange. Tribunal held it as rightly deducted for arriving at 'export turnover' by the A.O.

In view of the Supreme Court decision in K.Ravindranathan Nair ( 2007-TIOL-202-SC-IT ), what is deducted from the 'export turnover' (the numerator in the formula) need not necessarily be deducted from the 'total turnover' (the denominator in the formula). The expenses incurred in foreign exchange are deducted from the 'export turnover' by virtue of a specific provision in the Act, the objective apparently was 'netting' in relation to the foreign exchange 'inflow' and 'outflow' and not because such expenses were part of the 'export turnover'. There can be no logical reason to exclude from 'total turnover' what was never part of it in the first instance. Accordingly the alternate claim by assessee was rejected.

According to the assessee, A.O. erred in disallowing loss on account of exchange fluctuation since the same was reckoned as per Accounting Standard of the ICAI and accepted Accounting principles. CIT(A) has noted that relevant liability related to a loan give to a subsidiary company abroad and that this loss was arrived at as a result of the restatement of the value of the 'current assets' and 'liabilities' in the Balance Sheet, on account of exchange rate fluctuation as on 31.03.2003. Tribunal held such loss as not allowable in view of the decision of Madras High Court in the case of Indian Overseas Bank v. CIT [183 ITR 200].

It was claimed by the assessee, for the first time, before the CIT(A) that the payments received from the employees who resigned and left, in lieu of the notice period, was incorrectly included and offered for tax as 'income from other sources'. CIT(A) rejected the claim following the decision of Supreme Court in the case of Goetze (India) Ltd. v. CIT ( 2006-TIOL-198-SC-IT ) since the claim was not made before the A.O. by filing  a revised return. Tribunal upheld this decision since the receipt from the employees who left the job and made the payment in lieu of notice period has to be treated as revenue in nature.

Appeal by assessee partly allowed. :CHENNAI ITAT;

2008-TIOL-609-ITAT-MAD.pdf

M/s Camiceria Apparels India Pvt Ltd Vs ACIT, Chennai i (Dated: April 07, 2008 )

Relief under sec. 10B – Quota sales and interest income - not eligible – provisions of sec. 10B more restrictive after 01-04-2001 According to assessee, w.e.f. 01-04-2001 provisions of sec. 10B were liberalized and any profit of the business of the undertaking would be eligible for deduction u/s 10B and it has to be considered at par with sec. 80HHC(3). On appeal, Tribunal held that the earlier provision was rather wider because in that profits of the business were referred to, whereas in the present sub-section only profits of the undertaking are mentioned. Further it was also held that the provisions of sub-section (4) cannot override the provisions of section 10B(1), which is an enabling section and by which deduction is available only against the profits and gains derived from 100% export oriented undertaking. According to the tribunal, wherever the assessee's business consisted of some more activities apart from 100% export oriented undertaking and only composite books of accounts are maintained, then deduction u/s. 10B for export oriented undertaking has to be on a proportionate basis.

 Contribution made to provident fund before filing of the return could not be disallowed under s.43B. Decision of Supreme Court in Commissioner of Income Tax vs. Vinay Cement Ltd. (2007) 213 CTR (SC) 268 followed.

Appeal by assessee partly allowed .:CHENNAI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-2024-CESTAT-MAD.pdf

VKPK Arivuthurai & Brothers Vs CCE, Tirunelveli (Dated: September 30, 2008)

Central Excise – relied upon documents not supplied to the appellants though specific directions were given by the Tribunal in remand order to supply all the documents - wastage of time of the appellate Tribunal would have been avoided if the matter is sorted out. :CHENNAI CESTAT;

2008-TIOL-2023-CESTAT-DEL.pdf

M/s Amrit Versha Ispat Vs CCE, Meerut-I (Dated: September 22, 2008)

Central Excise - Stay/Dispensation of pre-deposit - demand of duty on allegation of clandestine removal of finished goods - the appellant company shown huge income from trading in securities and as sales commission while showing loss on manufacture of Ingots for which there is no explanation from the Appellant company which lends credence to the revenue's allegations - pre-deposit ordered. : DELHI CESTAT;

2008-TIOL-2022-CESTAT-DEL.pdf

M/s Mehra Copy House Vs CCE, Ludhiana (Dated: October 13, 2008)

Central Excise - Stay/Dispensation of pre-deposit - demand of duty on alleged clandestine clearances - a prima facie a case of outright clandestine removal by suppressing actual production and clearing the consignments using parallel invoices and receiving unaccounted cash into the accounts in the name of alleged proprietary concerns in the names of the directors and and employee - no prima facie case for waiver of pre-deposit. : DELHI CESTAT;

SERVICE TAX SECTION

2008-TIOL-2029-CESTAT-KOL.pdf + ores story.pdf

CCE, C & ST, BBSR-II Vs M/s Ores India (P) Ltd (Dated: October 24, 2008)

Service Tax - Irrespective of where the service may be provided, the location of the assessee viz. registered office would determine the jurisdiction of the Central Excise Commissioner to adjudge service tax cases – Revenue wins but then loses the case before the Tribunal as the Members constituting the Committee were not appointed as Chief Commissioner's by a notification in the official gazette.

Non est action by Review Committee Members - Revenue failed to produce copies of Notifications in the Official Gazette for perusal by the Bench and to satisfy that the signatories to the Review Order were authorized Authorities notified according to the procedure known to law to perform the functions of the Reviewing Authority. Accordingly, we are compelled to declare the act of review ab initio void and non est .

Tribunal decisions followed -

(i) CCE , Siliguri vs. Mall Exim Pvt. Ltd. ( 2008-TIOL-1642-CESTAT- KOL ),

(ii) CCE , Siliguri vs. Hindusthan Coca-cola Beverages ( 2008-TIOL-1629-CESTAT- KOL ),

(iii) Commissioner of Central Excise, Kolkata-III v. Naffar Chandra Jute Mills Ltd. ( 2008-TIOL-1805-CESTAT- KOL ). : KOLKATA CESTAT;

2008-TIOL-2028-CESTAT-DEL.pdf

M/s Purva Sainik Welfare Coop Society Ltd Vs CCE, Jaipur (Dated: October 24, 2008)

ST - Security Service - Appellant is a cooperative society of ex-servicemen - appellant claims the tax is payable only by a commercial concern which it is not - Waiver from pre-deposit granted: DELHI CESTAT;

2008-TIOL-2027-CESTAT-DEL.pdf

CCE, Allahabad Vs M/s Vijay Laxmi (Dated: September 11, 2008)

ST - Rent-a-Cab Operator - assessee provides cabs to M/s Northern Coal Fields - On being pointed out, pays tax with interest - Since the assessee is a small business person and was not aware of the legal provisions and even the service recipient did not inform nor paid tax to the assessee, it is a fit case for invoking Sec 80 - penalty set aside : DELHI CESTAT;

2008-TIOL-2026-CESTAT-BANG.pdf

General Manager, BSNL Vs CCE & CC, Guntur (Dated: August 12, 2008)

Service Tax – Refund – Tax paid in excess not eligible for refund beyond the one year period – Appeal devoid of merit : DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08not071.pdf

DGFT allows limited export of wheat to Myanmar and Nepal;

ctariff08_132.pdf

Anti-dumping notification 86/2007-Cus amended to make it 'PoY of polyester';

CASE LAWS

2008-TIOL-2025-CESTAT-MAD.pdf

M/s Aurobindo Pharma Limited Vs CC, Chennai (Dated: October 23, 2008)

Customs – Classification of goods is a departmental function – assessee cannot be penalised : CHENNAI CESTAT;