No Penal action on Electronically Filed IT Returns bearing Acknowledgement Date Stamp of 1 st October 2008;

Indian-Americans urge UN to declare Pakistan a terrorist state;

Govt somehow manages to introduce Insurance Bill to hike FDI limit amidst din and scuffle in Rajya Sabha;

Supreme Court orders price reduction of Petrol in Sri Lanka; Lanka IOC to cut price by Rs 100 per litre (See 'DDT')

Economic Depression – Keynes' Keys – Should the survivor expire on a heap of gold?(See 'DDT')

Sahar Airport Customs arrests Zambian lady with white sugar;

Director (Ad-VI) Pawan Wadhwa in CBDT succumbs to chest pain;

ddt 22 dec.pdf

Ban on Export of Cement Lifted;

tiol spl guest.pdf

The Fight Against Corruption;

guest article.pdf

No TDS - Rigour of Sec 40(a)(i): CBDT needs to look into 'no accounts' returns being used as escape route;

CBDT press release.pdf

No Penal action on Electronically Filed IT Returns bearing Acknowledgement Date Stamp of 1 st October 2008;

mbuzz1290.pdf

Developing Unmanned Aerial Vehicle: Pvt sector partners shortlisted;

mbuzz1289.pdf

Delhi has 58000 beggars including four post graduates and six graduates ;

mbuzz1288.pdf

Cellular and basic service: Customers are not happy, says Report;

mbuzz1287.pdf

India contributes 1.5 lakh tonne to SARRC Food Bank;

ACIT, Mumbai Vs M/s Bhaumik Colour Pvt Ltd (Dated: November 19, 2008 )

Income tax - deemed dividend - Sec 2(22)(e) - assessee is a pencil manufacturer - takes a sum as loan from another company - AO finds a common shareholder (a Trust) in both the companies and treats the loan as deemed dividend - CIT(A) deletes the addition on the ground that the Trust was not a beneficial shareholder of shares in both the companies and therefore the second limb of the provisions of Sec.2(22)(e) could not be applied to the Assessee.

Held, deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder. T the expression shareholder referred to in Sec.2(22)(e) refers to both a registered shareholder and beneficial shareholder. If a person is a registered shareholder but not the beneficial shareholder then the provisions of Sec 2(22)(e) will not apply. Similarly if a person is a beneficial shareholder but not a registered shareholder then also the provisions of Sec 2(22)(e) will not apply.

++ Trust ownership is a model of duplicate ownership. Trust property is, in fact, owned by two persons simultaneously in the sense that one is under an obligation to use the property for the benefit of the other. The ownership of the trustee called trust ownership is nominal rather than real. The beneficiary interest is called the beneficial interest. The trustee is to administer the property of another person but the ownership right in the trustee is to be used only on behalf of the real owner. As between trustee and third party ownership conferred on the trustee fictitiously by law prevails, that is, the trustee is clothed with the rights of the beneficiary and is so enable to personate or represent him in dealings with the world at large. The main purpose of Trusteeship is to protect the rights and interest of person who for any reason are unable effectively to protect them for themselves. Therefore provisions of Sec.2(22)(e) would not be applicable at all to the case of the Assessee.

++ The definition of Dividend u/s 2(22)(e) of the Act is an inclusive definition. Such inclusive definition enlarges the meaning of the term "Dividend" according to its ordinary and natural meaning to include even a loan of advance. Any loan or advance cannot be dividend according to its ordinary and natural meaning. The ordinary and natural meaning of the term dividend would be a share in profits to an investor in the share capital of a limited, company. To the extent the meaning of the word "dividend" is extended to loans and advances to a shareholder of to a concern in which a shareholder is substantially interested deeming them as Dividend in the hands of a shareholder the ordinary and natural meaning of the word "Dividend" is altered. To this extent the definition of the term "Dividend'' can be said to operate. If the definition of "Dividend" is extended to a loan or advance to a non shareholder the ordinary and natural meaning of the word dividend is taken away. In the light of the intention behind the provisions of Sec.2(22)(e) and in the absence of indication in Sec.2(22)(e) to extend the legal fiction to a case of loan or advance to a non-shareholder also, loan or advance to a non-shareholder cannot be taxed as Deemed Dividend in the hands of a non-shareholder. : MUMBAI ITAT( SPECIAL BENCH );

2008-TIOL-640-ITAT-MUM.pdf

Dana Coproration Inc Vs DDIT , Mumbai (Dated: August 12, 2008 )

Income tax - assessee is a non-resident - sells shares with RBI approval - capital gains - calculates long-term capital gains section 55(2)(b)(i) as shares were acquired prior to 1.4.1981 - Fair market value converted into USD at the exchange rate prevailing at 1.4.1981- AO objects on the ground that since shares were acquired in foreign exchange, it is the first proviso to Sec 48 which will apply and computes long-term capital loss - Held, since it is a settled issue in favour of the assessee in Alcan case, assessee's appeal allowed : MUMBAI ITAT;

2008-TIOL-639-ITAT-DEL.pdf

Ashwani Dhingra Vs ACIT, Noida (Dated: August 22, 2008 )

Interest under sec. 234A, 234B and 234C - compensatory, mandatory and automatic - If assessability of income in a particular year is not disputed by assessee, liability to pay such interest is a mere consequence.

Assessee having agricultural income alone. The assessment years under appeal are 1989-90 to 1994-95. By virtue of an order dated 17-08-2000 of Punjab & Haryana High Court order, assessee was entitled for interest pertaining to the previous years relevant to these assessment years, on the additional compensation it received on land acquisition. Assessee pleaded that it acquired the right to receive interest income only on the date of High Court order ie. on 17-08-2000 and hence there was no question of filing income tax returns before the due dates ie. by 1994 and no question of paying advance tax before 31-03-1994 as there was no liability to pay advance tax by that date. Tribunal dismissed the plea of the assessee holding that such chargeability of interest is not penal in nature. 

Appeal by assessee dismissed. :DELHI ITAT;

2008-TIOL-638-ITAT-BANG.pdf

M/s Karnataka Forest Development Corporation Ltd Vs ACIT, Bangalore (Dated: October 23, 2008 )

Income Tax - Assessee, a government company, files return and subsequently submits additional information which the AO refuses to consider - Assessee  files petition for rectification of order u/s. 154 - AO rejects it - CIT(A) goes with the AO - Held, the petition is barred by limitation - Assessee being a Government company, unlike an ordinary assessee, should have all the machinery to proceed with its day to day affairs diligently - Sec 5 of Limitation Act requires sufficient cause for condonation of delay - Assessee s petition for condonation of delay rejected - Appeal dismissed. : BANGALORE ITAT;

2008-TIOL-637-ITAT-MUM.pdf

Jindal Iron & Steel Company Vs JCIT, Mumbai (Dated: July 30, 2008)

Income Tax - Assessee at the time of amalgamation receives a sum under creditor's balance on account of purchase of machinery which remained unclaimed for a long time - Assessee writes back the amount and claims exemption - AO disallows deduction and treats it chargeable to tax as income under section 28(iv) - CIT(A) agrees with the AO's order - Held that the money was received by the assessee in the course of carrying on his business and although it was of capital nature at the point of time it was received, by efflux of time the money has become the assessee's own money taking a revenue character

Held that brokerage, commission, interest, rent, excise duty and sales tax are of same nature which are required to be deducted from total turnover while computing deduction under section 80HHC

Held that deduction under section 80HHC(3)(c) can be allowed only if there is a positive profit, if there is a loss, then that loss has to be taken into account for the purpose of computing profits

Held that liability incurred by the assessee under the leave encashment scheme applicable to its employees proportionate to the entitlement earned by employees, subject to ceiling on accumulation not being a contingent liability, therefore, the provision made, is deductible—Revenue raised appeal against AO's order of addition made on account of unutilized Modvat credit which was upheld by CIT(A) - Held that on the principle of consistency of accounting methods, the addition is justified

W.r.t to disallowance of start up expenses which was claimed by assessee as revenue but AO held it as capital expenditure, held that CIT(A) has rightly deleted the addition : MUMBAI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-639-HC-MAD-CX.pdf + hc ce story.pdf

Central Excise – Public Interest Litigation instigated by Central Excise Supdt against Hyundai Motors alleging large scale evasion – Petition vexatious launched purely with a view to wreck vengeance – dismissed :- we can only construe the present litigation as vexatious one and was launched purely with a view to wreck vengeance on the 5th respondent. It is relevant to note that even Mr.Samuel C. Wilson has not alleged any mala fide either personal or official as against any of the official respondents in regard to the complaints made by him as against 5th respondent:

No Roving Investigation: In a public interest litigation unless a strong case is made out as regards the irregularity or illegality in the action of any party against whom such a complaint is raised and such a complaint discloses that illegality or irregularity was carried out against public interest or the interest of the nation, it would be travesty of justice if the Courts were to still countenance such a prayer of the petitioner and order any roving investigation to be made by any public authority.: MADRAS HIGH COURT ;

2008-TIOL-2096-CESTAT-MAD.pdf

M/s Madras Cements Ltd Vs CCE, Trichy (Dated: August 13, 2008)

Central Excise – ROM – error apparent on record - when a decision rendered by the apex Court is not considered by the Tribunal at the time of final disposal of an appeal, the same would constitute an error apparent on the face of the record by reason of applicability of the doctrine of per incuriam – Final order recalled. : CHENNAI CESTAT;

2008-TIOL-2095-CESTAT-MAD.pdf

M/s S K G Mills (P) Ltd Vs CCE, Coimbatore (Dated: August 20, 2008)

Central Excise – clandestine clearances - the explanation offered by the appellants to the department was without bonafides – demand of duty upheld – penalty under Section 11 AC is reduced.: CHENNAI CESTAT;

2008-TIOL-2094-CESTAT-MAD.pdf

CCE, Madurai Vs M/s Fenner (India) Ltd (Dated: August 27, 2008)

Central Excise – Consulting Engineer Service - transfer of technology is not taxable under consulting engineer service – the issue is no longer res integra. : CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-2091-CESTAT-DEL.pdf

Life Insurance Corporation Of India Vs CCE, Jaipur (Dated: October 29, 2008)

ST - Insurance Auxiliary Services - Assessee is an insurance company - confusion prevailed over whether tax is to be paid on renewal commission paid to agents for policies issued prior to 16.8.2002 - seeks clarification from Board - on receipt of clarification, pays tax and interest after few month - Revenue imposes penalty - Since confusion persisted over the liability and a clarification was sought from the Board, and tax was paid on receiving the same, it is a fit case for Sec 80 - Assessee's appeal allowed :DELHI CESTAT;

2008-TIOL-2090-CESTAT-DEL.pdf

CCE Vs M/s Lafarge India Ltd (Dated: November 12, 2008)

ST - Space selling for advertisement - Assessee is a public transport company - gets into agreement with an advertising company to provide space at the back of its buses for ads - Prima facie, the assessee is liable to tax - not a fit case for full waiver of pre-deposit :DELHI CESTAT;

2008-TIOL-2089-CESTAT-DEL.pdf

M/s Bhopal City Link Ltd Vs CCE, Bhopal (Dated: December 12, 2008)

ST - Space selling for advertisement - Assessee is a public transport company - gets into agreement with an advertising company to provide space at the back of its buses for ads - Prima facie, the assessee is liable to tax - not a fit case for full waiver of pre-deposit :DELHI CESTAT;

CUSTOMS SECTION

2008-TIOL-638-HC-MUM-CUS.pdf + cus story.pdf

Shabir Ahmed Abdul Rahman, Maharashtra Vs UoI (Dated: December 3, 2008)

Customs – Confiscated gold sold during pendency of appeal – sale proceeds to be paid to the successful appellant – since what is returned is cash and not gold, no duty :- Since the petitioner is seeking redemption of the confiscated gold, he cannot escape payment of fine and penalty. In fact, counsel for the petitioner offered to pay fine and penalty. As regards payment of duty is concerned, duty would be payable only if the gold was actually allowed to be redeemed. In the present case, what is being given is the sale proceeds and not the gold as such. In such a case, the question of paying duty in respect of the sale proceeds would not arise. In this view of the matter, the customs authorities are liable to return the entire sale proceeds without deducting therefrom the duty but subject to deduction of fine and penalty. : BOMBAY HIGH COURT;

2008-TIOL-2093-CESTAT-MAD.pdf

Haja Mohideen Ahmed Shaik Mohideen Vs CC, Chennai (Dated: September 5, 2008)

Customs- smuggling of diamonds - evidence on record is clearly indicative of the appellant's conscious attempt to smuggle the diamonds out of the country - no valid ground against confiscation of the diamonds – matter remanded to examine if the appellant can be permitted to redeem the diamonds on payment of fine.: CHENNAI CESTAT;

2008-TIOL-2092-CESTAT-MAD.pdf

M/s Oceanic Enterprises India Pvt Ltd Vs CC, Tuticorin (Dated: September 2, 2008)

Customs – export of red sander logs – suspension of CHA licence under Regulation 20(2) of the CHALR, 2004 – It is an appropriate case for immediate action as the CHA had issued blank shipping bills carrying their signatures to somebody against a monetary consideration and those shipping bills were used for smuggling red sanders logs out of the country – However, the Commissioner is directed to initiate enquiry against the appellants under Regulation 22 within a period of 30 days of the order, failing which the suspension shall stand set aside.: CHENNAI CESTAT;