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Anti Dumping Duties - Commerce MOS explains (See 'DDT') ACC appoints K Chandramouli, 1975 batch IAS of UP Cadre, as new PF Commissioner in rank and pay of Secretary; Mumbai Airport Customs seizes 14.9 kg ketamine + CBN seizes 10.5 kg opium in Mandsaur; Avian Influenza resurfaces with vengeance in Assam + WB; 33000 birds culled; 13 epicenters notified so far: Govt; 567 Cos exporting finished leather; 1% drawback paid besides Cenvat Credit; Lok Sabha passes amendment in Prevention of Corruption Act + IPR Act for agri products; Women para military forces also to be deployed on borders: Govt; Govt goes for oil bonds worth Rs 22000 Crore; |
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| Dear Member, Sending the following files: |
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'Charitable Purpose' - Commercial Activities – CBDT explains; Service Tax Circular - too taxing and circuitous! Exim Bank's Line of Credit of USD 25 million to the Government of the Republic of Madagascar; Banking Ombudsman receives max complaints related to credit card and pre-closure charges without notice; Centre provides security personnel and helicopters to maintain peace in Orissa; Survey of territorial waters: mineral sands comprising zircon and garnet found; 567 Cos exporting finished leather; 1% drawback paid besides Cenvat Credit; Act passed by Parliament; Govt to set up Science & Engg Research Board; |
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2008-TIOL-23-ARA-IT.pdf + ara story.pdf Ikea Trading (Hong Kong) Ltd (Dated: December 19, 2008) Income tax - Applicant is tax resident of Hong Kong - sets up liaison office in India with RBI approval - facilitates purchase of goods directly exported to it or its nominees outside India - it does not carry out any purchases or sale of goods - earns no income - Held, ++ no income can be attributed to the purchase operations in India by resorting to the deeming fiction under Section 9(1)(i) because the Explanation clearly excludes such attribution. In the case of Mushtaq Ahmed (2008-TIOL-20-ARA-IT) , the Authority had noted that Clause (b) of Explanation 1 acts as an embargo against attributing any income to the purchase operations carried out in India, if such purchases are for the purpose of export. ++ The activities set out by the applicant are all in relation to and integrally connected with purchases and hence fall within clause (b) of Explanation 1. The fact that actual export is done by the Indian seller does not detract from the position that the goods purchased by the applicant through the aegis of its liaison office were meant to be exported. The intimate and perhaps inextricable link between purchase and export is an undeniable fact. The result is, if the applicant's case falls under the substantive part of the charging provision contained in Section 9(1)(i), Explanation 1(b) comes to the rescue of the applicant. : ADVANCE RULING AUTHORITY; 2008-TIOL-650-HC-MUM-IT.pdf + uk story.pdf Clifford Chance Vs DCIT, Mumbai (Dated: December 19, 2008) Income tax - India-UK tax treaty - assessee is a firm of solicitors, tax resident of UK - their services are hired for four power projects in India - All the partners in the JVs are non-resident except one - return filed for income arising out of operations in India as assessee fulfills 90 days condition and goes out of treaty domain for exemption - CIT(A) and Tribunal agree with the AO - Held, ++ Article 15 of DTAA provides for the residence rule in relation to taxation of income of an individual, including members of a partnership, the exception being where such individual is present in the "other" state for a period aggregating 90 days or more in the relevant previous year. In the case of a partnership, where "an individual is a member of a partnership even if he is not present" but "another individual member of the partnership is so present and performs professional services", then the presence of all such members is aggregated to ascertain their presence for 90 days. ++ If the test of 90 days is satisfied, the effect is to virtuallly take the assessee out of the treaty, the taxability of the income being determined under section 9(1)(i) of the Act. ++ Section 9 raises a legal fiction, but having regard to the contextual interpretation and furthermore in view of the fact that we are dealing with a taxation statue the legal fiction must be construed having regard to the object it seeks to achieve. The legal fiction created under section 9 of the Act must also be read having regard to the other provisions thereof. ++ The provisions of section 42 of the Indian Income-tax Act, 1922 provided that only such part of income as was attributable to the operations carried out in India would be taxable in India. ++ The territorial nexus doctrine, thus, plays an important part in assessment of tax. Tax is levied on one transaction where the operations which may give rise to income may take place partly in one territory and partly in another. ++ Income arising out of operations in more than one jurisdiction would have territorial nexus with each of the jurisdictions on actual basis. If that be so, it may not be correct to contend that the entire income "accrues or arises" in each of the jurisdictions. ++ Whatever is payable by a resident to a non-resident by way of fees for services, thus, would not always come within the purview of section 9(1)(vii) of the Act. It must have sufficient territorial nexus with India so as to furnish a basis for imposition of tax. ++ Whereas a resident would come within the purview of section 9(1)(vii) of the Act, a non-resident would not, as services of a non-resident to a resident utilized in India may not have much relevance in determining whether the income of the non-resident accrues or arises in India. It must have a direct link between the services rendered in India. When such a link is established, the same may again be subjected to any relief under the DTA. A distinction may also be made between rendition of services and utilization thereof. ++ Section 9(1)(vii)(c) envisages the fulfilment of two conditions : services, which are source of income sought to be taxed in India must be (i) utilized in India and (ii) rendered in India. Since both these conditions have not been satisfied simultaneously, only that part of income of the assessee which is charged on hourly basis in India and utilised in India, shall be chargeable to tax in India and the assessee's appeal was allowed. : BOMBAY HIGH COURT; Income Tax - Sec 40A(2)(a) - assessee enters into a lease agreement to have full finance for purchase of an effluent and a bottling plant - also takes other assets on lease, from two companies of its group - claims deduction for the lease rent paid - AO finds rate of return of lease to be 33.6%, and on the basis of relations between the lessor and the lessee invokes Section 40A (2)(a) - CIT(A) deletes the addition – Tribunal on the basis of consistency, upholds the CIT(A) order - Held, in order to maintain consistency, no interference is required to be made in allowance of the deduction - Revenue's appeal dismissed. : RAJASTHAN HIGH COURT; 2008-TIOL-646-ITAT-MUM.pdf + delta story.pdf ACIT, Mumbai Vs M/s Delta Airlines Inc (Dated: September 29, 2008) Income tax - Indo-US tax treaty - assessee is a tax resident of USA - is engaged in the business of passenger transportation by air in international traffic - installs equipment for security screening, maintenance and charter handling for itself but offers the same services to third party on fee because of excess capacity - claims exemption for income arising out of such activities under Article 8 of the treaty - AO disallows but CIT(A) allows - held, such subsidiary activities will not fall within the ambit of words 'any other activity directly connected with such transportation' used in para 2(b) of Article 8 of the treaty. The words “such transportation” refers to the transportation prescribed in the main body of para 2 which is transportation by sea or air of passengers, mail, livestock or goods carried by the owner or lessee or the charter of the ships. Thus, income arising out of such activities is not eligible for exemption under the tax treaty Assessee receives a letter from the AO regarding its possible tax liability once the assessment is completed - opts for FDR of the sum indicated in the letter - interest income - assessee claims exemption for the same as the FDR was made only to meet the tax liability directly connected to its main line business - held, interest income cannot be claimed as related to its airlines business - no exemption - Revenue's appeal allowed :MUMBAI ITAT; Shri P Damodaran Vs ITO, Chennai (Dated: March 14, 2008) 80IB deduction – Making of Cable Joining Kits used in telecommunication industry amounts to manufacture. Assessee claimed deduction under sec. 80 IB on the manufacture of Cable Joining Kits used in telecommunication industry. On appeal CIT(A) held that exemption is eligible only for the profits attributable to the HSS component of the total sales. On further appeal, after detailed analysis of the manufacturing process involved and various case laws on the definition of “manufacturing” , Tribunal held the entire activity as eligible for deduction under sec. 80 IB. It was further held that for the purpose of computing deduction, the eligible unit should be treated as an independent unit. Appeal by assessee allowed. :CHENNAI ITAT; |
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M/s Omkar Fine Organics Vs CCE, Pondicherry (Dated:May 23, 2008) Central Excise - Cenvat Credit wrongly taken, not utilised – No interest payable:CHENNAI CESTAT; 2008-TIOL-2112-CESTAT-BANG.pdf M/s PCB Inc Vs CCE, Bangalore (Dated: July 1, 2008) Central Excise – Delay in filing of appeal – Appellants ought to explain delay in filing appeal before the Commissioner (Appeals) – Commissioner (A) to decide condonation application in terms of Apex Court judgment in Commissioner, Land Acquisition Vs. MST. Katiji and Others – Matter remanded for de novo consideration : BANGALORE CESTAT; M/s GTN Exports Ltd Vs CCE, Coimbatore (Dated: July 16, 2008) CE – EOU – CENVAT Credit - Rule 6(1) of CCR which denies Cenvat credit on inputs or input services used the manufacture of exempted goods or services does not apply in the case of excisable goods cleared for export under bond Therefore there was no provision which prohibited an EOU from taking inputs credit in the material period. The restriction in utilization of Cenvat credit by EOUs was lifted by Notification No.18/04 dated 06.09.04. CBEC Circular No.799/32/2004 dated 23.09.04 clarified that EOUs were entitled to avail Cenvat credit scheme from 6.9.04. Thus, the EOUs which received duty paid goods could avail credit of duty paid on inputs or capital goods. We find that the Central Excise Rules or the Cenvat Credit Rules did not contain any bar on an EOU taking credit of duty paid on inputs received during the material time and utilize the credit for payment of duty on DTA clearances or for export. If for any reason, the credit could not be utilized, the same could be claimed as refund in terms of Rule 5 of CCR, 04. In the instant case, therefore, the appellants had taken credit in accordance with the statutory provisions. Rule 5 of CCR, 04 provides for refund of credit accumulated on account of export of finished goods without payment of duty. Such credit which cannot be utilized for any reason can be claimed as refund. As for eligibility of EOU to the balance 50% credit of capital goods received by the DTA unit in the previous fiscal, we hold that the statutory provisions did not bar taking of such credit by the EOU. The EOU also manufactured goods cleared for home consumption and the capital goods were not exclusively used to manufacture exempted goods. The relevant statutory provisions did not bar an EOU from availing balance 50% of the credit of duty paid on capital goods still installed in the EOU. As far as re-credit is concerned, the authorities had intimated that the assessee's refund claims had been closed/cancelled. We hold that the assessee was eligible for the re-credit taken in the Cenvat account as the amount represented Cenvat credit on the inputs used in the manufacture of goods exported by the EOU. : CHENNAI CESTAT;
SERVICE TAX SECTION 2008-TIOL-648-HC-RAJ-ST.pdf + hc st story.pdf UoI Vs M/s Inani Carriers & Anr (Dated: November 21, 2008) Service Tax – No review by Commissioner after order passed by Commissioner (Appeals): doctrine of merger is not a doctrine of universal or unlimited application, and it will depend on the nature of jurisdiction exercised by the superior forum:- But then, it also holds, that it will also depend on the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger, and that, the superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. In our view, the penalty whole hog was a subject matter of challenge before the Commissioner (Appeals), and was also capable of being challenged before the Commissioner (Appeals). Likewise, the Commissioner (Appeals) had jurisdiction to, and was capable of reversing, modifying, or affirming the order of penalty also, which was in issue before it. It may be noticed here, that the order in original imposed a penalty lesser than the one which according to the Department was required to be imposed, and the penalty as imposed was challenged. It is well nigh possible, that in appeal the Commissioner (Appeals) could have set aside the order altogether, or could have reduced it as well, while maintaining imposition of penalty, may be rightly, or wrongly. Therefore, on the parameters laid down in by the Supreme Court, the superior jurisdiction was capable of reversing, modifying, or affirming the order which was in issue before it, and in the present case the learned Commissioner (Appeals) declined to modify, and simply affirmed.: RAJASTHAN HIGH COURT; M/s BSNL Vs CCE, Ahmedabad (Dated:December 01, 2008) ST - telecom service - assessee is a PSU telecom service provider - it collects payments in cash, cheques with banks and post offices - the same are compiled at District Office as cash account current - Computer cell prepares a summar statement known as Sub Ledger Revenue - Revenue alleges short payment of tax - Demand is barred by limitation and an PSU company cannot be accused of malafide intention to evade tax: AHMEDABAD CESTAT; M/s Bharti Airtel Ltd Vs CCE, Lucknow (Dated: November 17, 2008) ST - telecom service - Assessee fails to include value of SIM card for payment of tax - demand raised - In view of Tribunal's decision in the case of Hutchison Max Telecom, waiver from pre-deposit granted: DELHI CESTAT; Dilip Construction Vs CCE, Raipur (Dated: November 18, 2008) ST - Cargo Handling Service - Assessees enter into contract with SAIL for providing certain services within mining area - Revenue treats the same as cargo handling and demands tax - In view of Tribunal's decision in Sainik Mining & Allied Services ( 2008-TIOL-77-CESTAT-KOL ) , the waiver from pre-deposit granted : DELHI CESTAT;
CUSTOMS SECTION NOTIFICATION CBEC notifies EPCG scheme for common service providers in towns of export excellence; Notification No. 63 (RE-2008) dated 21.11.2008 and No. 64 (RE- 2008) dated 24.11.2008 – transitional arrangements thereunder .; SION rate for Shea Stearine amended; CASE LAWS M/s Devi Entrprises Vs CC, Chennai (Dated: September 29, 2008) Customs – confiscation – export of Finished Leather which did not satisfy the norms prescribed - CLRI also certified that the samples did not satisfy the norms –confiscation under Section 113 (d), (h) (i) and (ii) and penalty under Section 114 upheld. : CHENNAI CESTAT; CC, Chennai Vs M/s Shakshambana Silks Exports (P) Ltd (Dated: September 24, 2008) Customs – import under DEEC licences – there is no infirmity in the order of the Commissioner in holding that the respondents have fulfilled the export obligation as certified by the licensing authority - It is very much open to the noticee to adduce evidence to disprove the allegations in the show cause notice. Interest under Section 28 AB – no interest is payable under Section 28 AB as the imports in question were made prior to 28.9.96. : CHENNAI CESTAT; |
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