Customs Refunds - Pre-audit of Refund Claims – CBEC clarifies – patently illegal?
(See 'DDT')

UK's Imperial Energy Plc accepts ONGC's takeover offer of USD 1.9 billion;

TRAI seeks views to revise Interconnection Usage Charges;

DRI surpasses own record seizure of 197 kg ketamine; Chennai DRI seizes 201 kg heading for Malaysia as kitchenware; Exporter and IEC-lender arrested;

Indian sports: Govt sets up anti-doping disciplinary panel;

Govt announces time-table for auction of 3G and BWA spectrum;

Agri Insurance Co of India settles claims worth Rs 847 Cr under NAIS for farmers of Gujarat, Bihar, UP and TN;

ddt 31 Dec.pdf

Combined Refrigerator Freezer with Separate External Doors – Classification - CBEC clarifies;

spl down.pdf

Total Recall;

2008-TIOL-241-SC-ENTRY.pdf + entry tax story.pdf

Jaiprakash Associates Ltd Vs State of MP & Ors (Dated: December 18, 2008)

Entry Tax – once again stuck - Does imposition of' entry tax' violate Article 301 of the Constitution? Will the principles of quid pro quo relevant to a fee apply in the matter of taxes? These and several other questions referred to Larger Bench: SUPREME COURT OF INDIA;

mbuzz1318.pdf

TRAI seeks views to revise Interconnection Usage Charges;

mbuzz1317.pdf

Indian sports: Govt sets up anti-doping disciplinary panel;

mbuzz1316.pdf

Govt announces time-table for auction of 3G and BWA spectrum;

2008-TIOL-671-HC-DEL-IT.pdf + expenditure story.pdf

CIT Vs J K Synthetics Limited (Dated : December 17, 2008)

Revenue or Capital Expenditure - it is the aim and object of expenditure, which would, determine its character and not the source and manner of its payment B road principles have been forged over the years, which require, to be applied to the facts of each case:-

(i) the expenditure incurred towards initial outlay of business would be in the nature of capital expenditure, however, if the expenditure is incurred while the business is on going , it would have to be ascertained if the expenditure is made for acquiring or bringing into existence an asset or an advantage of an enduring benefit for the business, if that be so, it will be in the nature of capital expenditure. If the expenditure, on the other hand, is for running the business or working it, with a view to produce profits, it would be in the nature of revenue expenditure;

(ii) it is the aim and object of expenditure, which would, determine its character and not the source and manner of its payment;

(iii) the test of once and for all payment i.e., a lump sum payment made, in respect of, a transaction is an inconclusive test. The character of payment can be determined by looking at what is the true nature of the asset which is acquired and not by the fact whether it is a payment in lump sum or in an instalment. In applying the test of an advantage of an enduring nature, it would not be proper, to look at the advantage obtained, as lasting forever. The distinction which is required to be drawn is, whether the expense has been incurred to do away with, what is a recurring expense for running a business, as against, an expense undertaken for the benefit of the business as a whole;

(iv) an expense incurred for acquisition of a source of profit or income would in the absence of any contrary circumstance, be in the nature of capital expenditure. As against this, an expenditure which enables the profit making structure to work more efficiently leaving the source or the profit making structure untouched, would be in the nature of revenue expenditure. In other words, expenditure incurred to fine tune trading operations to enable the management to run the business effectively, efficiently and profitably leaving the fixed assets untouched would be an expenditure of a revenue nature even though the advantage obtained may last for an indefinite period. To that extent, the test of enduring benefit or advantage could be considered as having broken down;

(v) expenditure incurred for grant of License which accords ‘access' to technical knowledge, as against, ‘absolute' transfer of technical knowledge and information would ordinarily be treated as revenue expenditure. In order to sift, in a manner of speaking, the grain from the chaff, one would have to closely look at the attendant circumstances

(vi) the fact that assessee could use the technical knowledge obtained during the tenure of the License for the purposes of its business after the Agreement has expired, and in that sense, resulting in an enduring advantage, has been categorically rejected by the courts. The Courts have held that this, by itself, cannot be decisive because knowledge by itself may last for a long period even though due to rapid change of technology and huge strides made in the field of science, the knowledge may with passage of time become obsolete;

(vii) while determining the nature of expenditure, given the diversity of human affairs and complicated nature of business; the test enunciated by courts have to be applied from a business point of view and on a fair appreciation of the whole fact situation before concluding whether the expenditure is in the nature of capital or revenue. :DELHI HIGH COURT;

2008-TIOL-670-HC-DEL-IT.pdf

CIT, Delhi Vs Web Commerce India Pvt Ltd (Dated : December 12, 2008 )

Income tax - Sec 10B(5) - This provision is similar to the provisions of Sec 80IA(7) and also 80HHB(3)(ia) and is directory and not mandatory in nature. As long as audit report is filed before completion of assesseement order, benefits cannot be disallowed to the assessee:DELHI HIGH COURT;

2008-TIOL-669-HC-DEL-IT.pdf

M/s Bhav Shakti Steel Mines Pvt Ltd Vs CIT,Delhi (Dated : December 16, 2008)

Income tax - Sec 68 - share application money - AO makes additions, alleging contribution by bogus shareholders - CIT(A) finds the assessee has furnished PAN card numbers of applicants and also look into their creditworthiness and genuine identity - Tribunal remands the case to the AO for fresh examination - held, since the CIT(A) has given clear findings about the authenticity of the contribution, the Tribunal was not right in remanding the issue - Tribunal order set aside and assessee's appeal allowed :DELHI HIGH COURT;

2008-TIOL-668-HC-DEL-IT.pdf

CIT, Delhi Vs Khaitan Chemicals And Fertilizers Ltd (Dated : September 23, 2008)

Income Tax - computation of net profit u/s 115JA - assessee files loss return - after merger of a group company, assessee revises return - net profit calculated after deducting prior period expenses - shows such items in the P & L Account separately as per the guidelines prescribed in the Accounting Standards - Revenue disallows but Tribunal allows - held,  prior period items and extraordinary items form part of the net profit or loss. The fact that the assessee adopted the alternative approach of showing such items in the statement of profit and loss after determination of current net profit or loss, does not mean that these items are not to be taken into account in computing net profit as envisaged in Section 115 JA. ITAT order upheld. Revenue Appeal dismissed :DELHI HIGH COURT;

2008-TIOL-667-HC-AHM-IT.pdf

H H Maharaja Shri Jyotindrasinhji Vs ACIT (Dated : September 12, 2008)

Income Tax - Appellant's father owned certain trusts in UK and USA and income from which were included in the return filed by his father during his lifetime - AO held it as taxable - CIT(A) confirmed the additions made by AO - Tribunal dismissed appellant's appeal - Held, the clauses of the trust reveal that trustees had sole discretion to retain or distribute the income to beneficiaries and accounts of the trust showed that income was retained and not distributed to appellant - Sec 5 covers income received, accrued or arisen to any assessee but in the present case it has no application as the income has neither accrued nor received by the assessee, nor it has been received or accrued on his behalf either in India or outside India, such income cannot be taxed under Sec 166 as it is not the income receivable - Since the Trustees have paid the tax on the income earned by them in U.K., the same cannot be taxed twice over-Appeal allowed. : GUJARAT HIGH COURT;

CENTRAL EXCISE SECTION

2008-TIOL-672-HC-AHM-CX.pdf + appeal hc story.pdf

CCE & CC, Surat-I Vs M/s Shree Ganesh Dyeing & Printing Works (Dated : November 13, 2008)

Central Excise – appeal – appeal filed by Commissioner himself instead of authorising an officer to do so – appeal maintainable – If Commissioner can authorise, he is empowered to do it himself: When a person is statutorily entitled to delegate powers to another person to file an appeal on behalf of the first named person, it goes without saying that the power which can be delegated is the power which the first named person would be entitled to exercise. Hence, until and unless the Commissioner is entitled to file an appeal, there is no question of the Commissioner authorising another officer to file appeal on behalf of the Commissioner. The language of the latter part of sub-section (2) of Section 35B of the Act itself makes this more than abundantly clear when the provision uses the phrase 'to appeal on his behalf.' Hence it is not necessary to dilate any further on this aspect of the matter. : GUJARAT HIGH COURT;

2008-TIOL-2155-CESTAT-AHM.pdf

M/s Swadeshi Khadi Gramudhyog Seva Sangh Vs CCE, Ahemadabad-II (Dated: November 7, 2008)

Central Excise – Eligibility for benefit of Notification 198/87-CE – Notification does not prescribe for production of certificate from KVIC before clearance of goods – Certificate from KVIC about provision of assistance indicates functioning from a village even during earlier period – Primafacie case in favour of appellants – Full waiver of pre-deposit and stay granted : AHMEDABAD CESTAT;

2008-TIOL-2154-CESTAT-MAD.pdf

M/s Durairaj Mills Ltd Vs CCE, Coimbatore (Dated: August 1, 2008)

Central Excise – refund – excess duty adjusted by debit notes issued by the customers - the assessee had collected excess duty from customers when the goods were cleared - the debit note was raised only after clearing the goods – lower authorities correctly followed the ratio of S Kumar 's Ltd case in disallowing the refund claim. : CHENNAI CESTAT;

2008-TIOL-2153-CESTAT-KOL.pdf

CCE & CC, BBSR II Vs M/s Bhusan Ltd (Dated: September 18, 2008)

Central Excise – Eligibility of CENVAT credit on cement, iron and steel products, welding electrodes used in setting up manufacturing plant to be looked afresh by the Commissioner - Factual verification of utilization of impugned goods necessary – All recent decisions from Tribunals and judiciary required to be considered – Matter remanded to Commissioner for fresh consideration by following principles of natural justice : KOLKATA CESTAT;

SERVICE TAX SECTION

2008-TIOL-2151-CESTAT-DEL.pdf

M/s Lilasons Breweries Ltd Vs CCE, Bhopal (Dated: November 3, 2008)

ST - refund - assessee receives franchisee fee and service tax but deposits tax on gross amount inclusive of service tax - refund claimed rejected - assessee pleads no reason given for rejection - held, it is not clear from Revenue's order whether it has followed the correct method to calculate the tax. If the gross amount inclusive of service tax charged is Rs. X and the rate of service tax is r%, the assessable value for calculating service tax would be Rs.100X/100+r) - matter remanded to determine value as per the provisions of Sec 67(2): DELHI CESTAT;

2008-TIOL-2150-CESTAT-MUM.pdf

Larsen And Toubro Ltd Vs CCE, Aurangabad (Dated: November 7, 2008)

ST - Cenvat credit - assessee is a manufacturer - takes credit on tax paid on canteen services - Issue settled by Larger Bench in favour of assessee - credit is admissible : MUMBAI CESTAT;

2008-TIOL-2149-CESTAT-DEL.pdf

M/s Modern Automobiles Vs CCE, Panchkula (Dated: November 19, 2008)

ST - assessee is an authorised service station - receives vehicles from manufacturer to further supply them to DGS & D - Revenue levies tax under C & F Service - Adjudicating authority drops demand but Commissioner upholds the demand - Prima facie, the assessee makes a case for waiver of pre-deposit : DELHI CESTAT;

2008-TIOL-2148-CESTAT-BANG.pdf

T B Shine Vs CCE, Calicut (Dated: July 3, 2008)

Service tax – Service tax – Value of materials consumed in photography service excludible in terms of Notification 12/2003-ST – When matter decided by Tribunals in a plethora of judgments sub-ordinate authorities bound to follow without reminders to do so : BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt08_140.pdf

CBEC notifies Customs exchange rates for export / import for Jan, 2009;

CASE LAWS

2008-TIOL-2152-CESTAT-BANG.pdf

M/s Bosch Limited (Formerly Known As M/S Motor Industries Company Limited) Vs CC, Mumbai (Dated: July 1, 2008)

Customs – Import of second hand machineries - It is settled law that unless transaction value is rejected for extraordinary or special reasons, the same has to be accepted – Apex Court 's decision in Eicher Tractors Ltd [2002-TIOL-06-SC-CUS] followed – Impugned order set aside : BANGALORE CESTAT;