DGCEI charge: Losing power is indeed painful! (See 'Common Basket)

ICAI sets up special panel to look into Satyam audit;

Govt may reduce fuel prices in a couple of days;

Decision of the Government on the recommendations of the Sixth Central Pay Commission relating to re-classification of cities/towns for grant of House Rent Allowance (HRA). (See 'Common Basket)

Income tax case: ICAI denies violatios of various provisons; exemption issue pending before DG;

Govt post offices offering half gram gold free for every 10 gm as Sankranti gift;

ddt 13 Jan.pdf + cic_order.pdf

Is Judiciary Accountable? – Full Bench of CIC paves the way;

DGCEI charge: giving up power is indeed painful!

office_memorandum.pdf

Decision of the Government on the recommendations of the Sixth Central Pay Commission relating to re-classification of cities/towns for grant of House Rent Allowance (HRA).;

mbuzz0041.pdf

Income tax case: ICAI denies violatios of various provisons; exemption issue pending before DG;

mbuzz0040.pdf

Govt post offices offering half gram gold free for every 10 gm as Sankranti gift;

2009-TIOL-30-ITAT-MUM.pdf + engineering story.pdf

DCIT, Mumbai Vs M/s Stock Engineer & Contractors B V (Dated: December 5, 2008)

Income tax - assessee is a Netherlands-based company - sets up PE to design and construct a sulphor block at Haldia project of IOCL - hires technical personnel from another Group company located in Malaysia - contract is confined to only supply of personnel who are to work under supervision of the PE - payments made for providing personnel - AO disallows expenses u/s 40(a)(i) for not deducting TDS u/s 195 on such payments - CIT(A) disagrees with the AO - Held,

Since there was no PE of the non-resident Malaysian company in India in terms of Article 5 of DTAA between India and Malaysia, the payment received by the non-resident Malaysian company was not taxable in India. Consequently, the provisions of section 195 and section 40(a)(i) of the Act could not be invoked.

Assessee issues debit note to the Head Office for payment of salary of the technical personnel - AO treats them as covered under 'Head Office expenses' under Sec 44C - Held, the salary will not fall within the ambit of the expression 'Head Office expenses' as defined in Explanation (iv) to Sec 44C - CIT(A) order upheld

Assessee hires supervisory personnel from a UK-based company - Payments made - AO invokes Sec 40(a)(i) - CIT(A) disagrees - Held, since this case is covered under both Article 5(2)(j) and Article 5(2)(k) of the India-UK DTAA, it is a settled legal provision that if the two provisions are applicable to a fact situation then the one which is beneficial to the assessee would be applicable and the non-resident having no PE as their personnel stayed for less than six months in India, cannot be subjected to TDS provisions u/s 195

PE in India hires a non-resident for providing Inspection service for materials required for execution of the project - Payments made - Since there was no imparting or transfer of technical knowledge or experience and the Netherlands-based entity had no PE in India, the payments are not subject to TDS:MUMBAI ITAT;

2009-TIOL-29-ITAT-MUM.pdf

M/s Bajaj Healthcare Pvt Ltd Vs DCIT, Mumbai (Dated: September 12, 2008)

Income tax - Sec 80IB - assessee is a manufacturer of bulk drugs - is also into exports - claims deduction u/s 80IB in relation to export incentives and interest income - AO disallows and CIT(A) agrees with the AO - held, since the language used in section 80IB is profit arrived from the business of undertaking, there is a clear-cut nexus between the undertaking and exports and deductions cannot be disallowed for DEPB licences, interest on term deposits and dividend from bank but not on interest from short-term deposits - Assessee's appeal dismissed:MUMBAI ITAT;

2009-TIOL-28-ITAT-DEL.pdf

K L Verma & Sons Huf Vs DCIT, New Delhi (Dated: October 17, 2008)

Income Tax – During search and seizure operation some documents relating to purchase of agricultural land were found from firm's premises in which assessees were partners - AO adds this unexplained investment as undisclosed income u/s 69B to the total income of assessees - CIT(A) confirms the order - Held that though the property was purchased in the name of the firm but the firm was not carrying on any business activity at that time and therefore cannot be said to earn any undisclosed income - Since assessee was not given a chance to cross examine, Assessee's appeal allowed for statistical purpose.:DELHI ITAT;

2009-TIOL-27-ITAT-MUM.pdf

ITO,Mumbai Vs M/s Rexnord Electronics & Controls Ltd (Dated: September 10, 2008)

Income tax - Assessee claims deduction of expenses related to ISO Certification - AO finds that the certification is valid for three years and allows only one-third of the expenses in the current AY - held, since the certification only helps in enhanced efficiency and improved operations and higher satisfaction of customers, it is revenue in nature - Revenue's appeal dismissed:MUMBAI ITAT;

2009-TIOL-26-ITAT-BANG.pdf

M/s VST Tillers & Tractors Ltd Vs CIT, Bangalore (Dated: November 21, 2008)

Income tax - assessee's subsidiary amalgamates with the assessee - amalgamation approved by the High Court - assessee claims deduction for unabsorbed losses and carried forward depreciation against its profits and files NIL return - AO accepts the same but CIT invokes Sec 263 - makes addition by taking the profits and gains of the assessee as that of its subsidiary - held, since the CIT's order is based on incorrect premise, it is not sustainable. The amalgamation approved by the High Court and as per the Sec 72, carried forward unabsored losses and depreciation of the subsidiary are the the losses of the assessee and the same can be set off against the profit of the assessee u/s 115JB(2) - Assessee's appeal allowed:BANGALORE ITAT;

SERVICE TAX SECTION

2009-TIOL-78-CESTAT-MAD.pdf + stgst.pdf

M/s Sridhar & Santhanam Vs CCE & ST, Chennai (Dated: December 5, 2008)

Service tax – Chartered Accountants / Cost Accountants service – exemption under Notification 59/98 ST – explanation inserted vide Notification 15/2002 restricting the scope of the Notification cannot be made applicable retrospectively – demand of service tax on other services set aside:CHENNAI CESTAT;.

2009-TIOL-77-CESTAT-DEL.pdf

M/s Bharat Heavy Electircals Ltd Vs CCE, Bhopal (Dated: December 3, 2008)

ST - erection and commissioning service - assessee undertakes composite contract to erect sub-stations for SEBs - three components of the contract are the supply of goods, civil work and erection and commissioning of stepdown transformers - assessee pays tax on erection and civil work separately and also claims abatement for civil work - demand raised - Revenue argues that a composite contract cannot be vivisected and the tax is to be paid on the gross charges - since the issue has gone to the Larger Bench, stay granted and pre-deposit waived in view of deposits made:DELHI CESTAT;

2009-TIOL-76-CESTAT-DEL.pdf

M/s Roshan Motors Ltd Vs CCE, Meerut (Dated: November 27, 2008)

ST - Business Auxiliary Service - assessee is an authorised car dealer - also signs agreement with banks for promotion of car finance products - demand with penalty - assessee argues their main business is to sell car and arranging finance is just to promote its own business of car-selling - Since the assessee receives service charges from banks for promoting their finance portfolios, it is taxable under business axuliary service - Penalty also upheld:DELHI CESTAT;

CENTRAL EXCISE SECTION

NOTIFICATION

etariff09_01.pdf

Tobacco and paan masala units in North-East: CBEC amends 8/2004 to reconstitute refund panel;

CASE LAWS

2009-TIOL-73-CESTAT-MUM.pdf + furnace oil story.pdf

CCE, Pune-II Vs M/s Hindustan Spinning & Weaving Pvt Ltd (Dated: October 22, 2008)

Furnace Oil is a consumable and entitled to benefit of exemption under notification 1/95-CE much before its amendment on 15.09.1998

Limitation - There is no case of misstatement or suppression as the respondent had in the year 1995 declared that they will be using furnace oil in boiler:MUMBAI CESTAT;.

2009-TIOL-72-CESTAT-MAD.pdf

CCE, Pondicherry Vs M/s HI-TECH Sealants & Adhesives (P) Ltd (Dated: August 14, 2008)

Central Excise – Delayed payment of Duty – The expression “at the rate of 2% per month or Rs.1000/- per day whichever is higher” used in sub-rule (3) of Rule 8 was held to be invalid by the Rajasthan High Court in the case of Lucid Colloids Ltd. Vs Union of India. Under Rule 8(3), interest can be levied only @ 2% p.m. (24% p.a.) as notified by the Central Government in terms of Section 11AB. (Para 4):CHENNAI CESTAT;

2009-TIOL-71-CESTAT-MAD.pdf

M/s Sundaram-Clayton Ltd Vs CCE, Chennai (Dated: August 25, 2008)

Central Excise – Manufacture - Marketability – Aluminium castings which emerged as an intermediate product used in the manufacture of spring brake chambers and the same is cleared to the Ministry of defense without payment of duty after availing the benefit of exemption notification. Duty demanded on the intermediate product ‘aluminium castings'. HELD - The aluminium castings in question were tailored for spring brake chambers ordered by the motor vehicle factory of the Defence Ministry. These castings were not fit for use by private motor vehicle manufacturers. Moreover, marketing of these castings and even transfer of information about the same to other persons were forbidden under the agreement between the appellants and the Defence Ministry, wherein the secrecy provisions of the Official Secrets Act were invoked. Obviously, the aluminium castings in question are not capable of being marketed and any duty of excise is not leviable thereon. Appeal allowed. (Para 2):CHENNAI CESTAT;

CUSTOMS SECTION

2009-TIOL-75-CESTAT-MAD.pdf + DGCEI Story.pdf

M/s Copier Force India Ltd Vs CC, Chennai (Dated: December 8, 2008)

Customs - Jurisdiction of officers for Issuance of Show Cause Notices & Adjudications – Show Cause Notices issued by ADG, DGCEI under Customs Act, 1962 – ADG, DGCEI has no jurisdiction to issue show cause notice in absence of any territorial jurisdiction for ADGCEI to exercise the powers of Commissioner of Customs specified by the Central Government / CBEC - It was for the CBEC under sub-section (1) of Section 5 of the Act to specify the area of jurisdiction – The show cause notice is not valid, ab initio bad in law and liable to be quashed.:CHENNAI CESTAT;

2009-TIOL-74-CESTAT-MAD.pdf

C K Geever Vs CC, Chennai (Dated: October 6, 2008)

Customs - Jurisdiction of officers for Issuance of Show Cause Notices & Adjudications – Show Cause Notices issued by ADG, DGCEI under Customs Act, 1962 – ADG, DGCEI has no jurisdiction to issue show cause notice in absence of any territorial jurisdiction for ADGCEI to exercise the powers of Commissioner of Customs specified by the Central Government / CBEC - It was for the CBEC under sub-section (1) of Section 5 of the Act to specify the area of jurisdiction – The show cause notice is not valid, ab initio bad in law and liable to be quashed.:CHENNAI CESTAT;