Sudan Customs Officers demand Bribe from Indian Ambassador (See 'DDT')

Satyamgate - Investigators need to look deeper into associate Cos and subsidiaries(See 'Common Basket')

CERC issues Tariff regulations for power generation and transmision projects;

Armed forces to up intake of officers from NCC: Defence Minister;

Great scope for improvement in bilateral ties between India and UK: Nath;

PM undergoes overall check-up at AIIMS;

Setting up of Central Madrassa Board under active consideration of Govt: HRD Minister;

India successfully test-fires nuclearload-capable BrahMos missile with a range of 290 km at Pokhran in Rajasthan;

SFIO finds clear nexus between Satyam and Maytas Properties Ltd & Maytas Infra Ltd; Govt authorises SFIO to obtain records and books from both companies;

ddt 20 jan.pdf

Free Sale and Commerce Certificate – DGFT amends HBP;

satyamgate.pdf

Satyamgate - Investigators need to look deeper into associate Cos and subsidiaries;

mbuzz0068.pdf

Great scope for improvement in bilateral ties between India and UK: Nath;

mbuzz0067.pdf

CERC issues Tariff regulations for power generation and transmision projects;

mbuzz0066.pdf

Interpol hosts first training course on genocide and crime against humanity;

mbuzz0065.pdf

Deprivation of minorities impedes progress of country:Vice President;

2009-TIOL-04-SC-IT .pdf

CIT, Baroda Vs K K Patel Foundation (Dated: January 07, 2009)

Income tax - Sec 80G - In view of the facts that the assessee had received benefits of exemption u/s 80G, penalty is not called for but the issue of burden is kept open - Revenue's appeal dismissed:SUPREME COURT;

2009-TIOL-33-HC-DEL-IT.pdf

CIT Vs DCM Ltd (Dated: January 13, 2009)

Income tax - assessee is a large group having multiple units of manufacturing - some of the units are located in non-conforming areas as per Mater Plan of Delhi - decides to close down one of the textile units - pays compensation for retrenchment and also incurs loss in disposal of govt securities necessitated by higher interest rate on employees' PF - Revenue disallows the retrenchment cost on the ground that the business was closed with the closure of the unit and the loss on sale of securiites cannot be allowed as it is covered by the provisions of Sec 14A - Tribunal allows - Merely because one unit was closed, the business of the Group was not shut down as it had many similar units carrying on the business

Since the Group had its own Employees PF Trust approved by the PF authorities and it could not pay the interest rate approved by the Central Govt it was forced to sell its securities which resulted in loss - Sec 14A has no application to such loss - Revenue's appeal dismissed:DELHI HIGH COURT;

2009-TIOL-32-HC-ORISSA-IT.pdf

U K Mahapatra And Co And Others Vs ITO (Dated: October 29, 2008)

Income Tax - Revenue conducts survey u/s 133A in the premises of Petitioner, a Chartered Accountant Firm which was the auditor of the assessee, and impounded certain files - Held that although Explanation to Sec 133A allows survey of any other place where the books of accounts of assessee are kept but the precondition for conducting survey u/s 133A, is that the client in course of survey must state that his books of accountant/documents and records are kept in the office of his chartered accountant/lawyer/tax practitioner - Assessee in the present case has not made any such statement in counter affidavit, therefore, the action of ITO is without authority of law

Held, ITO is not an income-tax authority competent to conduct survey u/s 133A - inspection and recording of reasons are cumulative pre-conditions for impounding books of account or other documents u/s 133A(3)(ia)

Held, wherever obtaining of "approval" of higher authority is provided under the Act to do certain thing with regard to an assessee, a hearing need not always be given to such assessee merely because some consequences arise - Petition disposed of partly in favor of petitioners:ORISSA HIGH COURT;

2009-TIOL-47-ITAT-PUNE.pdf + pune story.pdf

ACIT, Pune Vs EPCOS AG, Germany (Dated: June 30, 2008)

Income tax - Indo-German tax treaty - Assessee is a tax resident of Germany - has two subsidiaries in India - renders them services related to product marketing and sales support and information and technology support services - accepts tax liability @ 10% under Article 12 of the DTAA - AO treats the subsidiaries as its PE and holds that the the business profits of the assessee to be taxed on gross basis as per provisions of Sec 44D - CIT(A) disagrees - Held,

++ the concept of PE is the result of a compromise between the residence rule and source rule of taxation. It constitutes the 'home' for the foreign enterprise abroad. The core of PE in the source country consists of a fixed place of business of foreign enterprise and its business activities. In principle, the parent company, the foreign enterprise, and its subsidiary in the source country can be a PE for each other. Mere existence of a PE will not decide the taxability aspect of an income. A foreign enterprise may have a PE in a source country but may decide to carry out certain business through an agent or the subsidiary. In such a situation, the same income cannot be taxed in the hands of the PE. The source jurisdiction can tax only such component of income of the foreign enterprise which can effectively be attributed to the PE.

++ the DTAA is not an exemption regime. It is an alternative tax regime.

++ when there is an income earned by a foreign enterprise in a source country, whether its taxability should first be decided under the domestic laws and then under the DTAA or vice versa. When the destination is the same, it makes no difference. Rather, having established that the DTAA is an alternative tax regime, it is better to first examine the taxability aspect from its viewpoint and then the domestic law if so is provided.

++ Under Article 12 of the Indo-German tax treaty, as long as the payments are in the nature of ‘royalties and fees for technical services', the recipient of such payments has a limited tax liability @ 10 per cent on gross basis under Article 12(2).

++ This taxability as ‘royalties and fees for technical services', under Article 12(2), is subject to one important exclusion clause. This exclusion clause is set out in Article 15(5), and it has two limbs. The first limb is with regard to existence of a PE of a fixed base and the second condition is that “the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such PE or fixed base”. Both these conditions in our considered view, must be cumulatively satisfied.

++ The existence of a PE, or for that purpose an existence of ‘a fixed base', brings in paradigm shift to the extent that (a) instead of taxability on gross basis in the source country, the taxability is ascertained on net basis; and (b) instead of a lower rate of 10 per cent, which is charged under Article 12(2), the tax is at the rate prescribed under the domestic legislation but on net income.

++ once a German company has a PE in India and the right, contract and property in respect of which the royalties and fees for technical services are paid, its taxability of ‘royalties and fees from technical services' shifts from Article 12(2) to Article 7(2). The impact of this change is that as against taxability on gross basis @ 10 per cent, the taxability goes upto 20 per cent though on gross basis again.

++ Does the German tax resident have a PE in India?: The situs and manner of rendering of services, by anyone other than the employees or sub-contractees of the foreign principal, cannot govern whether or not the foreign principal will have a PE in India. The entire discussion about the work done by the employees of Indian subsidiaries is not at all germane to the issue of foreign company's PE.

++ Merely because an Indian company conducts its business, with the help and guidance it has received from a foreign company, in India, it does not follow that the foreign company so giving help and guidance will be deemed to have a PE in the form of that domestic company.

++ The e-mails and letters were sent from outside India, and at best Indian subsidiaries acted upon the advices so given in the e-mails and letters in India. That action of the subsidiaries cannot alter the situs of the activities of the Epcos AG.

++ a non-resident company having a PE in India, by itself, does not lead to taxability in India; there must be some profit attributable to such a PE which alone could be taxed in India because of the existence of the PE. When the PE carries on an activity which does not serve overall purpose of the foreign enterprise, or which does not contribute to profits of the enterprise, the existence of such a PE is wholly academic and does not have any tax implications in the source jurisdiction. To that limited extent, there is an inherent contradiction in the OECD approach inasmuch as on one hand PE provides threshold limits for triggering taxation in the source country, on the other hand the existence of the PE is decided de hors the activity in the absence of which taxability of profits in the source country cannot be triggered at all.

++ The requirements of exclusion clause under Article 15(5) also highlight this aspect of profit attribution. While we were examining interplay between Article 12 and Article 7, we had noticed that this exclusion clause has twin requirements of (a) existence of the PE through which business is carried out; and of (b) existence of effective connection between such a PE and the rights, properties and contracts in respect of which ‘royalties' and ‘fees for technical services' are paid. That would mean that only such ‘royalties' and fees for technical services' are excluded from the scope of Article 12(1) and (2) as are attributable to the PE through which business is carried on by the enterprise.

++ no revenues earned by the assessee company could be said to be attributable to the PE, even if one was to come to the conclusion that a PE existed, no taxability could arise under Article 7. The assessee has offered the royalties and fees for technical services for taxability in India under Article 12, and, to that extent, admitted tax liability exists.

++ In terms of the Indo German tax treaty provisions, it will have to be demonstrated that such royalties and fees for technical services have a live economic nexus with the PE and only then exclusion clause under Article 12(5) as also taxability under Articles 7(1) and 7(2), will come into play. It is only after these royalties and fees for technical services are so included in the business profits attributable to the PE that the provisions of Sections 44D and 115A can be invoked.:PUNE ITAT;

2009-TIOL-46-ITAT-MUM.pdf + bank story.pdf

Bank of America NT & SA Vs DCIT, Bombay (Dated: November 5, 2008)

Income tax - assessee is a foreign bank - enters into security transactions - sets off losses made out of such transactions against gains in the same trade - AO disallows the same on the ground that the losses emanated from transactions in violation of RBI guidelines - CIT(A) agrees - held, the law does require that the 'oral consent' given to brokers for transaction of securities should mandatorily be backed by 'written confirmation' but the same was violated by the assessee as rightly held by the Revenue but since the losses emanate from illegal transactions entered into books, they are allowable deduction as per settled laws

Assessee runs NRI desk at its overseas branches - claims deduction of expenses incurred on them u/s 37 - AO disallows on the ground that such expenses cannot be verified and other Asians also must have used the services - invokes Sec 44C - held, since Revenue fails to back its arguments by any evidence and the fact that Sec 44C is applicable to only 'Head Office Expenses', it will not have any applicability to expenses incurred on overseas branches - deduction allowable:MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-122-CESTAT-MUM.pdf + stgst story.pdf

M/s Finolex Cables Ltd Vs CCE, Pune-I (Dated: December 12, 2008)

Service Tax paid on Insurance of plant and machinery is an expenditure which goes into costing, hence Cenvat credit cannot be denied – Tribunal Gujarat HC decision in CCE vs. Excel Crop Care Ltd. [ 2008-TIOL-568-HC-AHM-CX ] & Tribunal decision in Grasim Industries vs. CCE, Jaipur [ 2008-TIOL-1039-CESTAT-DEL ] extending Cenvat Credit of Service Tax paid on Mobile phones and LB decision in CCE, Mumbai-V vs. GTC Industries Ltd. [ 2008-TIOL-1634-CESTAT-MUM-LB ] extending the Cenvat Credit of Service Tax paid on Catering Services relied upon.:MUMBAI CESTAT;

2009-TIOL-121-CESTAT-AHM.pdf

CCE, Vadodara Vs Shri Vishwas R Gole (Dated: December 12, 2008)

ST - Consulting Engineer Service - Respondent is a salaried Director of the company - Revenue raises demand for providing consulting engineer service - Since the respondent is not an egineer and he being a salaried person he cannot be held as one provding consulting engineer servide - Revenue's appeal dismissed:AHMEDABAD CESTAT;

2009-TIOL-120-CESTAT-AHM.pdf

CCE, Rajkot Vs M/s Port Officer (Dated: December 26, 2008)

ST - penalty - Revenue appeals against reduction in penalty u/s 76 - held, penalty can be reduced under Sec 76 by invoking powers under Sec 80 and it was rightly done in this case:AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-117-CESTAT-AHM.pdf

M/s Essar Steel Ltd Vs CCE, Surat (Dated: December 11, 2008)

Central Excise – Expressions ‘Assistant Commissioner' and ‘Deputy Commissioner' used interchangeably in the statute – Commissioner's direction to AC to file appeal when order passed by DC valid – Appellants preliminary objection set aside – Credit on all spares, components and accessories to machines irrespective of chapter heading eligible if machines are eligible capital goods :AHMEDABAD CESTAT;

2009-TIOL-116-CESTAT-MUM.pdf

CCE, Raigad Vs Pushpman Processors (Dated: November 17, 2008)

Central Excise – Furnace oil being a consumable eligible for benefit of exemption notification 1/95-CE – 100% EOU eligible to procure furnace oil duty free :MUMBAI CESTAT;

2009-TIOL-115-CESTAT-MAD.pdf

Grasim Industries Ltd Vs CCE, Trichy (Dated: December 15, 2008)

Central Excise – CENVAT Credit - Capital goods removed as such – Extended Period – Capital goods removed as such without reversing the credit taken. However, appellant reversed credit on the transaction value. They have acted in a manner held to have been legally correct in several decisions of this Tribunal. Therefore, larger period cannot be invoked in this case to demand differential duty. Appeal allowed. ( Para 2) :CHENNAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08pn137.pdf

Free Sale and Commerce Certificate – DGFT amends HBP;

CASE LAWS

2009-TIOL-01-ARA-CUS.pdf + ara story.pdf

M/s AES Chattisgarh Energy Pvt Ltd (Dated : December 19, 2008)

Customs - Exemption to Goods required for setting up of Mega Power Project - captive coal mine, dedicated coal transportation facility, dedicated water intake and pumping system, not eligible; dedicated power evacuation system eligible: the electricity generated will not and cannot be stored from its generation till the point of interconnection to the transmission network of Power Grid Corporation or any other transmission company and that it is technically impossible to store electricity after generation. In view of this factual position, which is not in dispute, it is clear that power evacuation system must be legitimately treated as a part of the inter-state power plant.: ADVANCE RULINGS;

2009-TIOL-119-CESTAT-MUM.pdf

M/s AMI Clearing & Forwarding Pvt Ltd Vs CC, Mumbai (Dated: September 2, 2008)

Customs – Suspension of CHA license – CHA and its director engaged in carrying cash for importers, arranging stamp papers for high sea sales and diversion of imported material to local market - Activities of CHA and its director violate the provisions of CHALR, 2004 and proved to be illegal beyond reasonable doubt – No infirmity in suspension of CHA license:MUMBAI CESTAT;

2009-TIOL-118-CESTAT-MAD.pdf

Haren Choksey Vs CC, Chennai (Dated: December 19, 2008)

Tribunal considered the financial hardship being faced by the appellant (duly evidenced by Income Tax returns filed by him), and reduced the amount of predeposit:CHENNAI CESTAT;