Customs – Exemption to ‘Virgin Olive Oil' – Virginity not doubted- CBEC Clarification (See 'DDT')

Ban on import of Chinese toys: China expresses serious concern over extensive use of WTO-approved trade remedies; calls for showing prudence;

SAARC Commerce Secretaries meeting tomorrow; to discuss transit facility by Pak for Afghanistan

CII Survey records negative growth in 32 sub-sectors in manufacturing;

House Panel voices concern over beaming of overdose of violence for TRP ratings;

Sahar Airport Customs seizes 23 kg Ketamine; arrests pax heading for Malaysia;

PM's Economic Advisory Panel calls for lowering of tax rates to spur growth;

ddt 10 Feb.pdf

Refund of 4% Special Additional Duty of Customs – CBEC Clarifies;

mbuzz0141.pdf

CII Survey records negative growth in 32 sub-sectors in manufacturing;

mbuzz0140.pdf

House Panel voices concern over beaming of overdose of violence for TRP ratings;

2009-TIOL-97-ITAT-DEL.pdf + nike story.pdf

ACIT, New Delhi Vs M/s Sierra Industrial Enterprises Pvt Ltd (Dated: December 18, 2008)

Income Tax - Royalty paid for use of brand name NIKE – Revenue Expenditure not Capital expenditure: The technical knowhow and other information for manufacture of products was to be provided by Nike to the assessee. It was made clear as per clause 6 of licence agreement that the trade marks, registrations, applications, goodwill associated with them would remain exclusive property of licensor. As per clause 15 it was further provided that in the event termination of agreement the licensee (i.e. the assessee) was supposed to deliver within 20 days of termination notice all the goods and items bearing trade mark, the confidential information in the form of drawings, designs including the copies made to the license. It was made clear that the assessee would not have any right whatsoever to use the technical information and the trade mark after termination of the agreement."; the CIT( A) in his well reasoned and well discussed order has rightly deleted the impugned addition made by AO by holding that the royalty expenditure involved in the instant ground of appeal is revenue expenditure and not capital expenditure:DELHI ITAT;

2009-TIOL-96-ITAT-BANG.pdf

ACIT, Bangalore Vs M/s Webtek Software Pvt Ltd (Dated: November 26, 2008)

Income Tax - Sec 10A - Assessee incures expenses towards exports of software - AO for excluding such expenses from export turnover but not from total turnover - Issue is no longer res integra - once certain expenses are excluded from exports turnover, the same is to be excluded from total turnover as well:BANGALORE ITAT;

2009-TIOL-95-ITAT-BANG.pdf

M/s Pratima Builders Vs ITO, Hubli (Dated: October 31, 2008)

Income Tax Act – Section 145 – Method of Accounting – Estimation of Income – Held, that the assessee had not maintained correct and complete accounts, the cost of construction had not been maintained properly and the only evidence which was submitted before the AO was a certificate of the engineer. The certificate also showed expenditure incurred in round sums, which was improbable and contrary to the normal state of affairs. The assessee has incurred major items of expenditure in cash, such as for purchase of sand, jolly, bricks etc. which were also not fully supported by external vouchers – Held that, section 145(3) gives authority to the AO to reject the book results if the accounts are not correct or complete. Having regard to the state of maintenance of the accounts by the assessee the departmental authorities were justified in rejecting them and in proceeding to estimate the net profit from the business.

Projetc Completion Method – Held, that there is no justification for not taking credit for any profits until the sale deeds are registered in favour of the purchasers even though the sales have been made and the price has been received. The registration of the sale deeds can be delayed for several reasons and it would be a concept abhorrent to the income-tax law if an assessee who is following the project completion method is allowed to defer taking credit for the income on the pretext that the sale deeds are yet to be registered.

Estimation of Income – Held, that there is no such mandate in section 145(3) which says that where the books are rejected the AO he may proceed to make the assessment in the manner provided by sec. 144 and that section says that the AO may take into account all the material he has gathered and proceed to make the assessment of the total income or loss to the best of his judgment. There is thus no statutory requirement that only the gross profit can be estimated and not the net profit – Held further, that once the AO applies a net profit rate to ascertain the assessable profits, he is deemed to have taken note of all the expenditure incurred and allowed them in arriving at the net profit. In accounting parlance, net profit means the profit which remains after making deduction for all types of expenditure.. It is this net profit that has been estimated by the AO and, therefore, there is no scope for further allowance for the expenditure.:BANGALORE ITAT;

2009-TIOL-94-ITAT-MUM.pdf

Poonam Narang Vs ACIT, Mumbai (Dated: October 6, 2008)

Wealth Tax - Assessee's premises searched and AO treats the jewellery found as undisclosed - CIT(A) deletes proportionate amount of jewellery added back by AO after considering the fact that assessee had declared some jewellery in the Wealth Tax Returns upto AY 1992-93 - Assessee appeals to the Tribunal which provides further relief - AO also initiates penalty proceedings u/s. 15BFA(2) since assessee fails to explain the sources of jewellery - CIT(A) confirms the penalty - Held, Sec 158BFA(2) is different from Sec 271(1)(c). Discretion u/s 158BFA(2) has to be exercised judiciously. Jewellery found was much lesser in weight than declared in the Wealth Tax Return and, therefore, there was no concealment w.r.t. the weight of gold. However, penalty levied is justified since no explanation was given for value of stones studded in the gold jewellery but the quantum has to be modified accordingly with reference to the addition sustained by the Tribunal - Assessee's appeal partly allowed.:MUMBAI ITAT;

2009-TIOL-93-ITAT-DEL.pdf

M/s Advance Ispat India Limited Vs DCIT, New Delhi (Dated: December 23, 2008)

Income Tax - Assessee  claims netting of the interest payment against the interest income on FDRs as required to be kept with the bank on a collateral basis. On the basis of close nexus between the bank interest payment and income , assessee sought set off. AO held that income was income from other sources and, therefore, the question of netting is not allowed - CIT(A) upheld AO order - Held, AO directed to exclude the interest expenditure from indirect cost as  incurred by the assessee to the making or obtaining income from interest.

On the issue of expenses attributable to other income i.e. ad hoc estimated by 10% - Held, the assessee's case, the direct cost is determined independently and the assessee's case does not fall in any of the exception where the deduction of 10% would be required. The case of the assessee would be in the general principle that in most of the cases, apportionment may not apply while computation u/s 80HHC (3)(b). No direct or indirect expenses are allocated to earning of incentive. Revenue order upheld.

On the issue of profit on sale of DEPB entitlement - Held, after looking into the policy of the scheme and thereafter to decide whether deduction on this amount is to be granted or not in the light of amendment inserted by Second Proviso to section 80HHC (3) read with section 28(iiid). Matter set aside the two years under consideration to the file of AO  for taking into consideration decisions of Apex court and High Court.

On the issue of unrealized export/customer claim cost consideration - Held, in view of the decision of the Tribunal in ITO vs. Armis Exports Limited the issue covered in favour of assessee.

On the issue of exclusion of commission payment from the export turnover-Held, ITO  directed  to exclude the commission from the turnover and compute the deduction u/s 80HHC.

On the issue of reducing rent rates and taxes added to indirect costs-Held,order set aside .Direction to AO to adjudicate the matter afresh and give justification for including/excluding the same in the indirect cost while working out the deduction u/s 80HHC.

On the issue of expenditure disallowed under section 14A incurred by the assessee for earning income not chargeable to tax.-Held, the matter stands covered by the decision of the Special Bench in the case of Dega Capital Management (P) Limited . Nothing in notice that the estimation of 10% is excessive. Even while computing:DELHI ITAT;

SERVICE TAX SECTION

2009-TIOL-245-CESTAT-MAD.pdf + stgst.pdf

M/s Andal Motors Vs CCE & ST, Salem (Dated: January 2, 2008)

Service Tax – GTA – consignor is a Company and consignee is an individual – Consignee pays freight – Who pays Service Tax? - Issue is contentious – Stay and waiver granted :CHENNAI CESTAT;

2009-TIOL-244-CESTAT-MAD.pdf

M/s Ashok Leyland Ltd Vs CCE & ST, LTU, Chennai (Dated: December 8, 2008)

Service Tax – Business Auxiliary Service – Services received from abroad - Stay /Dispensation of pre-deposit – The appellants had received Business Auxiliary Service (BAS) and paid commission to foreign commission agents during the period 2004-2005 & 2005-2006 (up to 31.10.05). As there was no clarity as to the liability to service tax of services received from abroad by a firm or a person in India at the material time, the appellant's claim that it entertained a bonafide belief that no tax was liable to be paid by it for the impugned services during the material period cannot be rejected as without substance. Waiver of pre-deposit and stay granted. ( Para 4):CHENNAI CESTAT;

2009-TIOL-243-CESTAT-DEL.pdf

CCE, Bhopal Vs M/s Zenith Spares (Dated: January 16, 2008)

ST - Repair and Maintenance Service - assessee undertakens repair of final drive gear box and housing cover - also stands guarantee to trouble-free performance of components - Revenue raises demand - Commissioner(A) holds it is only repair work and cannot be taxed - Held, since it is is only repair work and no maintenance component is involved, it cannot be taxed:DELHI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-241-CESTAT-KOL.pdf + tata story.pdf

CCE, Jamshedpur Vs M/s Tata Motors (Dated: December 16, 2008)

Central Excise – Valuation – Motor vehicle parts – cost of design and drawings to be included in Assessable Value – mistaken view by assessee and Department – no suppression and extended period of limitation: It is pertinent to note that though such a large number of vendors were manufacturing and supplying the components to M/s. Tata Motors over a long period, and in respect of which M/s. Tata Motors have been taking credit of input duty, the Departmental Authorities themselves had not raised the issue at any point of time earlier that the value of drawings and designs should be included in the assessable value of the components. This has also not been done after introduction of the new Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 specifically providing for addition to be made to the value towards drawings, designs etc., supplied free. As such, Tribunal was of the view that the escapement of the additional duty for the impugned period was not on account of suppression, misstatement etc, but on account of a mistake of law on the part of the assessees as well as the Departmental Authorities. Hence, while holding that the cost of drawings and designs @0.085%, as provided by M/s. Tata Motors, is includible in the assessable value of the components, Tribunal held that the demand for the same can only be sustained for the normal period of limitation.:KOLKATA CESTAT;

2009-TIOL-240-CESTAT-MAD.pdf

M/s DCW Ltd Vs CCE, Tirunelveli (Dated: December 12, 2008)

Central Excise – Refund – Appeal to CESTAT – The non-filing of an appeal before the Tribunal against the order of Commissioner (Appeals) allowing the refund is fatal to the Department in the light of the larger Bench decision in Ekantika Copiers (P) Ltd. Vs. CCE – 2002-TIOL-325-CESTAT-DEL-LB holding that as many appeals as there are Orders-in-Original, are required to be filed - Rule 6A of the CESTAT (Procedure) Rules, 1982. Revenue's appeal dismissed. ( Para 1)

Interest - The refund was granted within the period of three months from the date of the order of the Assistant Commissioner directing refund and hence there is no delay in granting refund so as to make the Department liable to pay any interest. ( Para 2):CHENNAI CESTAT;

2009-TIOL-239-CESTAT-MAD.pdf

Australian Foods India Pvt Ltd Vs CCE, Chennai-II (Dated: November 25, 2008)

Central Excise – Stay/Dispensation of predepsoit – CENVAT Credit – credit of duty paid on supplementary invoices to sister unit – credit denied on the ground that it was a case of non levy/short levy due to suppression of facts – prima facie case is not sustainable in view of Karnataka Soaps and detergents case = 2005-TIOL-647-CESTAT-BANG :CHENNAI CESTAT;

CUSTOMS SECTION

CIRCULAR

cuscir09_007.pdf

Clarification on admissibility of benefit of exemption in respect of ‘Virgin Olive Oil' under Notification No.21/2002-Customs dated 1.3.2002 – reg.

cuscir09_006.pdf

Procedure to be adopted for refund of 4% Special Additional Duty of Customs in pursuance of Notification No.102/2007-Customs dated 14.9.2007 – regarding.

CASE LAWS

2009-TIOL-242-CESTAT-MUM.pdf + DEPB story.pdf

Rexello Castors Pvt Ltd Vs CC, Mumbai  (Dated: December 4, 2008)

DEPB Scrip was issued by DGFT – even if there was any condition to the Brand Approval letter that had been not complied with, the Dy. Commissioner of Customs had no authority to sit in judgment over the DEPB credit allowed by DGFT

Deputy Commissioner, Customs, could, at best, convey the results of his verification to the licensing authority.

Commissioner(Appeals) order affirming that of the Deputy Commissioner is also not sustainable. 

Appeal allowed.:MUMBAI CESTAT;