Is Advance Ruling Authority a Tribunal? (See 'DDT')

926 branches of Banks to accept Advance Income Tax (See 'DDT')

CBI Court holds former telecom minister guilty in corruption case;

India-New Zealand FTA talks to be held too: Kamal Nath

Govt constitutes Consultative Committee for media facilitation;

Railways decides to discontinue the system of additional side middle berth;

CERC takes serious note of overdrawal of power from grid;

Centre gives aid of Rs 1787 Cr for setting up State Wide Area Network;

Pranab Mukherjee does not completely rule out another stimulus package;

TIOL COMMENTARY

ddt 20 Feb.pdf

Tax Return Preparer Scheme extended to TDS and Service Tax;

potpourri.pdf

'The Moral Structure of Universe': Dr Martin Luther King's vision and its corollaries;

CIRCULAR

rbi08cir053.pdf

Exim Bank's Line of Credit of USD 20 million to the Government of the Republic of Niger;

rbi08cir052.pdf

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR;

MIXED BUZZ

mbuzz0191.pdf

CBI Court holds former telecom minister guilty in corruption case;

mbuzz0190.pdf

Centre gives aid of Rs 1787 Cr for setting up State Wide Area Network;

mbuzz0189.pdf

Govt sets up Consultative Committee for media facilitation;

mbuzz0188.pdf

Accurate labour statistics vital for proper policy formulation: Minister;

mbuzz0187.pdf

DoT selects Auditor for Special Audit of Reliance Communications Ltd;

2009-TIOL-22-SC-IT.pdf

CIT, Dibrugarh Vs Doom Dooma India Ltd (Dated: February 18, 2009)

Income tax - AY 1988-89 - Sec 43(6)(b) - 'depreciation actually allowed' - assessee is into growing and manufacturing of tea - written down value of block assets - AO deducts 100% depreciation from the opening writtend down value - assessee argues only 40% depreciation to be deducted as per Sec 43(6)(b) - Tribunal held that since only 40 per cent of the assessee's composite income is chargeable u/s 28, for the purposes of computing the "written down value" of depreciable assets used in the tea business, only 40 per cent instead of 100 per cent of depreciation allowable at the prescribed rate shall be deducted in the case of the assessee - HC agrees with the Tribunal - held, the meaning of the words 'actually allowed' in Section 43(6)(b) is to mean - 'limited to depreciation actually taken into account or granted and given effect to, i.e. debited by the Income-tax Officer against the incomings of the business in computing the taxable income of the assessee'.

Computation of depreciation in cases covered by Rule 8 which deals with taxability of composite income: In cases where Rule 8 applies, the income which is brought to tax as "business income" is only 40 per cent of the composite income and consequently proportionate depreciation is required to be taken into account because that is the depreciation "actually allowed" - Revenue's appeal dismissed: SUPREME COURT;

2009-TIOL-84-HC-DEL-IT.pdf + uae story.pdf

UAE Exchange Centre Ltd Vs UoI (Dated: February 13, 2009)

Income tax - Indo-UAE DTAA - Writ - assessee is incorporated in UAE - offers remittance service for transferring money to various places in Indi, sent by NRIs - sets up Liaison Office at five places after taking RBI approval - files NIL returns - Meanwhile Authority for Advance Ruling holds that the activities of downloading information from the main server in the UAE, making Indian banks cheques and couriering them to actual beneficiaries of NRI remittances in India are integral part of main activities of the non-resident for fulfilling obligations of contracts entered with NIRs and the LO acted as PE and the income attributable to the LO is taxable in India - Revenue issues Sec 148 notice - writ filed - held, the Authority for Advance Ruling lost sight of the true meaning of the exclusionary clause in Article 5(3)(e) which is: maintenance of fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character. The plain meaning of the word "auxiliary" is “aiding or supporting, subsidiary”. The activity carried out by the LO in India is auxiliary in character. And the acid test for determination of a business connection is that there must be a real and intimate relationship between the activity of a non-resident outside the taxable territory with that of activity in the taxable territory.

held, the activity carried on by the liaison offices in India did not, in any manner, contribute directly or indirectly to the earning of profits or gains by the petitioner in UAE. Every aspect of the transaction was concluded in UAE. The commission for the services of remittances offered by the petitioner was also earned in UAE. The activity performed by the liaison offices in India was only supportive of the transaction carried on in UAE. It did not contribute to the earning of profits or gains by the petitioner in UAE.

Is Authority for Advance Ruling a Tribunal?: The broad test which has been laid down by the Courts are that an Authority shall be construed to be a Tribunal within the meaning of Article 227 of the Constitution of India if it is invested with the judicial power of the State, which is, that it should act judicially after ascertaining the facts placed before it and upon application of the relevant law applicable to the facts obtaining in a case. Broadly, the expression used in various judgments rendered by various Courts is that an Authority would be a Tribunal if it has the "trappings of a Court".

++ What are indices of the expression "trappings of a court": An authority to determine matters in cases initiated by parties, sitting in public, power to compel attendance of witnesses and to examine them on oath, duty to follow fundamental rules of evidence (though not the strict rules of the Evidence Act), provision for imposing sanctions etc.

++ the Authority constituted under Chapter XIX-B of the Act is a Tribunal as it is invested with powers of a civil court by virtue of provisions of Section 131 of the Act; which includes all such powers a court is vested with under the CPC when trying a suit in respect of matters relating to discovery, inspection, enforcing attendance of persons including officials of banking company and examining such persons on oath, compelling production of books of accounts, summons of accounts etc.: DELHI HIGH COURT;

2009-TIOL-117-ITAT-BANG.pdf + units story.pdf

ACIT, Bangalore Vs M/s Standard Chartered Finance Leasing Co (Dated: January 30, 2009)

Units are neither stocks, nor shares nor commodities as contemplated in section 43(5) of the IT Act – Even if they are considered to be 'speculative' in nature, the losses have to be set off against the profits as both are speculative in nature - The transactions in Units of the UTI do not fall within the purview of section 43(5) as units are neither stocks, nor shares nor commodities as contemplated in section 43(5) of the IT Act; proviso (b) to sec.43 (5) again uses the word 'stocks' and 'shares'. The word 'units' is not mentioned anywhere in the statute. Each category 'shares' 'stocks', 'commodities' are mutually exclusive and exhaustive - as it is presumed that Legislature does not use redundant/superfluous words. Thus the Income tax Act itself recognizes that 'securities' 'shares and bonds' and 'units' constitute separate and distinct categories of financial instruments. However, even if hypothetically or for the sake of argument, these transactions are considered to be 'speculative' in nature then in accordance with the provisions of sec 73 (1) of the Income tax Act, the losses have to be set off against the profits as both are speculative in nature. :BANGALORE ITAT;

2009-TIOL-116-ITAT-MAD.pdf

M/s Lakshmi Machine Works Ltd Vs ACIT, Coimbatore (Dated: August 08, 2008)

Income Tax - Assessee amalgamated with a sick company and relief u/s 72A for carry forward of losses was sought in the scheme of amalgamation which got BIFR's approval - AO allowed the carry forward of loss after enquiry - CIT(A) held AO's order as erroneous u/s 263 - Held, twin conditions for passing revisionary order u/s 263 are (i) order of AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue—Held wherever two views are possible and the ITO has taken one view to which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue—Held, provisions of a special Act(SICA Act) will override the provisions of a general Act—Held, once a scheme is sanctioned by the BIFR, it will have over-riding effect and, assessee will not be required to comply with the conditions contained in sec.72A because that would nullify the over-riding effect of the scheme - Assessee's appeal partly allowed. :CHENNAI ITAT;

SERVICE TAX SECTION

2009-TIOL-306-CESTAT-DEL.pdf

M/s SBEC Sugar Ltd Vs CCE, Meerut-I (Dated: January 2, 2009)

ST - C & F Service - assessee receives commission for coordinating orders of goods for bottlers - Service tax demand raised - Adjudicating authority treated the service as C & F Service for part of the period and BAS for later priod - Since the Commissioner (A) has not examined the agreement wholly, matter remanded:DELHI CESTAT;

2009-TIOL-305-CESTAT-AHM.pdf

M/s Hariala Depot Service Vs CCE, Ahmedabad (Dated: January 22, 2009)

ST - C & F Service - assessee claims deduction of reimbursable expenses - Commissioner (A) disallows - Since the contract clearly allows such reimbursement, the Revenue made a factual mistake in its findings - matter remanded

As regards the penalty under Sec 76 since the Revenue itself did not find any mala fide intention in delayed payment of tax, penalty is not sustainable in view of Sec 80:AHMEDABAD CESTAT;

2009-TIOL-304-CESTAT-MAD.pdf

M/s PLA Tyre Works Vs CCE & ST, Trichy (Dated: December 16, 2008)

Service Tax – Maintenance and repair Service – Valuation – The appellants were paying service tax only on 30% of the total charges collected. The balance 70% was treated as sale account of tread rubber used for treading. Invoices raised by the appellants show re-sales tax at 1% of the material cost and service tax at 10.2% on the making charges. The benefit of Notification No.12/03 dated 20.01.2003 providing exemption to cost of materials sold is available to the assessees. Further, once it is possible to bifurcate any transaction into sales portion and service portion, the respective tax is to be levied on the respective portion only. ( Para 3):CHENNAI CESTAT;

2009-TIOL-303-CESTAT-DEL.pdf

M/s Kamal & Company Vs CCE, Jaipur (Dated: January 5, 2009)

ST - Assessee is an authorised service station - provides free service to customers during warranty period of sale of car by Tata Motors - Revenue raises demand - Issue is already settled in favour of the assessee as the value of free services are included in the value of cars on which excise duty and sales tax are paid and there is no evidence to indicate that the manufacturer specifically reimburses or pays margin money to the assessee - assessee's appeal allowed:DELHI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-310-CESTAT-MUM.pdf + indorama story.pdf

Indo Rama Synthetics (I) Ltd Vs CCE, Nagpur (Dated: December 16, 2008)

Central Excise – Rule 5 of Valuation Rules, 2000 - Freight charges shown on invoice were an approximation vis-à-vis that actually collected from buyer - deduction of freight cannot be denied in its entirety by contending that only the actual, if shown on invoice, is allowable – Tribunal.

Tribunal's observations -

Held - the deduction of freight cannot be denied and duty cannot be demanded on the entire amount of freight. 

Commissioner(Appeals)'s order set aside and the appeal was allowed with consequential relief.:MUMBAI CESTAT;

2009-TIOL-309-CESTAT-MAD.pdf

CCE, Coimbatore Vs M/s L G Balakrishnan & Bros (Dated: October 14, 2008)

Central Excise – CENVAT – Removal of used capital goods – Rule 3(5) of CCR, 2004 did not apply to removals of worn-out capital goods. The respondents are not required to pay duty when the used capital goods were sold and are entitled to refund of the duty paid at the time of removal of the used tools/dies. Appeal dismissed. ( Para 3):CHENNAI CESTAT;

2009-TIOL-308-CESTAT-BANG.pdf

M/s B H P V Ltd Vs CCE, Visakhapatnam (Dated: September 25, 2008)

Central Excise – Mere write off of inputs/spares does not render reversal of CENVAT credit – As long as inputs are capable of being used and available in factory credit not deniable – No justification to impose penalty.:BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff09_017.pdf

Duty-free Import authorisation scheme amended;

ctariff09_016.pdf

Import of inputs under authorisation scheme even if SION is not fixed;

ctariff09_015.pdf

CBEC amends 92/2004, 41/2005, 73/2006, 90/2006 & 91/2006;

ctariff09_014.pdf

Import of goods against Hi-Tech Product Export Promotion Scheme exempted;

CASE LAWS

2009-TIOL-85-HC-MAD-CUS.pdf + warehouse story.pdf

CC, Chennai Vs M/s Bangalore Mano Filament Pvt Ltd (Dated: F December 18, 2008)

Customs – clearance from bonded warehouse – licence valid at the time of import but not at the time of clearance from warehouse – importer not entitled to exemption ; The importer's right to bring in the goods duty-free depends on the Advance licence, and when the Licence is not valid on the date when the duty is to be assessed, the right of exemption ceases. The incidence of duty depends on the time of clearance, and if the licence entitling the importer to bring in goods duty free had expired at the time when the goods were cleared, the department is right in objecting to his claim for exemption from duty on the ground that he had a valid Advance Licence under the DEEC Scheme at the time of the import.:MADRAS HIGH COURT;

2009-TIOL-307-CESTAT-MAD.pdf

CC, Chennai Vs M/s Magna Corpro Chems India Pvt Ltd (Dated: November 21, 2008)

Customs – Import – Refund – Refund claim filed by the appellants rejected on ground of time-bar as duty was not paid under protest - Filing of appeal against order of assessment amounts to protest and refund cannot be denied on the ground of time-bar when the denial of the benefit which was challenged by the appellant was successfully contested and the benefit allowed. Appeal dismissed. ( Para 2) :CHENNAI CESTAT;