The world's richest are now far too poorer (See 'DDT')

'Hurricane' campaign against tax havens: Three 'wickets' fall in Europe (See 'Common Basket)

RBI directs Cooperative Banks to indicate name of nominees in FDRs / pass books;

Billions coming into country from tax havens: Australia finalises tax treaties

Steep rise in world population aggravates water crisis, warns UN;

PC hands over replies to PK queries to Pranab;

Pawar for Maharashtrian Prime Minister;

Industrial Production further goes down to 0.5% in January, 2009;

Left, other Regional parties launch 'Third Front' as alternative to Congress and BJP;

TIOL COMMENTARY

ddt 13 march.pdf

Refund of service tax paid under notification No. 41/2007-ST Board Clarifications – Q & A;

editorial.pdf

'Hurricane' campaign against tax havens: Three 'wickets' fall in Europe;

MIXED BUZZ

mbuzz0281.pdf

Billions coming into country from tax havens: Australia finalises tax treaties

mbuzz0280.pdf

Steep rise in world population aggravates water crisis, warns UN;

mbuzz0279.pdf

UN declares 2009 'The Year of Climate Change';

NOTIFICATION

it09not024.pdf

Amends Rules related to investment norms for recognised PFs Income-tax (Fifth Amendment) Rules, 2009;

INSTRUCTION

instruct0902.pdf

Sec 10B benefits: CBDT clarifies approval granted to 100% EoU, later ratified by Board of Approval is acceptable for extending benefits;

CASE LAWS

2009-TIOL-123-HC-KAR-IT.pdf + philips story.pdf

CIT, Bangalore Vs Philips Software Centre Pvt Ltd (Dated: February 16, 2009)

Income tax - Sec 92C(2) - Can TP provisions be invoked in a case where Sec 10A benefits being availed by taxpayer? - HC grants stay without recovery and admits many substantial questions of law - Revenue's appeal admitted:KARNATAKA HIGH COURT;

2009-TIOL-122-HC-MUM-IT.pdf + HC tds story.pdf

East India Hotels Ltd Vs CBDT (Dated: March 6, 2009)

TDS on the charges you pay to a Barber? – No TDS on payments made to a hotel by a customer – the argument of the revenue that the service contracts between the petitioner hotel and its customers is covered under section 194C of the Act cannot be accepted because, neither such a contract constitutes 'work' within the meaning of section 194C of the Act nor those contracts are covered under service contracts specifically included by way of Explanation III to section 194C of the Act. If the contention of the revenue that the word 'any work' in section 194C is very wide enough to include all types of work is accepted, then it would mean that even the hair cutting work done by a barber would be a 'work' covered under section 194C and the person making payment to the barber would be covered under section 194C . Such a wider interpretation is uncalled for, especially when the revenue itself had considered since inception that section 194C is restricted to the works done by contractors / sub-contractors. Apart from the above, the CBDT by its circular No.715 dated 8/8/1995 has clarified that the payments made by persons other than individuals and HUF's for hotel accommodation taken on regular basis will be in the nature of 'rent' subject to TDS under section 194I of the Act. Thus, there is inconsistency in the stand of the CBDT as to whether the services rendered by a hotel to its customers is covered under section 194C or under section 194I of the Act.

CBDT Circular quashed: the circular No.681 dated 8/3/1994 to the extent it holds that the services made available by a hotel to its customers are covered under section 194C of the Act must be held to be bad in law.:BOMBAY HIGH COURT;

2009-TIOL-157-ITAT-MAD.pdf

M/s Elgi Finance Ltd Vs ACIT, Coimbatore (Dated: December 19, 2008)

Assignment of receivables to group concerns at discounted price – Discount allowed not deductible from business income.

Assessee assigned certain receivable in favour of group companies at a discount of Rs. 713 lakhs and claimed the same as deduction for its business income. According to the assessee, the funds belonging to it were held up to a great extent in receivables from various parties and since the assessee was urgently in need of funds such assignment was made in order to repay fixed deposits collected from the public. Therefore such a transaction was made in order to avoid grave financial situation and hence allowable as deduction from its business income.

In reply D.R. argued that such transfer of receivables amounts to transfer of capital asset. As per sec. 2(14) of the I.T. Act property of any kind held by the assessee is in the nature of capital asset and an asset does not cease to eb a capital asset only for the reason that the asset was generated or used in the course of carrying on of the business. If stock-in-trade can be a capital asset for the purpose of sec. 2(14), the receivables as well be in the nature of capital asset.

On appeal Tribunal held that the right to collect the receivables assigned to group companies is a capital asset and the transfer of such capital asset would result in capital gain / loss only and hence not allowable as deduction from business income.

Appeal by assessee dismissed.:CHENNAI ITAT;

2009-TIOL-156-ITAT-MUM.pdf

M/s Inderlok Hotels Pvt Ltd Vs ITO ,Mumbai (Dated: February 5, 2009)

Income Tax - Assessee Company, engaged in the business of the constructing residential flats, sold 2 flats and filed return showing profit from sale of flats as business income - AO added to assessee's income the difference between valuation adopted for the purpose of the stamp duty and actual sale consideration shown by the assessee applying Sec 50C - CIT(A) confirmed AO's order - Held, basic intention to insert section 50C is for the purpose of determining full value of sale consideration for the purpose of computation of capital gains u/s 48 of the Act - Held, section 50C has application only to the extent of determining sale consideration for computation of capital gain under chapter IV-E of the Act and it cannot be applied for determining the income under other heads - Assessee's appeal allowed.:MUMBAI ITAT;

2009-TIOL-155-ITAT-MUM.pdf

ACIT, Mumbai Vs M/s Pfizer Ltd (Dated: December 19, 2008)

Income tax - assessee claims deduction for market research expenses - Revenue disallows - CIT(A) allows it - held, since the Revenue had not appealed against the same in the previous case the same remained conclusive and since no new facts are brought on record, the CIT(A) does not call for any interference - Revenue's appeal dismissed:MUMBAI ITAT;

TRANSFER ORDER

Order 49 of 2009

CBEC issues transfer order of Six Addl./ JCs

SERVICE TAX SECTION

2009-TIOL-418-CESTAT-AHM.pdf

M/s Vijay Security Services Vs CST, Ahmedabad (Dated: January 21, 2009)

ST - Security service - Assessee provides service to a PSU - fails to pay tax - Revenue raises demand - Comm(A) asks for pre-deposit of entire demand - Appeal - Since the demand has been raised on the basis of statement of the service receiver that the entire service tax has been paid to the provider, no relief is called for - period to comply with pre-deposit condition extended - Assessee's appeal dismissed :AHMEDABAD CESTAT;

2009-TIOL-417-CESTAT-KOL.pdf

M/s Paharpur Cooling Towers Ltd Vs CST, Kolkata (Dated: December 11, 2008)

Service tax – No infirmity when service tax is paid in r/o GTA service through CENVAT A/c – Issue no longer res integra – Imposition of penalty and demand of interest set aside:KOLKATA CESTAT;

CENTRAL EXCISE SECTION

CIRCULAR

excise letter.pdf

Pre and post audit of abatement orders in terms of Rule 10 of Pan Masala Packing Machine Rules, 2008- clarification regarding.

CASE LAWS

2009-TIOL-421-CESTAT-AHM-LB.pdf + Banco Products Story.pdf

M/s Banco Products (India) Ltd Vs CCE, Vadodara-I (Dated: February 23, 2009)

Central Excise – MODVAT/CENVAT credit is available on the plastic crates used as material handling equipment in the factory premises as capital goods: An accessory may or may not be required for essential working of the main unit, but is an object which is used for the convenience and effectiveness of that unit. It may also not be necessary that such accessory must be designed to be used in a particular machine. The same may be of a kind, which is capable of being used as a common object, with number of machines. The only criteria for an object to be held as an accessory, as emerging from the various judgments is that that a particular item should be capable of being used with a machine and should advance the effectiveness of working of that machine. The plastic crates in question are used for transportation of the raw material to the processing machine and all the finished goods from the machine to the storage area. It can be argued that instead of using such plastic crates as material handling device, the various components or the inputs can be carried manually also. In any case, having elaborately discussed as to what is the meaning and scope of the term "accessory", as interpreted by the Supreme Court in various decisions and by Tribunal, - held that the plastic crates are eligible capital goods for the purposes of modvat credit.

As also as input: By applying the ratio as enacted by the Supreme Court to the issue disputed before it, held that the process of manufacture starts with the process of handling of the raw material and resultant use of plastic crates for movement of such raw material, in which case, the plastic crates would earn their status as inputs. The plastic crates are used for transporting/storing of the goods in the factory of production. Proper storage of inputs is essential for efficient manufacturing process and in absence of proper facilities for storage and transportation; the same will affect the manufacturing process. Further, the Supreme Court in the case of M/s Rajasthan State Chemical Works has observed that the manufacturing process starts with the drawing of water from the reservoir. By applying the same fact, it can be safely concluded that the manufacturing process starts with the issuance of the inputs from the stores and their further transportation to the production platform is only a part of the process of manufacture integrally related to the final production. In absence of the delivery of the raw material to the manufacturing platform, the process cannot start. Such delivery of the goods includes transportation of the goods by plastic crates. Similarly, finished products are required to be stored in a bonded store room. The plastic crates are again used for such transportation. As such, held that the plastic crates would also be eligible for modvat credit as input.:AHMEDABAD CESTAT LARGER BENCH;

2009-TIOL-420-CESTAT-AHM.pdf

M/s Nova Petrochemicals Ltd Vs CCE, Ahmedabad (Dated: November 19, 2008)

Central Excise – Levy of NCCD on POY captively consumed and clearance to 100% EOU – Matter remanded to Commissioner to re-examine the issue in view of orders passed on similar issue in favour of appellant in the jurisdictional Commissionerate:AHMEDABAD CESTAT;

2009-TIOL-419-CESTAT-AHM.pdf

M/s Tata Chemicals Ltd Vs CCE, Rajkot (Dated: December 11, 2008)

Central Excise – Matter already decided on merits by Assistant Commissioner following Tribunal's order for a different period – When department aware of facts SCN issued in 2003 for demand pertaining to 1998 on similar issue hit by limitation:AHMEDABAD CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt09_023.pdf

CBEC notifies Hassan in Karnataka for loading and unloading of goods;

CASE LAWS

2009-TIOL-121-HC-AHM-CUS.pdf

CCE Vs Jai Prakash Motwani (Dated: January 22, 2009)

Customs – No infirmity in Tribunal setting aside penalty on partner when partnership firm already penalized – No finding by Tribunal/Adjudicating authority on specific role of partner in the offence – No substantial question of law arises:GUJARAT HIGH COURT;

2009-TIOL-422-CESTAT-MUM.pdf + cus story.pdf

M/s AMI International Vs CC, Nhava Sheva (Dated: February 11, 2009)

Does reprography constitute infringement under the Copyright Act, 1951 and does the Customs authority have power to adjudicate copyright issue or jurisdiction to declare prohibition and confiscate the photocopied books, original of which was supplied by the Government of Ethiopia, Ministry of Education – Tribunal sets aside order and remands the case.

Observations of Tribunal while ordering remand –

It appears that the original books for the purpose of copying were supplied to the appellants by the customer. However, for reasons best known to them, they have not furnished any details as to how and when the books were supplied by the Government of Ethiopia and how and when the same were imported into India. They have also not offered any explanation as to how they have returned or intend to return the said originals of the books, which have been claimed to have been supplied by the Customer, back to the customer.

I further note that for the book, titled “Computer Organization and Architecture”, by William Stallings, M/s Prentice Hall of India Pvt. Ltd., New Delhi not only claimed copyright but also, vide their letter dated 26.9.2007 claimed that the right to export the said book is with them only and they, therefore, requested the Customs authorities to detain the books under export for the violation of the copyright.

In such a situation, the Commissioner should have sought clarification from the competent authority in the Copyright Act, in relation to all the 23 photocopied books, the list of which is annexed to the Show Cause Notice.

I find from the list that while writers' names are not mentioned in 12 photocopied books, publishers' names are not mentioned in any of the 23 photocopied books, although titles in respect of all the 23 books have been mentioned.

Pending receipt of clarification from the competent authority in the Copyright Act, the goods should have been detained by the Customs. In the facts and circumstances of the case, I am of the view that it is only proper that the Commissioner makes comprehensive reference to the competent authority in the Copyright Act giving full facts of the case and details of all the 23 photocopied books in question and take appropriate action as per law on receipt of the clarification from him in this regard. A copy of the clarification, as and when received, may also be provided to the appellants.

I further find that the appellants have raised several legal issues before me including the question of jurisdiction of the Commissioner of Customs to adjudicate such matters. It is seen that these issues were not raised by the appellants before the Commissioner. Hence, there are no findings recorded by the Commissioner on these issues in his Order. In the absence of any findings by the Commissioner, it is not possible for me to arrive at a conclusion.

Order of Commissioner set aside and matter remanded for denovo adjudication.:MUMBAI CESTAT;