Income from House Property – when rent received is higher than fair rent, notional interest on deposit not to be taken into account for determining annual value; Officers of Department must not take advantages of ignorance of an assessee: ITAT (See in "Direct Tax Basket")

Smuggling of diamonds - Department need not prove the impossible - It has to establish it's case with such a degree of probability that a prudent man may on it's basis believe in existence of facts in issue – Bombay HC holds order of Commissioner as unassailable (See in "Indirect Tax Basket")

Assessee is in Uttar Pradesh – Appeal against CESTAT Delhi Bench Order – Delhi High Court cannot exercise jurisdiction – No Forum Shopping: Delhi HC (See in "Indirect Tax Basket")

Industrial production down by 2.3% in March; works out to 2.4% between Apr-March, 2009;

TRAI hires services of third party agency to assess quality of telecom services;

Nine chemicals banned to protect public from poisonous substances;

Visbile signs of recovery in manufacturing: CII-M-Ascon Survey;

H1N1 cases double over weekend; Mexico and USA hard hit;

TIOL COMMENTARY

ddt 12 May.pdf

TIOL Effect – CBDT officially confirms that Form 17 and the rest of confusion effective only from 1.7.2009!

stgst.pdf

Is Section 76 of Finance Act, 1994 an eye-popping provision?

MIXED BUZZ

mbuzz0470.pdf

Industrial production down by 2.3% in March; works out to 2.4% between Apr-March, 2009;

mbuzz0469.pdf

TRAI hires services of third party agency to assess quality of telecom services;

mbuzz0468.pdf

Nine chemicals banned to protect public from poisonous substances;

mbuzz0467.pdf

Visible signs of recovery in manufacturing: CII-M-Ascon Survey;

mbuzz0466.pdf

H1N1 cases double over weekend; Mexico and USA hard hit;

2009-TIOL-233-HC-MUM-IT.pdf

CIT Vs M/s Mahalaxmi Glass Works Pvt Ltd (Dated: April 1, 2009)

Income tax - Sec 145A - Tribunal upholds CIT(A) order directing the AO to make adjustment of unutilised modvat credit to the opening stock - held, if there is any change in the closing stock then there is bound to be a corresponding adjustment in the opening stock of next year and such an adjustment does not amount to double benefits - Delhi HC decision in Commissioner of Income Tax Vs. Mahavir Alluminium Ltd followed - Revenue's appeal dismissed:BOMBAY HIGH COURT;

2009-TIOL-291-ITAT-MUM.pdf + rent story.pdf

ITO,Mumbai Vs M/s Pushya Properties Pvt Ltd (Dated: March 6, 2009)

Income Tax – Income from House Property – when rent received is higher than fair rent, notional interest on deposit not to be taken into account for determining annual value; when actual rent received by assessee was more than the fair rent of the house property section 23(1 )( b) is invoked, notional interest on deposit could not be taken into account for determining annual value. Since the action of the Assessing Officer is contrary to the judgment of jurisdictional high Court, therefore, same is liable to quash. When the Assessing Officer found that on the basis of information collected, the annual value is more than actual rent received then why the Assessing Officer did not take that higher annual value and why he reached to conclusion simply adding 10% of deposit to the actual amount received by the assessee?

'Multiple litigation' Officers of the Department must not take advantages of ignorance of an assessee. Can Assessing office sit on the decision of ITAT, when the order of Assessing officer has merged with the order of the ITAT? When on talks of merger of a judgment, order or a decision of a subordinate court or forum into the judgment, order or decision of a superior court or forum the merger may be of the entire order, i.e., the reasons and the conclusion, or only a part, viz.. only the conclusion by a different process of reasoning, in that event what merges is the operative part after the confirmation, reversal or modification, but in any event, the order of the lower court or the forum does not have any independent existence thereafter. The doctrine of merger is founded on principle of propriety in the hierarchy of justice delivery system, the underlying logic being that there cannot be more than one operative order governing same subject-matter at a given point of time. The only caveat to the doctrine of merger is that the content or the subject-matter of challenge before the superior forum has to be borne in mind.:MUMBAI ITAT;

2009-TIOL-290-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Monsanto India Ltd (Dated: March 24, 2009)

Income tax - Sec 10(1) - Assessee is into production of high yield hybrid seeds - enters into agreement with farmers for use of their land - also involves farmers in the farming activities but supervision is done by the assessee company's employees - treats the income as agricultural income - AO disallows but CIT(A) allows - held, in view of settled laws and the rule of consistency, it is agricultural income and cannot be treated as business receipt - Revenue's appeal allowed

Sec 80IB - sale of scrap - assessee sells empty drums as scrap and the receipt goes to reduce the cost of material - Revenue disallows - held, in view of the Special Bench decision of the Tribunal, receipt from sale of scrap items is to reduce the cost of raw materials and cannot be treated as a taxable revenue receipt - Revenue's appeal dismissed:MUMBAI ITAT;

2009-TIOL-289-ITAT-HYD.pdf

Dr Sudhir Nair (HUF) Vs ITO, Hyderabad (Dated: April 9, 2009 )

Income tax – Capital Gains – when two assets are transferred, there has to be two separate capital gains and the two cannot be integrated into one to compute only one Capital gain:HYDERABAD ITAT;

2009-TIOL-288-ITAT-MUM.pdf

Mrs Bakhtawar B Dubash Vs DCIT, Mumbai (Dated: January 29, 2009)

Income Tax - Section 2(24)(iv) and section 17(2)(iv) - Assessee is a director in a company - files return - AO makes addition on the ground that neither the company nor the assessee could prove that the expenses being for the purpose of business of company and not for personal purpose of the assessee - CIT (A) confirms the AO order - Held, it is the settled proposition of law that an amount can be taxed only once and not twice. Since the amount has already been taxed in the hands of the company by disallowing the same as not an allowable expenditure, the same cannot be added in the hands of the director as value of any benefit or perquisite and thereby attracting the provisions of section 2(24)(iv) or 17(2)(iv) or 28(iv), CIT(A) order set aside. Assessee appeal allowed.:MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-745-CESTAT-MUM.pdf

CCE, Goa Vs Marpol Pvt Ltd (Dated: March 26, 2009)

Cenvat Credit of Service Tax can be taken on the strength of TR-6 challan during the period 01.01.2005 to 16.06.2005 – Tribunal decision in Essel Pro-pack Ltd. vs. CCE [ 2007-TIOL-1643-CESTAT-Mum ] followed – Revenue appeal dismissed.:MUMBAI CESTAT;

2009-TIOL-744-CESTAT-DEL.pdf

M/s Universal Cylinders Ltd Vs CCE, Jaipur (Dated: March 3, 2009)

ST - Maintenance or repair service - Assessee enters into an agreement with the IOC Ltd for repair of LPG cylinders - demand and penalty confirmed - held, in view of amendment of the definition of maintenance/repair service, the demand of tax on repair job prior to 16.6.05 is not maintainable - Assessee's appeal allowed:DELHI CESTAT;

CENTRAL EXCISE SECTION

NOTIFICATION

exnt09_10.pdf

CBEC redefines jurisdictions of Coimbatore & Salem Excise Commissionerates following splitting of Coimbatore & Erode districts into three units;

CASE LAWS

2009-TIOL-235-HC-DEL-CX.pdf + appeal story.pdf

Brindavan Beverages Pvt Ltd Vs CCE, Meerut (Dated: May 1, 2009)

Assessee in Uttar Pradesh – Appeal against CESTAT Delhi Bench Order – Delhi High Court cannot exercise jurisdiction: merely because the Order that is impugned has been passed by the CESTAT, New Delhi, the High Court at New Delhi ought not exercise jurisdiction. It is not a moot question that if CESTAT had an establishment in Uttar Pradesh, the Plaintiff would have to file its appeal there. What is irrefutable is that the Plaintiff cannot contend that it is inconvenient to approach the High Court in Uttar Pradesh where its factory and offices are located. There is no justification for the officials to travel out of that State only because for reasons recondite, if not mala fide , a Court outside that State has been approached.

No Forum Shopping: Any High Court is justified in exercising powers under Article 226 either if the person, Authority or Government is located within its territories or if the significant part of the cause of action has arisen within its territories. The rationale of Section 20 of the Code of Civil Procedure would, therefore, also apply to Article 226 (2) of the Constitution. These considerations are aptly encapsulated in the term forum conveniens which refers to the situs where the legal action be most appropriately brought, considering the best interests of the parties and the public (see Black's Law Dictionary). The writ Court should invariably satisfy itself that its choosing is not malafide or an example of forum shopping.:DELHI HIGH COURT;

2009-TIOL-748-CESTAT-MUM.pdf

Hindustan Organic Chemicals Ltd Vs CCE & CC, Mumbai-VII (Dated: March 30, 2009)

Modvat credit allegedly wrongly availed was paid under protest in PLA after receipt of O-in-O – Commissioner(A) setting aside the order and assessee taking credit in Modvat account – Such suo motu taking of credit without filing refund claim is clearly illegal as no provision exists in the CER, 1944 for such an action – Larger Bench decision in BDH Industries Ltd. vs. CCE [ 2008-TIOL-1211-CESTAT-Mum-LB ] followed.:MUMBAI CESTAT;

2009-TIOL-747-CESTAT-MUM.pdf

CCE & CC, Nashik Vs M/s Jindal Saw Ltd (Dated: March 23, 2009)

Cost of food formed part of the expenditure incurred by the factory, which had a bearing on the cost of production of final product – Cenvat Credit available of the Service Tax paid on outdoor catering service availed and utilized in the factory canteen for supply of food to factory employees – LB decision in GTC Industries Ltd. [ 2008-TIOL-1634-CESTAT-Mum-LB ] relied upon.:MUMBAI CESTAT;

2009-TIOL-746-CESTAT-KOL.pdf

M/s La Opala Rg Ltd Vs CCE, Ranchi (Dated: January 26, 2009)

Central Excise - CENVAT Credit on common inputs - demand of 8% on the exempted goods - Assessee Appellants have maintained separate accounts and have intimated the Department well in advance about the percentage of the inputs they would have used in the production of dutiable goods, and have ab initio not taken credit of duty on inputs meant for use in the manufacture of non-dutiable goods, the confirmation of the duty-demand against them is not justified. Review by the Chief Commissioners - the appeal has not been signed by Chief Commissioner appointed by gazette Notification as required under law.:KOLKATA CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff09_046.pdf

Govt terminates anti-dumping duty on plastic ophthalmic lenses;

cuscir09_015.pdf

CBEC issues clarification on levy of Interest under Section 47(2) of Customs Act for delayed payment of duty on clearance of goods from a bonded warehouse;

CASE LAWS

2009-TIOL-234-HC-MUM-CUS.pdf + hc cus story.pdf

CIT Vs M/s Mahalaxmi Glass Works Pvt Ltd (Dated: April 23, 2009)

Smuggling of diamonds - Department has not to prove the impossible - It has to establish it's case with such a degree of probability that a prudent man may on it's basis believe in the existence of the fact in issue – High Court holds order of Commissioner, Customs(Preventive) as unassailable.

Principles laid down by High Court in the matter of section 123 of the Customs Act and retracted confession as deduced from the Apex Court decisions in D.Bhoormull [ 2002-TIOL-253-SC-CUS ] and Vinod Solanki [ 2009-TIOL-01-SC-Fema ]

Where any goods which are specified under subsection (2) of Section 123 of the Customs Act, 1962 are seized under the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods are seized. Such goods would obviously include goods which are specified by the Central Government by notification in the Official Gazette.

In case of other goods which are not covered by subsection 2 of Section 123 and in respect of which no notification is issued the basic cannons of criminal jurisprudence and natural justice will apply. The burden of proving that the goods are smuggled will be on the Department.

However, the Department has to establish its case with such a degree of probability that a prudent man may on its basis believe in the existence of the fact in issue.

The Department is not obliged to prove facts which are especially within the knowledge of the proceedee as part of its primary burden because under Section 106 of the Indian Evidence Act, the burden of proving facts which are specially within the knowledge of a person is on him.

However, the special or peculiar knowledge of the person proceeded against will not relieve the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden, to discharge which very slight evidence will suffice.

The evidence brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidence.

Initial burden to prove that the confession was voluntary in nature is on the Department.

To arrive at a finding as to whether the retracted confessional statement is voluntary or not, the court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant features.

The mere retraction of a confessional statement may not be sufficient to make the confessional statement irrelevant, but the court is obliged to take into consideration the pros and cons of both the confession and the retraction made by the accused.:BOMBAY HIGH COURT;

2009-TIOL-743-CESTAT-MAD.pdf

M/s Vinayaka Alloys Pvt Ltd Vs CC, Chennai (Dated: February 6, 2009)

Customs – Import – Heavy melting scrap – Used cartridges – Penalty – Confiscation - The appellant had imported the impugned consignment of HMS bonafidely and had also insisted that the consignment should be certified by an agency specified by the DGFT as not containing any explosive material. Hence, the appellant is not found guilty of transactions involving mens rea. There was no willful misdeclaration of the description of goods, rendering the consignment of HMS liable for confiscation under Sections 111 (m) of the Act. Used cartridges being a restricted item, their import is liable for confiscation under Section 111(d) of the Act. The importer is statutorily liable to penalty under Section 112 (a) of the Act. However, this had to be a token penalty considering that the penal liability arose owing to operation of the statute and not on account of the informed involvement of the importer in any offending transaction involving the used cartridges. Hence, only the spent cartridges are liable for confiscation under Section 111(d) of the Act. Penalty equal to the value of the offending goods is ordered in these cases. As regards the penalty on the CHA, the penalty is imposed on the sole ground that its lack of diligence facilitated offending transactions by the importer. As the importer is not found guilty of transactions involving mens rea, no penalty can be imposed on the CHA. ( Para 3) :CHENNAI CESTAT;