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Income tax - Search and seizure - TPO finds no fault but Investigation finds documents of tax avoidance - HC upholds provisional attachment of demat account u/s 281B; Sec 132 does not mandate disclosure of satisfaction recorded before issue of warrant: Bombay HC (See in "Direct Tax Basket") A severe back pain and wife's mental illness do not constitute sufficient cause for delay – Applications for Condonation of Delay dismissed by Tribunal (See in "Indirect Tax Basket") Embroidered fabrics, which are subject to process of dyeing and bleaching merit classification under Chapter heading 58.05 and are entitled to exemption under Notification no. 4/97-CE - Tribunal shreds ROM filed by Revenue (See in "Indirect Tax Basket") New Govt may impose cess on natural gas: Petroleum Secretary; UN drives turns to internet to reach target of 7 bn new trees; AEPC launches Multi-Varsity for apparel industry; President appoints four Addl Judges in Delhi HC + one in Kerala HC; SNC Lavalin case: Kerala Governor examining legal opinion before giving nod for action; Taxes on wage earners fall marginally in 2008 in OECD countries ; India's exports further slumps by 33% in April; No hope for recovery till Sept, 2009; WHO to release guidance for clinical management of H1N1 infection ; Ashok Chawla takes over as Finance Secretary; gets addl charge of Dept of Financial Services; |
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| Dear Member, Sending the following files: |
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TIOL COMMENTARY Pendency to be reduced by half – CESTAT President! Can ITAT take back what Assessing Officer has given? MIXED BUZZ UN drives turns to internet to reach target of 7 bn new trees; AEPC launches Multi-Varsity for apparel industry; Taxes on wage earners fall marginally in 2008 in OECD countries; WHO to release guidance for clinical management of H1N1 infection; |
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Implementation of new TDS Regime postponed till July 1; CASE LAWS 2009-TIOL-239-HC-MUM-IT.pdf + evasion story.pdf Genom Biotech Private Limited Vs DDIT (Dated: May 7, 2009) Income tax - Search u/s 132 - Assessee company manufactures drugs and also undertakes exports - sends foreign remittances to certain companies in Cyprus and UK for marketing and advertising expenses - Search and seizure - documents reveal foreign remittances made to foreign companies were deposited in the private account of petitioner no 2 who is CMD of the assessee-company - Revenue alleges tax avoidance - issues notice u/s 153A and also provisionally attaches immovable property and demact account of petitioner no 2 u/s 281B - Assessee argues the petitioner no 2 is an NRI and has earned abroad and brought the same back to India and made investments in shares - also contends that even the Transfer Pricing Officer had scrutinised and allowed it in regular assessment - alleges that the designated authority did not any material in possession to form a reasonable belief that there existed any one or one of the three conditions set out in clauses (a), (b) & (c) of section 132 (1) of the Act - held, ++ It is not the mandate of section 132 or any other provision in the Act that the reasonable belief recorded by the designated authority before issuing the warrant of authorisation must be disclosed to the assessee. ++ The information received was that the assessee has been manufacturing fake / exaggerated invoices and, therefore, the designated authority was justified in forming a belief that conditions set out in clause (b) of section 132(1) of the Act is satisfied. Similarly, the information received was that the investments made out of the funds brought to India represented the undisclosed income of the petitioner No.2 and, therefore, the designated authority was justified in forming a belief that conditions set out in clause (c) of section 132(1) of the Act are satisfied. ++ The fact that the notice under section 153A of the Act as well as the order under section 281B of the Act have been issued on the same date i.e. on 24/7/2008 would not affect the validity of the provisional attachment, because, under section 132 of the Act it is not mandatory that the proceedings must be pending on the date of invoking section 281B of the Act. Provisional attachment can be levied even in cases where the proceedings are yet to be initiated. Therefore, issuing 153A notice and invoking section 281B of the Act on the same day would not affect the validity of the order passed under section 281B of the Act on 24/7/2008.:BOMBAY HIGH COURT; Petron Engineering Construction Ltd Vs CIT (Dated: May 7, 2009) Income tax - Sec 80HHB (3) - assessee enters into a contract with a foreign company for erection and commissioning of a plant - while the project was on, assessee got additional work related to the same project - fails to bring back 50% of profits and gains in convertible foreign exchange within six months period as per law - files application for extension of time - Revenue rejects the same on the ground that the assessee fails to furnish valid reasons for its failure to bring back foreign exchange for claiming deduction - held, since the assessee had got additional work related to the project and not independent of the original contract, bringing back the funds may have delayed the execution of the project and hurt its business interests - Revenue should have fully examined the papers before denying the extension application which could have been filed only expiry of six months period and not before that - Revenue's order set aside and remanded for fresh consideration - Assessee's appeal allowed :BOMBAY HIGH COURT; ACIT, Bangalore Vs M/s Jataayu Software Pvt Ltd (Dated: March 31, 2009 ) Income tax - Sec 10A - Assessee is into export of computer software - receives orders from five domestic companies for export to foreign clients - assessee directly exports the software and claims benefits - AO disallows but CIT(A) allows - held, since it was only the order which was placed by the domestic companies but the goods were directly exported to foreign clients and the payment was also directly received in convertible foreign exchange, Sec 10A benefits cannot be denied - Revenue's appeal dismissed:BANGALORE ITAT; DCIT, Bangalore Vs M/s Salarpuria Properties Pvt Ltd (Dated: February 27, 2009) Income Tax - Sections 2(22)(e), 194, 201(1) and 201(1A) - Assessee is into building and construction business - grants loans to sister concerns - AO treats the same as 'deemed dividend' - insists on TDS under Sec 194 - CIT(A) takes the view that loans given to sister concerns which are not shareholders of the lender company are not 'deemed dividend' - Sec 194 r/w Sec201(1) not attracted – Tribunal upholds CIT(A)'s order observing that payment or advance to non-share holders does not require tax deduction at source under Sec 194 - Revenue's appeal dismissed.:BANGALORE ITAT; ACIT Vs Shri Sanjay Sabherwal (Dated: February 11, 2009) Income Tax - Deemed dividend - Sec 2(22)(e) - Assessee is MD in a closely-held company - takes loan from company - AO terms it as deemed dividend and adds the same to his total income - CIT(A) deletes it by accepting the assessee's plea that his interest in the company was reduced to 9% and Sec 2(22)(e) is not applicable in his case - held, since the voting right of the assessee was reduced to 9% in the extraordinary general body meeting of the company and the same was communicated to the RoC, it cannot be treated as deemed dividend - Revenue's appeal dismissed : RANCHI ITAT; |
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CBEC issues first list of AGT order for 11 Addl / JCITs;
SERVICE TAX SECTION Kaycee Industries Ltd Vs CCE, Thane (Dated: March 26, 2009) Service Tax paid on outdoor catering services received for supply of food in the canteen attached to the factory – Cenvat credit available as conditions laid down by Larger Bench decision in GTC Industries [ 2008-TIOL-1634-CESTAT-Mum-LB ] satisfied – Appeal allowed. :MUMBAI CESTAT; M/s United Enterprises Vs CCE & ST, Patna (Dated: March 2, 2009) Service tax - C & F Service - Assessee claims it provides cargo handling service relating to export cargo which is tax exempt - Revenue demands tax for C & F Service and imposes huge penalty - Revenue argues the assessee having entered into an agreement with M/s SAIL for loading, unloading, storing and transportation to clients of the principlal falls in the category of C & F Service - held, since the assessee provided information only after summons were issued and prima facie, do not make a strong case, 25% pre-deposit ordered:KOLKATA CESTAT;
CIRCULAR Manner of Scrutiny of ER1, ER2 and ER3 returns and returns submitted by Dealers by the proper officer – regarding.; CASE LAWS M/s Arveechem Pharma Ltd Vs ACCE, Mysore (Dated: April 21, 2009) Central Excise - recovery of interest on erroneous rebate - not a fit case for interference under Article 227 of the Constitution - It is open to the petitioner to move the revisional authority if the revisional authority has been made active on being constituted by the Central Government.: KARNATAKA HIGH COURT; 2009-TIOL-753-CESTAT-MUM.pdf + Modern Silk Story.pdf CCE, Mumbai-V Vs M/s Modern Silk Industries (Dated: March 26, 2009) Embroidered fabrics, which are subject to the process of dyeing, bleaching etc. merit classification under Chapter heading 58.05 and are entitled to exemption under Notification no. 4/97-CE - Tribunal shreds ROM filed by Revenue. Following findings of Commissioner(A) upheld – ++ Chapter 54.06 covers fabrics which fall in the category of base fabrics as against those under chapter 58.05 which covers embroidery in piece, in strips or in motifs. Once embroidered and classified, the fabrics cannot be reverted back to chapter 54.06 for classification. ++ A careful reading of Chapter 58 reveals the legislative intention that embroidery is not to be treated as fabrics or else there was nothing for creating chapter heading 58.05 or otherwise it could have been “embroidered fabrics” rather than the word “embroidery” alone. ++ The Board's Circular on the subject no. 25/12/69-CX.2 dtd. 18.01.74 underlines the view that once fabrics has been converted into embroidery, it cannot go back to base fabrics for the collection of processing duty and the fabric simply ceases to be base fabrics then and even if certain processes are carried out it still remains to be embroidered fabric. ++ Embroidered fabrics, which are subject to the process of dyeing, bleaching etc. merit classification under Chapter heading 58.05 and as such exemption envisaged under Notification no. 4/97-CE is available to the respondent. Tribunal observations on ROM application – ++ It is not open to the Revenue to reargue the matter and call upon the Tribunal to review the basis of the decision. This is beyond the scope of the rectification application. ++ Mistake apparent on the face of the record must be an obvious and a patent mistake and not something which has to be established by a long drawn process of reasoning or where two opinions are possible. Apex Court decision in CCE, Calcutta vs. ASCU Ltd. [ 2002-TIOL-408-SC-CX ] relied upon. ROM application of Revenue dismissed. :MUMBAI CESTAT; CCE, Nashik Vs Garware Polyester Ltd (Dated: March 20, 2009) Interest – Differential amounts paid by the assessee after finalization of the provisional assessment – Interest is payable under Rule 7(4) of the CER, 2002 – LB decision in Cadbury India Ltd. vs. CCE, Pune-I [ 2008-TIOL-1986-CESTAT-Mum-LB ] relied upon – Revenue appeals allowed.:MUMBAI CESTAT; Tech-Coat (Nashik) Pvt Ltd Vs CCE & CC, Nashik (Dated: March 30, 2009) Condonation of Delay – Submissions of the appellant that the Clerical Assistant in the office of the Consultant, who has since resigned, had received the documents from the appellants but did not file appeal with the Tribunal have been made in a haphazard manner without disclosing the name of the Clerical Assistant or the date of his resignation or his affidavit – Sufficient cause for condonation of delay in filing appeals not shown – Appeals dismissed as time barred.:MUMBAI CESTAT;
CUSTOMS SECTION NOTIFICATION Govt imposes anti-dumping duty on import of Injection Moulding Machines; CASE LAWS 2009-TIOL-237-HC-KERALA-CUS.pdf Mount Zion Collage Of Engineering Vs ACC (Dated: April 6, 2009) Customs – Import of aircraft for educational purposes – Valuation adopted by Customs based on contemporaneous imports found reasonable – Execution of bond and bank guarantee for duties arrived after provisional assessment only to secure interest of Revenue – No justification to interfere at the stage of provisional assessment:KERALA HIGH COURT; 2009-TIOL-755-CESTAT-MUM.pdf + Peak Agencies Story.pdf M/s Peak Agencies Vs CC, Mumbai (Dated: March 26, 2009) A severe back pain and wife's mental illness does not constitute sufficient cause for delay – Applications for Condonation of Delay dismissed by Tribunal. Tribunal's observations – The CHA had no back pain before 10.05.08 and could have instructed his Advocate to file the appeal. He might have taken rest as per medical advise from 10.05.08 to 03.06.08, but that did not stand in the way of his instructing the Advocate over telephone or otherwise for filing the appeal. :MUMBAI CESTAT; M/s Vastupal Tejpal Vs CC, Nhava Sheva (Dated: April 22, 2009) Wife's mental illness does not constitute sufficient cause for delay – Stay petitions/Appeals and Applications for Condonation of Delay dismissed by Tribunal. Tribunal's observations – On query, it is admitted by the appellants that no medical examination was done by any specialist doctor nor any tests were performed to determine such serious illness and nothing was produced by the applicant in this regard. The only reason that the appeal could not be filed in time is due to the illness of the wife of the proprietor. The medical record placed before us does not inspire any confidence. The explanation given by the appellants for condonation of delay is not acceptable.:MUMBAI CESTAT; |
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