Central Excise – Mandatory penalty – Dharmendra Textile case did not stipulate that for every demand, penalty is an automatic consequence – If non-payment of duty was attributable to fraud and collusion, Penalty is mandatory, payment of duty before or after SCN does not make any difference: Supreme Court (See in "Indirect Tax Basket")

Income Tax - Inter-corporate deposits are not deemed dividend under Sec 2(22)(e); Receipt on sale of trademark or brand name is not exigible to capital gains tax, prior to introduction of words 'Trademark or Brand name associated with a business': ITAT (See in "Direct Tax Basket")

New TDS Regime - A tale of goof-ups; TPL, TRU need to develop grip over taxpayers' pulse for improved compliance!(See in "Common Basket")

CBEC Chairman is back but big question mark over Commissioners' transfer order continues;

Software engineer suffers disability due to medical negligence: Supreme Court orders Rs one Crore compensation against AP Govt hospital;

ICAO adopts two new air law conventions on damage to third parties;

CBN arrests police constable in NDPS case;

UNESCO Peace Prize goes to Brazilian President;

India, China & Brazil propose, WTO grants extension to waiver to DCs for preferential tariff for LDCs;

USD 8 bn Hasal Ali case: Govt denies report on India giving forged papers to Swiss Govt;

TIOL COMMENTARY

ddt 14 May.pdf

Scrutiny of Central Excise Returns by Proper Officers – CBEC Instructions!

cobweb.pdf

New TDS Regime - A tale of goof-ups; TPL, TRU need to develop grip over taxpayers' pulse for improved compliance!

CASE LAWS

2009-TIOL-242-HC-MUM-FEMA.pdf

CFL Capital Financial Services Limited Vs Appellate Tribunal (Dated: May 6, 2009)

FEMA / FERA – Notice issued for violation of FERA within two years of its repeal is valid in terms of Section 49(3) of FEMA:BOMBAY HIGH COURT;

MIXED BUZZ

mbuzz0479.pdf

ICAO adopts two new air law conventions on damage to third parties;

mbuzz0478.pdf

CBN arrests police constable in NDPS case;

mbuzz0477.pdf

UNESCO Peace Prize goes to Brazilian President;

mbuzz0476.pdf

India, China & Brazil propose, WTO grants extension to waiver to DCs for preferential tariff for LDCs;

mbuzz0475.pdf

USD 8 bn Hasal Ali case: Govt denies report on India giving forged papers to Swiss Govt;

2009-TIOL-241-HC-MUM-IT.pdf

Messrs Indus Engineering Co Vs ACIT , Bombay (Dated: April 13, 2009)

Income tax - Penalty u/s 271(1)(c) - Assessee searched and havala loans detected - assessee admits the same - Additions made and penalty initiated - held, since the assessee did not disclose the undisclosed income either in the original return or the revised return it is a clear case of concealment of income. This case also does not come under Explanation 5 of Sec 271 as the assessee did not disclose the manner in which income had been earned - Immunity of Explanation 5 denied and assessee's appeal dismissed:BOMBAY HIGH COURT;

2009-TIOL-240-HC-KOL-IT.pdf

CIT Vs Sri Suresh Chand Bansal (Dated: March 13, 2009)

Income Tax - Section 271(1)(c) - 100% penalty on the ground of concealment of income – CIT(A) cancels penalty - Tribunal on the basis of decision of Apex Court in Diip N. Shroff v. JCIT upholds CIT(A) order - Held, the matter is covered by the  decision of the Apex Court in  Diip N. Shroff case (2007-TIOL-96-SC-IT) and does not call for interference - Revenue's appeal dismissed:CALCUTTA HIGH COURT;

2009-TIOL-297-ITAT-MUM.pdf + dividend story.pdf

Bombay Oil Industries Ltd Vs DCIT, Mumbai (Dated: January 22, 2009)

Inter-corporate deposits not deemed dividend under section 2(22 )( e) of the Income Tax Act; It is clear there is distinction between deposits vis -a- vis loans/advances. Section 2(22 )( e) enacts a deeming fiction whereby the scope and ambit of the word dividend has been enlarged to bring within its sweep certain payments made by a company as per the situations enumerated in the section. Such a deeming fiction would not be given a wider meaning than what it purports to do. The provisions would necessarily be accorded strict interpretation and the ambit of the fiction would not be pressed beyond its true limits. The requisite condition for invoking section 2(22 )( e) of the Act is that payment must be by way of loan or advances. Since there is a clear distinction between the inter-corporate deposits vis -a- vis loans/advances, the authorities below were not right in treating the same as deemed dividend under section 2(22)(e) of the Act.

The receipt on sale of trademark/brand name is not exigible to capital gains tax, prior to the introduction of the words “Trademark or Brand name associated with a business” It is an admitted fact that trademark/brand name of “Parachute” and “ Saffola ” is a self-generated asset and the cost of the same is nil. The receipt on sale of trademark/brand name is not exigible to capital gains tax, prior to the introduction of the words “Trademark or Brand name associated with a business”. The same has been clarified by the judgment of the Delhi High Court in the case of Milk Food Ltd. Therefore, for the relevant assessment year the sale receipts on account of transfer of trademark/brand name mentioned above is not liable to capital gain tax:MUMBAI ITAT;

2009-TIOL-296-ITAT-MAD.pdf

Shri V Sekar Vs ITO, Erode (Dated: December 12, 2008)

Penalty u/s 271(1)© - Cash credits not proved – Recording of satisfaction

Satisfaction to be recorded by AO while concluding the assessment proceedings. Mentioning of the words “ Penalty proceedings u/s 271(1)© are initiated separately ” is adequate in view of Madras High Court decision in Sajjanraj Nahar Vs CIT ( 283 ITR 320 ).

Addition on account of loan credit not proved and interest paid on bogus loans. Penalty upheld

Appeal by assessee dismissed.:CHENNAI ITAT;

2009-TIOL-295-ITAT-HYD.pdf

Sri Vishnu Cements Ltd Vs ACIT, Hyderabad (Dated: January 9, 2009)

Interest paid on TDS not deposited – no deduction allowed, especially when the assessee unauthorisedly utilised the revenue of the government:HYDERABAD ITAT;

SERVICE TAX SECTION

2009-TIOL-760-CESTAT-AHM.pdf

M/s Absolute Consultants Pvt Ltd Vs CST, Ahmedabad (Dated: April 21, 2009)

ST - Insurance Auxiliary Services - Demand raised on reimbursable charges - held, since the assessee has raised out of pocket expenses on its clients on flat rate basis, this does not mean that no expenses have been incurred and the Revenue can deny the credit. If reimbursed sum is more than the flat rate, the tax is to be paid on the differential but the details are to be verified and the matter is remanded - Assessee's appeal allowed:AHMEDABAD CESTAT;

2009-TIOL-756-CESTAT-DEL.pdf

M/s Prem Steels (P) Ltd Vs CCE, Meerut-I (Dated: March 4, 2009)

Service tax - Real Estate Agent service - assessee is a manufacturer of M S Ingots - earns commission from real estate brokerage - demand and penalty - first adjudicating authority drops demand - Reviewing authority confirms demand and imposes penalty - held, commission earned in relation to sale, purchase or leasing of property is covered by the definition of real estate agent service - demand confirmed but penalty reduced - Assessee's appeal dismissed:DELHI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-63-SC-CX.pdf + rajasthan spinning story

CC & CCE Vs M/s Rajasthan Spinning & Weaving Mills (Dated: May 12, 2009)

Central Excise – Mandatory penalty – Dharmendra Textile case did not stipulate that for every demand, penalty is an automatic consequence – The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of section 11A. That is what Dharamendra Textile decides.

If the non-payment of duty was attributable to fraud, collusion etc, Penalty is mandatory: It, therefore, follows that if the notice under section 11A (1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under section 11A (2) there is a legally tenable finding to that effect then the provision of section 11AC would also get attracted. penalty under section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section.

Payment of duty before or after SCN does not make any difference. How payment of the differential duty, whether before or after the show cause notice is issued, can alter the liability for penalty, the conditions for which are clearly spelled out in section 11AC of the Act.:SUPREME COURT;

2009-TIOL-62-SC-CX.pdf

UoI Vs M/s Krishna Processors (Dated: May 5, 2009)

Central Excise – Penalty under Rule 96 ZO mandatory as held in Dharamendra Textile case – writ petitions restored to respective High Courts – The consequence of the said judgment in Dharmendra Textile Processors is that the challenge, to the vires of Rule 96ZQ(5)(ii) in the Original Writ Petition before the High Courts stands revived.In the circumstances, the entire batch of Civil Appeals remitted to the respective High Courts for deciding the question of vires of the above sub-rule.:SUPREME COURT;

2009-TIOL-759-CESTAT-BANG.pdf + board story.pdf

CCE, Hyderabad Vs M/s Arch Pharmalabs Ltd (Dated: January 1, 2009)

Central Excise – Section 35B(2) – authorization letter to file the appeal under Section 35 B(2) signed by only one Commissioner instead of the Committee of the Commissioners is not valid – there is a drafting error in using the words “direct any Central Excise Officer authorized by him” in Section 35 B(2) and the same is brought to the notice of the Board to do the needful.

Central Excise – reversal of Credit availed on inputs, capital goods and intermediate goods lost in fire accident – the issue stands settled by the Larger Bench in case of M/s Grasim Industries and revenue appeals has no merit.:BANGALORE CESTAT;

2009-TIOL-758-CESTAT-DEL.pdf

M/s Hindustan Zinc Ltd Vs CCE, Jaipur (Dated: February 27, 2009)

Central Excise – Cement used for construction and repair of mines not eligible for CENVAT credit in view of Rajasthan High Court decision [ 2007-TIOL-798-HC-RAJ-CX ] – Impugned order disallowing CENVAT credit upheld – Penalty set aside as the issue involves interpretation:DELHI CESTAT;

2009-TIOL-757-CESTAT-MAD.pdf

CCE, Coimbatore Vs Sonal Vyapar Ltd (Dated: February 12, 2009)

Central Excise – Cenvat Credit – credit on inputs lying in stock – credit cannot be denied on the ground that the same was availed on the strength of delivery challans once duty paid nature of the goods was not under challenge.:CHENNAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff09_048.pdf

Govt decides to continue anti-dumping duty on caustic soda;

CASE LAWS

2009-TIOL-243-HC-MUM-CUS.pdf + hdfc story.pdf

HDFC Bank Ltd Vs UoI (Dated: April 27, 2009 )

Customs – Bank Guarantee - Commissioner's fiat against HDFC Bank – Circular struck down - no reasonable person instructed in law could have taken such a decision merely because petitioner was pursuing its legal remedies: Commissioner of Customs, while dealing with the public, in the instant case Commercial Banks, have the duty to act fairly. His acts should not result in denying to the petitioner HDFC Bank an equal opportunity of furnishing bank guarantee like any other commercial bank which would visit the Bank with civil consequences. Circular of the nature issued in its administrative power barring the HDFC bank from supplying bank guarantees to exporters, who have the business with Air Cargo Complex would be arbitrary.:BOMBAY HIGH COURT;