Union Budget 2009 - Some Random Thoughts! (See 'Budget Run-Up')

CBI books Customs Official – Exposes deep rooted corruption in Customs & Excise (See 'DDT')

Budget Session to commence on July 2 and conclude on August 7; Rail Budget to be tabled on July 3 and Union Budget on July 6;

GAIL's turnover increases 32% to Rs 23,776 Crore; Net Profit up by 8%;

Chennai city to be WiFi-ed with high speed wireless data connectivity;

PM takes off for official visit to Russia;

BJP's internal situation is now 'volcanic'; says Sushma;

TIOL COMMENTARY

ddt 15 June.pdf

Export of Edible Oil in branded packs of upto 5 Kg – Allowed till 30th September 2009;

Budget runup06.pdf

guest column.pdf

Amendment to IT Act : A giant step forward to protect Indian cyber space;

CASE LAW + ANALYSIS

2009-TIOL-306-HC-MUM-FEMA.pdf + penalty story.pdf

Shri Ashok Chopra Vs UoI (Dated : April 16, 2009)

FERA - Imposing penalty on the proprietorship concern as well as on the proprietor would amount to punishing the same person twice for the same contravention. Natural Granite Exports is not a company nor it is a partnership firm nor Hindu Joint Family ( HUF ), but it is a proprietorship concern of which Ashok Chopra alone is a proprietor. Therefore, neither it can be treated as a company nor as a firm nor an association of individuals. Ashok Chopra was carrying on the business in the assumed name and style of M/s. Natural Granite Exports and if any contravention of any provisions of law or rules is committed by the said concern, that contravention shall be presumed to have been committed by its proprietor i.e. Ashok Chopra. In view of this, M/s. Natural Granite Exports as the concern and its proprietor Ashok Chopra could not be held guilty separately and penalty could not be imposed on each of them. Imposing penalty on the proprietorship concern as well as on the proprietor would amount to punishing the same person twice for the same contravention. Therefore, when the proprietorship concern is found guilty and penalty is imposed on it, that penalty should be presumed to have been imposed on its proprietor and, therefore, no separate penalty could be imposed on the proprietor as has been done in the present case : BOMBAY HIGH COURT;

MIXED BUZZ

mbuzz0571.pdf

GAIL's turnover increases 32% to Rs 23,776 Crore; Net Profit up by 8%;

mbuzz0570.pdf

Chennai city to be WiFi-ed with high speed wireless data connectivity;

2009-TIOL-366-ITAT-MAD.pdf + fee story.pdf

ACIT, Chennai Vs M/s ICL Securities Ltd (Dated: April 28, 2009)

Non-compete fee paid to promoters of company from whom assessee purchased shares not eligible for deduction while computing capital gains.

Assessee, an investment company acquired shares of SVCL as part of agreement to take over Rasi cements Ltd. And their associated company – By a separate agreement, non-compete fee of Rs. 24.24 crores paid to three promoters of SVCL for not doing business in cement – AO held that payment of such non-compete fee cannot be treated as part of cost of acquisition of shares and hence not eligible for deduction while computing capital gains. On appeal, CIT(A) also observed that payment of such non-compete fee will only help the business of SVCL and can have some indirect benefit alone to the shares held by assessee and since the payment was in no way connected with the acquisition of shares, he agreed with the AO.

On appeal before Tribunal, assessee argued it to be a payment made on account of commercial expediency and hence allowable. According to the assessee since it had acquired substantial investment in SVCL, in order to safeguard its interest and to enhance the value of shares it asked the promoters of SVCL who were pioneers in the field not to undertake any competing business. On this basis it was contended that the value of shares got increased on account of promoters agreeing not to start competing business and hence the payment of non-compete fee was for preservation of value of shares.

Though the Accountant member accepted the arguments advanced by the assessee, the Judical member did not agree with the same. On reference to Third member, it was held that the purchase of shares of SVCL was independent of the transaction of payment of non-compete fee to three promoters. Improvement of a capital asset arises when it has some defect in its title or there is some impediment in its transfer or use or there is encumbrance attached to it. Further the rights acquired through non-compete agreement was not transferred to Zuari Ltd. to whom the shares were transferred which indicate that these rights are not part of the shares or even part of the business acquired by Zuari Ltd..

Shares of a limited company are distinct from assets of business of the company. Cost of improvement of business of the company is not equivalent to cost of acquisition / improvement of shares of such company. Claim of assessee for deduction of such sum while computing capital gains was rejected agreeing with the stand taken by Judicial Member.

Appeal by assessee dismissed.:CHENNAI ITAT;

2009-TIOL-365-ITAT-MUM.pdf

M/s UBS Securities India Pvt Ltd Vs DCIT, Mumbai (Dated: February 26, 2009)

Income tax - Assessee deals in securities - claims deduction for legal fees paid to non-resident agency and also claim deduction for depository charges paid - AO disallows - held, since it is a settled law that merely because an expenditure is incurred in the previous year it cannot be allowed - a payment made only after it is approved by a government agency or RBI in this case, the liability crystalises and it is an allowable deduction

As regards the payment of depository charges since it took time for disputed transactions to settle and such charges also include payment to SEBI, it is covered by deduction u/s 43B - Assessee's appeal allowed:MUMBAI ITAT;

2009-TIOL-364-ITAT-BANG.pdf

ACIT Bangalore Vs M/s Tata Coffee Ltd (Dated: April 09, 2009)

Income tax - Sec 115JA - AO disallows provision for bad and doubtful debts for determining the book profit u/s 115JA and charges interest u/s 234B - held, both these issues are settled by the Special Bench decisions of the Tribunal in assessee's favour - CIT(A) order upheld and Revenue's appeal dismissed :BANGALORE ITAT;

2009-TIOL-363-ITAT-BANG.pdf

ACIT, Bangalore Vs M/s Encore Software Ltd (Dated: April 17, 2009)

Income tax - Assessee is into software development and design - claims deduction for diminution in the value of semi-finished goods - AO disallows the write-off as he finds it based on estimate basis - held, it has already been held to be correct method of accounting by the Tribunal in the earlier year in the assessee's own case and there is no flaw in the CIT(A) order allowing the assessee's claim - Revenue's appeal rejected :BANGALORE ITAT;

2009-TIOL-362-ITAT-DEL.pdf

M/s Allied Nippon (India) Ltd Vs JCIT, New Delhi (Dated: March 31, 2009 )

Income tax - Assessee claims deduction for expenditure related to registration of Trade Mark - AO treats it as capital expenditure - CIT(A) agrees with the AO on the ground that the advantages derived from Trade Marke is of enduring nature - held, it is settled law that the trade mark is neither an asset nor an advantage but only helps the assessee in defending his title to the goods and saves the assessee from trouble of leading evidence in case of a suit filed in a court of law - it is an incidental facility to the owner and it is revenue expenditure - Assessee's appeal allowed :DELHI ITAT;

SERVICE TAX SECTION

2009-TIOL-913-CESTAT-MUM.pdf + st story.pdf

M/s Pandurang Travels Vs CCE, Pune (Dated: April 16, 2009)

Taking the department and the client for a bus ride by collecting but not depositing Service Tax in to the treasury – Penalty imposed pursuant to revision order is proper and legal – Tribunal.

Appellant surrendering their ‘Tour operator' registration of Service Tax by contending that they are within exemption limits – investigation revealed that the appellant continued to charge and recover service tax from their client but did not deposit in treasury – appellants are having the knowledge of their liability to pay service tax and their customer is taking the CENVAT credit of the service tax - SCN issued and the amount paid by appellant – lenient view taken and penalty not imposed by original authority - Commissioner imposing penalty in revisionary proceedings is proper in law as intention to evade duty is apparent.

Order in revision upheld and appeal dismissed. :MUMBAI CESTAT;

2009-TIOL-912-CESTAT-BANG.pdf

M/s T T Enterprises Ltd Vs CCE, Bangalore (Dated: February 27, 2009)

Service Tax – Liability of service tax on Visa services provided to sovereign countries – Pre-deposit of Rs. 25 lakhs ordered :BANGALORE CESTAT;

2009-TIOL-911-CESTAT-BANG.pdf

Lenovo (India) Pvt Ltd Vs CCE & ST, Bangalore (Dated: February 10, 2009)

Service Tax – Promoting sale of products of foreign client in India being Business Auxiliary Service fulfils the conditions under Export of Service Rules, 2005 and qualifies as export of service – Rebate of tax paid on commissions received thereof allowed following Tribunal decision in ABS Ltd vs. CCE, Bangalore 2008-TIOL-1500-CESTAT-BANG – Impugned order liable to be set aside :BANGALORE CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-910-CESTAT-BANG.pdf

M/s Otis Elevator Co (India) Ltd Vs CCE, Bangalore (Dated: February 10, 2009)

Central Excise – Clearance of parts/components for installation and commissioning of lifts at site in terms of composite contract to be valued as per cost construction method in terms of Rule 11 read with Section 4 – Issue squarely covered by Tribunal order in appellants own case – Impugned order set aside :BANGALORE CESTAT;

2009-TIOL-909-CESTAT-MAD.pdf

GEC Alsthom India Ltd Vs CCE, Tiruchirapalli (Dated: April 13, 2009)

Central Excise – Valuation - Post manufacturing expenses- Interest on receivables - The appellants have not discharged the burden of showing that the interest on receivables was inbuilt into the price charged, it is not deductible from the assessable value. (Para 2) :CHENNAI CESTAT;

2009-TIOL-908-CESTAT-BANG.pdf

CCE & CC, Guntur Vs M/s Andhra Cements Ltd (Dated: March 2, 2009)

Central Excise – Oxygen, nitrogen and welding electrodes used for maintenance & repair of plant & machinery are inputs within the meaning of Rule 2(k) of CENVAT Credit Rules, 2004 – Definition of inputs very wide to cover maintenance & repair – Impugned order upheld :BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08pn186.pdf

DGFT amends Appendix 4-C to include one more agency in Maharashtra for issuing certificate of origin of goods;

CASE LAWS

2009-TIOL-907-CESTAT-BANG.pdf

M/s Taurion Iron & Steel Company Pvt Ltd Vs CCE, Visakhapatnam (Dated: January 30, 2009)

Customs – Export of iron ore availing benefit of Notification 62/2007-Cus for concessional rate of duty @ Rs. 50 per MT if iron content is less than 62% - Test report of chemical examiner showing iron content as above 62% does not indicate whether iron content was calculated after considering moisture element – Percentage content of other impurities also not provided – Test reports of samples drawn by inspection agency recognized by Commerce Ministry and test report on samples drawn at destination port indicate iron content less than 62% and provides details of other impurities also – Such reports cannot be ignored and summarily rejected – Request of exporter demanding re-test in view of contradictory reports denied by lower authorities which violates principles of natural justice – Impugned order demanding differential duty has no merits, liable to be set aside :BANGALORE CESTAT;