President appoints Devanand Konwar as Governor of Bihar + H R Bhardwaj as Governor of Karnataka and Rameshwar Thakur transferred to MP;

FM must extend tax holiday to keep IT Sector away from 'holiday'! (See 'Budget Run-up)

CIT (A), Chandigarh, H V Kalra, IRS of 1982 batch, dies of cardiac arrest yesterday night;

Govt imposes anti-dumping duty on Diethyl Thio Chloride + Phosphoric Acid;

RBI reconstitutes technical panel on monetary policy;

RBI directs banks to share credit information with customers on nominal charge;

CII provides roadmap for 700 mn broadband users by 2014;

OECD content with progress in measures to curb tax evasion;

Swine Flu update: 68 test positive in India so far;

TIOL COMMENTARY

ddt 24 June.pdf

New UN/EDIFACT message facilitates Single Window developments;

budgetrunup13.pdf

FM must extend tax holiday to keep IT Sector away from 'holiday'!

spl down.pdf

A tale of Lights, Camera and Taxation!

RBI

rbi_instruction.pdf

RBI directs banks to share credit information with customers on nominal charge;

MIXED BUZZ

mbuzz0599.pdf

RBI reconstitutes technical panel on monetary policy;

mbuzz0598.pdf

CII provides roadmap for 700 mn broadband users by 2014;

mbuzz0597.pdf

OECD content with progress in measures to curb tax evasion;

2009-TIOL-399-ITAT-DEL.pdf + tool story.pdf

ACIT, Dehradun Vs M/s Halliburton Offshore Services Inc (Dated: May 13, 2009)

Income tax - Sec 44BB - assessee is a non-resident company incorporated in Cayman Island - provides oil rigs, various services and facilities to exploration and extraction of oil to ONGC - loss of equipment in hole - ONGC reimburses the cost as per the agreement - AO for taxing the same as taxable receipts - held, Sec 44BB is a Special Provision but it is for taxing all receipts relating to provisions for services and facilities provided for oil extraction and cannot be stretched to include capital receipts under its ambit - since the reimbursement by ONGC and Insurance company is for loss of capital equipment, capital receipts are not taxable u/s 44BB

However, reimbursement of service tax and repair of machinery are receipts taxable under this Section :DELHI ITAT;

2009-TIOL-398-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Citizen Hotels Pvt Ltd (Dated: January 30, 2009)

Income Tax - Assessee receives  dividend income which is  exempt under the Act. The AO makes the disallowance u/s 14A by holding that the interest expenditure could not be attributed to the earning of taxable income - CIT(A) allows  part relief - Held, CIT(A) order set aside, direction to AO to calculate  disallowable amount as per the guidelines laid down by the Special Bench in the case of ITO Vs. Daga Capital Management Pvt. Ltd.

On the issue of deletion of addition being 10% of repairs and maintenance expenses - AO  held that 10% of such expenses as capital in nature - CIT(A), following his own order for assessment year 1998-99, deleted this addition.-Held, in view of Tribunal decision in assessee own case CIT(A) order upheld. Revenue Appeal dismissed. :MUMBAI ITAT;

2009-TIOL-397-ITAT-MAD.pdf

ITO, Chennai Vs M/s Chemmencherry Estates Co (Dated: November 28, 2008)

Penalty u/s 271(1)© - Did not offer income from sale of land claiming it as agricultural land – Claim not bonafide – penalty upheld.

Assessee did not offer income from sale of land on the reasoning that the land was agricultural land. Detailed analysis of the issue right from purchase of land as well as various developmental activities done by assessee proved that the real intention in this transaction is doing real estate business and assessee had no bonafide reason in not disclosing the income. Decision of Apex Court in Dharmendra Textile Processors & ors. ( 306 ITR 277 ) followed.

Appeal by Revenue allowed. :CHENNAI ITAT;

2009-TIOL-396-ITAT-DEL.pdf

M/s Adwel Advertising Pvt Ltd Vs DCIT, New Delhi (Dated: March 05, 2009)

Income tax - Assessee claims deduction for bank guarantee charges - Since part of the charges pertained to previous year, AO disallows it - held, Revenue has a valid ground to do so as liability to pay does not arise only on the basis of bank certificate but the assessee is right in claiming it as a business expenditure for earlier years which the Revenue may allow after examinign the issue :DELHI ITAT;

2009-TIOL-395-ITAT-MUM.pdf

ACIT, Mumbai Vs M/s A P Art Printers Pvt Ltd (Dated: March 2, 2009)

Income Tax - Section 145A - Appeal on the ground that CIT(A) erred in deleting the AO's addition being adjustment u/s 145 - Assessee contends that similar ground has been disposed of by the Tribunal in assessee's own case for earlier assessment year - Held, Tribunal has not considered the amended provisions of section 145A, in deciding the issue. In view of decision of the Tribunal in the case of M/s Cynamid Agro Ltd the AO  directed to follow the directions and see if any addition is warranted in case. In case the AO finds that any addition is warranted, he may make the same subject to maximum being the relief allowed by the CIT(A). Revenue Appeal allowed for statistical purposes.

On the issue of CIT(A) erred in directing the AO to delete the disallowance of expenses on factory premises renovation and replacement - Held, Whether any expenditure incurred by the assessee on account of repairs and renovation is permissible as capital or revenue expenditure even in respect of rented premises is a question of fact to be determined on the facts and in the circumstances of each case. Matter remanded to AO for a fresh decision on the issue. :MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-962-CESTAT-MUM.pdf + alcohol story.pdf

M/s Rubicon Formulations Pvt Ltd Vs CCE, Aurangabad (Dated: June 5, 2009)

Producing products containing alcohol – whether Service Tax liability under Business Auxiliary Service – CESTAT orders pre-deposit of the entire amount of Service Tax demand and interest.

CESTAT's observations -

In the matter in hand, it is not in dispute that the applicants do not manufacture the product under any contract of bottling arrangement in the sense that the activity of manufacturing of the product by the applicants is for and behalf of his clients and in the manner described under the contract between the applicants and his clients.

In other words, it is the service rendered by the applicants to their clients in terms of the contract with the clients.

The Circular 249/1/2006-CX.4 dated 27th October 2008 explains the exclusion of activity from ‘Business Auxiliary Service' when the activity amounts to manufacture of a product as described in the said Circular, more particularly, in para 3 thereof.

The learned Consultant has not been able to point out the activity of the applicants to be in consonance with the description of the activity in para 3 of the Circular so as to claim exemption from being classified as ‘Business Auxiliary Service' within the meaning of the said expression under the said Act.

Prima facie, therefore, we do not find any case having been made out for grant of stay of the impugned order demanding the Service Tax.

Subsequent to the Circular the lower authorities had taken a different view in the case of the applicant's activity, hence there is a, prima facie case made out for the grant of waiver in relation to the demand pertaining to the penalty amount .

Pre-deposit of the entire Service Tax demand and the interest thereon ordered to be made within twelve weeks.

Applications for Stay partly succeed.:MUMBAI CESTAT;

2009-TIOL-961-CESTAT-BANG.pdf

CCE & ST, LTU Vs M/s Dell International Services India Pvt Ltd (Dated: January 13, 2009)

Service Tax – Review of order of Committee of Commissioners - Once the Review Committee has taken a decision not to file an appeal before CESTAT, then the said Committee becomes functus officio. There is no legal provision for sitting in judgments over the decision of the Review Committee. (Para 4):BANGALORE CESTAT;

2009-TIOL-960-CESTAT-AHM.pdf

M/s Banco Product (India) Ltd Vs CCE, Vadodara (Dated: June 11, 2009)

ST - Service recipient - Assessee pays commission to foreign agents for procuring exports orders - demand raised - assessee partly pays tax and interest but pleads that as per settled law it is not liable to pay tax for period prior to 18.4.06 - held, since 40% of tax is already paid, it is a fit case for waiver of pre-deposit :AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-965-CESTAT-BANG.pdf + andhra story.pdf

CCE, Guntur Vs M/s Andhra Sugars Ltd (Dated: December 31, 2008)

Central Excise – CENVAT Credit – whether credit is admissible on cement used for construction of supporting structures for plant and machinery – matter placed before president for constitution of Larger Bench. :BANGALORE CESTAT;

2009-TIOL-964-CESTAT-BANG.pdf

M/s MSPL Gases Ltd Vs CCE, Mysore (Dated: February 17, 2009)

Central Excise – Includibility of fixed facility charges in assessable value of gases supplied, prima facie case in favour of appellants – Full waiver of pre-deposit in view of Tribunal decision in BOC India vs. CCE, Jamshedpur 2005-TIOL-190-CESTAT-KOL and stay granted :BANGALORE CESTAT;

2009-TIOL-963-CESTAT-BANG.pdf

M/s Ruchi Infrastructure Limited Vs CCE, Visakhapatnam (Dated: February 18, 2009)

Central Excise – I f there is no illegality or invalidity in taking CENVAT credit on the date of entitlement, right to utilize such credit against further duty liability become indefeasible and cannot be recovered – CESTAT Larger Bench decision in HMT Ltd vs. CCE, Panchkula 2008-TIOL-1884-CESTAT-DEL-LB followed – Impugned order set aside :BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff09_074.pdf

Govt imposes anti-dumping duty on Phosphoric Acid

ctariff09_073.pdf

Govt imposes anti-dumping duty on Diethyl Thio Chloride

CIRCULAR

dgft08cir096.pdf

Import of metal scrap – submission of copy of contract between buyer and seller.

CASE LAWS

2009-TIOL-959-CESTAT-AHM.pdf

M/s Essar Oils Ltd Vs CCE & CC, Rajkot (Dated: April 22, 2009)

Customs – draw back – while the decision on the conversion of shipping bills is pending with the Commissioner Customs, Jamnagar , rejection of draw back claim ( brand rate) by the Commissioner was premature and actually he should have awaited the final decision on the application for conversion of shipping bills and also taking note of the fact that in the event of Commissioner of Customs Jamnagar allowing the conversion, the conversion would become infructuous because of the Commissioner's impugned order – matter remanded to reconsider the issue after a decision is taken on conversion of the shipping bills. :AHMEDABAD CESTAT;