Union Budget 2009: Radical changes necessary; Economy calls for Long Term Fiscal Policy (See 'Budget Run-up' for Mr Arvind P Datar's wish-list)

Govt appoints Y S Bhave as Chairperson of Airports Economic Regulatory Authority for five years;

Pop Star Michael Jackson dies of cardiac arrest;

Calicut DRI seizes IC worth Rs 55 lakh from pax heading for Sharjah;

Merge Cess and Surcharge into single corporate tax: CII;

Sibal proposes to make Class X exams option in new school education system;

Economic crisis - World economies looking for 'green growth' as a way out: OECD;

Cabinet Secretary makes presentation before PM on 'one rank one pension' proposal;

Assam Governor Shiv Charan Mathur dies of cardiac arrest ;

TIOL COMMENTARY

ddt 26 June.pdf + trichy_trade_notice.pdf

Larger Bench vs Division Bench – What if Larger Bench decision stayed by High Court?

potpourri.pdf

Understanding fraud at work: Role-model for economic fraudsters;

budgetrunup15.pdf

Union Budget 2009: Radical changes necessary; Economy calls for Long Term Fiscal Policy;

MIXED BUZZ

mbuzz0604.pdf

Merge Cess and Surcharge into single corporate tax: CII;

mbuzz0603.pdf

Economic crisis - World economies looking for 'green growth' as a way out: OECD;

2009-TIOL-315-HC-MUM-IT.pdf

M/s Dipti Textile Industries Vs CIT , Bombay (Dated : June 15, 2009)

Income tax - Sec 37 - Assessee is in the business of hiring of machinery and sale & purchase of yarn and fabrics - claims deduction for interest paid for discounting of bills - Revenue disallows - CIT(A) partly diallows the appeal - Tribunal upholds the CIT(A) order - held, since the Tribunal has held that the transaction relating to bills discounting was a genuine one involving larger business interest and business expediency and similar expenditure has been allowed in subsequent years, the Bench has no choice but allow the assessee's appeal:BOMBAY HIGH COURT;

2009-TIOL-314-HC-UTTRANCHAL-IT.pdf

CIT, Dehradun Vs National Institute Of Aeronautical Engineering Educational Society (Dated : June 12, 2009)

Income tax - charitable purpose - Sec 2(15) - Assessee is a registered society - files registration application u/s 12AA - Revenue examines the accounts of income and expenditure in details and rejects the application - Tribunal allows the appeal of the assessee - held, mere imparting education for primary purpose of earning profits cannot be said to be charitable activity. Tribunal's view that since word “education” is not qualified in Section 2(15) of the Act, as such, every application received by a society, which is engaged in the business of imparting “education” is bound to be registered under Section 12 AA. If such a view is accepted, CIT will be failing in its duty to comply with the provision of law contained in clause (a) of sub-section (1) of Section 12 AA of the Act. In the instant case the CIT has categorically stated that the assessee had made huge profits and there was no charity involved in their activities. Charity is soul of the expression 'charitable purpose'. Mere trade and commerce in education cannot be said to be a charitable purpose - Revenue's appeal allowed: UTTARAKHAND HIGH COURT;

2009-TIOL-408-ITAT-HYD.pdf + remittance story.pdf

Speck Systems Ltd Vs DCIT, Hyderabad (Dated: February 13, 2009)

Extension of time for FE remittance – CIT's order not appealed against – Fresh appeal not valid – What the AO could not do, the CIT(A) or Tribunal cannot do: Against this order, the assessee did not file any appeal. The obvious presumption is that the assessee was not aggrieved by the above order. In the process, the order of the Assessing Officer got merged with the order of the CIT(A). Once it got merged with the order of the CIT (A), the Assessing Officer became functus officio so far as his original order is concerned.: HYDERABAD ITAT;

2009-TIOL-407-ITAT-BANG.pdf

ITO, Bangalore Vs M/s ITC Hotels Ltd (Dated: May 01, 2009)

Income tax - Indo-USA DTAA - Assessee is a reputed hotel group - receives certain services from US-based hotel group and makes payment without TDS - Revenue treats it as royalty or fees for technical services u/s 9(1)(vi) or (vii) and also under Article 12(3) of the DTAA - CIT(A) goes by the Delhi HC decision in the assessee's case and treats it as business income and since the non-resident has no PE in India, the payment received is held to be non-taxable - Revenue refers to the Explanation inserted at the end of section 9 by the Finance Act, 2007 with retrospective effect from 1.6.1976 which states that TDS to be deducted under clauses (v), (vi) and (vii) of sub-section (1) of Sec 9 even if there is no PE - held, since the income of the non-resident is held to be business income, this Explanation has no applicability to this case - Revenue's appeal dismissed :BANGALORE ITAT;

2009-TIOL-406-ITAT-MUM.pdf

ITO , Mumbai Vs M/s Gold Rock World Trade Ltd (Dated: February 2, 2009)

Income tax - Sec 28(iv) - Assessee is an exporter - shows certain payment as 'advance rice account' - AO for taxing the same - Assessee argues since their contract has a provision by which any dispute can be referred for arbitration within 15 years, they cannot write off the entry - held, since an arbitration clause exists in the contract and the liability has not ceased and the issue was scrutinised in the past by the Revenue, no addition can be made and income be treated as business income u/s 28(iv) - Revenue's appeal dismissed :MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-975-CESTAT-DEL.pdf

Municipal Corpn Of Delhi Vs CST, Delhi (Dated: April 28, 2009)

ST - assessee is a government agency and lets out facilities for marriages and social activities - demand - held, assessee is liable to pay service tax but since it has not charged service tax separately from their customers, the tax is to be calculated on the basis of cum-tax value - matter remanded for re-calculation - Assessee's appeal dismissed :DELHI CESTAT;

2009-TIOL-974-CESTAT-AHM.pdf

M/s Indo Nippon Chemicals Co Ltd Vs CCE, Vadodara (Dated: April 21, 2009)

ST - Consulting Engineer Service - Revenue raised demand for transfer of technical knowhow - assessee pleads it is not an engineering firm and nor in the business of consulting engineering service and then transfer of knowhow is the transfer of property which cannot be subjected to service tax - Revenue alleges the assessee concealed the agreement copy and gave a statement before the Commissioner(A) that it was rental income - held, if the assessee has concealed the evidence the law vests sufficient powers in the Revenue to conduct proper investigation and produce documents but since Revenue fails to prove that the assessee was providing consulting enegineering service, the demand is not sustainable:AHMEDABAD CESTAT;

M/s Gujarat Petroleum Corpn Ltd Vs CCE, Ahmedabad-III (Dated: June 10, 2009)

ST - Service recipient - assessee is into oil exploration and extraction - receives certain services from a non-resident service provider - demand raised and penalty imposed - assessee pleads it is not liable to pay tax for period prior to 18.04.06 as settled by the Bombay HC and it has deposited certain sum under protest which may be treated as sufficient for pre-deposit - held, since the assessee is a State Govt undertaking and its tax liability is likely to be the sum already paid under protest, waiver from more pre-deposit granted:AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-312-HC-MUM-CX.pdf + credit story.pdf

CCE, Mumbai Vs M/s Okasa Ltd (Dated : June 10, 2009)

Central Excise – CENVAT Credit - plastic dropper packed in the paediatric drops container – input – eligible for credit: where dropper is provided in the carton along with bottle containing the drug it amounts to manufacture and the manufacturer is entitled to credit of duty paid on such product being input of the firm product.:BOMBAY HIGH COURT;

2009-TIOL-977-CESTAT-MUM.pdf

M/s Dharamsi Morarji Chemical Co Ltd Vs CCE, Raigad (Dated: January 23, 2009)

Rule 6 of CCR, 2004 - Sulphuric acid cleared to independent buyers by following the procedure of warehousing as laid down under Concessional Rate of duty for manufacture of Excisable Goods Rules, 2001 is only postponement of duty and not equivalent to exemption from duty – SC decision in Ballarpur Industries Ltd. [2007-TIOL-153-SC-CX] distinguishable – Strong prima facie case – Pre-deposit dispensed and recovery stayed. :MUMBAI CESTAT;

2009-TIOL-976-CESTAT-BANG.pdf

Neo Foods Pvt Ltd Vs CC, Bangalore (Dated: January 16, 2009)

Central Excise – 100% EOU – Exempted goods exported - Service Tax – Un-utilised credit – Refund - Rule 6 (6) (v) of Cenvat Credit Rules, 2004 covers all exports of final products by a 100% EOU and, therefore, would not be hit by Rule 6 (1) as far as the entitlement to Cenvat Credit on input/input service used in relation to the manufacture of final products exported by a 100% EOU is concerned. Consequently, the appellants would be entitled for the refund of unutilized credit. ( Para 11)

Principles of Excise taxation – Exports vis-à-vis home clearances - The basic principle in excise taxation is that the excise duty/service tax should be only in respect of goods/services consumed within the country. If the goods/services are exported, they should not suffer any excise duty/service tax. ( Para 8)

Export under Bond – Execution of bond by 100% EOU - Every 100% EOU executes a B-17 bond, which is comprehensive. The bond is executed by 100% EOU to cover any revenue loss on account of procurement of inputs without payment of duty. There is also an export obligation for every 100% EOU. They execute a letter of undertaking with the Development Commissioner to fulfil the export obligations. In these circumstances, the export of goods by a 100% EOU should be considered as export under bond. ( Para 9.2) :BANGALORE CESTAT;

CUSTOMS SECTION

2009-TIOL-313-HC-MUM-CUS.pdf + customs story.pdf

M/s P Kishanchand Textiles Pvt Ltd Vs UoI (Dated : June 10, 2009 )

Customs – seizure – Show Cause Notice issued after three years – goods liable to be released: Admittedly, the show cause notice was issued about 3-1/2 years after the seizure. In view of this, under the provisions of Section 110(2), the respondents are bound to return the goods to the petitioners from whose possession the same were seized. :BOMBAY HIGH COURT;