Pre-Deposit - Post-adjudication Blues - Delete Section 35F (See 'DDT')

Last-minute 'wish list' for Budget 2009 (See 'Budget Run-Up')

Income tax - Remittances to non-residents u/s 195: CBDT notifies implementation of new procedure (electronic filing in Form 15CA) from July 1, 2009

L&T bags Rs 1230 Cr electrical project orders;

GST will promote exports and employment: Dr Kelkar;

SC expresses concern over attacks on Indian students;

HRD Minister Kapil Sibal inducted into Senate of Foundation Lindau Nobel Prize Winners;

Swine Flu: Four more add to tally exceeding 90 in India;

Sacred Chinese mountain enters UNESCO World Heritage List;

TIOL COMMENTARY

ddt 29 June.pdf

GST Stuck? Karunanidhi opposes;

budgetrunup18.pdf

Last-minute 'wish list' for Budget 2009;

guest column.pdf

India needs another VDIS-like Scheme to 'tax' Tax Havens!

DEPUTATION POSTS

deputation_ncb.pdf

NCB looking for Zonal Directors;

MIXED BUZZ

mbuzz0612.pdf

GST will promote exports and employment: Dr Kelkar;

mbuzz0611.pdf

L&T bags Rs 1230 Cr electrical project orders;

mbuzz0610.pdf

Sacred Chinese mountain enters UNESCO World Heritage List;

CIRCULAR

it09cir04.pdf

Income tax - Remittances to non-residents u/s 195: CBDT notifies implementation of new procedure (electronic filing in Form 15CA) from July 1, 2009

CASE LAWS

2009-TIOL-416-ITAT-PUNE.pdf + TP story.pdf

Income Tax – Transfer Pricing – ALP adjustments - it is immaterial as to  whether or not the income of the assessee was exempt from income tax. Special Bench decision in Aztec Software [which was stayed by Karnataka HC] followed: a Division Bench cannot even diregard decision of another Division Bench, let alone that of a Larger Bench. Five Member Special Bench decision in the case of Aztech Software Technology followed and the conclusion  of the CIT(A) to the effect that the transfer pricing provisions could not have been invoked on the facts of this case, as the assessee did not have any tax avoidance motive, is vacated. Interestingly in this case, the Special Bench decision reliep upon by the Revenue and respectfully followed by the Tribunal, hads been stayed by the Karnataka High Court 2009-TIOL-170-HC-KAR-IT and apparently this fact was not brought to the notice of the Tribunal by either parties. So in effect after a scloarly discussion on judicial discipline, what the Tribunal followed was a non-existing judgement!

Arms Length Price: In a situation in which the revenue authorities seek to disturb the method of determining the arms length price, as adopted by the assessee, it is necessary for them to demonstrate that, on the given facts of the case, a particular method will be more appropriate vis-à-vis the method adopted by the assessee, and such an appropriateness of method must be shown on the touchstone of the factors set out in Rule 10C(2) above. The ALP adjustments are counter measures to ensure that the prices at which international transactions are entered into by the associated enterprises are not so contrived as to adversely affect the domestic tax base, and, therefore, most appropriate method should be decided in the light of this basic governing principle alone.

In a situation in which the assessee has followed one of the standard metods of determining ALP, such a method cannot be discarded in preference over transactional profit methods unless the revenue authorities are able to demonstrate the fallacies in application of standard methods.  In any event, any preference of one method over the other method must be justified by the Transfer Pricing Officer on the basis of cogent material and sound reasoning. :PUNE ITAT;

2009-TIOL-415-ITAT-MAD.pdf

ITO, Chennai Vs M/s Sicgil India Pvt Ltd (Dated: April 30, 2009)

Income Tax - Assessee Company claimed deduction u/s 80IB, before set off of carry forward losses relating to the immediately preceding assessment year, in respect of Goa unit from the profits of business - AO allowed it after setting off the losses - CIT(A) allowed assessee's appeal - Held, the specific provisions of Sec 80IA(5) provides that the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years - Held, Sec. 80IB envisages that "the provisions contained in sub-section (5) and sub-sections (7) to (12) of Section 80IA shall, so far as may be, apply to the eligible business under this section", so what has to be done under section 80IA(5) has to be done in the context of 80IB - Held, eligible deduction under section 80IB for the assessment year under consideration has to be computed after setting of the loss of the Goa unit for the earlier assessment year - Revenue's appeal allowed. :CHENNAI ITAT;

2009-TIOL-414-ITAT-MAD.pdf

M/s Shah Yarn Tax Private Limited Vs ACIT, Coimbatore (Dated: May 6, 2009)

Income tax - Sec 50C – Assessee did not claim before AO that the amount received as sale consideration and mentioned in the conveyance deed is the fair market value of the property – The preliminary burden of the assessee under subsection (2) of sec. 50C not discharged – hence AO was not required to make any reference to the Valuation Officer.

During the year assessee sold shares of four companies – Claimed taxation at 10% u/s 112 without indexation in respect of shares of two companies and declared long term capital loss with respect to the shares of the other two companies after indexation – On appeal it was held that though the assessee has option to claim either the concessional rate of tax u/s 112 or indexation while computing the capital gains, it cannot apply different yardsticks for computing the capital gains in the very same A.Y. :CHENNAI ITAT;

2009-TIOL-413-ITAT-RANCHI.pdf

Addl. CIT, Ranchi Vs M/s Ramjee Power Construction (Dated: February 5, 2009)

Income tax - undisclosed income - AO alleges bogus share application money and treats the same as undisclosed income - held, in view of settled law, if the Revenue gets evidence it can proceed against the assessee but the fund contributed towards capital money cannot be treated as undisclosed income :RANCHI ITAT;

2009-TIOL-412-ITAT-MUM.pdf

Dy.CIT, Mumbai Vs M/s Inditravel Pvt Ltd (Dated: March 18, 2009)

Income Tax - penalty u/s 271 (1)(c) - Assesssee is in the business of travel related services, professional services and printing - AO makes two disallowance first related to  retrenchment compensation paid to the employees on closure of units and the other being disallowance on account of write off of sundry advances – CIT(A) deletes the disallowance relating to payment of the retrenchment compensation but upheld disallowance relating to write off of sundry advances - AO also imposes penalty on the issue of disallowance of write off of sundry advances on the ground that the assessee has furnished inaccurate particulars of income - CIT(A) holds that the penalty, if any, should be levied only to the extent of tax effect on the income which is the positive income available with the assessee. He also observes that no penalty is leviable when the assessee's income is a loss and reduces the quantum of penalty – Held, mere disallowance of claim, on a difference of opinion between the AO and the assessee, does not by itself justify levy of penalty. The Explanation given by the assessee is bona fide and the AO has not proved that it is false. The penalty levied in this case is not justified. Assessee's Appeal allowed. :MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-989-CESTAT-MUM.pdf + sec80 story.pdf

M/s Ahmednagar Merchants Co-Operative Bank Ltd Vs  CCE, Aurangabad (Dated: May 4 2009)

Section 80 of Finance Act, 1994 is a unique provision not found in other statutes - If the discretion is there not to impose penalty under section 80 ibid, the discretion is as well there to impose lesser penalty – CESTAT

Once it is found that the Cenvat Credit was irregularly availed by the appellants, by implication, to that extent the Service Tax on the Output service was short paid, and it had to be recovered under Rule 14 of the Cenvat Credit Rules, 2004 - the show cause notice for invoking the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with section 11A of the Central Excise Act, 1944 and section 73 of the Finance Act, 1994 and read with section 11AB of the Central Excise Act, 1944 and section 75 of the Finance Act, 1994 for recovery of irregularly availed Cenvat credit and demanding interest respectively is perfectly in order and is within the framework of law.

Crucial information and the material particulars required for availing credit of service tax are not available in the document viz. daily summary sheet, hence credit rightly denied because of non-fulfillment of the requirements of the provisions of Rule 4A of the Service Tax Rules, 1994 read with Rule 9 of the CCR, 2004.

Revenue appeal dismissed. Assessees appeal rejected. Commissioner(Appeals) order upheld. :MUMBAI CESTAT;

2009-TIOL-988-CESTAT-MUM.pdf

Security And Escorts Services Pvt Ltd Vs CST, Mumbai (Dated: May 13 2009)

Commissioner (Appeals) has no power to condone the delay in filing appeal beyond the further period of three months as provided in section 85(3) of the Finance Act, 1994 – Delay of 386 days is beyond the power of the Commr(A) to condone – Order of Commr(A) is legal and proper – Appeal dismissed.:MUMBAI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-986-CESTAT-MUM.pdf

CCE, CC & ST, Raigad Vs M/s Waman Industrial Chemicals Ltd (Dated: May 26 2009)

Common input LDO/Furnace oil is used for processing of job work goods – No cause for reversal of Cenvat Credit as held by Larger Bench in Sterlite Industries [2005-TIOL-305-CESTAT-MUM-LB] – Revenue appeal dismissed. :MUMBAI CESTAT;

2009-TIOL-985-CESTAT-MUM.pdf

M/s Madhu Tex Industries Ltd Vs CCE, Thane-I (Dated: March 25 2009)

Under valuation - Job workers doing processing of cotton man made fabrics received from merchant manufacturers/traders – for the mis-declaration of merchant manufacturers, extended period is not invokable in the absence of any finding that the assessee knew or deliberately failed to declare the correct cost of grey fabrics – there is no legal requirement thrust on the processors to verify the correctness of the declaration furnished by owners – Demand barred by limitation and penalties set aside - SC decision in Lajya Dyeing & Bleaching [2008-TIOL-56-SC-CX] followed.:MUMBAI CESTAT;

M/s Cummins Generator Technologies India Ltd Vs CCE, Aurangabad (Dated: May 22 2009)

Cenvat Credit of Service Tax paid on Outdoor catering services – no mention in the pleadings as to the number of workers in the factory and as to whether the cost of supply of food in the factory canteen formed a part of the assessable value of excisable goods – matter remanded to adjudicating authority to examine the above issues in the light of the LB decision in GTC Industries – 2008-TIOL-1634-CESTAT-MUM-LB . :MUMBAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt09_068.pdf

Exchange rate for July notified;

CAES LAWS

2009-TIOL-316-HC-MUM-CUS.pdf + unjust story.pdf

United Spirits Limited Vs CC, Mumbai (Dated : June 25, 2009)

Principle of ‘unjust enrichment' does not apply to refund of Redemption Fine: The question is whether fine or penalty is also subject to the doctrine of unjust enrichment. The Customs Act, 1962 has specifically provided in Section 27(2) that when a person is claiming refund of duty and that if applicant is entitled to refund the amount will be credited in the fund subject to the proviso. Section 2(15) defines ‘duty', which means a duty of customs leviable under this Act. It does not include fine or penalty. Section 12 sets out the duties on goods. Section 111 provides for confiscation of improperly imported goods as set out therein. The principles of ‘unjust enrichment', therefore, would not arise in a case of redemption fine.: BOMBAY HIGH COURT;

2009-TIOL-987-CESTAT-MUM.pdf

M/s Sah Petroleums Ltd Vs CC, Mumbai (Dated: May 26 2009)

Finalisation of provisional assessment – payment of interest – since substantive charging provision for interest is section 18(3) though its recovery is under section 28AB of the Customs Act, 1962, former cannot be given retrospective effect prior to its insertion on 13.07.2006 by the Taxation Laws (Amendment) Act, 2006 – Appeal allowed. :MUMBAI CESTAT;