Exemption from additional duty of customs on components and accessories of mobile handsets – CN 79/2009 – appears redundant;

The rush for retroactivity!

Budget 2009 – Chartered Accountants happily enter into an area that was the exclusive domain of Cost Accountants;

SFIO stats shows Govt not very serious about serious frauds!

CBDT issues transfer order of 10 CCITs; K K Tripathi goes as DGIT (Inv), Chennai and Vinod Khurana as DGIT (Inv), Kolkata;

DRI (Hqs) seizes 10 kg heroin in Delhi; 55 kg in four cases in recent past;

DoP&T asks all Ministries / Departments to keep at least one woman Member in selection panels mandatorily for better representation;

ASI earns Rs 67 Cr from ticketing of monuments but spends only Rs 32 Cr on maintenance in 2008-09;

FDI policies of G20 found to be positive: UN Report;

Luxembourg shows marked improvement in complying with TIEA;

TIOL COMMENTARY

ddt 09 July.pdf

Budget 2009 – Chartered Accountants happily enter into an area that was the exclusive domain of Cost Accountants;

cobweb.pdf

FM does it - India can now sign TIEAs with tax havens; CBDT anchors for Safe Harbour in place of APA ;

BUDGET ANALYSIS

budgetstory42.pdf

The rush for retroactivity!

budgetstory41.pdf

Exemption from additional duty of customs on components and accessories of mobile handsets – CN 79/2009 – appears redundant;

budgetstory36.pdf

Refund of Customs duty on re-export and certain other situations ;

MIXED BUZZ

mbuzz0640.pdf

SFIO stats shows Govt not very serious about serious frauds!

mbuzz0638.pdf

FDI policies of G20 found to be positive: UN Report;

mbuzz0637.pdf

Luxembourg shows marked improvement in complying with TIEA;

CBDT Order 093_2009.pdf

CBDT issues transfer order of 10 CCITs;

CASE LAWS

2009-TIOL-81-SC-IT.pdf

Nectar Beverages Pvt Ltd Vs DCIT (Dated: July 6, 2009)

Income tax - Sec 41(1) - assessee is a soft drinks manufacturer - purchases bottles and crates, each item costing less than Rs 5000 - claims 100% depreciation u/s 32(1)(ii) - worn out bottles and crates sold out and proceeds shown as 'miscellaneous income' in subsequent years - Sec 41(2) - balancing charge - Section deleted - AO treats sale proceeds as business income u/s 41(1) - held, had Sec 41(1) served the purpose of taking care of balancing charge, there was no need for Parliament to enact Sec 41(2) - all these sub-sections were inserted to take care of specific situations - the bottles and crates purchased prior to 31.3.1995 did not form part of the block of assets, hence, profits on sale of such assets were not taxable as a balancing charge, neither under Section 41(1) nor under Section 50 - the bottles and crates purchased after 1.4.1995, on account of deletion of proviso to Section 31(1)(ii) (vide Finance Act, 1995) such bottles and crates formed part of block of assets and consequently such assets purchased after 1.4.1995 became exigible to capital gains tax under Section 50 - Assessee's appeal allowed: SUPREME COURT;

2009-TIOL-441-ITAT-BANG.pdf + amco story.pdf

M/s Amco Power Systems Ltd Vs ITO, Bangalore (Dated: June 13, 2009)

Set off of carry forward loss - 51% of the voting power is to be beneficially held during the year: To see the applicability of sec. 79 of the Income-tax Act, we have to see that 51% of the voting power is beneficially held during the year under reference by the persons who held such voting right during the year in which loss was incurred. Since, the Board of Directors of M/s APIL are controlled by M/s ABL , being a holding company, hence the voting power of M/s APIL is controlled by M/s ABL and hence such voting power is beneficially held by M/s ABL.

Expenditure on Know-how: Section 35AB is applicable when the amount paid is not consideration as revenue expenditure but a capital expenditure: looking to the definition of the word paid given in sec. 43(2) of the Income-tax Act, ITAT held that the CIT( A) was justified in allowing the deduction. Section 35AB is applicable when the amount paid is not consideration as revenue expenditure but a capital expenditure. It is also useful to note that in case the assessee is not given deduction under sec. 35AB then, it will be entitled to depreciation under sec. 32 of the Act.:BANGALORE ITAT;

2009-TIOL-440-ITAT-BANG.pdf

ACIT, Bangalore Vs M/s Kshema Technologies Ltd (Dated: May 29, 2009)

Income Tax - Assessee, claimed that the exchange fluctuation loss should be considered for reduction from the 'total turnover' - AO rejected the contention and held that expenses incurred in foreign currency for providing software development services outside India could be excluded from the 'export turnover' - CIT(A) partly allowed assessee's appeal - Held, expenses incurred, in foreign exchange in providing technical services outside India reduced from the declared export turnover is also to be reduced from the declared total turnover in computing the deduction u/s 10A - Held, expenses incurred in foreign currency for providing software development outside India from the export turnover should not be excluded for the purposes of Sec. 10A—Revenue's appeal dismissed. :BANGALORE ITAT;

2009-TIOL-439-ITAT-MUM.pdf

M/s Rumans Industrial Chemical Corpn Vs ACIT, Mumbai (Dated: March 20, 2009)

Income Tax - Section 50C(2) - AO adopts market value for the valuation of the  property where as the  sale consideration being less then the market value - CIT(A) confirms it - Held, in case assessing officer does not agree with the explanation of the assessee with regard to lower consideration disclosed by him, he should refer the matter back to DVO for getting some market rate established as on date of sale. Matter remanded  back to the file of AO with a direction that he should refer the matter of valuation in the light of of section 50C(2) to DVO for determining the correct consideration - Assessee Appeal allowed. :MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-1031-CESTAT-DEL.pdf

CCE, Ludhiana Vs M/s Safal Construciton (Dated: May 26, 2009)

ST - Commercial or Industrial Construction - Demand and penalties - Commissioner(A) upholds the demand and penalties under Ss 76 and 77 but not under Sec 78 - held, since demand for extended period of limitation has been confirmed, dropping penalty u/s 78 for alleged suppression of facts is contradictory - since the assessee did not reply to SCN and appear for personal hearing, the issue is remanded :DELHI CESTAT;

2009-TIOL-1030-CESTAT-DEL.pdf

CCE, Ludhiana Vs M/s J R Industries (Dated: May 11, 2009)

ST - Commissioning & Installation service - Commissioner(A) finds the contract composite and finds it not taxable - assessee pleads the Revenue wants to tax advance payment - held, since no service has been provided, the taxable event has not taken place - advance payment cannot be taxed :DELHI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-1034-CESTAT-MAD.pdf

M/s Almonard P Ltd Vs CCE, Chennai IV (Dated: April 17, 2009)

Central Excise – CENVAT Credit – dutiable and exempted goods – payment of 10% under rule 6 (3)(b) – matter remanded for fresh decision in view of Larger Bench decision in case of M/s Nicholas Piramel (I) Ltd vs. CCE, Thane 2008-TIOL-1877 -CESTAT- MUM-LB :CHENNAI CESTAT;

2009-TIOL-1033-CESTAT-MUM.pdf

CCE, Raigad Vs M/s Mahalaxmi Seamless Ltd (Dated: April 28, 2009)

Common cenvatted inputs used for job work as well as for manufacture of dutiable final products – no need to reverse credit on inputs used for job work – LB decision in Sterlite Industries [ 2005-TIOL-305-CESTAT-Mum-LB ] upheld by Bombay High Court in C.E Appeal no. 76 of 2008 – Revenue appeal not sustainable, hence dismissed.:MUMBAI CESTAT;

CUSTOMS SECTION

2009-TIOL-1032-CESTAT-AHM.pdf + cus story.pdf

M/s Haria Exports Ltd Vs CC, Kandla (Dated: May 29, 2009)

Customs – Re-import of export goods by SEZ unit by mis-declaring country of origin – Appellants clearly aware of the nature of goods imported and changed track only because of investigation – Transaction with buyer in foreign country of doubtful nature – Mens rea not a pre-requisite for confiscation of goods and imposition of redemption fine and penalty – Misdeclaration of country of origin renders the goods liable for confiscation – Impugned order imposing redemption fine of Rs. 25 lakhs and penalties upheld – Member (Technical)

Customs – Re-import of export goods by SEZ unit by mis-declaring country of origin – No dispute regarding non-availment of export benefits by appellants at the time of export of goods – Plausible explanation from the appellant that the country of origin was shown based on the commercial invoice of their buyers – No benefit accrued to appellants, hence benefit of doubt extended – Redemption fine reduced to Rs. 1 lakh – Penalties on company/individuals set aside – Member (Judicial)

Third Member on reference:

Customs – Re-import of export goods by SEZ unit by mis-declaring country of origin – Bonafide of appellants relevant to determine quantum of fine and penalty – In the facts and circumstances of the case, where there is no revenue implication, no requirement to impose penalty and quantum of fine imposed excessive – Concurred with Member (Judicial) on reduction of redemption fine and setting aside penalties: AHMEDABAD CESTAT;