Lok Sabha passes Budget 2009; Rajya Sabha to do so tomorrow;

Amendment to Finance Bill: FM allows deduction for capital expenditure to petro & gas Cos; exemption limit for severely disabled hiked from Rs 75000 to Rs 100,000;

Service Tax on new services and also alterations in scope of existing services to be effective from September 1, 2009: FM;

FM grants service tax exemption to construction of roads from 'maintenance and repair' service with immediate effect;

Tax holiday for Industrial Parks extended by two more years;

1% interest subvention offered on housing loan upto Rs 10 lakh for houses costing upto Rs 20 lakh;

Tax holiday to industry engaged in processing and packaging of meat and meat products;

FM promises to put New Direct Tax Codes on MoF website before Winter Session;

HC orders probe by CVC into Prashar Bharati controversy;

Steps taken to promote MICE and Heli Tourism;

L&T contributes to India's first nuclear-powered Submarine;

TIOL COMMENTARY

ddt 27july09.pdf

CENVAT Credit formula unsuited for clearances from 100% EOU / EHTP / STP to DTA when exempt from levy of VAT/Sales Tax – Rule 3(7) (a) of CCR 2004 requires an amendment;

Amendments to Finance Bill 2009.pdf + budget story.pdf

Amendment to Finance Bill: FM allows deduction for capital expenditure to petro & gas Cos; exemption limit for disabled hiked;

guest column.pdf

Availment of credit on import of service - A lacuna?;

TIOL TOP.pdf

Budget 2009 – What's in it? It would not get me a bottle of whisky: Jaswant Singh;

MIXED BUZZ

mbuzz0692.pdf

Steps taken to promote MICE and Heli Tourism;

mbuzz0691.pdf

L&T contributes to India's first nuclear-powered Submarine;

2009-TIOL-366-HC-MUM-IT.pdf + housing story.pdf

Sind Coop. HSG. Society Vs ITO, Pune (Dated: July 17, 2009)

The principle of mutuality will apply to a cooperative Housing Society which has its predominant activity, the maintenance of the property of the society which includes its building or buildings and as long as there is no taint of commerciality, trade or business.

The Tests: (1) Is there any commerciality involved? (2) From the moneys received are the services offered in the nature of profit sharing or privileges, advantages and conveniences? (3) Are the participants and contributors identifiable and belong to the same class in the case of cooperative housing society? (4) Do the members have the right to share in the surplus and do they have a right to deal with its surpluses? : BOMBAY HIGH COURT;

2009-TIOL-364-HC-MUM-IT.pdf

Indian Planetary Society Vs CBDT (Dated: July 10, 2009)

Income tax - Sec 35(1)(ii) - Appellant is a registered public trust - engaged in scientific research and popularises science among general public - makes application to Govt of India for recognition as Scientific and Industrial Research Organisation - also seeks approval for benefits u/s Sec 35(1)(ii) - CBDT rejects the application without assigning any reason - revision petition filed - CBDT says there is no rule for review of rejected applications - held, as per the provisions of the Section 35 the CBDT is neither a competent authority to certify the scientific research nor has sufficient documents in relation to examination of the scientific activities of the appellant and this vitiates the case against the appellant - CBDT rejection order set aside and Appellant's appeal allowed.: BOMBAY HIGH COURT;

2009-TIOL-363-HC-DEL-IT.pdf

CIT Vs M/s Zoravar Vanaspati Limited (Dated: July 24, 2009)

Income tax - Interest under Sections 234A & 234B - Revenue for levy of interest on assessed income - CIT(A) directs the AO to compute interest chargeable on returned income - Tribunal goes into the question of leviability of interest and finds that since the AO has not talked about the levy of interest in the assessment order, it is bad in law - held, issue remanded to the Tribunal for fesh consideration and Revenue directed to reword the grounds of appeal.: DELHI HIGH COURT;

2009-TIOL-481-ITAT-MUM.pdf

M/s Raymond Ltd Vs ACIT, Mumbai (Dated: May 01, 2009)

Income Tax Act – Section 145A – Held, that adjustments on account of modvat are required to be made in respect of the purchases, sales and inventory in the closing stock. In view of the judgment of the Hon'ble High Court Of Delhi in case Mahavir Aluminium ( 2007-TIOL-742-HC-DEL-IT ), adjustments on account of modvat is also required to he made to opening stock – matter set aside.

Income Tax Act – Section 14A – Held, in view of sub-section 2 and subsection 3 inserted by Finance Act 2006 w.e.f. 01.04.2007, the disallowance of expenses in relation to the exempt income is required to be made as per the guidelines framed by the government. Thought the said amendment is effective from 01.04.2007, the Special Bench of the Tribunal in case of M/s. Daga Capital Management P. Ltd. (119 TTJ 289) = (2008-TIOL-509-ITAT-MUM-SB) has held that the said amendment is retrospective in nature and will apply to all pending proceedings. The government had in the meantime notified the Rule being Rule No. 8D giving the guidelines for disallowance of expenses. In view of the decision of the Special Bench (supra) the disallowance if any has to be made in terms of Rule 8D, which was not available at the time of passing the order by the AO. Matter set aside

Income Tax Act – Section 115JA – Held that there is no provisions in the Explanation to section 115JA for making any addition on account of prior period expenses which are ascertained liabilities.

Income Tax Act – Section 115JA – Held that since the profit and loss account for the purpose of book profit is to be computed as per the provisions of Companies Act, the provision for loss on account of foreign exchange fluctuation is required to be allowed as there is no express provision in the Explanation to 115JA(1) regarding any adjustments to be made on account of foreign exchange loss.

Income Tax Act – Section 94(7) - Held that provisions of section 94(7) are applicable form A.Y. 2002-2003 and it is therefore, not applicable in relation to transactions relating to the prior years

Income Tax Act – Business Expenditure – VRS – Held that, provisions of section 35DDA are not applicable to the facts of the cases as the said section is applicable from assessment year 2001-02. The allow ability of such expenditure prior to insertion of section 35DDA had been considered by the Hon'ble High Court of Mumbai in case of Bhor Industries Ltd, ( 2003-TIOL-176-HC-MUM-IT ) in which it has been held that expenditure on account of VRS liability is allowable as revenue expenditure.

Other issues were decided following earlier years ITAT orders in assessee's own case.: MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-1130-CESTAT-MAD.pdf

M/s Citibank N A Vs CST, Chennai (Dated: April 30, 2009)

Service Tax – Stay / dispensation of pre-deposit – Banking and other Financial Services – the 3% mark up collected for using the credit cards / debit cards abroad is prima facie taxable under Banking and Other Financial Services – pre-deposit of Rs 1.5 crores ordered. – Section Section 65(12) (a) of the Finance Act, 1994.: CHENNAI CESTAT;

2009-TIOL-1129-CESTAT-BANG.pdf

M/s Cochin Shipyard Ltd Vs CCE, Cochin (Dated: January 23, 2009)

Service Tax – Maintenance & Repair of ships not liable to service tax without an agreement/contract with customers prior to 16.06.2005 – Impugned order set aside : BANGALORE CESTAT;

2009-TIOL-1128-CESTAT-BANG.pdf

M/s Roughten International Pvt Ltd Vs CCE, Mangalore (Dated: March 19, 2009)

Service Tax – Services of consulting engineers rendered to state for construction of national highways, covered under Consulting Engineer Services – Pre-deposit of Rs. 5 lakhs ordered: BANGALORE CESTAT;

2009-TIOL-1127-CESTAT-BANG.pdf

Syndicate Bank, Manipal Vs CCE, Mangalore (Dated: February 10, 2009)

Service Tax – Reversal of stale DDs, credit on account of air tickets, reversal of old debit entries cannot be considered as value of taxable service – Cash management service taxable only w.e.f 01.06.2007 – Export of services exempt from service tax – Prima facie case in favour of appellants – Balance amount of pre-deposited waived and stay granted : BANGALORE CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-1133-CESTAT-MUM-LB.pdf + lb story.pdf

CCE, Mumbai-III Vs M/s Supreme Petrochem Ltd (Dated:June 12, 2009)

Valuation – Central Excise – pre 1.7.2000, the expenses of loading of excisable goods within the factory for clearance to a buyer are liable to be included in the assessable value of the goods irrespective of who incurred such expenses …for the period prior to 1.7.2000, the principle which was laid down by the Apex Court in Bombay Tyre International (supra) and subsequently followed In Indian Oxygen (supra) has got to be applied and, accordingly, the expenses of loading of goods within the factory are includable in the assessable value of the goods for the period prior to 1.7.2000 irrespective of who incurred such expenses.

For the period from 1.7.2000 also, it is liable to be included in the assessable value of the goods unless it is proved by the assessee that the burden of such expenses was not borne by them – …Cost of loading of the goods cannot be treated as part of cost of transportation under Rule 5 of the Central Excise Valuation Rules, 2000 as Rule 5 would be applicable only to a case where the goods are sold for delivery at a place other than the place of removal and for the further reason that, even in Bombay Tyre International, transportation from factory gate (place of removal) to the place of sale/delivery was treated differently from outward handling of goods up to factory gate and in the instant case, the place of removal and the place of sale/delivery were one and the same, namely the factory.: MUMBAI CESTAT;

2009-TIOL-1132-CESTAT-BANG.pdf

M/s Electronic Control Corporation Vs CCE & CC , Cochin (Dated: February 26, 2009)

Central Excise – Clandestine manufacture & clearance of electric chokes – Method adopted by adjudicating authority to correlate purchase of raw materials with finished products manufactured & cleared not convincing – Production & clearance calculations arrived at by adjudicating authority does not even correlate with statement given in this regard by assessees and other available evidences – Matter remanded to original authority for de novo decision after granting hearing to assessees : BANGALORE CESTAT;

2009-TIOL-1131-CESTAT-BANG.pdf

M/s Aurobindo Pharma Ltd Vs ACCE, Hyderabad (Dated: March 4, 2009)

Central Excise – Clearance of bulk drugs viz., etavirenz, nelfinavir mesylate, didanosine, indinavir, nevirapine and stavudine eligible for exemption in terms of S. No. 47A of Notification 4/2006-CE and not S.No. 47B as claimed by Revenue – Commissioner's order set aside and Commissioner (Appeals) order upheld : BANGALORE CESTAT;

CUSTOMS SECTION

2009-TIOL-365-HC-DEL-CUS.pdf + cus story.pdf

M/s Seiko Brushware (India) & Ors Vs Directorate Of Revenue Intelligence (Dated: July 15, 2009)

Customs - Prosecution vs Departmental proceedings - once the department has no legs to stand with respect to the original cause of action, continuing criminal proceedings and prosecuting the accused in such like matters amounts to abuse of the process of Court: once departmental adjudication exonerates the accused of the offences which are the basis of lodging a complaint against the accused/petitioners before a criminal Court under Section 135 Customs Act, the complaint cannot be permitted to be tried further because once the department has no legs to stand with respect to the original cause of action, continuing criminal proceedings and prosecuting the accused in such like matters tantamounts to abuse of the process of Court and therefore such proceedings must come to an end. : DELHI HIGH COURT;

2009-TIOL-1126-CESTAT-MUM.pdf

Sesa Goa Ltd Vs CC, Goa (Dated: June 17, 2009)

Refund of CVD – claim for exemption from CVD not considered by assessing authority – duty paid under protest – since assessment not challenged, refund claim held not admissible – section 154 of Customs Act, 1962 cannot be pressed into service – SC decision in Priya Blue Industries [ 2004-TIOL-78-SC-Cus ] squarely covers the case – Appeal dismissed. : MUMBAI CESTAT;