CBI raids former Chairman of Chennai Port Trust & others; recovers cash of Rs 2.36 Crore;

Bangalore DRI seizes IC worth Rs 25 lakh being smuggled out to Sharjah;

Cairn India commences formal production of crude oil from Barmer in Rajasthan;

CBEC amends provisions for EDI Infrastructure under Cargo Handling in Customs Areas Regulation;

Guidelines for dealing with Requests for Change in Area of SEZs;

Service tax on Client Supplied Materials - Government scores a self goal?

India, Singapore sign tourism cooperation pact;

India-ASEAN FTA: PM gives words to protect interests of Kerala farmers;

CBI Director looks at CBI as world class agency in near future;

TIOL COMMENTARY

ddt 4 aug.pdf

Transfer of In-principle or Formal approval issued to a SEZ Developer to its subsidiary or SPV;

stgst.pdf

Service tax on Client Supplied Materials - Government scores a self goal?

RBI CIRCULAR

rbi09cir006.pdf

Memorandum of Instructions governing money changing activities;

MIXED BUZZ

mbuzz0721.pdf

India, Singapore sign tourism cooperation pact;

mbuzz0720.pdf

India-ASEAN FTA: PM gives words to protect interests of Kerala farmers;

mbuzz0719.pdf

CBI Director looks at CBI as world class agency;

2009-TIOL-387-HC-UTTRANCHAL-IT.pdf

Director Of Income Tax International Taxation Delhi-II, Vs M/s Schlumberger Asia Service Ltd (Dated: July 24, 2009 )

Income tax - deemed profits - Sec 44BB - Indian company reimburses Customs duty paid on imported equipment - Is such reimbursement includible in gross receipts taxable under I-T Act?

Assessee is a Hong Kong-based company - enters into contract with ONGC for prospecting, exploration and extraction of mineral oils - reimbursement of Customs duty on equipment imported - AO for inclusion of customs duty in gross receipts taxable @ 10% under Sec 44BB - CIT(A) and Tribunal disagree with the AO - held, since Customs duty is statutory in nature, and no deemed profits are involved in the reimbursement to the assessee, it cannot be taxed u/s 44BB - Revenue's appeal dismissed.: UTTARAKHAND HIGH COURT;

2009-TIOL-386-HC-MAD-IT.pdf

M/s Orient Hospital Ltd Vs DCIT, Madurai (Dated: June 29, 2009)

Income tax - section 56(2)(iii) - Assessee company constructs a hospital building and runs a hospital - suffers losses - leases out hospital building along with medical equipment on rental - treats it to be business income and sets off losses suffered in previous years - AO treats the lease income as 'income from other sources' and disallows set off of carried forward losses - Tribunal agrees with the AO but allows the set off - held, as per provisions of section 56(2)(iii), the lease rental from hospital building along with equipment cannot be treated as profit from business or profession and thus there is no flaw in the Tribunal's order to treat it 'income from other sources' and set off is to be allowed as per the Apex Court decision.: MADRAS HIGH COURT;

2009-TIOL-385-HC-MUM-IT.pdf

Manish D Shah Vs C M Betgeri (Dated: July 27, 2009)

Income tax - Sec 234B - assessee fails to pay advance tax - notice issued for interest payment - interest at the rate of 2% charged u/s 234B - full tax with interest paid by the assessee - later, the assessee files rectification application for the excess interest charged - bone of contention is whetehr interest is to be charged upto the date of intimation u/s 143(1) or regular assessment u/s 143(3) - held, as per the language of Sec 234B, the interest is to be charged from the date of regular assessment u/s 143(3) and not from the date of intimation u/s 143(1)

Is interest still payable u/s 220 even after paying the same u/s 234B? - held, the interest payable u/s 220 is different from interest payable for default in advance tax u/s 234B - the provisions of law u/s 220 makes it clear that what is payable is interest in terms of demand made u/s 156, and on failure of the assessee to pay the tax within 30 days from the service of notice - thus, the interest payable being payable under two different heads, it is not possible to accept the contention of the assessee that once interest is paid under Section 234B no interest is payable under Section 220 of the IT Act - however, since no tax was payable during the relevant period, the tax paid u/s 220 is not correct, and it is without jurisdiction for the Revenue to claim so.: BOMBAY HIGH COURT;

2009-TIOL-491-ITAT-MUM.pdf + penalty story.pdf

Variable Insurance Products Fund Vs ADIT, Mumbai (Dated: May 7, 2009)

Income tax - Indo-USA DTAA - Assessees are incorporated investment trusts in the USA - registered with SEBI as sub accounts of a Foreign Institutional Investor - make investments in shares and securities - file return declaring capital gains - revise return on the basis of an Advance Ruling in the case of a sister concern for treating the income as business income under DTAA - Revised returns held invalid by the A.O - Penalty u/s 271(1)(c) initiated for making false claim - whether penalty based on such invalid returns sustainable.

Assessees are American investors in stock markets - registered with SEBI as sub-accounts of M/s Fidelity Management Research Co - file returns, declaring short-term capital gains as well as dividend income - following an advance ruling, the assessees file revised return, claiming that their income be treated as business income on the ground that the shares and securities held by them were business assets - And since the assessees have no PE, the business income is not taxable in India under the Indo-USA DTAA - AO asks for audit report and details of books maintained - Assessees reply to the AO that they do not maintain separate books for their Indian investments - AO invalidates the revised returns and initiates penalty u/s 271(1)(c) for making false claims of DTAA benefits - held, since the AO has found defects in the revised return and invalidated the same, initiating penalty on the basis of such invalid return cannot be sustained - besides, merely claiming a change in the nature of income, on the basis of a court ruling, cannot be equated to filing of false information - Assessee's appeal allowed.: MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-1189-CESTAT-AHM.pdf

CCE, Vapi Vs M/s TPL Plastech Ltd (Dated: May 29, 2009)

ST - Cenvat credit on mobile phones - Revenue disallows - held, until the Revenue proves that the mobile phones were not used in relation to the manufacture, credit cannot be denied: AHMEDABAD CESTAT;

2009-TIOL-1188-CESTAT-BANG.pdf

M/s Sobha Developers Ltd Vs CST, Bangalore (Dated: March 12, 2009)

Service tax – Levy of service tax on construction of residential complex service – Service tax paid on 30% of contract value only as balance representing value of goods and materials subject to VAT – Pre-deposit of balance amount of Rs. 49 crores, along with interest and penalty waived till disposal of appeal.: BANGALORE CESTAT;

2009-TIOL-1187-CESTAT-BANG.pdf

Sri K Manmohan Mally Prop Vs CCE, Mangalore (Dated: February 26, 2009)

Service tax – Cost of land and stamp duty excluded from value of taxable service – Prima facie strong case in favour of appellants – Full waiver of pre-deposit and stay granted.: BANGALORE CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-389-HC-ALL-CX.pdf + Lamicoat International STORY.pdf

Loknath Prasad Gupta Vs CCE, Noida (Dated: June 25, 2009)

Central Excise – When Tribunal already directed pre-deposit of duty and penalty by factory, interest of Revenue would be served if appellants (individuals) furnish security of Rs. 5 lakhs each, other than cash or bank guarantee.: ALLAHABAD HIGH COURT;

2009-TIOL-388-HC-ALL-CX.pdf + Lamicoat International STORY.pdf

M/s Lamicoat International Pvt Ltd Vs CCE, Noida Asia Service Ltd (Dated: June 25, 2009)

Central Excise – Direction of CESTAT to deposit an amount of Rs.37.20 lakhs towards duty and penalty not disputed when stay applications were heard – Appellant unable to convince that substantial question of law arises for consideration.: ALLAHABAD HIGH COURT;

2009-TIOL-1186-CESTAT-BANG.pdf

M/s Swastik Engineering Vs CCE, Bangalore (Dated: April 27, 2009)

Central Excise – Brass strips, phosphor bronze strips and copper strips obtained after cutting & slitting of coils and subjected to further process – Denial of input credit later on the ground that processes does not amount to manufacture not justified when assessee was advised to register and pay duty – Prima facie strong case on merits – Full waiver of pre-deposit and stay granted.: BANGALORE CESTAT;

2009-TIOL-1185-CESTAT-BANG.pdf

M/s Taher Ali Industries & Projects (P) Ltd Vs CCE, Visakhapatnam (Dated: January 15, 2009)

Central Excise – When there is no SCN or Adjudication order, no appeal maintainable in a case which is still under investigation – Impugned order of Appellate Commissioner dismissing appeal as not maintainable upheld.: BANGALORE CESTAT;

CUSTOMS SECTION

CIRCULAR

cuscir09_021.pdf

Provisions relating to EDI infrastructure under the "Handling of Cargo in Customs Areas Regulations, 2009";

CASE LAWS

2009-TIOL-1184-CESTAT-MAD.pdf + Base Corpn STORY.pdf

CC, Chennai Vs M/s Base Corporation Ltd (Dated: May 11, 2009)

Customs – DEEC – Nexus with product exported – The transferee of the licence is under no obligation to establish nexus with the export goods when the export obligation had already been fulfilled by the transferor exporter.: CHENNAI CESTAT;

2009-TIOL-1183-CESTAT-BANG.pdf

M/s Sorento Granito Pvt Ltd Vs CC, Visakhapatnam (Dated: February 4, 2009)

Customs – Overseas supplier shipped additional consignment of feeder assembly along with hydraulic press without amending the value indicated in commercial invoices issued earlier – Bill of Entry filed based on commercial invoice – When reasons for this faux pas explained to earlier Commissioner who agreed and ordered for re-assessment, subsequent Commissioner passing an order confiscating the goods and imposing fine and penalty shows lack of application of mind – Impugned orders set aside.: BANGALORE CESTAT;