Has Budget been enacted? Nobody knows!

Supplementary invoices - interest - Demand of interest set aside based on a Five Member order [that was never delivered]: CESTAT;

Statutory Status for SFIO: Govt actively considering it;

Tax evasion by Domestic Cos through offshore entities: Isn't India ready for CFC Regulations?

Norms for building infrastructure in non - processing area of SEZ;

Service Tax - BAS - commission paid to sales agents - input service - entitled for credit - demand and penalty set aside: CESTAT

Swine Flue panic finally grips Indian cities; Govt gearing up to match gravity of pandemic

ACC clears appointment of U K Bansal, IPS (UP:74) as Spl Secretary (Internal Security) in MHA

TIOL COMMENTARY

ddt 6 Aug 09.pdf

Norms for building infrastructure in non - processing area of SEZ;

tcw147.pdf

Tax evasion by Domestic Cos through offshore entities: Isn't India ready for CFC Regulations?;

MIXED BUZZ

mbuzz0728.pdf

Railways takes loans from FIIs for three projects;

mbuzz0727.pdf

Govt releases subsidy of Rs 2546 Crore under TUF Scheme;

mbuzz0726.pdf

Swine Flue panic finally grips Indian cities; Govt gearing up to match gravity of pandemic;

cbdtorder113_2009.pdf

CBDT issues local transfer order of 17 CITs;

CASE LAWS

2009-TIOL-394-HC-CHHATISGARH-IT.pdf + vrs story.pdf

ITO, Korba Vs Dhan Sai Srivas (Dated: June 16, 2009)

A provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee. VRS payment, subject to limit of Rs.5 Lac, is exempted from tax, even if the payment is made in installments to be paid in subsequent years: salary or benefit in lieu of salary payable to an employee opting for voluntary retirement is chargeable to tax under Section 15 (a) as soon as it became due, though not paid. The amount so received is exempted from being charged to tax to the extent of Rs.5 ,00,000 /- by the reason of Section 10 ( 10C ) of the Act. Even if the payment is stretched over a period of years, the same would not become chargeable to tax in any subsequent assessment year.: CHHATTISGARH HIGH COURT;

2009-TIOL-393-HC-DEL-IT.pdf

CIT Vs Panacea Biotech Ltd (Dated: July 27, 2009)

Income tax - Sec 32 - Assessee buys a flat for office use - office is furnished and kept ready for use - claims depreciation - AO disallows on the ground of passive use of the asset - held, the expression “used for the purpose of business” includes passive user of the assets in the business, and Revenue's appeal has no force

Assessee purchases two machineries - makes payment for one within the FY and opens LC and receives invoice for the second but the payment is to be made in the next FY - Since expenditure is not incurred within the meaning of the provision of Section 35(2) (i) (a), AO disallows deduction - held, since the assessee is following mercantile system of accounting and the expression 'incur' means to 'become liable to' make payment for the expenditure - Deduction allowable - Revenue's appeal dismissed.: DELHI HIGH COURT;

2009-TIOL-496-ITAT-BANG.pdf

M/s United Breweries (Holdings) Ltd Vs ACIT, Bangalore (Dated: May 28, 2009)

Income tax - Sec 36(1)(vii) - Assessee company is created out of demerger of erstwhile UB Ltd along with UB Beer Ltd - Erstwhile UB Holdings Ltd gets into an agreement with a South African company National Sorghum Breweries Ltd for providing management services - a payment of five million rand is agreed to be paid for first four years of service, and thereafter 7.5% of profit before tax is to be paid for the services provided - Assessee enters into another agreement with United Breweries Ltd to provide the services on their behalf as they had no wherewithal to fulfill the obgligation themselves - bad debt - assessee write off the fee receivable as bad debt after receiving a letter from the South African company that the South African Reserve Bank has not approved the payment - AO disallows the write off and asks assessee to prove that adequate efforts were made for recovery - CIT(A) allows the appeal - held, although from papers files it is not clear who is debtor for the payment and the same needs to be examined in de novo but once bad debt is written off in books of account, the assessee need not prove the same - Assessee's appeal allowed.: BANGALORE ITAT;

2009-TIOL-495-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Indian Plywood MFG Co Pvt Ltd (Dated: February 6, 2009)

Income tax – Penalty u/s 271(1)(c) – Held that as per the findings of the CIT (A) none of the additions made in search proceedings would have come out in case of no search proceedings were made and in absence of acceptable explanations from the assessee, penalty is correctly levied. Where the returned loss is reduced and the assessed amount is still a loss, levy of penalty u/s 271(1) is possible in view of decision of Apex court in Goldcoin Health Food Pvt. Ltd. Appeal of revenue is allowed.

Held - Penalty on additions set aside by the Tribunal to the file of AO would not survive and the AO is free to proceed in accordance with law if he finds for levy of penalty from facts after framing fresh orders.: MUMBAI ITAT;

2009-TIOL-494-ITAT-MAD.pdf

Shri R Yoogamoorthy Vs ACIT,Coimbatre (Dated: February 27, 2009)

Income tax - Sec. 158BD – Documents seized from the premises of the searched person shows receipt of unaccounted money by assessee in connection with transfer of a liquor shop – Assessee was confronted with the seized document as well as sworn statement of the searched person – After the assessee admitted that even the cheque payment received by him was not fully accounted, proceedings u/s 158BD was initiated – AO complied with the provisions contained in sec. 158BD – No time limit prescribed in the Act for issue of notice u/s 158BD – Appellate authorities cannot prescribe any time limit for initiation of such proceedings.

Assessee's contention that a part of the payment received was towards non-compete fee is devoid of any merits since it is only an afterthought and not supported by any written agreement for non-competition – Since the seized document showed both cheque and cash payments and since assessee admitted the receipt of cheque payment, he cannot deny the cash receipts.: CHENNAI ITAT;

sez09ins030.pdf

Norms for building infrastructure in the non-processing area of SEZ;

sez_notification.pdf

MoC amends SEZ Act to incorporate SEZ for Free Trade & Warehousing;

SERVICE TAX SECTION

CASE LAWS

2009-TIOL-1209-CESTAT-BANG.pdf + bas story.pdf

M/s Lanco Industries Ltd Vs CCE, Tirupathi (Dated: July 2, 2009)

Service Tax – BAS - commission paid to sales agents – input service – entitled for credit – demand and penalty set aside: any input service used by the manufacturer, whether directly or indirectly in or in relation to the manufacture of final product and clearance of final product from the place of removal, stands eligible for availing as credit.: BANGALORE CESTAT;

2009-TIOL-1208-CESTAT-AHM.pdf

M/s GHCL Ltd Vs CCE, Bhavnagar (Dated: July 15, 2009)

ST - Cenvat Credit - Assessee avails credit on tax paid for security services - Revenue denies it on the ground that security services were availed for residential colony, located in the vicinity of the factory and the same is directly or indirectly not in relation to the manufacture of final products - held, it is already a settled issue that security service is covered among the input services as defined in Rule 2(1) of the CCRs - Assessee's appeal allowed: AHMEDABAD CESTAT;

2009-TIOL-1207-CESTAT-KOL.pdf

M/s Hindustan Steel Works Construction Ltd Vs CCE, & ST, BBSR-I (Dated: June 15, 2009)

ST - Industrial Construction Service - Assessee pleads that half of its contracts is not related to industrial construction - they are about supply of labour, cleaning etc - argues against extended period on the ground that it is registered with the Revenue since 2004 - held, on examination of its contracts it is revealed that most of its activities are related to industrial construction service. And although it is registered with the Revenue, it has not filed any return and that is why Revenue is not aware of what services it has provided so far - a pre-deposit of Rs 30 lakh, in addition to the sum already deposited, ordered.: KOLKATA CESTAT;

2009-TIOL-1206-CESTAT-DEL.pdf

Surender Singh Chhatwal & CO Vs CCE, Raipur (Dated: July 13, 2009)

Service Tax – Cargo Handling Service and Commercial Construction service – whether the activities undertaken by the appellants resulted in construction of a Dam or Ash Dyke – Matter remanded.: DELHI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-1205-CESTAT-MUM.pdf + invoice story.pdf

Klassic Wheels Pvt Ltd Vs CCE, Aurangabad (Dated:June 4, 2009)

Supplementary invoices – interest – Demand of interest set aside based on a Five Member order [that was never delivered].: MUMBAI CESTAT;

2009-TIOL-1204-CESTAT-MAD.pdf

M/s Hindustan Motors Limited Vs CCE, Chennai-II (Dated: May 20, 2009)

Central Excise – Valuation – Advertisement charges incurred by the dealers are not incudable in the value of the motor vehicles.: CHENNAI CESTAT;

2009-TIOL-1203-CESTAT-BANG.pdf

CCE, Bangalore-III Vs M/s Himalaya Drug Company (Dated: April 28, 2009)

Central Excise – Face Wash Gel cleared with Anti-Dandruff Shampoo – duty was paid on Anti-Dandruff Shampoo under Section 4A and Face Wash Gel offered free – no infirmity in the order of the lower adjudicating authority in setting aside the demand of duty by including the cost of face wash in MRP.: BANGALORE CESTAT;

2009-TIOL-1202-CESTAT-BANG.pdf

M/s Spectra Lamps Pvt Ltd Vs CCE, Mysore (Dated: April 3, 2009)

Central Excise – Earlier order of Tribunal considered the facts pertaining to the service of order-in-original and upheld the Appellate Commissioner's order of dismissal of appeal on limitation – No reason to recall Tribunal's order.: BANGALORE CESTAT;

CUSTOMS SECTION

2009-TIOL-1201-CESTAT-BANG.pdf

M/s Such Silk International Ltd Vs CCE & CC, Mysore (Dated: March 24, 2009)

Customs – 100% EOU – Non fulfillment of export obligation resulting in duty demand on capital goods and raw materials imported/procured duty free – Appellant's bank have moved DRT for recovery of dues – Strong case for waiver of pre-deposit – Stay granted.: BANGALORE CESTAT;

2009-TIOL-1200-CESTAT-BANG.pdf

M/s Duroflex Exports Pvt Ltd Vs CC, Bangalore (Dated: April 17, 2009)

Customs - Inadvertent clerical error committed by CHA in endorsing shipping bills for export as DEPB instead of DEEC - No allegation that imported inputs have been diverted - Appellant having deposited part amount, pre deposit of balance amount waived and stay granted.: BANGALORE CESTAT;