FM releases New Direct Tax Code at North Block today (See 'Direct Tax Basket' for details)

Fake Notes Circulation in India - lowest in World?

Income Tax - Penalty - Punitive measure or revenue generator?

Industrial Production grows by 7.8% in June;

Swine Flu scare: DGCA warns of action against airlines for not distributing health screening card on board;

Kolkata DRI seizes 8 kg Pak-origin heroin from railways wagon;

TIOL COMMENTARY

ddt 12 Aug.pdf

Advance Authorization – Export of SCOMET items – DGFT Clarifies;

spl down.pdf

Income Tax - Penalty - Punitive measure or revenue generator?;

CASE LAW + Analysis

2009-TIOL-92-SC-MISC.pdf + sc story.pdf

Sudhir Shantilal Mehta Vs CBI (Dated: August 7, 2009)

Harshad Mehta stock market scam: SC confirms sentences of former UCO Bank Chairman and close associates of Mehta : SUPREME COURT;

MIXED BUZZ

mbuzz0750.pdf

Industrial Production grows by 7.8% in June;

mbuzz0749.pdf

Swine Flu scare: DGCA warns of action against airlines for not distributing health screening card on board;

mbuzz0748.pdf

Domestic market size of technical textiles expected to reach Rs 66,414 Crore by 2012;

mbuzz0747.pdf

Kolkata DRI seizes 8 kg Pak-origin heroin from railways wagon;

Direct Taxes Code.pdf + Discussion Paper.pdf

FM releases New Direct Tax Code at North Block;

CASE LAWS

2009-TIOL-21-ARA-IT.pdf + ara story.pdf

M/s Invensys Systems Inc (Dated: August 6, 2009)

India-USA DTAA - Applicant is US-based manufacturer of engineering goods and also R&D-based service provider - enters into Cost Allocation Agreement with India-based Group company - withholding tax u/s 195 - Whether payments made for availing services listed out in the agreement are liable to TDS u/s 195?

Applicant raises invoice on the Indian Group Co on the basis of the formula given in the agreement - Counsel for the applicant pleads that most of the services listed out in the agreement are outside the ambit of technical services as defined under Article 12 of the DTAA and can at best be clubbed as managerial services which cannot be taxed as included services - Secondly, the applicant further argues that since all the services have been provided from outside India, the payment made cannot be taxed either under Sec 9(1) or Sec 5 of the I-T Act - Applicant further states that even if some of the services listed in the agreement are brought within the ambit of technical or consultancy services, what further takes it outside the ambit of taxation in India is the Clause (b) of Article 12.4 of the DTAA which uses the expression 'make available' which means enabling the recipient of the service to apply the technical knowhow on its own - held,

++ there is no service which 'makes available' the technical knowledge, experience or skills possessed by the provider of service to the recipient. The services even if they are technical, do not ‘make available' the technical knowledge, etc. within the meaning of Art. 12.4(b) of the Treaty.

++ No income can be taxed in India if the services are rendered from abroad.

++ even if certain activities undertaken by the applicant are not really services but they are more in the nature of stewardship/shareholder activities, for that reason, the amounts received from the Indian Group Co cannot be taxed in India in the absence of a permanent establishment (PE)

++ the applicant is not liable to be taxed in India as per the provisions of DTAA - Article 7.1 and Article 12.4 and the India-based Group Co is not obliged to withhold tax at source u/s 195.: ADVANCE RULINGS;

2009-TIOL-510-ITAT-DEL.pdf

Sahara India Mass Communication Vs ACIT, Lucknow (Dated: May 29, 2009)

Income Tax - Assessee, engaged in publishing and printing business, claimed deduction on account of gift articles given - AO disallowed 50% of the deduction - CIT(A) confirmed disallowance - Held, the gift articles did not bear the logo of the assessee, they were distributed in the course of business to its customers and business associates in the course of business and the expenditure is allowable as business expenditure - Held, w.r.t expenditure on staff attending night shifts is incurred in the course of business and is reasonable with reference to the business needs and is fully supported by the vouchers furnished by the employees in respect of the expenditure - Held, assessee has a large number of bureau offices at different locations and the expenditure incurred on reimbursement of telephone expenses of the staff is prima facie for the purpose of business - Assessee's appeal partly allowed.: DELHI ITAT;

2009-TIOL-509-ITAT-MUM.pdf

M/s Sanjeev Woollen Mills Vs ITO,Mumbai (Dated: March 26, 2009)

Income Tax - Assessee company, manufacturer and exporter of blanket, claimed deduction u/s 80HHC - AO found that assessee valued the stock at market price and therefore revaluation was done and assessee's income was revalued and additions were made to assessee's income - CIT(A) dismissed assessee's appeal but Tribunal allowed assessee's appeal - HC allowed revenue's appeal and revenue thereafter imposed penalty u/s 271(1)(c) - Held the findings indicate that the explanation of the assessee that it was under bonafide belief that method followed had given the correct profit of the relevant years cannot be accepted—Held, however, that since the assessee was a 100% exempt export unit, the inflation of income hardly affected the quantum of tax to be paid—Assessee's appeal allowed.: MUMBAI ITAT;

2009-TIOL-508-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Silicon Graphics Systems (I) Ltd (Dated: May 22, 2009)

Income tax - Sec 43B - Assessee claims deduction for customs duty paid under protest - AO treats it as contingent liability and disallows - held, since it is settled law that it is not necessary that liability to pay duty must be incurred first and only thereafter the payment of such duty is made. The deduction is allowable u/s 43B of the Act on payment basis before incurring the liability to pay such amounts - Revenue's appeal disallowed.: DELHI ITAT;

2009-TIOL-507-ITAT-MUM.pdf

ITO, Mumbai Vs M/s Ultra Entertainment (Dated: May 26, 2009)

Income tax - Penalty u/s 271C - assessee is into online lottery business - enters into an agreement with a company which is licensed by the State Government to conduct the entire online business - assessee pays certain percentage of its total revenue for using the infrastructure of the licensed company - fails to deduct TDS - AO says TDS u/s 194C was liable to be deducted and holds the assessee in default - CIT(A) holds TDS u/s 194J should have been invoked in this case but finds 'reasonable cause' u/s 273B for failure to comply with TDS provisions and dismisses penalty proceedings - held, since the assessee had a professional advice not to deduct tax at source it was a 'reasonable cause' for failure and penalty is not called for - CIT(A) order upheld - Revenue's appeal dismissed.: MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-1242-CESTAT-DEL.pdf

M/s Dimensional Stone Vs CCE, Jaipur (Dated: May 25, 2009)

ST - Service recipient - no liability can be fastened before the amendment inserting Sec 66A w.e.f 18.4.2006.: DELHI CESTAT;

2009-TIOL-1241-CESTAT-AHM.pdf

M/s Endeavour Instrument Pvt Ltd Vs CCE, Ahmedabad (Dated: June 1, 2009)

ST - Installation & Commissioning Services - Assessee manufactures weigh-bridges - also provides installation services to its clients - Revenue raises demand from 1.7.2003 - Assessee discharges tax liability from 10.9.2004 and also pays 25% penalty - waiver of pre-deposit granted.: AHMEDABAD CESTAT;

2009-TIOL-1240-CESTAT-DEL.pdf

CCE, Meerut Vs M/s Ashoka Trading Co (Dated: May 21, 2009)

ST - Are expenses reimbursable includible in gross value of service taxable? - since matter is pending with the Larger Bencb, status quo ordered.: DELHI CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-1245-CESTAT-KOL.pdf

M/s Burdwan Iron & Steel Co Pvt Ltd Vs CCE, Bolpur (Dated: June 4, 2009)

Central Excise – Clandestine removal of MS Ingots – Private records show higher production than statutory records and admitted by appellants – Difference in cost of raw material as per accounts compared with receipt invoices – Pre-deposit of Rs. 17.5 lakhs ordered.: KOLKATA CESTAT;

2009-TIOL-1244-CESTAT-MAD.pdf

M/s Indian Organic Chemicals Ltd Vs CCE, Chennai (Dated: May 25, 2009)

Central Excise – CENVAT Credit on capital goods transferred to another company – there is no physical removal from the factory but the entire factory together with capital goods were hived off to another company – credit cannot be disallowed.

Penalty – the appellants reversed the irregular credit before issue of show cause notice – penalty reduced to 25% of the credit involved.: CHENNAI CESTAT;

2009-TIOL-1243-CESTAT-AHM.pdf

CCE, Rajkot Vs M/s Mahalaxmi Extrusions (Dated: March 23, 2009)

Central Excise – Rule 4 of CENVAT credit Rules does not debar availing depreciation on balance of 50% of the duty, which is not availed as CENVAT Credit – No merit in Revenue appeal – Tribunal decision in Suprajit Engineering 2007-TIOL-180-CESTAT-BANG followed – Impugned order of Appellate Commissioner upheld.: AHMEDABAD CESTAT;

CUSTOMS SECTION

NOTIFICATION + CIRCULAR

dgft08cir100.pdf

Condition on import of textile and textile articles as per Para 11 (i) of Chapter 1A of ITC (HS) Classifications of Export and Import Items 2004-09;

dgft08cir098.pdf

Modification of Policy Circular No. 51 (RE-2008) / 2004-2009 dated 6th January, 2009;

dgft08pn194.pdf

ANF headings - Words 'and discounts, if any' deleted from Para 3.23.11;

CASE LAWS

2009-TIOL-91-SC-COFEPOSA.pdf + cofeposa story.pdf

Thahira Haris Etc Vs Government Of Karnataka & Others (Dated: April 15, 2009)

COFEPOSA – Release of detenu detained under COFEPOSA – Constitution of India provides adequate safeguards under clauses (5) and (6) of Article 22 to the detenu who is detained in pursuance of the order made under any law providing for preventive detention – Grounds of detention and relevant relied upon documents not provided to detenu violates Article 22 (5) of the Constitution of India and Section 3(3) of COFEPOSA – Impugned order of High Court upholding the detention order set aside and detention order quashed with a directive to release the detenu forthwith if he is not required in any other case.: SUPREME COURT;

2009-TIOL-404-HC-DEL-EXIM.pdf + exim story.pdf

Ajay industrial. Corpn Vs Dir General, Foreign Trade (Dated: July 16, 2009)

EXIM Policy 1992-97 – Revalidation of licenses after endorsement of transfer on duty free advance licenses – Para 125 of EXIM Policy does not differentiate between transferable license and a non-transferable license – All import licenses whether endorsed as transferable or non-transferable to be treated alike – On transfer a duty free license in the hands of third party is valid for the balance period mentioned in the licence or six months from the date of transfer, whichever is later – Rejection of applications for revalidation of licenses after endorsement of transfer quashed – DGFT directed to consider request for revalidation – No opinion expressed as to whether request for extension has merits and justifiable.: DELHI HIGH COURT ;

2009-TIOL-1246-CESTAT-MAD.pdf

M/s Billiards Point Vs CC, Chennai (Dated: April 17, 2009)

Customs – the relevant date for determination of violation of law is the date of shipment of the goods – import of capital goods of more than 10 years old – confiscation under Section 111 (d) upheld.: CHENNAI CESTAT ;