Ministry of Railways decides against forceful acquisition of land for projects;

CBEC clarifies benefit of reduced penalty u/s 11AC not available at appeal stage;

Kolkata DRI seizes Ketamine plus FICN worth Rs 2 lakh;

FM addresses CBDT + CBEC Commissioners in Chennai; insists on simple I-T Forms; asks CCEs to prepare for GST roll-out;

For all SEZ problems - go to Department of Commerce (See 'DDT');

Govt sets up Expert Panel to review working of Motor Vehicle Act; Former Surface Transport Secy S Sunder to head it;

CBDT delighted by sudden surge in second instalment of advance tax;

Hotels taken out real estate exposure by RBI: Tourism Ministry;

Govt keen to follow PPP model for Innovation Univs to be set up during 11th Plan: Sibal;

TIOL COMMENTARY

ddt 16 sept.pdf

For all SEZ problems - go to Department of Commerce

spl down.pdf

Foreign Trade Policy – Fancy aspirations and empty provisions?

MIXED BUZZ

mbuzz0857.pdf

Kolkata DRI seizes Ketamine plus FICN worth Rs 2 lakh;

mbuzz0856.pdf

Govt sets up Expert Group to examine norms under NREGA for works on private land;

mbuzz0855.pdf

Ministry of Railways decides against forceful acquisition of land for projects;

mbuzz0854.pdf

Govt keen to follow PPP model for Innovation Univs to be set up during 11th Plan: Sibal;

mbuzz0853.pdf

Hotels taken out real estate exposure by RBI: Tourism Ministry;

2009-TIOL-106-SC-IT.pdf

M/s Unnao Distilleries And Braveries Ltd Vs CIT-II And Ors (Dated: July 28, 2009)

Income tax - Search u/s 132 - Revenue finds documents relating to some payments made to public servants - Order u/s 127 issued for centralisation of all cases - Assessee pleads that their case has been pending before the Settlement Commission and any such transfer may not serve any purpose - held, since the case is pending with the Settlement Commission, the Revenue's move to transfer the case from Kanpur to Delhi for coordinated investigation becomes infructuous - Assessee's appeal allowed:SUPREME COURT;

2009-TIOL-495-HC-MUM-IT.pdf + stock story.pdf

CIT, Mumbai Vs M/s Techno Shares & Stocks Ltd (Dated: September 11, 2009)

IT – No depreciation on stock exchange membership card acquired by an assessee on or after 1/4/1998: it is reasonable to construe that the expression 'licences' is used in section 32(1)(ii) of the Act to apply to licences relatable to intellectual properties only and not to all licences. The expression 'licences' in section 32(1)(ii) of the Act cannot be construed widely, because, the expression `any other business or commercial rights of similar nature' in Section 32(1)(ii) of the Act makes it abundantly clear that the legislature intended to give narrower or restricted meaning to the expressions used in the Section. No hesitation in holding that the expression 'licences' in section 32(1)(ii) of the Act must be construed restrictively so as to apply to licences relating to acquisition / user of intellectual property rights.

The argument advanced by the assessees that since the BSE card is a capital asset and is liable for capital gains tax when sold at a profit, depreciation must be allowed on the BSE card acquired after 1/4/1998 is also without any merit, because, under section 32 of the Act depreciation is not allowed on all capital assets but is allowable on capital assets which fall in any of the categories enumerated in the Section. As it is held that the BSE card does not fall in any of the categories specified in section 32(1 )( ii) of the Act, depreciation cannot be allowed on the BSE card.:BOMBAY HIGH COURT;

2009-TIOL-494-HC-DEL-IT.pdf

CIT Vs Eshaan Holding P Ltd (Dated: August 31, 2009)

Income Tax Act – Section 148 – Service of Notice – Notice u/s 148 issued by AO on 29-01-2004 by that time assessee had already shifted to a new address - ROI filed for AY 03-04 on 28-11-2003 prior to issue of notice u/'s 148 showing the new address – ITAT held :

There is no proof of service of notice u/s 148 , even otherwise this is not a valid service because assessee had already filed ROI for Ay 03-04 showing the new address

Before issue of notice u/s 148 it was expected of AO to have checked up if there is a change in address.
Service of notice u/s 148 is jurisdictional pre condition.

Presumption u/s 27 of General Clauses Act can't be drawn because notice was not addressed properly.

Assessee had denied service of notice before the AO.

High Court upheld the order passed by ITAT.: DELHI HIGH COURT;

2009-TIOL-567-ITAT-MUM.pdf

M/s Jaykay Finholdings (India) Pvt Ltd Vs ACIT, Mumbai (Dated: June 22, 2009)

Income tax – Section 10(23G) –The assessee company purchased equity shares of an enterprise ‘SCL' engaged in the business of operating any infrastructure facility and was an eligible enterprise for exemption u/s 10(23G) of the Act - In A.Y. 2005-06, the assessee sold these shares and claimed the capital gains arising on it as exempt u/s. 10(23G) - Rule 2-E of the I. T. Rules, 1962 provides for guidelines for approval u/s. 10(23G) of the Act – The ‘SCL' was approved as an eligible enterprise for section 10(23G) for the A.Y. 2002-03 to 2004-05 as per the Rule 2-E applicable at that time – Rule 2E was substituted by the I.T. (6th Amendment) Rules 2004 w.e.f. 12.1.2004 and provided that an approval once granted would remain valid till the same is withdrawn by the Central Government however it did not provide for any procedure regarding renewal of approvals already granted after the expiry of the period of three years as per the earlier Rule 2E (6). ‘SCL' made an application after amendment in Rule 2B on 3.4.2007 which was pending without any action being taken on the same. Further the assessee's name was changed from SCL to M/s. Hutchison Essar Telecom Ltd. (HETL) when the shares were sold by the assessee - AO disallowed the exemption claimed by the assessee stating that SCL ceased to exist when its name was changed to HETL and the business of the said company also changed and therefore for non compliance of sub rule (6) & (7) approval granted u/s. 10(23G) to SCL will not hold good – Moreover the assessee failed to furnish the tax audit report for A.Y. 2005-06 before CCIT as required by sub rule (3) of Rule 2E to enquire and furnish the report to the Central Government for passing necessary order for considering it an eligible enterprise for exemption u/s 10(23G) - therefore, exemption is no longer available. Therefore the capital gains arising from sale of shares of M/s HETL are not exempt from capital gains – CIT (A) confirmed the addition – Held

++ that Section 23(3) of the Companies Act, 1956 provides that change of name does not affect rights or obligations of the Company. By a mere change of name the constitution of the company is not changed and that all rights and obligations under law of the old company pass to the new company as it held by Hon'ble Calcutta High Court in Economic Development Corporation Ltd. Vs. CIT, 75 ITR 233 (Cal). Therefore, the change of name of SCL to HETL will have no effect for exemption u/s 10(23G).

++ that it is only the Central Government which have the authorities under sub-rule (8) of Rule 2-E to withdraw the approval granted under sub-rule (5) of Rule 2E and the AO has no jurisdiction to go into the aspect with regard to existence of conditions for grant of approval or its continuance or its cancellation. So long as the approval granted remains valid, he has to accept the same. The AO exceeded his jurisdiction while holding that the assessee did not fulfill the conditions for eligibility and its continuation of approval u/s. 10(23G) of the Act.

++ that Rule 2E being a procedural provision, the new Rule 2E substituted w.e.f. 12.01.04 would apply to all approvals which are in force as on the date of its substitution. As on 12.1.04, when the new rule came into force, the Assessee's approval remained valid and should be deemed to be one issued under new Rule 2-E. There are no facts justifying coming to a conclusion that SCL was not engaged in the business of infrastructure development. The word ‘substitution' would connote that the rule making authority intended to give benefit to the enterprise who were already approved and whose approvals were valid as on the date of its substitution. Therefore, the appeal of the assessee is allowed and the capital gain on sale of shares of an enterprise approved u/s 10(23G) is considered as exempt u/s 10(23G).

++ that the capital gains computed on sale of shares of HETL in the books of account will be excluded while computing the book profits u/s 115JB as per the explanation 1 to (ii) to section 115JB which provides that the income covered under the provisions of section 10 (excluding 10(38)) section 11 or 12 are to be reduced from amounts so credited to the profit and loss accounts in order to work out the book profit.:MUMBAI ITAT;

2009-TIOL-566-ITAT-DEL.pdf

Aftab Seth Vs DIT, New Delhi (Dated: July 23, 2009)

Income tax - long-term capital gains - assessee inherits property on demise of his mother in 2003 - disposal of property - long term capital gains - AO takes cost inflation index for FY 2002-03 as per the Explanation 1(b) to Section 2(42A) - Assessee for fair market value of the property as on 1-4-81 - held, it is now settled law that the period of holding for determination of the long term capital asset, includes the period for which the previous owner held the asset that devolved upon the legal heir as per section 49(1) of the Act. The indexation is to be done from 1-4-1981 - Assessee's appeal allowed:DELHI ITAT;

SERVICE TAX SECTION

2009-TIOL-1473-CESTAT-KOL.pdf

M/s Essel Mining & Industries Ltd Vs CST, Bhubaneswar (Dated: June 16, 2009)

ST - GTA Service - Assessee paying tax where gross amount charged by the service provider is more than Rs 1500 - dispute over consignments where tax paid is less than Rs 1500 as Revenue denies the benefit of exemption notification - waiver from pre-deposit granted - stay ordered: KOLKATA CESTAT;

2009-TIOL-1472-CESTAT-MAD.pdf

Prasad Corporation Ltd Vs CST, Chennai (Dated: June 2, 2009)

Service Tax – Stay / Dispensation of pre-deposit – prima facie, the activity of giving special effects etc to the inputs received via internet is covered under Video Tape Production Service – Pre-deposit of Rs 50 Lakhs ordered.: CHENNAI CESTAT;

2009-TIOL-1471-CESTAT-MAD.pdf

CCE, Chennai-III Vs M/s Southern Synthetics Ltd (Dated: June 15, 2009)

Service Tax – Goods Transport Operation Agency Service for the period from 16.11.97 to 1.6.98 – Show Cause Notice under Section 73 of the Finance Act, 1994 is not maintainable as the respondents were liable to file returns under Section 71 A and Section 73 is applicable only in cases where return is to be filed under Section 70.: CHENNAI CESTAT;

CENTRAL EXCISE SECTION

CIRCULAR

excircular898.pdf

Benefit of reduced penalty under provisos to Section 11AC- whether also available at appeal stage- reg.

NOTIFICATION

etariff09_25.pdf

Exemption for import of brush to be exported with hair dye;

CASE LAWS

2009-TIOL-497-HC-P&H-CX.pdf + interest story.pdf

CCE, Ludhiana Vs M/s Ralson Carbon Black Ltd (Dated: August 18, 2009)

Central Excise – Reduction of penal period of mandated two months under Rule 8 of Central Excise Rules, 2002 by CESTAT justified when assessees paid substantial portion of duty with interest – No reason to interfere with order of CESTAT: PUNJAB & HARYANA HIGH COURT;

2009-TIOL-1476-CESTAT-BANG.pdf

M/s M M Cylinders (P) Ltd Vs CCE, CC & ST, Tirupati (Dated: April 20, 2009)

Central Excise – Undervaluation of LPG cylinders due to inflated freight charges – Pre-deposit of Rs. 10 lakhs ordered and balance amounts waived till disposal of appeal: BANGALORE CESTAT;

2009-TIOL-1475-CESTAT-MAD.pdf

M/s Roots Industries Ltd Vs CCE, Coimbatore (Dated: June 19, 2009)

Central Excise – Stay / dispensation of pre-deposit - Inputs cleared as such for export under bond – Reversal of CENVAT credit - Inputs exported as such under bond without reversal of an amount equal to the credit availed. Confirmation of demand by the Revenue stayed as Board's letter and precedent decision in favour of appellants. (Para 2) : CHENNAI CESTAT;

2009-TIOL-1474-CESTAT-MAD.pdf

M/s Indo Swiss Jewels Ltd Vs CCE, Chennai (Dated: May 18, 2009)

Central Excise – Shortage of Final products – Clandestine clearance - Evidence – There is no reliable evidence that the figures recorded in the production summary sheets represented the final figures of the finished goods accounted in the RG-I register. The Revenue has not substantiated the allegation of clandestine clearance with material indicating consumption of raw material or evidence of receipt of proceeds relatable to the quantity found short, or statements recorded from buyers of such goods. It is settled law that charge of clandestine clearance cannot be found without reliable and concrete evidence. In the circumstances the demand of duty and penalty are unsustainable and the impugned order is vacated. ( Para 5): CHENNAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt09_144.pdf

CBEC revises tariff value of poppy seeds + brass scraps;

ctariff09_106.pdf

Exemption for import of brush to be exported with hair dye;

CASE LAWS

2009-TIOL-496-HC-MUM-CUS.pdf + exim story.pdf

M/s Dimexon Vs UoI (Dated: August 12, 2009)

Customs Duty – Exemptions under Customs Act - The Exim Policy cannot have the effect of reading down the Exemption Notification: Duty is payable pursuant to the Customs Act. The Import and Export Control Act regulates the import or export of goods. In so far levy of customs duty is concerned, the Customs Act is the Special Act. The issue whether any goods can be imported or exported has nothing to do with the assessment of customs duty. Therefore, once the Notification is issued under Section 25 of the Customs Act that Notification alone would govern the issue of exemption of customs duty.:BOMBAY HIGH COURT;

2009-TIOL-1470-CESTAT-MAD.pdf

M/s South India Corporation (Agencies) Ltd Vs CC, Trichy (Dated: June 17, 2009)

Customs – EPCG – partial fulfillment of export obligation – revenue demanded full duty foregone - the duty payable should be worked out based on the extent of fulfillment of export obligation – no case for imposition of penalty and interest is also not applicable as under Notification 160/92, there is no provision to demand interest.:CHENNAI CESTAT;