Principal Bench of CAT sets aside appointment of CBDT chairman and other members except S S Khan;

Barack Obama wins Nobel Peace Prize;

Govt identifies seven critical areas in Direct Taxes Code;

President appoints Mehinder Singh Sullar, Ram Chand Gupta and Gurdev Singh as Additional Judges of the Punjab & Haryana High Court;

Seeking of views of Trade and Industry and Field Formations on the proposed amendment of CENVAT Credit Rules to provide for registration by the importer who wish to issue cenvatable invoices (Draft Circular)

White Paper on GST may be released in few weeks + Many States find April 1, 2010 deadline too early;

Valuation of SKO (PDS), LPG and other goods under Transaction Value System from 1.7.2000: CBEC decides to contest it further before SC;

Herta Mueller wins Nobel Prize in Literature;

TIOL COMMENTARY

ddt 09 oct.pdf

Strange are ways of Board – Mystery shrouds a smuggled amendment;

guest column.pdf

Cenvat Credit parity granted to EoUs but how does it work?

MIXED BUZZ

mbuzz0919.pdf

Govt identifies seven critical areas in Direct Taxes Code;

mbuzz0918.pdf

UN AIDS official urges India not to waver in battle against epidemic;

2009-TIOL-614-ITAT-DEL.pdf + ranbaxy story.pdf

DCIT, New Delhi Vs M/s Ranbaxy Laboratories Ltd (Dated: July 24, 2009)

Deduction on account of shares given under Employees Stock Option Scheme (ESOP ). The assessee is not to defray or pay any liability under the claim. Therefore, such notional loss cannot be held to be allowable under the scheme of the Act.

Addition of Rs. 28 ,76,76,167 /- made u/s 43B on account of provision for pension to employees and when no pension trust was constituted nor contributed the amount to any outside agency. no separate fund was created and the pension was payable to the employees upon their resignation/retirement or to the family members in the event of death of the employee. there can be no question of disallowance u/s 43B of the Act

Donation: The mere fact that making of a donation for a charitable or public cause or in public interest results in the Government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount under section 37(1) other Act when such payment had been made for the purpose of the assessee's business.

Section 80 HHC : Excise Duty – Foreign exchange: - excise duty could not be added to the total turnover for the purpose of computation of deduction u/s 80HHC ; foreign exchange fluctuation gain pertaining to exports affected in earlier years cannot be said to be "any other receipts of a similar nature" in terms of Explanation (baa) to sec. 80HHC for calculating "profits of the business".

Addition of Rs. 1,88,06,077/- made on account of demand raised by NPAA when the demand did not crystallize as the matter was subjudice , and pertained to a period not under consideration. Disputing the payment of liability by way of an appeal does not disentitle the assessee to claim that demand as an expenditure as what is sought by the assessee who is disputing the liability is a relief from higher court. Tribunal found no infirmity in the order of CIT( A) vide which he has held that such liability being arisen and crystallized during the year should have been allowed to the assessee.

weighted deduction u/s. 35( 2AB ) on the cost of computer, motor-car and other assets provided to R&D employees. The expenditure has been incurred by the assesses on vehicles, computers and other assets, provided to its employees working at the approved research facilities and directly engaged in the research and development activities. There is no dispute that the expenditure in question was incurred by the assessee in respect of research & development facilities which have been duly approved by the prescribed authority u/s 35( 2AB ). Therefore, the assessee is clearly entitled for weighted deduction. :DELHI ITAT;

2009-TIOL-613-ITAT-MUM.pdf

ACIT, Mumbai Vs M/s Spica Elastic Pvt Ltd (Dated: September 1, 2009)

Income tax - Sec 40A(2)(b) - Assessee is a manufacturer of elastic - incurs expenses on purchase of licensed software - AO treats the same as capital expenditure and allows depreciation - held, it is settled law that the technology is fast chaning, and systems need regular upgradation or replacement, and therefore, it is revenue expenditure, fully deductible - Revenue's appeal dismissed:MUMBAI ITAT;

2009-TIOL-612-ITAT-MUM.pdf

M/s Unicom Appliances Ltd Vs CIT, Mumbai (Dated: January 16, 2009)

Income tax - Sec 80IB, 263 - Assessee claims deductions u/s 80IB - AO allows it - CIT invokes powers u/s 263 on the ground that the AO has failed to apply his mind to income heads like 'sales & services' and 'other income' - held, it is settled law that the deduction u/s 80IB is allowable on profits and gains derived from certain industrial undertakings. The receipts by way of service charges and other income cannot be held as income derived from the industrial undertaking. CIT order upheld and assessee's appeal dismissed:MUMBAI ITAT;

2009-TIOL-611-ITAT-MUM.pdf

Universal Ferro & Allied Chemicals Ltd Vs ACIT, Mumbai (Dated: August 11, 2009)

Income tax - section 40(a)(i) - Assessee makes payment to a US citizen towards retainership fee - AO insists on TDS - held, since the services were provided outside India and the non-resident had no fixed place in India, his income is not taxable in India - therefore, there is no ground for tax deduction at source and the sum cannot be disallowed under section 40(a)(i) - assessee's appeal allowed:MUMBAI ITAT;

2009-TIOL-610-ITAT-MUM.pdf

Xelo Pty Ltd Vs DDIT, Mumbai (Dated: June 22, 2009)

Income Tax – Sec 9 - Income deemed to accrue or arise in India – Assessee is a resident of Australia and enters into a contract with Metro Railways through its PE in India – Assessee does not offer to tax profit on account of off-shore supply of equipments – Held, considering that Metro Railways had itself bifurcated the value of contract amongst supply of equipments and services contention of revenue that there was no scope of bifurcation between indigenous services and offshore supply of equipments was unacceptable – Held further that since offshore supply of equipment was made were by property of goods passed on to buyer in foreign country and further payment was received by assessee in foreign country, no part of income on account of offshore supply could be said to have deemed to accrue or arise to assessee in India within meaning of section 9

Income Tax Act – Section 90 – Held that if income is not taxable as per the provisions of Act provisions of DTAA cannot be invoked to create any tax liability

Income Tax Act – Section 9 read with Rule 10 – Attribution of Profits - Assessee fails to produce books of account and thus the AO applies rule 10 and determines income at rate of 10% - CIT(A) arbitrarily reduces profit rate to 8% - Held, matter is to be remanded to AO with a direction to compute income from all products as per books of account which assessee now claims to have in its possession.: MUMBAI ITAT;

SERVICE TAX SECTION

2009-TIOL-1597-CESTAT-BANG.pdf

M/s Federal bank ltd Vs CCE, Cochin (Dated: May 12, 2009)

Service tax - Collection of telephone bills, arrangement for drawing DDs, arranging payment collection services for insurance policy etc classifiable under Banking & Other Financial Service and not Business Auxiliary Service – Non-acceptance of Tribunal order not a valid reason to confirm demands:BANGALORE CESTAT;

2009-TIOL-1596-CESTAT-BANG.pdf

M/s Hetero Drugs Ltd Vs CCE, Hyderabad (Dated: June 10, 2009)

Service tax – Recipient of taxable service from person residing outside India not liable to tax prior to 01.01.2005 in view of LB judgment in Hindustan Zinc Ltd 2008-TIOL-1149-CESTAT-DEL-LB – Penalties set aside as service tax demand is not contested:BANGALORE CESTAT;

2009-TIOL-1595-CESTAT-MAD.pdf

T V S Motor Company Ltd Vs CCE, Chennai (Dated: May 19, 2009)

Service Tax – Stay / Dispensation of pre-deposit – amount paid to Foreign Service providers for off shore services – the provision for grossing up of the amount under Section 195A of the Income Tax Act is applicable only for the payment of income tax and not for the purpose of service tax – pre-deposit waived.:CHENNAI CESTAT;

CENTRAL EXCISE SECTION

CIRCULAR

draft_circular.pdf

Seeking of views of Trade and Industry and Field Formations on the proposed amendment of CENVAT Credit Rules to provide for registration by the importer who wish to issue cenvatable invoices – reg;

excircular901.pdf

Valuation of SKO(PDS), LPG and other goods under Transaction Value System from 01.07.2000.

CASE LAWS

2009-TIOL-1601-CESTAT-MUM.pdf + piaggio story.pdf

M/s Piaggio Vehicles (P) Ltd Vs CCE, Pune III (Dated: September 17, 2009)

Once the Cenvat Credit on Input services was allowed by the Commissioner(Appeals) and demand was set aside, imposition of interest and penalty by the original adjudicating authority is against the law – CESTAT:MUMBAI CESTAT;

2009-TIOL-1600-CESTAT-KOL.pdf

M/s Bata India Ltd Vs CCE, Patna (Dated: June 11, 2009)

Central Excise – Notification 214/86-CE presupposes that job workers are real manufacturers and principals only undertake to pay duty on their behalf – Intermediate goods were manufactured by job workers and such intermediate goods claimed as exempt under Notification 10/2006-CE and there is no duty demand against job workers, that question is not looked into – Principals having not given any undertaking to pay duty and they are not the manufacturers of intermediates duty demand and penalty not sustainable – Impugned order set aside:KOLKATA CESTAT;

2009-TIOL-1599-CESTAT-BANG.pdf

M/s Aurobindo Pharma Ltd Vs CCE, Hyderabad (Dated: June 9, 2009)

Central Excise – Remission of duty allowable on inputs sent to job work destroyed in fire at job worker's premises – Impugned order liable to be set aside:BANGALORE CESTAT;

2009-TIOL-1598-CESTAT-MAD.pdf

Shri A Ganesan Vs CCE, Chennai (Dated: June 22, 2009)

Central Excise – Stay / Dispensation of pre-deposit - demand of duty on the proprietary concern when the manufacturing activity was undertaken by the job workers – prima facie case made out for waiver of pre-deposit.:CHENNAI CESTAT;

CUSTOMS SECTION

2009-TIOL-535-HC-DEL-CUS.pdf + cus story.pdf

Gopalchand Khandelwal Vs DRI (Dated: October 6, 2009)

Customs – admissibility of statement of co-accused; confession does not amount to proof – The court may take the confession into consideration and thereby, no doubt, makes its evidence on which the court may act; but the confession does not amount to proof. Clearly there must be other evidence. The confession is only one element in the consideration of all the facts proved in the case; it can be put into the scale and weighed with the other evidence.:DELHI HIGH COURT;

2009-TIOL-1594-CESTAT-BANG.pdf

M/s Bagadiya Brothers Pvt Ltd Vs CC & CCE, Visakhapatnam (Dated: May 12, 2009)

Customs – Chemical examiner's report on sample tested after one month not reliable as Fe content changes due to evaporation – Samples drawn at the time of export and test report from reputed laboratory to be accepted – Concessional rate of duty under Notification 62/2007-Cus cannot be denied for iron ore fines exported with Fe content less than 62% :BANGALORE CESTAT;