NITCO Tiles chief Rajiv Talwar finally responds to DRI summons; walks in with family and walks out after recording statement;

Cabinet Secretary organises special session on DTC & GST for all Secretaries to Govt of India at Vigyan Bhawan today; JS (TPL) Arvind Modi fumbles in answering many queries related to EET;

Is Subsidy received under Montreal Protocol taxable receipt? ITAT holds a part of subsidy towards incremental operational costs is revenue receipt;

Moderate polling reported from Maharashtra and Haryana State elections;

Govt extends 2% interest subvention benefits to readymade garments exporters from December 2008;

Nobel Prize for Economics goes to two Americans - Elinor Ostrom and Oliver E Williamson for studies in economic goverance;

TIOL COMMENTARY

ddt 13 oct.pdf

Your Taxes @ Work - Take Diversion

guest column.pdf

Papa, don't pay taxes!

RBI NOTIFICATION

Notifocation.pdf

Rupee Export Credit Interest Rates + Interest Rates on Rupee Export Credit;

MIXED BUZZ

mbuzz0925.pdf

NELP VIII receives lukewarm response for highest ever 70 blocks on auction;

2009-TIOL-623-ITAT-PUNE.pdf + eagle story.pdf

Eagle Flask India Pvt Ltd Vs JCIT, Pune (Dated: May 29, 2009)

Income tax - Sec 28(i) - Assessee manufactures steel flasks and thermowares - receives certain sums as subsidy from UNDP under Montreal Protocol for phasing out Ozone Depleting Substances (ODS) and meeting incremental expenses of production - A part of the sum received is towards the purchase of capital goods and the rest for meeting the hike in the running costs of the manufacture on account of the clean energy in place of ODS - AO treats the entire sum as capital in nature and does not offer the same for taxation - AO treats a part of the subsidy linked to meeting 'incremental costs' as trading receipt as it is for day to day running of the business - CIT(A) agrees with the AO - held, this is not a case which is covered under section 28(ii)(va). Clause (va) was inserted in the Act vide Finance Act 2002 to tax that compensation which is paid for not doing certain business. In other words, this Clause treats a capital receipt as income but this has to be for not doing certain business. In this case, the compensation is not for not doing certain business but for meeting incremental costs of doing business and it is very much a revenue receipt or it may be deducted from the total costs of production - such subsidy is very much revenue receipt, and is liable to tax - Assessee's appeal dismissed:PUNE ITAT;

2009-TIOL-622-ITAT-DEL.pdf

Citifinancial Consumer Finance India Ltd Vs ACIT, New Delhi (Dated: July 31, 2009)

Income Tax – Section 37(1) - AO held that one time payment of entrance fee to Delhi Golf Club gives enduring advantage to the assessee and is therefore, a capital expenditure – Held following CIT vs Samtel Color Ltd decisiuon ( 2009-TIOL-58-HC-DEL-IT ), the expenditure on corporate membership of a club is revenue expenditure and allowable as such.

Income Tax Act – Section 37(1) – AO noted that the assessee in its books of account treated commission payable to Direct Selling Agents (DSA) as deferred revenue expenditure over the period of loan. However, in computation of income entire expenditure has been claimed. The AO relying upon the decision of Hon'ble Supreme Court in the case of Madras Industrial Investment Corpn. Ltd, Vs. CIT ( 2002-TIOL-290-SC-IT-LB ), held that the entire expenditure in one year cannot be allowed – Held that the assessee's liability to pay the commission partly arises at the time when the DSA sources the hirer and partly on the volume of business generated. The assessee disburses the amount only after receiving the upfront processing fee from the prospective borrowers. It is also accepted fact that upfront processing fee is taxed in the year of receipt itself and not spread over the period of hire-purchase finance. Therefore, it can be said that the payment of commission is not based on the hire-purchase charges receivable by the assessee but on the basis of hirer sourced by the DSA and in respect of such hirer the processing fee is received, is allowable in the year of payment. However, the copies of contracts with DSA do not demonstrate as to what services were rendered by the DSA for which the liability to pay the brokerage arises and how it can be worked out. The agreement shows that DSA were to source the borrower but the terms of agreement do not reveal as to on what basis the brokerage is payable and is linked to what, or how the assessee will be liable to pay such brokerage. However in absence of sufficient material matter remitted back to the file of the AO to examine the facts afresh. The AO shall consider how the brokerage paid is worked out and is linked to what nature of income receivable by the assessee. If the brokerage payable is linked to hire charges which are receivable over period of hire purchase finance, the brokerage will also be allowed accordingly. However, if it is otherwise, the same will be allowed in the year of payment itself. :DELHI ITAT;

2009-TIOL-621-ITAT-DEL.pdf

M/s Amway India Enterprises Pvt Ltd Vs DCIT, New Delhi (Dated: May 29, 2009)

Income tax - Sec 37(1) - Assessee incurs huge expenses for leasehold improvements - AO treats the same as capital in nature - held, it was decided earlier in the assessee's own case that such expenditures are revenue in nature except for workstations as held by the Delhi HC in Bigjo's case - case remanded for fresh examination:DELHI ITAT;

2009-TIOL-620-ITAT-MUM.pdf

ACIT, Mumbai Vs M/s A K Corpn (Dated: April 29, 2009)

Income Tax - Assessee, a registered firm and consultant to foreign parties, claims deduction u/s 80-O which is initially allowed but subsequently AO issues notice u/s 148 and disallows - CIT(A) allows the deduction - Held, services rendered from within India for use outside India are entitled for deduction u/s. 80-O. Information collected by the assessee and supplied to the foreign principals has been used or were useful to the foreign enterprise in their manufacturing programme or its modifications to suit the Indian parties involved. Information furnished by the assessee is not knowledge-oriented and value oriented. The assessee collects strategic information from various sources and assimilates the same, and after filtering delivers the right information at the right time and right place so that it can be commercially used by its clients - Revenue's appeal dismissed.:MUMBAI ITAT;

2009-TIOL-619-ITAT-BANG.pdf

3G Wireless Communications Pvt Ltd Vs ACIT, Bangalore (Dated: July 10, 2009)

Income Tax - Assessee, a company engaged in the business of buying, selling, assembling and servicing of wireless communication equipments, claims deduction u/s 80-IB - AO denies the contention holding that the activity of the assessee is not manufacture or production - CIT(A) agrees with the AO - Held, the expression "production" has a wider meaning than the word 'manufacture' and 'production' includes the activity of manufacturing by applying human endeavour on some existing raw material - demonstration of assessee's equipment proves that company indulges in manufacturing activity since various electrical and electronic components are integrated by an indigenously designed circuit and assembled in a box, thereby bringing out into existence a new product, the utility and function being altogether different from the inputs - Assessee's appeal allowed.: BANGALORE ITAT;

SERVICE TAX SECTION

2009-TIOL-1626-CESTAT-MUM.pdf

M/s Tata Motors Ltd Vs CCE, Pune (Dated: August 28, 2009)

Cenvat Credit – Outdoor Catering Service is an Input Service – Adjudicating and appellate authorities to scrupulously follow binding judicial precedents for sake of administering justice – Tribunal decisions in GTC Industries ltd. 2008-TIOL-1634-CESTAT-MUM-LB and Pudumjee Pulp & Paper Mills 2009-TIOL-795-CESTAT-MUM relied upon.:MUMBAI CESTAT;

2009-TIOL-1625-CESTAT-MAD.pdf

M/s A-I Chemicals Vs CCE, Trichy (Dated: June 9, 2009)

Service Tax – Stay / Dispensation of pre-deposit – service tax on goods transport agency service – the appellant are a proprietor concern and does not fall under any of the seven categories listed under Rule 2(1)(d)(v) of the Service Tax Rules 1994 – pre-deposit waived.:CHENNAI CESTAT;

2009-TIOL-1624-CESTAT-MAD.pdf

M/s A S Transport Vs CCE, Trichy (Dated: July 14, 2009)

Service tax – Cargo handling service – the activities of loading and unloading of goods meant to be transported are covered under cargo handling service – Sec 65(23) of the Finance Act, 1994 and CBEC Circular dated 1.8.2002 – demand of Service Tax upheld.:CHENNAI CESTAT;

CENTRAL EXCISE SECTION

Hindalco Industries Ltd Vs CCE, Belapur (Dated: September 11, 2009)

Written off inputs in books of account – Payment of Cenvat Credit taken - Notification 26/2007-CE(N.T) dated 11.05.2007 is prospective in operation, rules CESTAT and allows appeal.:MUMBAI CESTAT;

2009-TIOL-1622-CESTAT-MUM.pdf

Godrej & Boyce MFG Co Ltd Vs CCE, Mumbai-II (Dated: August 31, 2009)

Recovery of an amount of Rs.63.22 lakhs under rule 6(3)(b) of CCR, 2004 in respect of inputs used for exempted goods – Appellant reversed credit of Rs.42 lakhs, albeit after clearance of said goods and relies on Hello Mineral Water (P) Ltd. 2004-TIOL-57-HC-All-CX and Dr.Writer's Food Products Pvt. Ltd. 2009-TIOL-846-CESTAT-MUM claiming that reversal of credit amounts to non-taking of Cenvat credit – Prima facie case – Balance pre-deposit waived and stay granted.:MUMBAI CESTAT;

2009-TIOL-1621-CESTAT-BANG.pdf

M/s Glaxo Smithkline Asia Pvt Ltd Vs CCE, Visakhapatnam (Dated: May 15, 2009)

Central Excise – Eno fruit salt classifiable as ayurvedic P or P medicament under Chapter Heading No. 3003.39/3004 90 11 – Impugned order set aside:BANGALORE CESTAT;

2009-TIOL-1620-CESTAT-MUM.pdf

M/s Tata Motors Ltd Vs CCE, Pune-I (Dated: September 1, 2009)

Issue - Demand for interest on differential duty paid upon finalization of provisional assessments - in the backdrop of Larger bench decision in Cadbury India Ltd. 2008-TIOL-1986-CESTAT-Mum-LB and Supreme Court decision in SKF India Ltd- 2009-TIOL-82-SC-CX appellant ordered to pre-deposit entire amount of interest.:MUMBAI CESTAT;

CUSTOMS SECTION

2009-TIOL-540-HC-MUM-CUS.pdf + hc story.pdf

U S Vitamin India Limited Vs UoI (Dated: August 25, 2009)

Customs – petition seeking handing over the goods detained or payment of value of the goods – the respondents, Collector of Customs directed to pay the petitioner the value of goods along with interest at the rate of 6% for 18 years – also directed to pay the cost of petition: BOMBAY HIGH COURT;

2009-TIOL-1619-CESTAT-MAD.pdf

M/s Symrise Private Ltd Vs CC, Chennai (Dated: June 3, 2009)

Customs – refund of excess duty paid due to clerical error – refund rejected by the lower authorities on the ground that the assessment was not challenged - the assessment remained final unless and until the same was disturbed by recourse to a process recognized by law such as filing an appeal does not disentitle an importer to the benefit on consequence of correction of clerical error specifically provided under Section 154 of the Act – the lower authorities wrongly held that Section 154 applied only to clerical errors committed by the officers of the department – the appellants are entitled for refund: CHENNAI CESTAT;