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Ad hoc promotion to Commissioner-level: CBEC wraps up DPC for 24 vacancies; CBEC grants Sec 11C benefits to alcoholic beverages processors covered under Business Auxiliary Service; Govt sanctions 116 posts for CIC; Govt to amend Recruitment Rules for ASI; PM releases Common Entry Ticket for world heritage sites; Govt sets up welfare fund for offshore Indian workers; |
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| Dear Member, Sending the following files: |
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TIOL COMMENTARY CAG recommends that Government should introduce appropriate provision in CENVAT Credit Rules to require reversal of CENVAT credit on input services used for written off output services; American MNCs bribing Indian public officials - Do we have any statistics on Indian MNCs doing the same? MIXED BUZZ Govt sanctions 116 posts for CIC; Govt to amend Recruitment Rules for ASI; PM releases Common Entry Ticket for world heritage sites; Govt sets up welfare fund for offshore Indian workers; |
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2009-TIOL-30-ARA-IT.pdf + ara story.pdf Federation Of Indian Chambers Of Commerce And Industries (Dated: November 30, 2009) India-USA DTAA - Applicant enters into agreement with DRDO for commercialisation of technologies in defence-related areas - also enters into an agreement with the University of Texas to provide certain managerial, technical and consultancy services - Applicant agrees to pay USD 60,000 in five instalments to the US University - Whether the consideration paid for the technical and managerial services provided by the US University is liable to be taxed as 'fees for included services' in India under Clause (b) of Article 12(4) of the DTAA and Sec 9(1)(vii) of the Domestic Law. Applicant enters into MoU with Defence Research Development Organisation (DRDO) for assisting it in identification and business development of competitive global technologies from its inventory of existing defence-related innovations - jointly initiates 'Accelerated Technology Assessment and Commercialisation' Programme for two years - applicant enters into second agreement with UT(IC2) of University of Texas which has specialisation in helping out commercialisation of technological innovation - the non-resident university is to carry out lab nomination, global screening of nominated technologies, Quickscan, and Commercial assessment - the University is also to provide Programme Manager to design and implement the programme Revenue takes the view that the income shall be deemed to accrue or arise in India under Section 9(1)(vii)(b) of the Income-tax Act, 1961 and also under clause (b) of Article 12(4) of the DTAA and the applicant is liable to deduct tax at source under Sec 195 Having heard the parties the Authority observes that, ++ Going by Sec 9(1)(vii)(b), the services rendered by UT(IC2) might fall within the scope of the definition in Explanation 2. However, if the non-resident recipient of the income is entitled to the benefit under a DTAA by reason of any specific provision contained therein, the provisions of DTAA will prevail over the provisions of domestic law. ++ Under the DTAA, the most vital question is whether technical or consultancy services rendered by UT “make available technical knowledge, experience, skill etc” within the meaning of clause (b) of para 4 of Art.12.. The expression ‘make available' is not employed in Explanation 2 to Section 9(1)(vii), which defines “fees for technical services”. It requires that the service provider should also make its technical knowledge, experience, skill, know-how etc. known to the recipient of the service so as to equip him to independently perform the technical function himself in future, without the help of the service provider. The interpretation of the expression “make available” is found in the MOU to the India-US DTAA itself. ++ Explaining broadly the principles involved in technology commercialization and making the participants familiar with various aspects of the programme does not prima facie amount to making available technical knowledge or expertise possessed by the instructors of UT. At any rate, it seems to be merely incidental to the implementation of the programme which does not fall within the definition of ‘included services'. It is not possible to split up this segment of service and apportion a part of consideration received to ‘training', even if it has the flavour of ‘included services'. ++ Evaluating the potential of technologies after interaction with the experts and passing on the results of its interaction and furnishing relevant informations which are by and large within public domain in order to enable DRDO to find potential customers do not fall within the scope of services contemplated in paragraph 4 of Art.12 of the DTAA. ++ Most of the services no doubt answer the description of technical and consultancy services. Few of them are managerial in nature. But, none of the technical/consultancy services and related activities undertaken by UT would amount to making available the technical knowledge, experience, skill, know-how or processes possessed by UT. ++ Acting as a facilitator and technical consultant for the purpose of commercialization of identified technologies, screening and assessment of technologies by deploying the expertise and resources which UT has, and preparing technical reports including market analysis cannot be legitimately brought within the purview of para 4(b) of Art.12. Expression of opinion, formulation of recommendation, and rendering assistance to DRDO in connection with ATAC programme do not really make available the technical knowledge or know-how to DRDO, except perhaps in an incidental or indirect manner. UT's services and the consideration received therefore cannot be brought within the ambit of Art.12.4 of DTAA. ++ The services/activities provided by UT(IC2) to DRDO pursuant to the Agreement entered into between FICCI and UT(IC2) do not fall within the purview of Art.12(4)(b) of the DTAA and the payments received under the Agreement are not liable to be taxed as fees for technical services under the domestic law. They cannot be subjected to tax as business profits in view of the undisputed and undeniable fact that UT has no permanent establishment in India and the services were not carried out through a PE in India.: ADVANCE RULING; CIT, Chennai Vs M/s UCAL Fuel Systems Ltd (Dated: April 27, 2009) Income tax - Sec 234B, 234C, 115JAA - AO calculates interest first and then allows MAT Credit - Tribunal disagrees with the Revenue - held, it is settled law that Rule 12(1)(a) and Form-I cannot go beyond the provisions of the Act. Form-I cannot lay down the order of priority of adjustment of TDS, advance Tax, MAT credit under Section 115JAA which is contrary to the provisions of the Act. The order passed by the Tribunal is in accordance with law and there is no error or illegality in the order of Tribunal so as to warrant interference. Revenue's appeal dismissed:MADRAS HIGH COURT; CIT, Lucknow Vs Sri Sanjiv Misra (Dated: November 10, 2009) Income tax - Sec 10B, 271(1)(c) - Assessee exports computer software - receives major part of export proceeds - but claims deduction for the full sum on the ground that the extension was granted by the RBI to bring the rest of the exporter proceeds - AO takes the view that 90% of the sum not brought into India to be added to the taxable income - levies penalty - CIT(A) deletes penalty - Tribunal dismisses Revenue's appeal - held, the fact that the balance exports proceeds were not brought into India at the time of granting extension and also the fact that the Tribunal has put reliance on assessee's Charterted Accountants' certificate but not on Revenue's version, the Tribunal's order is vitiated - matter remanded:ALLAHABAD HIGH COURT; M/s Intel Technology India Pvt Ltd Vs DCIT, Bangalore Ltd (Dated: September 25, 2009) Income tax - Sec 10A - Assessee is engaged in export of computer software - files return - AO allows expenditure incurred in foreign currency, on account of professional and consultancy charges and traveling and conveyance expenses, and the same were not reduced from the export turnover while calculating the deduction u/s 10A - CIT(A) invokes powers u/s 263 and directs the AO to reduce the expenses in foreign currency from export turnover before allowing Sec 10A benefits - held, issue is no longer res integra as it has been settled that if such expenses incurred in foreign currency are deducted from the export turnover, the same are also to be deducted from total turnover for allowing Sec 10A benefits - Assessee's appeal allowed:BANGALORE ITAT; DCIT, Mumbai Vs M/s Glenmark Laboratories Ltd (Dated: November 9, 2009) Income tax - Sec 80HHC, 115JB - Assessee claims deduction u/s 80HHC even while computing the book profit u/s 115JB - AO disallows - CIT (A) follows several judicial decisions and allows the appeal - held, in view of the Special Bench decision in Syncome Formulations (I) Ltd. (2007-TIOL-96-ITAT-MUM-SB), there is no infirmity in CIT(A)'s order - Revenue's appeal dismissed:MUMBAI ITAT; |
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SERVICE TAX SECTION NOTIFICATION CBEC grants Sec 11C benefits to alcoholic beverages processors covered under Business Auxiliary Service; CASE LAWS M/s Premchand Gokaldas Vs CST, Ahmedabad (Dated : August 27, 2009) ST - Condonation of delay - limitation for filing appeal - Assessee files appeal but papers deposited at wrong office housed on the same floor where Commissioner(A)'s office is located - Assessee writes to the concerned authority to hand over the appeal memo to the Commissioner(A) but it was not done and fresh papers were filed - Commissioner(A) dismisses appeal for late filing - held, since the appeal was filed within the limition period, papers deposited with a wrong office should not be counted towards the limittion period - Pre-deposit waiver granted and issue remanded : AHMEDABAD CESTAT; 2009-TIOL-1982-CESTAT-BANG.pdf M/s Jet Airways (India) Pvt Ltd Vs CCE, Hyderabad (Dated : May 28, 2009) Service Tax – Assessee neither collects cargo from consignor's premises nor delivers cargo to consignee's premises – Mere transportation of cargo from one place to another by airways would not amount to cargo handling service: BANGALORE CESTAT; 2009-TIOL-1981-CESTAT-AHM.pdf + testing story.pdf CST, Ahmedabad Vs M/s B A Research India Ltd (Dated : November 11, 2009) Service Tax - Technical Testing – though test done in India, result sent abroad – export of service: Consideration of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. This is not the disputed fact.: AHMEDABAD CESTAT;
CENTRAL EXCISE SECTION 2009-TIOL-649-HC-MUM-CX.pdf + nichlos pirmal story.pdf CCE, Mumbai Vs M/s Nicholas Piramal (India) Ltd (Dated: August 14, 2009) Central Excise – CENVAT Credit – Exempted and dutiable goods – reversal of credit is no substitute for payment of 8% (10% or 5%) - It is not open to an assessee to contend that some other method is also available and the assessee has the choice of claiming credit or reversing the same. Big win for Revenue – CESTAT LB order in 2008-TIOL-1877-CESTAT-MUM-LB over -ruled – High Court Merely because an assessee contends and it may be factually true that in some instances the rule cannot be followed in the matter of maintaining accounts that cannot be said to be a tool of oppression to extract that amount which is beyond the remedial measure A power to give benefit, encompasses within itself, the power to put conditions and restrictions under which credit is available. Power to give benefit also carries with it power to take it back or withdraw it. Rule 6 makes it clear that in so far as inputs used in the manufacture of exempted goods, no cenvat credit is allowed. The rule making authority however noting that inputs may be used both for manufacturing final products which may be dutiable and other final products which are exempt, has provided that such manufacturer will be given credit in so far as inputs used for manufacturing of dutiable goods, if accounts are maintained in terms of the rules. Therefore merely because the assessee contends that he is willing to forego credit on inputs used in the manufacture of exempted final product, does not warrant a departure from the requirements of Rule 6(2) and 6(3). The rules contemplate that on failure to maintain accounts in terms of Rule 6(2) the consequences would be in terms of Rule The legislature in so far as machinery for levying of tax had left it to the delegate to make the rule. The delegate has made the rule. An assessee seeking to take advantage of Rule 6, is fully aware of the requirements of the rules including Rule 6(1). Chandrapur Magnet not applicable: Chandrapur Magnet Wires Pvt.Ltd. Vs. Collector of Central Excise reported in (2002-TIOL-41-SC-CX) , has not considered either the interpretation of Rule 57C or Rule 57CC. The issue for consideration was whether availing of modvat credit on inputs used in the manufacture of exempted final product in terms of the rules as then in force. Once the law itself has laid down, the circumstances under which credit can be availed, it is that method by which the credit can alone be availed. Reliance is placed in the judgment in Share Medical Care Vs. UoI (2007-TIOL-26-SC-CUS) is misplaced. It is not open to an assessee to contend that some other method is also available and the assessee has the choice of claiming credit or reversing the same. Such an argument is devoid of merits considering the clear language of Rule 6(1) and is consequently rejected.:BOMBAY HIGH COURT; M/s Sri Ambal Mills Pvt Ltd Vs CCE, Coimbatore (Dated : August 13, 2009) Central Excise - Tribunal had directed Commissioner to pass order in four months from its order dt. 8/1/99 – The impugned order was passed only on 29/3/2007 - order set aside.: CHENNAI CESTAT; 2009-TIOL-1979-CESTAT-BANG.pdf M/s Page Apparels Pvt Ltd Vs CCE, Bangalore (Dated : May 22, 2009) Central Excise – Articles of apparel classifiable under Chapter 62 assessable based on tariff value fixed by Government – Provisions of Section 4 cannot be invoked for demand of differential duty when there is no dispute that assessee had not discharged duty based on price list – Impugned order set aside: BANGALORE CESTAT; CCE, Pondicherry Vs Vanavil Dyes & Chemicals Ltd (Dated : July 30, 2009) Central Excise – power to remand – Commissioner (A) continues to have the power of remand even after the amendment to Sec 35A (3) vide Finance Act 2001.: CHENNAI CESTAT;
CUSTOMS SECTION INSTRUCTION Implementation of the decisions taken by MoEF in respect of Hazardous Waste (Management, Handling and Transboundary) Rules, 2008; CASE LAWS 2009-TIOL-1977-CESTAT-BANG.pdf CC, Hyderabad Vs M/s Lens Master International (Dated : May 13, 2009) Customs – 100% EOU – Non fulfilment of export obligation – CESTAT directed original authority to consider assessees plea for destruction of unutilized raw materials and consumables in terms of EXIM policy while disposing assessees appeal – Duty liability and consequent penalty to be re-determined as per remand directions in assessees appeal: BANGALORE CESTAT; M/s Vector Freight Forwarders Vs CC, Tuticorin (Dated : May 21, 2009) Customs - The Commissioner ordered suspension of the CHA licence with a delay of three months and therefore the order under Regulation 20 (2) of CHALR is inconsistent with those provisions - No additional material evidencing culpable involvement of the CHA in the export of contraband was gathered in the investigation to justify the decision of the Commissioner that the appellant being allowed to continue to function as a CHA would jeopardize Government revenue – impugned order is vacated.: CHENNAI CESTAT; |
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