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CBEC clarifies on service tax valuation issues relating to CHA Service; Indian corporate again on spree of raising loans from overseas; Refund of service tax paid on foreign agent commission by exporters Notification No.18/2009 dated 07/07/2009 clarification - Reg ; Permission for export of edible oil in small consumer packs regarding; Indians in UK demand dual citizenship;write to PM; Review of Scheme for Compassionate Appointment in the light of the 6th Pay Commission recommendations; Tourism Minister launches Hunar Se Rozgar through hotels scheme; GST going to subsume Purchase Tax; State FMs agree to Centre's demand; Poor preparations of infrastructure for Commonwealth Games 2010 upset Delhi CM; International inspecting team calls it 'distressing'; Indian Navy foils yet another piracy bid in Gulf of Aden; It's time now to levy environment protection Cess!; HRD Ministry keen on joining hands with UID Authority: Sibal; UN proclaims International Year of Youth in 2010; Climate Change deal at Copenhagen: UN Chief calls it 'essential beginning'; |
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| Dear Member, Sending the following files: |
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TIOL RUN UP TO GST Proposed GST Regime: Business Concerns and Possible Issues; TIOL COMMENTARY Implement GST by April 1, 2011 - Maharashtra Sales Tax Commissioner; Environmental Friendly Goods (EFG) - Need Of The Hour; It's time for environment protection Cess! 6th Pay Commission Office Memorandum Review of Scheme for Compassionate Appointment in the light of the 6th Pay Commission recommendations; MIXED BUZZ Indian corporate again on spree of raising loans from overseas; Tourism Minister launches Hunar Se Rozgar through hotels scheme; HRD Ministry keen on joining hands with UID Authority: Sibal; Climate Change deal at Copenhagen: UN Chief calls it 'essential beginning'; UN proclaims 2010 as International Year of Youth; |
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2009-TIOL-712-HC-KERALA-IT.pdf M/s Infoparks Kerala Vs DCIT (Dated: October 16, 2009) Income tax - Sec 197(1), 2(15), 11 - Assessee is a govt-owned registered society - sets up IT Park and lets out the buildings constructed on rent - taxability of rental income - Assessee seeks TDS Certificate u/s 197(1) - argues that since it is a registeres body under Sec 11, its rental income is not subject to TDS - AO denies the issue of certificate on the ground that there has been an amendment in the Sec 2(15) to tax the income earned from promotion of 'any trade, commerce or busness' - assessee goes in writ - held, whether the assessee is eligible for exemption for the activity purused during the period after the amendment in Sec 2(15) is an issue which can be looked into by the Revenue at the time of assessment. However, the Revenue is within the four walls of law to deny the issue of certificate u/s 197(1) - Assessee's appeal dismissed: KERALA HIGH COURT; M/s M Kantilal Exports Vs ACIT (Dated: December 4, 2009) Income tax - Sec 69C - Assessee is a diamond trader - makes typo-error in the audit report submitted u/s 44AB - AO makes addition for unexplained expenditure - CIT(A) deletes the additions - Tribunal reverses the CIT(A) order - Held, since the Revenue has already adjusted the refund amount of Rs 3 Crore and the assessee has agreed to pay Rs 10 lakh per month till the disposal of the appeal, waiver from pre-deposit granted with stay - Case disposed off: GUJARAT HIGH COURT; 2009-TIOL-790-ITAT-MUM.pdf + gharda_story.pdf Gharda Chemicals Ltd Vs DCIT, Mumbai (Dated: November 30, 2009) Income tax - Transfer Pricing - Sec 92CA - assessee is a domestic company, engaged in export of Dicamba - has a wholly owned subsidiary located in the USA - undertakes exports to its Associated Enterprise (AE) at a price lower than the price charged to independent buyers - determination of ALP - TPO applies CUP method to make adjustments - whether provisions of Sec 92CA are applicable to this case where there is no reduction in tax liability to the assessee as the profit or loss to the AE becomes a part of tax liability to the assessee in totality - whether Internal CUP method is best suited method to determine the ALP Assessee sets up wholly owned subsidiary in the USA as direct export was not permissible - AE is a loss-making unit - assessee undertakes international transactions with the AE at a price cheaper than the price charged to independent buyers from other countries - AO refers the case to the TPO - Revenue finds assessee had used CUP method to work out the ALP but charged lower price from the AE - TPO makes adjustments - assessee furnishes additional evidence before the CIT(A) who rejects the same in view of Rule 46A and approves the adjustments - Issue goes to the Tribunal The counsel for the assessee contended that the ALP determined by the assessee was based on report of a third party expert and the same deserved to be accepted. He stated that the assessee opted for External CUP method for determining the ALP. Elaborating further he pointed out that the price charged by the assessee from other non-USA parties was for small lots reflecting the direct export to them as against the sale made to its AE on wholesale basis for making further sale to various customers in USA on retail basis. He stated that due to local laws of USA it was not possible for the assessee to make direct exports to the customers, which necessitated the brining into existence its AE so that Dicamba could be sold in USA. He further argued that the assessee categorically submitted before the CIT(A) that instead of CUP method, the Resale price method for determination of ALP should be considered. He stated that Ghardha USA Inc. had actually suffered losses and the resale price method was most appropriate as the ALP cannot be ascertained at an exorbitant figure in disregard to the stark reality of there being loss in the hands of the AE. Having heard the parties the Tribunal observed that, ++ Application of provisions of Sec 92CA: The Chapter X contains special provisions relating to avoidance of tax. The rationale behind the transfer pricing provisions is to curtail the avoidance of tax in India. The argument that the transfer pricing provisions are not applicable in view of the total incidence of tax remaining at the same leval due to losses incurred by AE offsetting the income of the assessee, does not merit acceptance. ++ The intent and purpose of these provisions is not to ensure that there is no diminuition in the tax liability of Indian Enterprise as well as its AE on a total basis. Rather the logic is to make certain that the transactions between the Associated Enterprises should not be arranged in such a way that the ultimate tax payable in India is artificially reduced. What is material is that the rightful tax payable in India should not suffer due to the adjustment of price for goods or services between the related enterprises. ++ The payment of tax by the AE abroad does not contribute anything to the Indian exchequer. Important factor is the payment of tax qua India and not qua the assessee along with its AE on a whole. If the assessee's total tax liability logic is accepted, it would render the provisions of Sec 92 to 92F redundant. ++ A bare perusal of sub-rule (b) brings to fore that the resale price method is applicable with reference to the property purchased or services obtained by an enterprise from its AE which is thereafter resold or are provided to the unrelated enterprise. It shows that if the Indian Enterprise purchases good or obtains services from its AE in an international transaction, then the ALP shall be determined by adjusting the price at which the property is purchased or services are obtained by the Indian Enterprise. ++ But in the instant case, the property is sold and not purchased by an Indian Enterprise from its AE abroad in an international transaction. Ex consequenti the Resale price method cannot be invoked in the hands of the assessee in India for the determination of ALP. ++ The CUP method is applicable both in the cases where property is purchased or sold. The only requirement is that the price which is charged or paid in comparable uncontrolled transaction should be adjusted to account for differences. ++ Internal CUP Method: The price charged by an Indian party from UK or Australia may be at much variance with that charged from USA. In such a scenario no valid comparison can be made between the price charged by the assessee from other countries with that from USA, more particularly when the quantity exported to the USA is on wholesale basis with that to other countries in small lots on retail basis. The Internal CUP method is not suitable in the present circumstances. ++ External CUP Method: This method contemplates comparison of the price charged by the assessee from its AE with that at which the goods are available in the open market in that country from transactions between the unrelated third parties. With a view to determine the price at which such goods are available in the open market in that country, it is sine qua non to consider the price at which such goods are imported by other parties on an average basis. Such an average price should be some realistic price representing the price from the whole or the large part of whole of the imports made in USA of this product and not some isolated or a stray transaction. ++ If product A is imported by hundred parties at the rates ranging between 50 US$ to 70US$ from different countries, then the lowest price of 50 USD cannot be treated as ALP. Rather in such a situation the average price of 60 USD should be taken as ALP. In the present case the assessee is relying on a third party report in support of the price shown by it as ALP. Such third party report cannot be the sole basis for determining the ALP on comparable uncontrolled price method for the reason that the third party is not a Government Agency of USA, which could vouch for the price at which Dicamba is imported in USA from various countries. The third party, in turn, has relied on certain stray instance of importing Dicamba from China. Reliance on such selective data cannot be a best guide for the determination of ALP. ++ Since the authorities below have gone by the determination of ALP on the basis of Internal CUP method, which is not appropriate in the given circumstances, it will be in the interest of justice if impugned order is set aside on this score and the matter is restored to the file of A.O.: MUMBAI ITAT; Rehan Balsara Trust Vs ITO, Mumbai (Dated: May 22, 2009) Income Tax - Sec 2(47), 54EC - Assessee is an individual - enters into share purchase agreement but takes final delivery after few months - as per agreement, vendors restricted from exercising various rights in relation to the shares - Revenue argues that on account of substantial extinguishment of rights, the transfer of shares took place on signing of the agreement - Assessee contents that the delivery of shares got over when all the convents contemplated in the share purchase agreement became irrevocable, and then only transfer can be said to be complete - and thus, the transfer entitles the assessee to avail exemption u/s 54EC - Held, since the final delivery of shares took place months after signing the agreement, the actual transfer of shares cannot be said to be completed on the date of signing the purchase agreement - Assessee's appeal allowed: MUMBAI ITAT; DDIT, Mumbai Vs M/s MAG Kugelfischer GMBH (Dated: November 30, 2009) Income tax - Sec 92CA(1) - assessee is a non-resident company - AO refers the case to the TOP for determination of ALP for transactions with its AEs in India - TOP approves the ALP but advises addition for tax liability borne by the Indian AE on payment of royalty in violation of the approval granted by the Govt - TPO observes that the tax liability borne on royalty payment by the AE does not qualify for exemption u/s 10(6A) - CIT(A) disagrees with the AO on the ground that the assessee was given approval by the Govt for receipt of rotyalty net of taxes - held, there is no ground to upset the finding of the CIT(A) as the TPO himself observes that the assessee had Govt approval to receive royalty net of taxes - Revenue's appeal dismissed: MUMBAI ITAT; ACIT, Bangalore Vs M/s Blue Mountain Food Products Ltd (Dated: April 17, 2009) Income Tax - Assessee company files return of income claiming a loss - AO holds that the loss is due to interest claimed as a business expenditure which should not be allowed as the assessee had no business activity for that year - CIT(A) holds in favour of the assessee - Held, the amendment to sec 43B is applicable to assessment year in dispute - Held, the departmental circular elaborated the scope and effect of the amendment which stated that scope of this section has been expanded to cover interest on any term loan from a schedule, bank - Revenue's appeal dismissed. : BANGALORE ITAT; |
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SERVICE TAX SECTION CIRCULAR CBEC clarifies on service tax valuation issues relating to CHA Service; Refund of service tax paid on foreign agent commission by exporters Notification No.18/2009 dated 07/07/2009 clarification - Reg ;
CASE LAWS 2009-TIOL-710-HC-KERALA-ST.pdf + st story.pdf CCE Vs M/s Cochin International Airport Ltd (Dated: July 9, 2009) Service Tax User fee collected by airport is not for any service not taxable: KERALA HIGH COURT; 2009-TIOL-2090-CESTAT-MUM.pdf + riya story.pdf Riya Travels & Tours (I) Pvt Ltd Vs CST, Mumbai (Dated: November 16, 2009) Only a mistake apparent from record can be rectified under Sec 35C(2) as applicable to Service Tax appeals applications styled as modification application' cannot be pressed into service for claiming benefits not claimed earlier Applications dismissed: MUMBAI CESTAT; 2009-TIOL-2089-CESTAT-BANG.pdf M/s Logipro Software Pvt Ltd Vs CCE, Bangalore (Dated: July 2, 2009) Service Tax Entire amount of service tax liability discharged before expiry of extra-ordinary tax payer friendly scheme Scheme applicable to even un-registered assessees Fit case for invoking Section 80 of Finance Act, 1994 and set aside penalties Impugned order set aside: BANGALORE CESTAT; 2009-TIOL-2088-CESTAT-BANG.pdf M/s Santhi Constructions Vs CCE, Guntur (Dated: September 7, 2009) Service Tax Dismissal of appeal by Appellate Commissioner for non-compliance of direction under Section 35F Deposit of Rs. 1.77 lakhs before original authority sufficient for the purpose Impugned order set aside and matter remanded to Appellate Commissioner for de novo consideration by following principles of natural justice: BANGALORE CESTAT;
CENTRAL EXCISE SECTION 2009-TIOL-2093-CESTAT-DEL.pdf + prakash industries story.pdf M/s Prakash Indus Ltd Vs CCE, Raipur (Dated: August 21, 2009) Central Excise - Principles of Natural Justice - Personal Hearing - Adjournments - Section 33-A(2) of Central Excise Act, 1944 provides an embargo upon the power of the adjudicating authority to adjourn the matter indefinitely and for more than three times at the request of a party to a proceedings. However, prolongation of the hearing from one day to another on account of paucity of time or for non-completion of recording of testimony of one or more witnesses or for non-conclusion of the arguments, would not amount to an adjournment, it would amount to continuation of the proceedings. Besides, the adjournments, as stated in the proviso, are at the insistence of a party to the proceedings and not on account of any difficulty faced by the authority. The limit of three times adjournment is to be understood in the facts and circumstances of each case and may be extended if the circumstances so demand. Undoubtedly, such adjournment will have to be for the valid and justifiable reasons to be recorded in writing by the authority concerned . (Para 8) Legal Bias - Meaning of - Bias may be defined as a preconceived opinion or predisposition or predetermination to decide a case or an issue in a particular manner, so much so that such predisposition does not leave the mind open to conviction. It is, in fact, a condition of mind, which sways judgments and renders the Judge unable to exercise impartiality in a particular case. Bias has many forms. It may be pecuniary bias, personal bias, bias as to subject matter in dispute, or policy bias etc. The letter of the respondent reveals preconceived opinion on the material issue in the matter which clearly reveals bias mind. Matter to be heard by a different Commissioner. (Para 15, 16 & 20) Quasi Judicial enquiries - Scope of rules of natural justice - Quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries. The purpose of the rules of natural justice is to prevent miscarriage of justice. These rules are applicable to administrative enquiries. To what extent the same would be attracted will depend upon the facts and circumstances of each case. (Para 17): DELHI CESTAT; 2009-TIOL-2092-CESTAT-BANG.pdf M/s Bosch Limited Vs CCE, Bangalore (Dated: June 23, 2009) Central Excise Eligibility of exemption for nozzle and nozzle holders cleared for use in manufacture of injectors under notifications 249/82-CE, 217/85-CE, 75/86-CE and 216/87-CE As per manufacturing process, nozzle holder comes first and injector emerges later only after unscrewing nozzle from nozzle holder Nozzle, nozzle holder meant for captive consumption not subjected to korex processing which is required for marketing them as separate products Only oil dipped nozzles are used captively Department has not proved that nozzle holder emerges first and used in manufacture of injectors Revenue has not discharged burden of test of marketability of nozzle, nozzle holder in the form in which they are captively used In terms of Board Circular 14/88 parts which go into manufacture of component parts also exempted from payment of duty under Notification 217/85-CE - Notification 75/86, as amended, would be applicable to nozzle and nozzle holders even when they are coupled together to form injectors as clarified by Hyderabad Collectorate Trade Notice No. 196/87 Central excise law uniformly applicable throughout India and unless Hyderabad Trade Notice is withdrawn or held as issued without authority of law, it can be made applicable in other jurisdictional Commissionerates Impugned order denying benefit of exemption notifications set aside: BANGALORE CESTAT; 2009-TIOL-2091-CESTAT-BANG.pdf Bharat Heavy Electricals Ltd Vs CCE, Hyderabad (Dated: August 4, 2009) Central Excise Classification of grinding rolls SCN issued for revising classification from 7325 to 8404 for subsequent period alleging suppression of facts when SCN was issued on same set of facts for prior period Tribunal earlier upheld on merits classification of grinding rolls under Chapter 8404 for prior period Demand of duty and imposition of penalty for subsequent period hit by limitation, liable to be set aside: BANGALORE CESTAT; M/s International Transformer (P) Ltd Vs CCE, Lucknow (Dated: July 7, 2009) Central Excise - CENVAT - Common inputs - Dutiable and exempted goods - Reversal of Credit on basis of transaction value - There is no material available to show that the appellants removed the transformer oil as such from their factory. In the present case it is admitted fact that transformer oil was used in the appellants own factory for repairing work and they have reversed the proportionate credit on their own. HELD - Demand of duty on the basis of transaction value of buyer is not sustainable. Rule 3(4) of Cenvat Credit Rules cannot be invoked.: CHENNAI CESTAT;
CUSTOMS SECTION CIRCULAR Permission for export of edible oil in small consumer packs regarding; Regulations for Courier imports and exports through electronic declaration and processing in specified Customs stations regarding.
CASE LAWS 2009-TIOL-2087-CESTAT-BANG.pdf M/s NI Systems (India) Pvt Ltd Vs CC, Bangalore (Dated: June 29, 2009) Customs Classification of imported PXI Controllers and parts thereof whether classifiable under 8471 or 9031 or 9032 PXI Controller not a measuring instrument in itself but connected with processors, mother board, hard drive with Windows XP, serial port, USD ports, video port, ethernet port, etc and used for a variety of applications from advanced data acquisition to automated manufacturing test PXI Controllers have characteristics of automatic data processing machines Not classifiable under 9031 or 9032 as held by revenue but classifiable under 8471 as claimed by appellant Impugned order devoid of merits, set aside: BANGALORE CESTAT; 2009-TIOL-2085-CESTAT-BANG.pdf CC, Cochin Vs M/s Victory Trading Co (Dated: May 26, 2009) Customs Import of RBD Palmolein along with Palm Kernel Fatty Acid Distillate Assessee unaware of supplier loading impugned goods resulting in mis-declaration and produced supplier's letter to adjudicating authority to that effect No evidence adduced by revenue to suggest that assessee paid higher amount to supplier in lieu of import of RBD palmolein No infirmity in reduction of redemption fine and penalty by Appellate Commissioner: BANGALORE CESTAT; |
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