Advocates appearing for Revenue expected to know recent judgments of Court as well as that of Apex Court - Bombay High Court frowns on want of knowledge of Revenue Counsel (See 'DDT' Column)

US Cargo Plane dives into river; two killed; Most airports going for full-body scanners;

Future belongs to nations with grains and not guns : Dr Swaminathan;

M S Swaminathan Foundations urges Govt to set up National Biotechnology Regulatory Authority;

UN offers online courses to boost cancer treatment in poor nations;

FM hands over a copy of DTC to PM; DTC Bill unlikely to make it to Parliament during Budget Session;

TIOL RUN UP TO GST

gst story.pdf

Will GST really make real estate cheaper?

TIOL COMMENTARY

ddt 6 jan.pdf

Customs and Central Excise – Headless Commissionerates – at crucial last quarter?

spl down.pdf

Coping with effects of Karnataka High Court ruling in Samsung Electronics;

MIXED BUZZ

mbuzz1189.pdf

Future belongs to nations with grains and not guns : Dr Swaminathan;

mbuzz1188.pdf

M S Swaminathan Foundations urges Govt to set up National Biotechnology Regulatory Authority;

mbuzz1187.pdf

UN offers online courses to boost cancer treatment in poor nations;

2010-TIOL-13-ITAT-DEL.pdf

Anand & Anand Vs ACIT, New Delhi (Dated: July 17, 2009)

Income Tax - Section 32(1), 43(6)(c) - assessee is a firm of advocates having its principal place of profession at a leased building - vacates the said leased premises and hands over the possession of the premises to the landlord together with all the additions or alterations made thereto by assessee by way of capital expenditure incurred thereupon - Assessee after adjusting the amount it receives towards the capitalized value of the leased premises against the opening amount of the WDV of the leased premises, writes off the balance amount in its accounts as 'assets written off' and claims short-term capital loss to that extent - AO disallows assessee's  claim of short-term capital loss and adjusted the shortfall against the aggregate WDV of Block of Assets of Building comprising of (i) building owned by the assessee and (ii) the capitalized expenditure incurred on leased premises, which have been treated as a building owned by the assessee vide Explanation 1 to section 32(1), and after considering the current year's depreciation on resultant WDV, a net addition made to the returned income shown by the assessee by disallowing the assessee's claim on account of assets written off - CIT(A) confirms AO action - Held, the action of the AO in disallowing the assessee's claim of deduction on account of difference between the individual WDV of the leased office structure and recovery made in respect thereof is justified. The AO is further justified in computing the depreciation on the opening WDV of block of assets comprising both building owned by assessee as well as lease office structure, which is deemed building owned by assessee, as adjusted by the additions and reductions provided in section 43(6)(c). CIT(A) order confirming the order of the AO  upheld. Assessee's appeal dismissed.:DELHI ITAT;

2010-TIOL-12-ITAT-DEL.pdf

ACIT, Faridabad Vs M/s O K Auto Engg Works (Dated: December 7, 2009)

Income tax - Sec 68 - AO notices from cash book register and bank statement that the entry in the books for cash withdrawal is one day before the actual withdrawl as shown in the bank statement - Assessee attributes it to wrong entry by the accountant - CIT(A) deletes additions - held, merely because the accountant makes a wrong entry, it does not make the cash withdrawal unaccounted - CIT(A) order upheld - Revenue's appeal dismissed:DELHI ITAT;

ACIT, New Delhi Vs M/s Sahara India Financial Corpn Ltd (Dated: November 30, 2009)

Income Tax - Sec 143(3) - assessee challenges CIT(A) order upholding re-assessment and also the direction to the AO to grant only 7.5% deduction towards self supervision charges in respect of Properties while estimating the cost of construction of the property - Assessee submits that it maintains its books of accounts in respect of cost of construction and no defect has been pointed out in the books - further contends that the final variation in the cost of construction between the total investment as declared by the assessee and as estimated by the DVO is only marginal - Held, assessee is maintaining books of accounts in respect of construction and the A.O. has not pointed out any defect or falsity in the accounts - Further, it has been fairly agreed upon by both the sides that the addition on account of the difference in the cost of constriction has been made only in respect of two A.Ys years. The addition as made by the A.O. on the basis of estimation made by the DVO in respect of the cost of construction is not sustainable and is liable to be deleted in toto. The final variation in the cost of construction between the total investment as declared by the assessee and as estimated by the DVO is less man 1%. Further if the difference as considered by the A.O. between the DVO's report and the investment as disclosed by the assessee, is considered then the total investment in respect of the property itself would far exceed the total investment estimated by the DVO. No addition is called for. The issue of granting the assessee self supervision charges @ 7.5% or @ 10% does not arise for consideration and consequently, the same is not adjudicated upon. Assessee's appeal allowed.:DELHI ITAT;

2010-TIOL-10-ITAT-MUM.pdf

Besix Kier Dabhol S A Vs ADIT, Mumbai (Dated: December 9, 2009)

Income tax - Sec 263 - Assessee is a non-resident - AO passes assessment order u/s 143(3) - DIT finds the order erroneous and prejudicial to Revenue's interest - AO frames fresh assessment order as per the order - meanwhile, the order passed under Sec 263 is set aside by the Tribunal - held, in view of the fact that the basis of fresh assessment which was the order sec 263 itself does not survive, the fresh assessment does not stand - Assessee's appeal allowed: MUMBAI ITAT;

2010-TIOL-09-ITAT-MUM.pdf + firm story.pdf

Mr Dharamsingh M Popat Vs ACIT, Mumbai (Dated: January 6, 2009)

Income tax - A firm and its partners are consequently separate entities under the Income tax Act: Though in general law, a firm and its partners are not distinct, this is subject to statutory exceptions. Under the scheme of assessment of firms applicable from AY. 1993-94 a firm is treated as an independent entity and the expenditure by way of remuneration, interest, commission etc. paid to partners is allowable to it as a deduction subject to ceilings and such interest, salary etc is taxable in the hands of the partners. A firm and its partners are consequently separate entities under the Act; Accordingly, the fact that the profits are charged to tax in the hands of the firm does not mean that the share of such profits is non – exempt in the hands of the partner. The profits being exempt in the hands of the partner, s. 14-A does apply in computing his total income.

The assessee, a partner in a firm, received ‘share of profit' and ‘salary' from the firm. While the ‘share of profit' was exempt u/s 10(2A), the ‘salary' was taxable as business income u/s 28 (v). The assessee claimed deduction for business expenditure incurred by him. The AO held that as the assessee had exempt income, s. 14A applied and a part of the expenditure had to be disallowed. This was confirmed by the CIT (A). Before the Tribunal, the assessee argued that as a partnership firm was merely a compendium of partners having no independent legal personality, the share of profit was not an exempt income in the hands of partner as the firm had paid tax thereon.

HELD rejecting the plea:

(i) Though in general law, a firm and its partners are not distinct, this is subject to statutory exceptions. Under the scheme of assessment of firms applicable from AY. 1993-94 a firm is treated as an independent entity and the expenditure by way of remuneration, interest, commission etc. paid to partners is allowable to it as a deduction subject to ceilings and such interest, salary etc is taxable in the hands of the partners. A firm and its partners are consequently separate entities under the Act;

(ii) Accordingly, the fact that the profits are charged to tax in the hands of the firm does not mean that the share of such profits is non – exempt in the hands of the partner. The profits being exempt in the hands of the partner, s. 14-A does apply in computing his total income.

(iii) The disallowance has to be worked out as per Rule 8D in view of Daga Capital 119 TTJ 289 (Mum) having held it to be retrospective.: MUMBAI ITAT;

SERVICE TAX SECTION

2010-TIOL-32-CESTAT-DEL.pdf

M/s Life Insurance Corpn Of India Vs CCE, Jaipur (Dated : October 20, 2009)

Service Tax – Insurance service – Adjudicating authority to verify if service tax liability is discharged by assessee in the jurisdiction of its centralized registration office and proceed according to law – Impugned orders set aside and matter remanded: DELHI CESTAT;

2010-TIOL-31-CESTAT-DEL.pdf

Applicant was a proprietorship firm which was transferred to Limited company from 1.8.2005 – Applicant pleading that they had no knowledge that the limited company is liable to file return every month instead of half-yearly return as filed – Tax paid for period September 2005 to March 2006 in March 2006 - Penalty imposed – no prima facie case for waiver of pre-deposit of penalty – Pre-deposit ordered.: DELHI CESTAT;

2010-TIOL-28-CESTAT-BANG.pdf + puravankara story.pdf

M/s Puravankara Projects Ltd Vs CST, Bangalore (Dated : August 4, 2009)

Service Tax – Works contract service – Activity of construction of complexes through works contracts brought into tax net only from 01.06.2007, activity forming part of works contract could not have been separated and taxed under a pre-existing category for the period prior to 1/6/2007

Service Tax – Ancillary activity forming part of main activity carried out under works contract cannot be subjected to service tax – Gym constructed for use of flat owners not liable to service tax under health and fitness service as the facility is owned by flat owners – Charges collected from flat owners for transfer of ownership as part of construction agreement for purchase of flats not taxable under separate category of real estate agents service – Reimbursable amounts collected for maintenance of flats till ownership is transferred to association of owners not taxable under maintenance & repair service

Service Tax– Construction of flats and transferring them to land owners who are co-developers in exchange for land received from them cannot be held to be any service – Consideration received in the form of right on land transferred to them cannot be held as exempted service

Service Tax – Restricting utilization of CENVAT Credit to 20% by invoking provisions of Rule 6(3) not sustainable – Complete waiver of pre-deposit of service tax and penalty ordered: BANGALORE CESTAT;

CENTRAL EXCISE SECTION

2010-TIOL-14-HC-AP-CX.pdf + sanghi story.pdf

M/s Sanghi Polyesters Limited Vs Superintendent Of Central Excise (Dated: November 25, 2009)

Central Excise – Default in Monthly Payment of duty – bar on utilising Cenvat credit – Attachment of goods without notice not correct – Proper course is to issue notice for recovery of wrong credit: this is a case where the respondents alleged that by operation of sub-rule (3A) of Rule 8, which was amended with effect from 01.06.2006, the petitioner was not entitled to avail Cenvat credit during the period of default. Thus, in substance, the dispute relates to the petitioner's eligibility to avail Cenvat credit during the period of default, namely, between 01.06.2006 and 14.06.2006. This dispute is thus clearly comprehended by Rule 14 of the Cenvat Credit Rules, 2004.

Since the dispute between the parties is governed by the special rules, which specifically applied Section 11(A) for effecting recoveries, the said provision is squarely attracted and consequently it is incumbent upon the respondents to issue a show cause notice to the petitioner calling upon it to pay the duty in respect of which Cenvat credit was availed. If and when such a notice is issued, the petitioner shall be free to raise such objections as are permissible to it under law including the one relating to the period of limitation. :ANDHRA PRADESH HIGH COURT;

2010-TIOL-34-CESTAT-MAD.pdf

M/s Sundaram Clayton Ltd Vs CCE, Chennai (Dated : September 8, 2009)

Central Excise – interest on duty paid on supplementary invoices – the fact of price variation is known pursuant to the contract of sale and cannot be contemplated at the time of removal of goods – the ratio of SKF India Ltd is squarely applicable and interest is payable.:CHENNAI CESTAT;

2010-TIOL-33-CESTAT-BANG.pdf

CCE, Bangalore Vs M/s Group Pharmaceuticals Ltd (Dated : May 19, 2009)

Central Excise – When there is no sale involved in transaction between job worker and principal, value to be adopted in terms of Section 4(1)(b) – No infirmity in computation of value based on raw material cost, packing material cost and job charges –  Impugned order upheld – No merit in Revenue appeal:BANGALORE CESTAT;

2010-TIOL-29-CESTAT-MUM.pdf + M&M story.pdf

CCE, Nasik Vs M/s Mahindra & Mahindra Ltd (Dated : November 26, 2009)

Bullet proofing activity on vehicles was done by a job worker after clearance of bare vehicle from factory on payment of duty - Cost of bullet proofing cannot be added into assessable value at manufacturer's end - CESTAT:MUMBAI CESTAT;

CUSTOMS SECTION

2010-TIOL-30-CESTAT-BANG.pdf

M/s Steer Overseas Pvt Ltd Vs CC & CCE, Visakhapatnam (Dated : April 2, 2009)

Customs – Export of Iron Ore availing concessional rate of export duty under Notification 62/2007-Cus – Chemical examiner's report on sample tested indicated Fe content of more than 62% – Appellants request for re-testing of samples not acceded resulting in violation of principles of natural justice – Long delay in testing of samples results in increased evaporation thereby increased Fe content – Percentage declared by appellant and confirmed at destination port to be accepted as valid – Benefit of concessional rate of duty available:BANGALORE CESTAT;