I-T - Sec 80P - Cooperative society invests surplus funds in short-term deposits - claims deduction for interest - Since such income is not operational profits eligible for deduction, it falls under head 'income from other sources' u/s 56 and is taxable: Supreme Court (See 'Breaking News' + '2010-TIOL-11-SC-IT')

Is Certificate issued by CA valid - verify online? (See 'DDT' Column)

Private sector to get more space in armed forces' modernisation: Antony

Kolkata DRI seizes Red Sanders wood from a truck in Hooghly district

Verification of CA Certificate: ICAI offers online facility to DGFT offices (See Cir 23 in 'What's New')

Ban on export of wheat and wheat products eased for Nepal (See 'What's New')

Works Contract Service should be expanded to cover all activities presently taxed under VAT (See 'TIOL BUDGET RUN-UP Column')

TIOL COMMENTARY

ddt 11 Feb 10.pdf

Is Certificate issued by CA valid - verify online?

tcw174.pdf

Recruitment Rules for Revenue Board Members: Mr Mankad, it's your chance to err on side of merit and integrity alone!

MIXED BUZZ

mbuzz1302.pdf

India receives USD 1.5 bn FDI inflows in Dec 2009 ;

mbuzz1301.pdf

Cabinet okays proposal to table Finance Commission report in Parliament ;

mbuzz1300.pdf

CCEA gives nod to DIP&P for review of FDI policy ;

mbuzz1299.pdf

Opium cultivation to be substantially down this year in Afghanistan: UN ;

CASE LAWS

2010-TIOL-11-SC-IT + sc story.pdf

M/s The Totgars Cooperative Sale Society Limited Vs ITO, Karnataka (Dated: February 8, 2010)

Income tax - Sec 28, 56, 80P - Assessee is a cooperative society - provides credit facilities and markets agricultural produce of its members - invests surplus funds not required in its regular business as short-term bank deposits and also securities - earns interest income - claims deduction u/s 80P(2)(a)(i) - AO disallows the same by treating it as 'income from other sources' u/s 56 - Tribunal and High Court reject the assessee's appeals - Issue goes to the Apex Court which has held that. : SUPREME COURT

2010-TIOL-73-ITAT-MUM

M/s Axis Capital Markets (India) Ltd Vs ITO,Mumbai (Dated: November 30, 2009)

Income Tax Act, 1961 – AY 2004-05 - Treatment of income from investment business of the assessee as speculation income

Section 73 – Whether the income of a public company from its investment business can be treated as business income from speculation business when the income of the same company for the same investment business has been treated as capital gains in the previous and subsequent assessment years

The assessee is a public company engaged in the investment business. In the present assessment years, it showed its income as income from capital gains. Before the AO, the assessee submitted that in the AY in question is hot not treated the shares as stock in trade. Further, the shares had been purchased and sold with the intention of investment and not with the intent of speculation. Further, the income from the same business had been treated as long term capital gains in the previous and subsequent assessment years. The AO, however, rejected the arguments of the assessee. The AO found that in the same year, the assessee had claimed expenditure as business expenditure. Based on this and other observations, the AO held that the income of the assessee was speculation income and rejected the set-off of brought forward long term capital loss against the income of the assessee for AY 2004-05.

On appeal to the CIT(A), the order of the AO was upheld. The CIT(A) observed that the assessee had claimed expenditure as business expenditure for AY 2004-05. Further, the assessee had shown short term capital loss from shares, which showed that the assessee was frequently involved in the buying and selling of shares. This pointed to speculation business. The CIT(A), however, agreed with the assessee that if the that if the profits from long term capital gain have to be treated as speculative income within the meaning of Explanation to section 73, then brought forward long term capital loss on similar transaction should be allowed as set off as speculative loss by the Assessing Officer. : MUMBAI ITAT

2010-TIOL-72-ITAT-MUM

M/s Tanu Health Care Ltd Vs Addl.CIT, Mumbai (Dated: January 19, 2010)

Income Tax - Sec 269SS, 269T, 271D and 271E - Assessee  is engaged in manufacturing and marketing of Ayurvedic & Allopathic medicines, chemical raw materials, shares as well as into business of financing, investment and consultancy services - On the observation that on a  number of occasions, Assessee has shown receipts and repayments in cash from four persons, including a company AO levies penalty u/s 271D and 271E for violations of section 269SS and section 269T - CIT(A) confirms the penalty - Held, the two terms - Loan and Advances - are not the same and connote different nature of transactions. The amount received as an advance for the purchase of shares and declared as such in the books of account is different from a loan transaction. Third party evidences cannot be rejected without verification or further enquiry. Mere rejection of submissions made by the Assessee and third party evidences produced by him, does not authorise either the AO or the Addl. Commissioner of Income to come to a conclusion that the explanation is not genuine - conclusion drawn both by the AO as well as by the CIT(Appeals) is based on surmises and conjectures. The penalties in question quashed - Assessee's appeal allowed. : MUMBAI ITAT

2010-TIOL-71-ITAT-MUM

M/s Tricom India Ltd Vs ACIT, Mumbai (Dated: December 1, 2009)

Income Tax Act, 1961 – Deduction of interest income u/s 10B of the IT Act

Section 10B – Whether interest income generated from surplus of profits can be claimed for deduction u/s10B of the Act – Whether such interest income is ‘derived from' profits

Assessee in the business of providing IT enabled services and claimed deduction u/s 10B of the Act. The AO noticed that the profit declared by the assessee included certain interest income and miscellaneous income. AO held that u/s 10B, profits included only profits from export and did not include the interest generated therein. Thus, the AO added the interest income to tax under the head of other sources of income. On appeal, the order of the AO was upheld by the CIT(A). : MUMBAI ITAT

2010-TIOL-70-ITAT-DEL

M/s Vatika Hotels Pvt Ltd Vs Addl.CIT, New Delhi (Dated: January 22, 2010)

Income Tax Act, 1961 – Imposition of penalty for receiving loan or deposit without account payee check

Section 271D, 269SS – Whether by allocating shares in lieu of transfer of land, the assessee had contravened the provisions of Section 269SS r/w Section 271D?

Land worth INR 50.5 crore was transferred to the assessee by another company (Vatika Ltd.). The consideration for this transfer was not paid in cash, but was adjusted by allocating shares worth 50.5 crore. The AO was of the view that the sum of Rs. 50.00 crore shown as share application money in financial year 2005-06 was received otherwise than by account payee cheque or account payee draft i.e. the provisions of Section 269SS were contravened by the assessee . Thus, the AO initiated proceedings u/s 271D of the Act. On appeal, the CIT(A) upheld the levy of penalty by the AO. : DELHI ITAT

DEPUTATION

CBEC_Vacancies_in_Board.pdf

Filling up the post of Under Secretary/Senior Technical Officer/Technical Officer/Senior Analysts in the Central Board of Excise & Customs/ CEIB;

SERVICE TAX SECTION

2010-TIOL-243-CESTAT-DEL

M/s Agilent Technologies India Pvt Ltd Vs CCE, New Delhi (Dated: November 23, 2009)

Service tax - stay / dispensation of pre-deposit - Business Auxiliary Service and Maintenance or Repair service - Revenue raises two demands under two different heads - assessee argues that it is a case of export of services to Singapore and exports is exempted - held, going by documents, the services were provided in India and there is no case for export of service - Pre-deposit ordered.: DELHI CESTAT

CENTRAL EXCISE SECTION

2010-TIOL-242-CESTAT-BANG

M/s Incowax Pvt Ltd Vs CCE, Bangalore (Dated: March 5, 2009)

Central Excise – Eligibility of CENVAT Credit on rejected goods returned without reprocessing – Appellants claim of documentary evidences to show return of rejected goods after reprocessing to be examined by original authority – Matter remanded for de novo consideration. : BANGALORE CESTAT

2010-TIOL-241-CESTAT-DEL

Mr Jitendra Kejriwal Vs CCE, Rohtak (Dated: July 13, 2009)

Central Excise – Under valuation in r/o manufacture and clearance of plywood and block boards – Prima facie seized records and laptop disclose under valuation of goods and receipt of unaccounted cash establishing evasion of excise duty – No cogent reason adduced for claiming cross examination of deponents including government examiner – Pre-deposit of entire duty demanded ordered – Since only part evidence considered by original authority for fastening duty liability, too premature to insist on deposit of penalties – Waiver granted from deposit of penalties and interest. : DELHI CESTAT

2010-TIOL-240-CESTAT-DEL

M/s Oriental Trimex Ltd Vs CCE, Noida (Dated: August 10, 2009)

Central Excise – Classification – Process of cutting, sawing, sizing of marble blocks and slabs does not amount to manufacture prior to 01.03.2006 – Classifiable under chapter 25 w.e.f. 01.03.2006 and not under chapter 6802 as claimed by Revenue – Eligible for benefit of Notification 4/06-CE – Demand of duty and penalty not sustainable – Impugned orders set asid. : DELHI CESTAT

CUSTOMS SECTION

DGFT NOTIFICATION

dgft09not030.pdf

CASE LAWS

2010-TIOL-119-HC-DEL-CUS + hc story.pdf

M/s Sesame Foods Private Limited Vs UoI (Dated : February 2, 2010)

Customs - Drawback on sesame seeds - the Petitioner failed to produce proof of payment of customs duty on Sesame seeds, claimed to have been imported by the DTA suppliers - If agricultural inputs that are in fact not imported, do not otherwise suffer incidence of excise duty, the question of fixing an AIR for such commodity cannot arise -no legal infirmity in the impugned decisions taken by the Respondents to withdraw the deemed export duty drawback granted to the Petitioner

There is no estoppel against an illegality. If the Petitioner was in fact not entitled in law to claim deemed export duty drawback they cannot prevent the Respondents from taking corrective steps to recover the amounts wrongly released to the Petitioner. : HIGH COURT

2010-TIOL-244-CESTAT-MUM + max story.pdf

Max Overseas Vs CC, Marmagoa (Dated: December 23, 2009)

Shower Gel, Roll on, Shampoo/Conditioner shampoo, Shaving Gel, Hair Cream, Body Cream and Scented Spray are “cosmetics” covered by the term “Substances” mentioned at Entry no. 1 in Schedule ‘D' of Rule 132 of the Drugs & Cosmetics Rules, 1945 and can be imported from any port – Absolute Confiscation of goods set aside – CESTAT. : MUMBAI CESTAT