President to present Moortidevi Award to Law Minister for literary work;

ACC appoints Jamini Kumar Sharma as Member Secretary, Tariff Commission, Ministry of Commerce and Industry;

President transfers Additional Judge of Madras High Court, Justice Raja Elango, as Additional Judge of Andhra Pradesh High Court;

Import of Ships (Vessels) & other moveable capital goods etc. if imported under SFIS Scheme of FTP and their installation, clarification thereof;

CBEC transfers Ashok R Mahida, Addl Commissioner, from Ahmedabad to Bhopal zone;

CBEC issues transfer order of 10 AC/DCs + promotes two as JCs;

FIU offers deputation options for Addl Director-level posts ;

Dear Member,

Sending the following files:

TIOL COMMENTARY

ddt 18 mar.pdf

Is Service Tax payable on retention money held by clients of EPC Contractors?

cobweb.pdf

Rising graph of revenue collections also means diminishing cost of collections - Will FM allocate more for Revenue Boards?

DEPUTATION POST

post_additional_director.pdf

FIU offers deputation options for Addl Director-level posts;

ACC Appointments

acc_appointments.pdf

ACC appoints Jamini Kumar Sharma as Member Secretary, Tariff Commission, Ministry of Commerce and Industry;

MIXED BUZZ

mbuzz1395.pdf

Moily to get Moortidevi Award for literary work;

2010-TIOL-135-ITAT-DEL.pdf + sms story.pdf

SMS Demag Pvt Ltd Vs DCIT, New Delhi (Dated: January 29, 2010 )

Income tax - Sec 195, 32, 147, 40(a)(i) - Indo-German DTAA - Article 24 - Assessee is a subsidiary of a German company - engaged in the business of supply of assemblies of metallurgical equipment and technical service in design and engineering - makes payments to parent company for software installation - whether TDS u/s 195 is deductible on such payment of royalty - whether it is fee for technical services or outright sale of software - whether the assessee cannot be discrimianted against as per Article 24(1) of DTAA:DELHI ITAT;

2010-TIOL-134-ITAT-DEL.pdf

M/s Comet Leasing & Finance Ltd Vs ACIT, New Delhi (Dated: February 26, 2010)

Income Tax - Penalty - Sec 271(1)(c) - Assessee  is engaged in the business of leasing and financing - claims depreciation @ 100% in respect of one sugar mill roller leased out - AO disallows depreciation on the ground of inflation of the cost of asset to reduce tax liability - CIT(A) upholds the order - Tribunal holds that the entire transaction is a financing transaction and not a lease transaction and hence the Assessee is not entitled to depreciation - the entire lease rent received by the assessee cannot be taxed and only the interest component is to be taxed over a period of 3 years - AO initiates penalty proceedings - Held, in the ultimate analysis the income offered by the Assessee is the same as directed to be computed by the Tribunal, the Assessee cannot be fastened with further liability of penalty merely because the income in one year is higher than that offered but in subsequent year the income offered by the Assessee is higher. It is not the case that higher income was offered in subsequent years on receipt of order of the Tribunal. Income was offered in regular course by showing the entire lease rental as income. Therefore, the Assessee having offered an explanation which is also substantiated, which is bona fide and since all the facts relating to same and material to the computation of total income have been disclosed by him, even in terms of Explanation 1 to section 271(1)(c) the amount disallowed by way of depreciation will not result into income in respect of which particulars have been concealed. Penalty levied u/s 271(1)(c) canceled - Assessee's appeal allowed:DELHI ITAT;

2010-TIOL-133-ITAT-MUM.pdf

ITO, Mumbai Vs M/s Coral Granites Pvt Ltd (Dated: December 11, 2009)

Income Tax Act, 1961 – Initiation of Penalty proceedings against assessee for unexplained expenditure and investment

Section 271(1)(c) – Whether the AO was justified in commencing penalty proceedings against the assessee when the latter was unable to explain certain expenditures and investments made by it

The penalty proceedings were initiated on two issues: unexplained commission paid by the assessee for upto INR 70,000/- and unexplained purchases made by the assessee for INR 91,612/-. In the former, the assessee in its return had claimed that it had paid money to certain persons as commission. However, on notice being issued to the persons u/s 133(6), four were unanswered and one was returned. The AO thus rejected the claim of the assessees and disallowed the amount. This was upheld by the ITAT. In the latter issue, the assessee claimed that it had made cash payments to purchase certain granite blocks form a party. Upon examining the party in question, the AO was informed that the party had had no outstanding amounts receivable from the assessee. The assessee objected to this and produced an affidavit stating that it had made cash payments. However, the AO rejected the claim of the assessee, which was upheld by the ITAT.

Subsequently, the AO started penalty proceedings against the assessee. On appeal to the CIT(A), the CIT(A) rejected the initiation of the penalty proceedings on the ground that the assessee had produced sufficient evidence to show back its claim and that the claims had been rejected merely because of a difference of opinion with the AO:MUMBAI ITAT;

2010-TIOL-132-ITAT-MUM.pdf

ACIT, Mumbai Vs Meridian Enterprises Computing Solutions P Ltd (Dated: March 8, 2010)

Income tax - Sec 10A, 10B - Assessee is into software exports - AO studies the agreement and holds that the assessee is into supply of IT manpower and not eligible for deductions u/s 10A or 10B - CIT(A) goes for in-depth study and holds that the assessee hires IT professionals who are paid on manhour basis for developing onsite software at the importer's premises and is eligible for deductions - held, no infirmity in the CIT(A) order as there are clear findings that the assessee is a small software developer and hires staff as and when it has assignments in hand - does not keep many employees on payrolll but is very much involved in export of software - Sec 10A/10B benefits cannot be denied - Revenue's appeal dismissed :MUMBAI ITAT;

CBEC GROUP A PROMOTION - 2010

cbecorder067_2010.pdf

Two promoted as JCs;

CBEC GROUP A TRANSFER - 2010

cbecorder064_2010.pdf

CBEC issues transfer order of 10 AC/DCs;

SERVICE TAX SECTION

2010-TIOL-422-CESTAT-KOL.pdf

M/s HI-TEK Powercon Pvt Ltd Vs CCE & CST, BBSR-I (Dated: December 12, 2009)

ST - Cenvat Credit on outward GTA service - Revenue raises demand - held, since freight is not an integral part of the excisable goods in this case the P&H HC decision in Gujarat Ambuja will not apply - not a fit case for waiver of pre-deposit:KOLKATA CESTAT;

2010-TIOL-417-CESTAT-KOL.pdf

M/s Brahmaputra Enterprise Vs CCE, Shillong (Dated: January 11, 2010)

ST - Penalty under Sec 76 - condonation of delay - assessee fails to file appeal against levy of penalty within limitation period - files necessary affidavit showing reasons for delay with appeal petition - Commissioner (Appeals) rejects - held, since the assessee has filed affidavit for delay, waiver from pre-deposit granted and issue remanded:KOLKATA CESTAT;

CENTRAL EXCISE SECTION

2010-TIOL-421-CESTAT-MUM.pdf + cinder story.pdf

M/s Century Rayon Vs CCE, Mumbai (Dated: January 13, 2010)

Duty on “Cinder” paid under protest but collected from customers – Changing the manner of issuing invoice but retaining the ultimate price charged to customers indicates unjust enrichment - Amount correctly credited to Consumer Welfare fund:DELHI CESTAT;

2010-TIOL-420-CESTAT-MAD.pdf

Fenner (India) Ltd Vs CCE, Madurai (Dated: November 13, 2009)

Central Excise – Penalty under Rule 173 Q of the Central Excise Rules, 1944 – The adjudicating authority has not arrived at a conclusion as to whether the provisions of Rule 173Q(1)(a) or (b) or (c) have been made out against the appellants, although he was required to do so in terms of the Tribunal's remand order – Penalty set aside:CHENNAI CESTAT;

2010-TIOL-419-CESTAT-BANG.pdf

M/s Cee Jee Lubricants Vs CCE & CC , Cochin (Dated: October 23, 2009)

Central Excise – Manufacture – Processing of waste/used lubricating oil into re-usable lubricating oil by undertaking processes like vacuum distillation, centrifuging, removal of moisture, carbon and other impurities, does not amount to manufacture – Impugned orders not sustainable, liable to be set aside:BANGALORE CESTAT;

2010-TIOL-418-CESTAT-MAD.pdf

Cauvery Stones Impex Private Ltd Vs CCE, Salem (Dated: November 13, 2009)

Central Excise – CENVAT Credit – outward transportation from factory gate to the port is eligible as input service – credit admissible.

Refund of credit under Rule 5 of the CENVAT Credit Rules, 2004 – clearance to the 100% EOUs is also to be considered as export for the purpose of refund under Rule 5:CHENNAI CESTAT;

CUSTOMS SECTION

DGFT CIRCULAR

dgft09cir026.pdf

Import of Ships (Vessels) & other moveable capital goods etc. if imported under SFIS Scheme of FTP and their installation, clarification thereof;

CASE LAWS

Sophisticated Marbles & Granite Industries Vs UoI (Dated : March 4, 2010)

Customs – import restrictions on marble slabs/blocks – challenge to the condition of having gang saw by the importers - it is not possible to hold that the transition from the dual policy to a unified policy was either arbitrary or irrational - The decision-making process itself appears to be a well deliberated one where matters were considered at different levels. The Respondents were faced with an unenviable task of accommodating several competing interests. The court cannot be expected to sit in appeal over the decision of the government to introduce a requirement for eligibility for grant of an import licence and opine that one criterion is more appropriate than the other - Mere inconvenience to a trader cannot by itself render the policy arbitrary or unreasonable. : DELHI HIGH COURT ;

Regards
Customercare Executive

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