Allowing losses on account of Forex Derivatives - CBDT issues instructions (See 'DDT' Column)

Sanjiv Sharma, IRS 1989, selected as Tax Policy Analyst in the Global Foram on Transparency and Exchange of Information under OECD

Services rendered to foreign consumers (NRIs) - DGFT allows acceptance of cash in foreign currency notes towards fulfilment of EO under EPCG;

Payment of Dearness Allowance to Central Government employees - Revised Rates effective from 1.1.2010.;

Central Excise - Area-based exemption for HP & Uttranchal slated to lapse on March 31; Govt yet to decide on extension;

SEZ: Govt directs Gems & Jewellery units to file declaration of imports ;

Foreign investment - review of cases under Govt Route;

CBDT invites applications for Director-level post in Board;

India elected Chairman of IPDC;

CCEA approves Rs 1156 Cr Coastal Zone Management Project;

Justice P V Reddi takes over as Chairman of 19th Law Commission of India;

Dear Member,

Sending the following files:

TIOL COMMENTARY

ddt 26 mar.pdf

Recovery of Drawback for Export Values not realized by Exporter;

ice cubes.pdf

Create an integrated and proactive financial regulator;

RBI CIRCULAR

rbi09cir042.pdf

Exim Bank's Line of Credit of USD 50 million to the Government of the Republic of Zambia;

PRESS NOTE

pn1_2010.pdf

Review of cases under Government Route i.e which require prior approval of the Government of India for making foreign investment.

SEZ - INSTRUCTION

sez09ins051.pdf

Declaration of Raw matereial components etc. imported by G& J units in respect of goods to be manufactured by them – Reg;

MEMORANDUM

Office Memorandum.pdf

Payment of Dearness Allowance to Central Government employees - Revised Rates effective from 1.1.2010.;

MIXED BUZZ

mbuzz1422.pdf

India elected Chairman of IPDC;

mbuzz1421.pdf

CCEA approves Rs 1156 Cr Coastal Zone Management Project;

DEPUTATION POST

post_directors_cbdt.pdf

CBDT invites applications for Director-level post in Board;

INSTRUCTION

instruct1003.pdf

Allowing Losses on account of Forex Derivatives - CBDT issues instructions;

CASE LAWS

2010-TIOL-188-HC-KAR-IT.pdf

CIT, Bangalore Vs Sri Babu Reddy (Dated : March 1, 2010)

Income tax - Sec 44AA, 271A - Assessee is a civil contractor - files return along with tax audit report - AO notices that the assessee has not maintained books of account as prescribed by Sec 44AA - assessee contends that there is no prescribed format - Tribunal goes with the assessee - held, since no format has been prescribed by Sec 44AA for the assessee there is no question of penalty u/s 271A - Revenue's appeal dismissed:KARNATAKA HIGH COURT;

2010-TIOL-149-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Jackson Ltd (Dated: February 15, 2010)

Income Tax - Sec 80IB(7), 80IB(13) - Assessee manufactures DG Sets and runs two units - one is export oriented and the other is non-export oriented - claims deduction u/s 80IB - Assessee maintains separate book of accounts for the two units and inflates certain expenses of non export oriented unit - AO allocates the total expenses on both units and thereby reduces the deduction of eligible unit - CIT(A) following the order of earlier year apportions the expenses in correct manner - held, there being no change in facts the CIT(A) correctly apportioned the expenses:DELHI ITAT;

2010-TIOL-148-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Power Plant Performance & Improvement Ltd (Dated: February 12, 2010)

Income tax - Section 37 - Nature of Royalty payment - capital vs revenue expenditure - The assessee company is in the business of renovation and modernization of old power plants since its incorporation in May, 1997. Till financial year 2000-01, the assessee paid royalty in pursuance of the foreign collaboration agreement entered into between the assessee company, BHEL and Siemens Aktengesellschaft, Germany. The agreement was effective from/ on 1st September, 1997. The assessee company debited certain sums in the profit and loss account on account of royalty paid on the basis of net sales/ turnover – AO disallowed the payment of royalty on the basis of Supreme Court decision in the case of Southern Switchgear Ltd. vs. CIT - CIT(A), distinguishing the case of Southern Switchgear Ltd allowed the appeal of the assessee - On further appeal by the revenue, ITAT takes the view that the payment of royalty since directly proportional to the turnover of sale is a revenue expense - Revenue's appeal dismissed :DELHI ITAT;

2010-TIOL-147-ITAT-MAD-TM.pdf + tm story.pdf

M/s Sical Logistics Ltd Vs ACIT, Chennai (Dated: November 27, 2009)

Income Tax - Consistency is undoubtedly a sound principle but it cannot be in violation of the express provision of the Act. Valuation fixed by Municipal authorities is quite relevant for the determination of the ALV. This property was let out by the assessee on a monthly rental of Rs.3500/- and hence the sum of Rs.42,000/- was offered for tax. The annual value fixed by the Corporation of this property was Rs.2,04,968/- for the purpose of levy of property tax. The A.M. upheld the contention of the assessee on the ground that the value of Rs.42,000/- was accepted by the revenue in the earlier years. He held that though the principle of res judicata was not applicable to Income-tax proceedings, consistency should be maintained when there is no change in facts. It is expressly provided in sec.23(1) that the ALV of any property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year. However, if the property is let out, then the actual rent received or receivable shall be the ALV if it is in excess of the sum referred to earlier. It is also trite that the valuation fixed by Municipal authorities is quite relevant for the determination of the ALV:CHENNAI ITAT (THIRD MEMBER);

2010-TIOL-146-ITAT-DEL.pdf

DCIT, Delhi Vs M/s Jindal Dyechem Industries Pvt Ltd (Dated: February 26, 2010)

Income Tax - Sec 92CA - Transfer Pricing - Assessee advances interest-free loans to wholly owned subsidiary outside the country - AO raises objection and invokes TP provisions - applies CUP method and makes additions - Assessee objects on the ground that the case has to be referred to the TPO for computing arm's length price - CIT(A) agrees with the assessee and holds that the assessee has been receiving dividend payments from the subsidiary and the same has been offered to tax at the highest marginal rate - held, it is not mandatory for the AO to refer all the cases to the TPO - it can also computer arm's length price on its own - case remanded to the CIT(A) for fresh adjudication:DELHI ITAT;

SERVICE TAX SECTION

2010-TIOL-457-CESTAT-DEL.pdf + cenvat story.pdf

M/s HCL Technologies Ltd Vs CCE, Noida (Dated: December 4, 2009)

Service Tax – Stay/dispensation of pre-deposit - CENVAT Credit on capital goods – The invoice on which the capital goods were received classified the goods under 73.08 which is not covered under the definition of capital goods – assessment of the goods at the supplier's end cannot be reopened – alternate plea to consider the goods as inputs is not acceptable as term 'input' would cover only those goods used in providing the services which get either used up or consumed or get transferred to service receiver either as such or in changed form – plea of limitation is also prima facie not acceptable as the auditors and the department and the C&AG conduct only test check and hundred percent records are not checked – pre-deposit ordered:DELHI CESTAT;

2010-TIOL-456-CESTAT-MUM.pdf

Automobile Corporation Of Goa Ltd Vs CCE, Pune-I (Dated: January 14, 2010)

Service Tax paid on GTA – Cenvat Credit available as appellant satisfied all conditions in Board Circular 97/8/2007-ST dated 23.8.2007 viz. goods supplied to customer on FOR destination basis, seller is responsible for damages/loss of goods in transit and freight charges are part of price of the goods delivered at buyer's doorstep :CHENNAI CESTAT;

CENTRAL EXCISE SECTION

2010-TIOL-455-CESTAT-MAD.pdf

M/s Akash Aromatics (P) Ltd Vs CCE, Chennai (Dated: December 14, 2009)

Central Excise – Penalty under Section 11AC –equal penalty imposed is set aside and the matter remanded to consider the contention of the appellant for reduced penalty of 25% of the duty.

Spent Diethyl Phthalte emerging from input Diethyl Phthalte after using – demand of duty equal to the credit taken on Diethyl Phthalte is set aside:CHENNAI CESTAT;

2010-TIOL-454-CESTAT-MAD.pdf

M/s Veeraa Spinning Mills (P) Ltd Vs CCE, Salem (Dated: December 14, 2009)

Central Excise – CENVAT Credit availed on capital goods exclusively used for exempted goods and inputs sent to the job worker not received back within six months – since the appellants had paid back the amount after being pointed out by the department and had balance of credit at all points of time, interest under Section 11 AB and penalty under Section 11 AC set aside – token penalty of Rs.2000/- under Rule 15 (1) of the CENVAT Credit Rules 2004 imposed:CHENNAI CESTAT;

2010-TIOL-453-CESTAT-MAD.pdf

M/s V K P K Arivithurai & Brothers Vs CCE, Tirunelveli (Dated: December 16, 2009)

Central Excise – passing of the impugned remand order by the Joint Commissioner of Central Excise without complying with the directions of the Tribunal - if the applicants are aggrieved by the impugned orders they should approach the first appellate authority by way of filing appeals as provided under the statute, who can look into their grievances including the grievances regarding alleged non supply of documents and alleged non compliance of the directions of the Tribunal :CHENNAI CESTAT;

Regards
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