TMI Tax Updates - e-Newsletter
February 29, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Highlights / Catch Notes
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Income Tax:
Depreciation on hotel building given on lease Licence fee receivable taxable as business income - depreciation allowed - HC
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Income Tax:
Block Assessment - Set off or carry forward of loss for p/y years from the undisclosed income determined during Search - It is clear that in computing the total income or loss of the Block period, the income or loss of each of the previous year has to be taken into consideration and computed in accordance with the provisions of the Act except set off or brought forward of loss under Section 32(2) of Act. - HC
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Income Tax:
Income-tax (Appellate Tribunal) Rules, 1963 - Amendment in rules 2, 4A, 9, 26 & 34A; deletion of proviso to rule 35A and substitution of words 'Income Tax Officer' and Appellate Assistant Commissioner - Ntf. No. F. 71-Ad(AT)/2012, Dated: February 7, 2012
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Income Tax:
Export commission payable to non-resident agents No doubt the agents rendered services abroad and have solicited orders, but the right to receive the commission arises in India when the order is executed by the applicant in India. - Taxable in India - TDS liable to be deducted. - AAR
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Income Tax:
Penalty u/s 271C - Non deduction of TDS u/s 194A - Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007 -TMI - 1676 - SUPREME COURT OF INDIA] wherein the applicability of ss. 194C, 194I, 201(1A) has been explained - Decided in favor of the assessee - AT
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Income Tax:
TDS on interest - liability of paying tax is that of the creditor and a statutory duty is cast on the debtor to deduct tax and make payments. The revenue cannot collect tax on interest from both the principal and the agent. - HC
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Customs:
Foreign currency - illegal import - a compulsory requirement of making a Custom Declaration Form (CDF) is the legal requirement specifically when the impugned foreign currency involved is more then US $ 5000 ( or equivalent). - CGOVT
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Customs:
Amends Notification No. 12/97 Customs(N.T.) dated the 2nd April, 1997 - Ntf. No. 12/2012 - Customs (N.T.) Dated: February 27, 2012
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Customs:
Appointment of Common Adjudicating Authority - Ntf. No. 13/2012-Customs (N.T.) Dated: February 27, 2012
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DGFT:
Duty exemption on re-import of Cut & Polished Diamonds sent abroad for Certification/ Grading - Ntf. No. 100 (RE-2010) /2009-2014 Dated: February 28, 2012
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DGFT:
Import of spares for the existing machinery procured indigenously under EPCG Scheme. - Cir. No. 54 (RE-2010)/2009-14 Dated: February 23, 2012
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DGFT:
Operationalisation of provisions of Para 5.11.2 of Hand Book of Procedure Vol.-1 (2009-14) [RE: 2010]. - Cir. No. 53 (RE-2010)/2009-14 Dated: February 23, 2012
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FEMA:
Import of Gold on Loan Basis- Tenor of Loan and Opening of Stand - By Letter of Credit . - Cir. No. 83 Dated: February 27, 2012
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Corporate Law:
Daily fine - Period of limitation - Default on submission of annual returns - default in filing the balance-sheet of the profit and loss of the Companies within the prescribed statutory period was a continuing offence. - HC
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Indian Laws:
Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfill the requirement of the Advocates Act, 1961 and the Bar Council of India Rules - HC
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Indian Laws:
Having regard to the aim and object of the International Commercial Arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.
- HC
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Service Tax:
Cenvat credit - assessee availed input service tax credit among other things for the function arranged for Kannada Rajyostava Day and colour photography expenses in respect of the inaugural function of Kengeri Police Station - Credit allowed - HC
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Service Tax:
Commercial concern versus non profit concern - As per definition of security agency under Section 65(94) service provider should be engaged in the business rendering specified service. There is no warrant for reading therein requirement of profit motive. - HC
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Service Tax:
Notification No. 41/2007-ST dated 06.10.2007 - Refund - Regarding refund of service tax paid on CHA service and technical testing service - there cannot be two different yard sticks for charging the service tax and allowing the benefits. - AT
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Service Tax:
If the assessee has discharged the service tax liability on his own ascertainment or on the basis of ascertainment by the Central Excise officers and inform the Central Excise officer of payment of such service tax then, no notice under sub-section (1) in respect of the amount so paid shall be served - AT
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Service Tax:
Business Auxiliary Services - Job work - yamming process amount to manufacture - not liable to service tax - AT
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Central Excise:
Cenvat Credit on Inputs - Served from India Scheme (SFIS) - debits made in SFIS would not amount to exemption from payment of duty. - Provisions of Rule 6 are not attracted - AT
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Central Excise:
Cenvat credit wrongly claimed - supplier committed fraud - cenvat credit can not be recovered from the purchaser since he was not part of fraud - HC
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VAT:
Dena Bank Authorized for e-payment - Ntf. No. No. F.7(239)/P-I/05/VAT/2009/1275-1287 Dated: February 21, 2012
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2012 (2) TMI 389
Writ petition filed aginst order of Administrative Tribunal allowing stepping up of pay of employee to that of an admitted junior at each post and cannot be treated as once in a service time employee have exercised this option twice at different posts - Held that:- No jurisdictional error or legal infirmity in is found in the order. Obviously, such stepping up can be done only in terms of the other conditions being satisfied in accordance with the rules.
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2012 (2) TMI 388
Validity of reassessment order original order framed u/s 143(3) - assessee filed objections and contended change of opinion of A.O. objections disposed by way of non-speaking order on 02.11.2010 writ petition against the said order filed on 24.11.10 - reassessment order passed in meantime dated 19.11.2010 - Held that:-Once we have quashed the order dated 2.11.2010 on the ground of it being non-reasoned and does not meeting the basic requirements of the principles of natural justice, the petitioner should not be denied relief on the ground that the Revenue had proceeded in great haste and hurry to pass the reassessment order. In the present case, therefore, quashing of order dated 2nd November, 2010 would necessarily entail and as a sequitor mandate quashing of the reassessment order dated 19th November, 2010. A.O. is directed to pass a fresh order on the objections raised by the petitioner in terms of direction issued in case of GKN Driveshafts (India) Ltd (2002 - TMI - 6100 - Supreme Court) Decided in favor of assessee.
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2012 (2) TMI 387
Recovery apprehended during the pendency of the appeals writ petition filed - Held that:- In such case petitioner is directed to file stay petitions and recovery proceedings for realising the tax due from the petitioner will be kept in abeyance until orders are passed.
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2012 (2) TMI 386
Depreciation on hotel building given on lease non-disclosure of licence fees as income after A.Y. 1995-96 by assessee on ground of dispute between assessee and ITC Ltd settlement agreement executed - A.O. made addition on accrual basis and allowed depreciation search conducted in 2007 A.O. disallowed depreciation on ground that hotel building was not being used for business Held that:- CIT(A) deleted dis-allowance of depreciation on ground that for claiming the depreciation it is not necessary to use the asset by the assessee directly. The appellant's ownership over the asset on which depreciation is claimed is not under dispute and user of these assets in business is also not under dispute. Tribunal has also recorded that licence fee receivable should be included as "business income" and accordingly, depreciation on hotel building is to be allowed. Aforesaid is upheld Decided against the Revenue.
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2012 (2) TMI 385
Order issued by the CIT u/s 220(2A) waiving 50% of the interest due u/s 220(2) appeal declined against such order Held that:- CIT(A) order of granting partial relief is not interferred with however, having regard to the fact that the appellant is a widow and the financial constraints stated by her, we grant 12 equal monthly installments to clear the arrears.
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2012 (2) TMI 384
Expenditure in respect of exempt Income - Investment in shares - Tax free Income - Held That:- In view of Godrej & Boyce Manufacturing (2010 -TMI - 78448 - BOMBAY HIGH COURT) and Maxopp Investments Ltd (2011 - TMI - 208569 - Delhi High Court), we remand the matter back to AO to consider varios aspects.
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2012 (2) TMI 383
Deduction on payment basis - Employees Contribution towards P.F. and E.S.I - Held That:- In view of Vinay Cement (2007 -TMI - 102762 - Supreme Court of India), case remanded back to AO to find out whether the payments have been made before the due date of filing of return or not.
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2012 (2) TMI 366
Transfer pricing adjustment to ALP Revenue contended that distinct operating profit margin to cost in the preceding year qua the AEs and non-AEs should not be applied to the ratio of operating profit to cost in the current year on a combined basis Held that:- Nature of international transactions in the year under consideration with its AE s are similar to the preceding year and Operating profit margin for the current year compares favorably with that finally determined for the preceding year therefore, CIT(A) order of deleting addition is upheld. Addition on account of non-charging of interest on trade debtors from the AEs Held that:- Section 92B transpires that the transactions of 'sale' and 'lending ... money' have been distinctly set out. It is evident that interest income is associated only with the lending or borrowing of money and not with sale. When the international transaction is that of 'sale', the interest aspect is embedded in it. Early or late realization of sale proceeds is only incidental to the transaction of sale, but not a separate transaction in itself. No adjustment is warranted. Further, relevant consideration is the taxation of the enterprises of the group that are chargeable to tax in India. If the concept of over all higher or lower rate/amount of tax in the other countries in which AEs are situated is taken into consideration, then Chapter-X of the Income-tax Act would become meaningless.
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2012 (2) TMI 365
Fees for technical services Revenue treated transportation fees receivable as FTS u/s 9(1)(vii) Hongkong company engaged in the business of provision of supply chain management, including the provision of freight and forwarding and logistics services Held that:- In instant case, role of the assessee in the entire transaction was to perform only the destination services outside India by unloading and loading of consignment, custom clearance and transportation to the ultimate customer. In our opinion, it is too much to categorize such restricted services as managerial services. Further, use of computer in tracing the movement of the goods, though indirect, remote and not necessary, can not bring the payment for freight and logistics services within the purview of "technical services". Also, section 9(1)(i) cannot be invoked since assessee rendered "International services" outside India - Decided in favor of assessee.
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2012 (2) TMI 364
Income deemed to accrue or arise in India - export commission payable to non-resident agents withholding of tax - Held that:- No doubt the agents rendered services abroad and have solicited orders, but the right to receive the commission arises in India when the order is executed by the applicant in India. We therefore hold such export commission payable to be deemed to accrue and arise in India, and is taxable in view of the specific provision of Section 5(2)(b) r.w.s. 9(1)(i). Applicant has not contended that it is availing benefits under the provision of DTAA with Pakistan nor has it a claim of tax exemption under any provision of the Act. The provision of section 195 would apply.
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2012 (2) TMI 363
Revisionary order passed u/s 263 - Long-term capital gains - 'Deemed transfer' of property u/s 2(47)(v) - dis-allowance of exemption u/s 54EC reckoning period of six months for the deposit in bonds from the date of agreement and receipt of part payment at the first instance Held that:- Admittedly, assessee received part payments after execution of agreement to sale and handing over of possession thereby completing the transaction in terms of section 53A of Transfer of Property Act and invested in specified bonds i.e. NABARD bonds within one month of the receipt of sale consideration being part payment. In our view, in such case, the period of six months for making deposit u/s. 54EC should be reckoned from the dates of actual receipt of the consideration. Therefore, assessee is eligible for exemption u/s 54EC on part payment received Decided in favor of assessee.
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2012 (2) TMI 362
Plea for stay of the collection of tax and the interest partial relief - Held that:- Petitioner is directed to deposit sum of Rs.1.75 lacs in respect of the tax demand of Rs. 6.95 lacs as per the impugned order dated 29.12.2011 within fifteen days from the date of receipt of a copy of this order for admissibility of appeal.
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Customs
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2012 (2) TMI 377
Petition sought for directing the respondent to furnish backup copies of the data contained in a Laptop/hard discs seized during search conducted, enabling petitioner to file replies Held that:- Since prayer of the petitioner is now agreed upon by the respondents. Therefore, this Writ Petition stands disposed of with a direction to the respondents to furnish the documents within stipulated time.
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2012 (2) TMI 360
Goods Imported - Provisional release - Held That:- Respondent shall complete the proceedings pursuant to the show cause notice issued to the petitioner, expeditiously. The same shall be done within 3 weeks from the date of receipt of a copy of this judgment. The writ petition is disposed of as above.
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2012 (2) TMI 359
Re-export of goods petition filed by foreign exporter to seek permission for re-shipment of goods exported by it to India - importer abandons the goods Held that:- Since, Petitioner has the right to request such permission and importer does not have any objection for the re-export of the goods in question, the respondents are directed to consider the request of re-export of the goods in question unless there are other legal impediments, for granting such permission.
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Corporate Laws
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2012 (2) TMI 361
Companies Act 1956 - petition filed u/s 433(e) & (f), 434 & 439 of Companies Act, 1956 seeking to wind up the Respondent-Company non-payment of debt Held that:- From the facts of the case it is concluded that there is no bona fide dispute as regards the dues of the petitioning creditor and mere filing of a suit is not enough to say that there is bona fide dispute as regards the claim of the petitioner or this application is an abuse of process of this Court. There is no doubt that the Company failed and neglected to pay the dues of the Petitioner Company. Therefore, this winding up application is admitted. The winding up application is to be advertised. However, Company is granted an opportunity to pay the dues as aforesaid by five monthly equal installments as stipulated. In case of regular payment of installments, order of advertisement would remain stayed permanently. In case any one of the installments is not paid the petitioner is permitted to publish the notice as directed hereinabove - Decided in favor of petitioner.
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Service Tax
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2012 (2) TMI 392
Refund of service tax claimed on expenses incurred on road and rail and port handling and terminal charges for export of goods denial of claim on ground of lack of evidences stay petition - Held that:- Neither impugned order speak about non receipt of the goods at the port for export nor there is any evidence of not incurring handling and terminal charges when export remained undisputed. In the absence of contrary finding exporter should not be denied the benefit through rigidity of procedure Decided in favor of assessee.
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2012 (2) TMI 368
Whether power u/s 84 of the Finance Act, 1994 can be exercised by Revisional Authority during pendency of the appeal before Commissioner Held that:- Issue which is pending before the first Appellate authority, shall not be subject to revision jurisdiction u/s 84 of the Finance Act, 1994.
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2012 (2) TMI 367
Determination of nature of activity - whether repair and maintenance or industrial and commercial construction Held that:- Matter remitted back to adjudicating authority.
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Central Excise
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2012 (2) TMI 358
Whether penalty and interest u/s 11AC of Central Excise Act, 1944 can be levied and collected when the duty has been paid before the issue of Show Cause Notice Held that:- In view of decision in case of Union of India Vs. Dharmendra Textile Processors Ors., (2008 - TMI - 31520 - Supreme Court) , Order of Tribunal is set aside and matter is remitted back to Tribunal for its fresh consideration and decision.
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2012 (2) TMI 357
Pre-deposit for admissibility of appeal petitioner pleaded financial hardship seeked part relief - Held that:- Petitioner is directed to make a pre-deposit of 50% of the sales tax said to be payable by the petitioner, within a period of four weeks from today for admissibility of appeal.
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2012 (2) TMI 356
Differential duty - assessee being manufacturer of Washing Machines demand raised by Revenue on ground of undercharging of sale price decided in favor of assessee by first appellate authority & Tribunal Held that:- In our considered view, the Tribunal and the First Appellate Authority have not committed any error whatsoever and findings and the conclusions reached by those Authorities cannot be characterized as perverse. Therefore, appeal dismissed.
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