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TMI Tax Updates - e-Newsletter
March 13, 2012
Case Laws in this Newsletter:
Income Tax
Central Excise
News
Summary: The 27th edition of AAHAR, India's premier food and hospitality exposition, was inaugurated by the Minister of Commerce, Industry, and Textiles. India's food market is valued at $182 billion, with agricultural exports projected to reach $40 billion by 2015. The event serves as a platform for business opportunities, joint ventures, and technology collaborations. Despite being a major food producer, India faces significant post-harvest losses due to inadequate infrastructure. The government is encouraging foreign investment to improve the food value chain. Over 550 exhibitors from various countries are participating, showcasing diverse products and technologies.
Summary: The Finance Minister urged public sector banks to enhance customer service by leveraging technology and focusing on human resource development to become strong financial institutions. Emphasizing the importance of customer retention, the minister highlighted the need for efficient, cost-effective services and skilled personnel to meet modern banking demands. With a significant portion of the workforce nearing retirement, banks face challenges in replacing traditional banking skills with specialized financial service skills. The minister encouraged banks to prepare Human Resource Management Plans and prioritize training, especially in technology and rural banking, to ensure future readiness and global competitiveness.
Notifications
Customs
1.
08/2012 - Customs - dated
9-3-2012
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Cus
Seeks to amend the Notification No. 3/89-Customs, by exempting customs duty on remnant turbine fuel consumed during an aero show organised by the central government.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 8/2012-Customs to amend Notification No. 3/89-Customs. This amendment exempts customs duty on aviation turbine fuel that remains as remnant fuel in aircraft arriving from outside India and is consumed during an aero show organized by the central government. The amendment modifies condition (2) of the original notification to specify that the exemption applies to fuels other than aviation turbine fuel consumed during an aero show, and adds a new entry to Schedule II to include aero shows organized by the central government.
DGFT
2.
106 (RE-2010)/2009-14 - dated
12-3-2012
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FTP
Removal of Prohibition on export of cotton (Tariff Codes 5201 and 5203).
Summary: The Government of India has lifted the prohibition on the export of cotton under Tariff Codes 5201 and 5203, effective immediately. This decision revokes the previous Notification No. 102 dated 05.03.2012. Cotton, both not carded nor combed and carded or combed, is now categorized under a "Free" export policy, requiring prior registration of contracts with the Directorate General of Foreign Trade (DGFT). Registration Certificates (RCs) affected by the prior prohibition may need extension and revalidation. Exports can proceed only after RCs are revalidated. The policy change is documented in Notification No. 106 dated 12th March 2012.
Highlights / Catch Notes
Income Tax
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Marriage Shoguns Taxable as Gifts When Given to Assessee, Not Bride, Court Rules Against Assessee.
Case-Laws - AT : Shoguns received on marriage taxable as gift - Shoguns were given to assesse and not to daughter, logically cheque should be in bride name - No details provided which showed that amount has been transferred to bride's account. Decided against assesee. - AT
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Income from undisclosed sources taxable u/s 69A of the Income Tax Act; no deductions allowed.
Case-Laws - AT : Surrender of income - additional income offered is deemed income assessable u/s 69A of the Act and no deduction is allowable against such deemed income assessed u/s 69A of the Act in the hands of the assessee. - AT
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Auditor's Duty: Transaction Non-Reporting Doesn't Justify Rejection of Books in Job Work Context.
Case-Laws - AT : Rejection of Books of Account - non reporting of transaction can be best attributed to auditor and cannot be ground to reject books. For Job work - AT
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Capital Loss from Foreign Car Sale Valid Despite Resale Profit by Lessees; Lease Terms Uncontested by Revenue Authorities.
Case-Laws - HC : Capital loss on the sale of the foreign cars - when the sale of the cars itself flow from the terms of the lease agreement and the terms of the agreement thus not questioned by the Revenue, the mere fact that the cars were sold at a price so low and that the lessees could subsequently sell the car for a higher price would not defeat the claim of the assessee for capital loss. - HC
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High Court Rules Notional Interest on Security Deposit Not Part of Employee Accommodation Perquisite Value.
Case-Laws - HC : Determination of perquisite value - Rule 3 - Where an employer takes residential premises on rent by giving security deposit for the benefit of employees, whether the notional interest on such security deposit is liable to be included in the perquisite value of the accommodation given to the assessee employee is the question raised in this appeal - held no - HC
Customs
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Amendment to Exempt Customs Duty on Remnant Turbine Fuel for Central Government Aero Show Under Notification No. 08/2012-Customs.
Notifications : Seeks to amend the Notification No. 3/89-Customs, by exempting customs duty on remnant turbine fuel consumed during an aero show organised by the central government. - Ntf. No. 08/2012 - Customs Dated: March 9, 2012
DGFT
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Export Ban on Cotton Lifted Under Tariff Codes 5201 and 5203 per DGFT Notification No. 106 (RE-2010)/2009-14.
Notifications : Removal of Prohibition on export of cotton (Tariff Codes 5201 and 5203). - Ntf. No. 106 (RE-2010)/2009-14 Dated: March 12, 2012
Service Tax
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Rule 3(ii) of 2006 Taxation Rules: No Evidence Found of Service Partially Performed in India.
Case-Laws - AT : Taxation of Service (Provided from Outside India and Received in India) Rules, 2006 - Rule 3(ii) - Held that: there is no evidence on record that the service has been partly performed in India - AT
Central Excise
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Rule 6(6) Cenvat Credit Rules: Exempted Goods Supply from DTA to SEZ Units/Developers Eases Credit Restrictions.
Case-Laws - AT : Supplies to SEZ from DTA - Exception provided under Rule 6(6) of Cenvat Credit Rules, 2004 shall be applicable to supply of exempted goods both to SEZ units and SEZ developers/promoters. - AT
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Deemed Credit Under Notification 58/97 CE: Input Purchasers Entitled to Credit Despite Disputes on Manufacturer's Production Capacity.
Case-Laws - HC : Deemed credit under Notification 58/97 CE - in case the annual capacity of production of input manufacturer because of dispute cannot be determined at the time of issue of invoice, the scheme of conveyance of deemed credit cannot be put on hold and the substantive benefit of deemed credit cannot be denied to the input purchaser. - HC
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Demand for Secretive Removal of Electricity Consumption Overturned Due to Insufficient Evidence.
Case-Laws - AT : Demand - clandestine removal - based upon the calculations arrived at by the department on the basis of electricity consumption - no corroborative evidence - demand set aside. - AT
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Jewellery with brand names only on packaging, not on the item itself, isn't taxed as branded.
Circulars : If brand name is not affixed or embossed on the jewellery or article itself but appears on the packing, such goods will not be treated as branded jewellery and thus will not be liable to excise duty.
VAT
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Court Rules Homoeopathic Globules Exempt from VAT Under West Bengal Value Added Tax Act, 2003 Item No. 35A.
Case-Laws - HC : Principal of classification - VAT on homoeo globules - West Bengal Value Added Tax Act, 2003 - omoeo globule imported by the writ petitioner is entitled to the benefit of item No. 35A for which no tax is payable and direct the assessing authority to act accordingly. - HC
Case Laws:
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Income Tax
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2012 (3) TMI 155
Recovery proceedings issued during pendency of appeal against the order issued, stay petition before 2nd respondent and pendency of application for rectification before 1st respondent – Held that:- 2nd respondent is directed to consider stay petition within stipulated time and in the meanwhile further proceedings pursuant to Ext.P1 will be kept in abeyance – Decided in favor of petitioner.
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2012 (3) TMI 154
Appeal to be filed in Tribunal- the limit prescribed for filing appeal before the Tribunal is Rs. 2 Lakhs now increased to 3 Lakhs vide Instruction No. 3/2011 dated 9.2.2011-Difference between the tax on the total income assessed and the tax that would have been chargeable, had such total income been reduced by the amount of income in respect of the issue against which appeal is intended to be filed- - held that:- appeals of the Revenue against Ld. CIT(A)are dismissed being not maintainable and the Cross-objections of the assessee are dismissed as not pressed Merely because the assessee fails to claim the benefit of set off cannot relieve the ITO of his duty to apply section 72 in an appropriate case.
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2012 (3) TMI 153
Application of provisions of Section 50C - effective date - Immovable property sold - Amount received as Co-owners - Property transferred on 4.10.06 registered under Property Act 8.01.07 - Held That:- This amendment was brought w.e.f. 01.10.2009 for the reason there was a leakage in the provision because certain persons who transferred the land on the basis of sale agreement and want to save themselves from the valuation to be adopted by the Stamp Valuation Authority. Accordingly, from 01.10.2009 even if the land is transferred through the agreement, provision of section 50C is still applicable. However, these provisions are not applicable on the facts of the present case because the transfer, was already made much before the date of amendment, made to section 50C. So taking into consideration this aspect that the sale agreement was much before the date of sale deed execution and the possession was already given on 4.10.2006 before the sale deed execution, which was executed on 08.01.2007. Therefore, we hold that the provision of section 50C(1) are not applicable on the facts of the present case. Determination of value for the purpose of section 50C - Stamp value authority versus Registered Valuer - Value determined by Stamp Valuation Officer at Rs.33,76,391 - by registered value 13,88,000 - Held That:- After going through these reasons, we are of the view that if the valuation of this property is taken to Rs.20 lakhs instead of Rs.33,76,391/- or shown by Registered Valuer that will meet ends of justice. Though the valuation of Registered Valuation Officer is on some authentic method but there can be some shortcomings also. The AO has not referred the matter to DVO whereas he should have referred the matter to the DVO for taking valuation from him so that both the valuation can be compared. It is a matter of small addition. Therefore, we are not inclined to send the matter to the file of the AO for referring the matter to the DVO for the purpose of ascertaining actual market value. Accordingly, we direct the AO to adopt valuation of this property at Rs.20 lacs for the purpose of capital gains. We order accordingly.
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2012 (3) TMI 152
Sales tax Incentives eligible for deduction under 80IB - Held That:- In view of assessee own case for A/Y 05-06, AO not to exclude sales tax incentives from the profit of the units while calculating the deduction u/s 80IB of the Act. Interest Incentive eligible for deduction under 80IB - Held That:- When in immediately preceding assessment year assessee didnot raised the ground related to denial of deduction under 80IB on interest received, we reject the claim of assessee on principle of consistency.
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2012 (3) TMI 151
Whether the land,subject-matter of sale is agricultural land as on the date of sale without taking into consideration the conversion of land to non-agricultural purpose - held that :-the land retained its agricultural character till the date of the order permitting non-agricultural use and thereafter it is not an agricultural land and, therefore, can be treated as capital asset. whether the land should be treated as agricultural land and the same is exempt from capital gains in view of section 2(14) - held that sale consideration of Rs. 50 lakhs, is not a transaction involving transfer of a capital asset and, therefore, no need to bring the income referable to the capital gains part of the transfer of the asset.
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2012 (3) TMI 150
Brought forward and Setoff of business expenditure and business loss against "Income from House Property" when business has already closed in earlier year - Section 71 - Held That:- Total amount of business loss is Rs. 17,45,392. Out of the same, Rs. 7,64,562 is disallowed against the assessee and the balance would be set off against the income from house property. - Tribunal has rightly appreciated the law and issue and has found that even though there was a temporary break, the assessee continued the business in dis- tributorship and also maintained the establishment, thereby incurred the expenditure which were wholly and exclusively for the purpose of the business. This finding of the Tribunal is in tune with the order of the Division Bench in CIT v. S. S. M. Ahmed Hussain (1986 -TMI - 26098 - MADRAS High Court) Purchase of aluminum - Delayed Payment - Assessee contended TDS deducted and amount remitted to goverment account - Interest Expenditure of Rs 7,64,562 - Disallowance made Held That:- There is also no material to show that there was any compromise between the assessee and Nalco as to the payment of interest and by virtue of the agreement, paid the interest during the accounting year. No material were brought on record. - Decided against assessee.
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Central Excise
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2012 (3) TMI 147
Modvat credit on the glasses of bottles included in the assessable value of aerated water during the material period - Revenue submits that as per clause (iii) of the explanation to Rule 57 A of the Central Excise Rules, the cost of packing material which is not included or had not been included in the preceding financial years in the assesseable value of the final product under Section 4 of the Central Excise Act, does not qualify as `inputs' for the purpose of the Modvat credit - Held that :- the assessee had added price of the empty glass bottles and crown corks in the assessable value of the final product as shown in the cost certificate issued by the Chartered Accountant and as such, they are entitled to avail the Modvat credit - the appeal, is dismissed as it does not raise any substantial question of law as the appeal against the order of the CESTAT cannot be entertained if it involves a question of fact
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