TMI Tax Updates - e-Newsletter
March 16, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
Articles
By: DEVKUMAR KOTHARI
Summary: The article discusses a case involving the Income Tax Department's search operations, highlighting the violation of basic human rights during these procedures. A complaint was filed with the Bihar Human Rights Commission, alleging that the department's officials confined individuals, restricted food preparation, and engaged in coercive behavior during a search. The Commission found these actions violated human rights, awarding monetary compensation to the complainant. The Income Tax Department contested this decision, arguing procedural errors and good faith actions. However, the Patna High Court upheld the Commission's findings, emphasizing the need to respect human dignity during such operations.
By: CSSwati Rawat
Summary: The introduction of the Goods and Services Tax (GST) in India aims to create a unified and efficient indirect tax system, replacing various existing levies. GST will apply uniformly across manufacturers, traders, and service providers, allowing businesses to claim credit for all indirect taxes paid on procurement. This change encourages companies to restructure supply chains for cost efficiency without tax concerns, potentially reducing logistics costs. Additionally, GST impacts pricing strategies, with tax rates on goods expected to decrease and those on services to increase. Businesses must revamp accounting, IT systems, and documentation to adapt, ensuring a smooth transition.
By: CSSwati Rawat
Summary: A ruling by the Cochin Bench of the Income-Tax Appellate Tribunal classified lease rental income as business income, contrary to the Assessing Officer's view of it as house property income. This decision involved a company that had agreements with another entity for constructing and leasing hostel facilities, arguing the income was indivisible business income. The Tribunal emphasized the inseparability of agreements based on intent and conduct. The Direct Taxes Code proposes taxing such income as house property income, except for Special Economic Zone developers. The ruling highlights the complexity of tax classification for lease rental income involving commercial activities.
By: Pradeep Jain
Summary: Circulars issued by the Central Board of Excise & Customs (CBEC) under Section 37B of the Central Excise Act, 1944, are intended to ensure uniformity in the classification and levy of excise duties. These circulars are binding on departmental officers but not on assessees, quasi-judicial bodies, or courts. The Supreme Court has clarified that if a circular conflicts with a Supreme Court judgment, the latter prevails. The landmark judgment in the Dhiren Chemical Industries case initially held circulars as binding on the department, but subsequent rulings, including Ratan Melting & Wire Industries, have emphasized that circulars cannot override statutory provisions or Supreme Court decisions.
By: Vivek Harsh
Summary: The article discusses potential changes to income tax regulations from a common person's perspective. It suggests increasing the exemption limit from Rs 1,80,000 to Rs 3,00,000, adjusting the highest tax rate threshold to Rs 10,00,000, and enhancing deductions for infrastructure bonds and home loan interest. It also proposes removing the deemed let-out house property provision and increasing deduction limits under section 80C. Other recommendations include raising exemptions for transport and children education allowances, house rent allowance, and medical expenses reimbursement, all aimed at increasing disposable income for salaried individuals.
News
Summary: The Limited Liability Partnership (LLP) Act, 2008, effective from March 31, 2009, allows individuals or corporate bodies to form partnerships. While joint venture LLPs between the government and private sector are feasible, the Act does not recognize a government-only LLP, and thus, no data on such joint ventures is maintained. Audits of LLPs are conducted by members of The Institute of Chartered Accountants of India according to LLP Rules, 2009. This information was provided by the Minister of State in the Ministry of Corporate Affairs in response to a query about government-private sector LLPs.
Summary: The Minister of State for Corporate Affairs informed the Lok Sabha about the Companies Bill, 2011, which introduces stringent disclosure requirements for companies and their promoters at incorporation and on an ongoing basis. The Bill aims to enhance accountability through provisions related to the appointment and accountability of key managerial personnel, defining the role of independent directors, and imposing stricter penalties. Introduced on December 14, 2011, the Bill was referred to the Parliamentary Standing Committee on Finance following extensive discussions with stakeholders and recommendations from the Expert Committee on Company Law led by Dr. Jamshed J. Irani.
Summary: The Minister of State in the Ministry of Corporate Affairs informed the Lok Sabha that the Competition Commission of India received complaints against cement manufacturers from the Builders Association and the Director General of the former Monopolies and Restrictive Trade Practices Commission. These complaints allege unfair trade practices, including price control, production limitation, supply restriction, and collusive price fixing. Although the Serious Fraud Investigation Office has not specifically investigated cartelization, it has examined certain cement companies for violations of the Companies Act, 1956.
Summary: The 53rd National Cost Convention of Cost and Management Accountants, organized by the Institute of Cost Accountants of India, commenced in New Delhi, focusing on public-friendly accounting. The Minister of State for Corporate Affairs urged accountants to maintain integrity and transparency, filing financial statements in XBRL format. The convention, themed "Sustainability Framework-Integrated Reporting Imperatives for CMAs," aims to integrate sustainability management. Over 1000 delegates, including national and international experts, are participating. Discussions will cover policy intervention, corporate governance, capital markets, integrated reporting, and climate change. The ICAI, established under the Cost and Works Accountant Act, supports these initiatives.
Summary: The Reserve Bank of India (RBI) decided to maintain the cash reserve ratio at 4.75% and the policy repo rate at 8.5% due to ongoing macroeconomic conditions. The reverse repo rate remains at 7.5%, with the marginal standing facility and Bank Rate at 9.5%. The RBI had earlier reduced the CRR to address liquidity deficits. Global economic conditions show modest improvement, but growth in the euro area and emerging economies is slowing. Domestically, GDP growth decelerated to 6.1% in Q3 of 2011-12, with inflation pressures easing slightly. Fiscal deficits and high crude oil prices pose ongoing challenges.
Summary: The Economic Survey 2011-12 highlights a projected industrial growth of 4-5% and anticipates a rebound in the next financial year. It emphasizes boosting business sentiment, encouraging investment, and addressing infrastructure bottlenecks. Notable advancements include increased public health investment, substantial MGNREGA coverage, and the launch of the low-cost computing device Aakash. The services sector grew by 9.4%, aiding the economy during the global crisis. Public sector banks saw a 19% growth in priority lending, with agriculture credit exceeding targets. Despite global financial volatility, India's economy remains resilient, with GDP growth pegged at 6.9% and a brighter outlook for future fiscal years.
Summary: The Economic Survey 2011-12 projects India's industrial growth at 4-5% for the current financial year, lower than recent years and potential rates. It emphasizes boosting business sentiments, encouraging investment, and addressing bottlenecks. Despite challenges, the sector is expected to rebound next year due to factors like easing inflation and improved manufacturing performance globally. The survey highlights a decline in industrial growth to 3.6% from 8.3% the previous year, with contractions in mining and moderated growth in manufacturing. The National Manufacturing Policy aims for higher growth to increase manufacturing's GDP share and labor absorption, requiring policy measures on land, infrastructure, and investment.
Summary: The Economic Survey 2011-12 highlights remarkable achievements in certain infrastructure sectors during the Eleventh Five Year Plan, despite some setbacks. Public-private partnerships have successfully attracted private investment, setting a foundation for future growth. The Twelfth Plan projects a need for over Rs. 45 lakh crore in investments, with 50% expected from the private sector. Challenges include financing, project delays, and negative credit growth, particularly in power and telecom. Foreign direct investment showed growth, especially in power and telecommunications. The survey emphasizes the need for innovative financing models and strengthening domestic financial institutions to attract long-term investors.
Summary: The Economic Survey 2011-12 highlights significant advancements in women's empowerment in India. Education initiatives like the Sarva Shiksha Abhiyan have improved gender parity and increased female school enrollment. Literacy rates for women rose from 53.67% in 2001 to 65.46% in 2011. Health improvements under the National Rural Health Mission include reduced fertility and maternal mortality rates. Economic inclusion is supported by micro-finance, with 76% of Self Help Groups being women-led. Gender Budgeting has increased allocations for women-focused programs. The National Mission for Empowerment of Women aims to enhance coordination of women's welfare initiatives across various sectors.
Summary: Public health investment in India has significantly increased, with combined expenditure on medical, public health, water supply, sanitation, and family welfare rising from Rs. 53,057.80 crore in 2006-07 to Rs. 96,672.79 crore in 2010-11. The government is enhancing healthcare access through subsidized insurance schemes like the Rasthriya Swasthaya Bima Yojana (RSBY), now extended to MGNREGA beneficiaries and beedi workers. The Janani Shishu Suraksha Karyakram (JSSK) offers free healthcare entitlements to pregnant women and newborns. Additionally, 264 high-focus districts have been identified for targeted health interventions, and the Janani Suraksha Yojana (JSY) has expanded its reach to reduce maternal mortality.
Summary: The coverage under MGNREGA increased from 4.51 crore households in 2008-09 to 5.49 crore in 2010-11, with an average of 47 person-days of employment per household. Average wages rose from Rs 65 in 2006-07 to Rs 100 in 2010-11. Women accounted for 48% of person-days over the last three years. The government has initiated an ICT and biometrics project for MGNREGA and set up a committee to develop a wage rate index. Revised wage rates were indexed to the Consumer Price Index. Additionally, 13 crore Aadhaar numbers have been generated, and significant progress was made in various rural development schemes.
Summary: The Economic Survey 2011-12 highlights ongoing educational reforms in India, including increased government spending on education from 2.72% of GDP in 2006-07 to 3.11% in 2011-12. Key initiatives include the revision of Sarva Shiksha Abhiyan norms to align with the Right to Education Act, reducing out-of-school children, and enhancing teacher qualifications. The launch of Aakash, a low-cost computing device, marks a significant development in educational technology. Efforts to improve connectivity and e-content creation are underway, with over 400 universities and 14,000 colleges receiving network enhancements. The survey emphasizes the need to expand innovation and technology incubation in educational institutions.
Summary: The Labour Bureau's surveys reveal a sustained upward trend in employment in India since July 2009, despite global economic challenges. The Economic Survey 2011-12 highlights a significant increase in employment across various sectors, with the IT/BPO sector leading with an addition of 7.96 lakh jobs from September 2010 to September 2011. Other sectors like metals, automobiles, and textiles also saw growth, while leather and transport experienced slight declines. Export-oriented units showed a rise of 1.96 lakh jobs. Overall, employment in selected sectors increased by 23.58 lakh from October 2008 to September 2011, with private sector growth outpacing public sector growth.
Summary: The Economic Survey 2011-12, presented in India, emphasizes integrating lower carbon sustainable growth into the Twelfth Five Year Plan starting April 2012. It highlights India's low per capita CO2 emissions compared to developed nations and its proactive measures like the National Action Plan on Climate Change. The Survey introduces a chapter on sustainable development, acknowledging challenges like climate change and resource pressures. It calls for developed countries to reciprocate the flexibility shown by developing nations, including India, at international forums. The Survey underscores the importance of economic reforms, technological advancements, and public spending for sustainable development and social justice.
Summary: The Indian services sector demonstrated resilience during the global economic crisis, growing by 9.4% in 2010-11 despite a slowdown in GDP growth to 6.9%. This sector, alongside agriculture, positioned India among the fastest-growing economies, countering industrial sector challenges. The services sector's GDP share rose to 56.3% in 2011-12, with construction included, reaching 64.4%. Employment data highlights the sector's importance, second only to agriculture. Although FDI inflows to services slowed in previous years, they rebounded in 2011-12. States like Arunachal Pradesh and Sikkim showed the highest growth rates. Despite some moderation, tourism and retail sectors remained robust.
Summary: Public sector banks in India reported a 19% growth in priority sector lending, with agricultural credit exceeding targets by 19%, benefiting over 12.7 million new farmers. Nearly all public sector bank branches are now fully computerized. The Economic Survey 2011-12 highlighted these achievements, noting a significant rise in bank credit and priority sector advances. Additionally, the Self Help Group-bank linkage program has expanded, with substantial savings growth. The government has infused Rs 12,000 crore into public sector banks to maintain capital adequacy. Financial inclusion remains a key focus, with strategies to address challenges in the unorganized and micro-business sectors.
Summary: The global financial market volatility is expected to tighten the availability and cost of foreign funding, impacting banks and corporations. Despite the Euro Zone crisis, Indian banks have remained robust, supported by government measures to mitigate liquidity stress. The Economic Survey 2011-12 highlights concerns over sovereign risks, particularly from Greece, affecting financial markets. It emphasizes the importance of risk and liquidity management as the banking sector becomes more complex. India's resilience during the 2008 crisis is attributed to strict external commercial borrowing policies. Challenges include enhancing the corporate bond market and addressing financing needs of the unorganized sector.
Summary: India's forex reserves stood at $293 billion, while its external debt reached $326 billion. The rupee depreciated by 12.4% against the dollar month-to-month, influenced by global economic uncertainties and high oil prices. The current account deficit rose modestly due to increased prices of oil, gold, and silver. Export growth slowed, while imports remained high, leading to a trade deficit. Foreign institutional investment flows decreased, affecting the capital account. The Economic Survey highlighted concerns over trade and current account deficits, as well as the rupee's volatility, impacting investor confidence and necessitating policy measures to stabilize the currency.
Summary: India's cumulative export growth reached 23.5% from April 2011 to January 2012, totaling US $242.8 billion. Exports from Special Economic Zones (SEZs) increased by 14.5% to Rs. 2,60,973 crore by December 2011. Despite initial robust growth, exports slowed due to the Eurozone crisis but later recovered. Key sectors like petroleum, gems, and engineering showed significant growth. Imports rose by 29.4% to US $391.5 billion, with a notable increase in gold and silver imports. India diversified its trade markets, reducing reliance on Europe and America, although challenges remain, including trade facilitation and infrastructural issues. SEZs showed substantial investment and employment growth.
Summary: The Economic Survey 2011-12 highlights India's growing significance in the global economy despite global uncertainties. With a projected growth rate of 7%, India is the second fastest-growing major economy after China. India's share in global merchandise exports rose from 0.5% in 1990 to 1.5% in 2010, and foreign exchange reserves have surged to $300 billion. The survey emphasizes India's need to engage globally on macroeconomic issues. Despite challenges such as dependence on imports for petroleum and low R&D spending, India's robust growth prospects are supported by demographics and high investment rates.
Summary: The Economic Survey 2011-12 highlights India's efforts to combat inflation through calibrated government measures and monetary tightening by the Reserve Bank. While these efforts slowed growth temporarily, they did not cause long-term damage or unemployment spikes. The Survey emphasizes the need for rapid fiscal consolidation by increasing the tax-GDP ratio and reducing wasteful expenditures. It projects economic growth to rebound in 2012-13, driven by savings and investment rates. India's CRIS rating improved by nearly 3%, reflecting its rising global economic position. The Survey underscores the importance of infrastructure investment, transparent pricing, and land acquisition reforms for sustained growth.
Summary: The Economic Survey 2011-12 highlights a shift in household food demand and supply constraints, particularly in vegetables and fruits, contributing to inflation. To address these issues, it suggests educating farmers on fertilizers and insecticides, promoting alternative cropping, and regulating agricultural imports. Establishing special markets and improving Mandi governance are recommended, allowing more traders and easing interstate trade restrictions. The survey advises exempting perishable items from certain regulations and encourages investment in post-harvest infrastructure, including leveraging FDI in multi-brand retail. The government is urged to enhance modern storage facilities for food grains.
Summary: The Economic Survey 2011-12 forecasts a 2.5% growth for the agriculture sector, falling short of the 4% target despite record food grain production. Agriculture accounted for 13.9% of GDP in 2011-12. Concerns include a decline in food grain cultivation areas and infrastructure gaps. The survey suggests foreign direct investment (FDI) in multi-brand retail to improve infrastructure, especially in storage and distribution. Recommendations include enhancing yield through research, improving mandi governance, and promoting inter-state trade. Regular imports and policy adjustments are advised to meet rising food demand and ensure a positive medium-term outlook.
Summary: The Economic Survey 2011-12 anticipates a moderation in inflation, expecting the Wholesale Price Index to reach 6.5 to 7 percent by March 2012, with further easing in 2012-13 due to tightened monetary policy and government measures. The gap between WPI and CPI inflation has narrowed, largely due to a decline in food inflation driven by lower prices in fruits, vegetables, and cereals. The Survey highlights the importance of supply-side measures and fiscal consolidation for sustained price stability, while acknowledging the challenges posed by global economic uncertainties and the need for vigilant monetary policy to manage inflationary expectations.
Summary: The Indian economy is projected to grow by 6.9% in 2011-12, a slowdown from previous years due to weakening industrial growth. Despite this, the Economic Survey forecasts GDP growth of 7.6% in 2012-13 and 8.6% in 2013-14, driven by strong performance in agriculture and services. Inflation has been high but is slowing, and the Reserve Bank of India has tightened monetary policy to manage it. Investment rates have declined, affecting growth, but fiscal consolidation and easing inflation are expected to boost investment. India's foreign trade and financial integration continue to be key growth drivers amid global economic challenges.
Summary: The Economic Survey 2011-12 highlights a 6.9% growth rate, with a promising outlook for stability and real GDP growth projected at 7.6% in 2012-13 and 8.6% in 2013-14. Agriculture is forecasted to grow by 2.5%, while the services sector expands by 9.4%, increasing its GDP share to 59%. Industrial growth is estimated at 4-5%. Inflation, particularly WPI food inflation, has significantly decreased, encouraging investment. India remains a fast-growing economy with improved sovereign credit ratings. Exports grew by 40.5%, imports by 30.4%, and foreign reserves now cover most external debt. Social services spending increased, and sustainable development remains a priority.
Summary: The Railway Minister conducted extensive consultations with Chief Ministers, Members of Parliament, and various stakeholders before finalizing the Railway Budget. The budget includes several new projects in collaboration with state governments, with cost-sharing arrangements for projects such as Rohtak-Hansi, Akkanapet-Medak, Bhadrachalam-Kovvur, and Rajabhatkhowa-Jainti. Additionally, rail corridors will be developed in Chhattisgarh with industry participation. Enhanced rail connectivity is planned from Pithapuram to Kakinada, supported by the Andhra Pradesh Government. Other states like Karnataka, Madhya Pradesh, Rajasthan, Jharkhand, and Maharashtra have also agreed to share costs for additional projects, which will be prioritized for necessary approvals.
Summary: The Railway Budget for 2012-13 announced several new train services, including express, passenger, MEMU, and DEMU trains, along with extensions and increased frequencies. Notable additions include the Kamakhya-Lokmanya Tilak AC Express, Secunderabad-Shalimar AC Express, and Chennai-Bangalore AC Double-decker Express. New intercity services were introduced, such as the Kamakhya-Tezpur Intercity Express and Tiruchchirappalli-Tirunelveli Intercity Express. The budget also featured new passenger trains like the Koderma-Nawadih and Sriganganagar-Suratgarh services, alongside MEMU and DEMU services, enhancing connectivity across various regions.
Summary: The 53rd National Cost Convention of Cost and Management Accountants, organized by the Institute of Cost Accountants of India, will be held in New Delhi, focusing on enhancing long-term enterprise value through Environment, Society, and Governance. The event will address integrated sustainability management, risk management, and performance measurement. Inaugurated by the Minister of State for Corporate Affairs, the convention will feature over 1000 delegates, including national and international experts. Key discussions will include sustainable development, corporate governance, responsible investment, and the shift from financial to integrated reporting. The ICAI, a globally recognized accounting body, supports these initiatives.
Summary: The Indian Railways plans to launch a wellness program for employees to detect and treat lifestyle-related diseases early. Emphasizing the need for adequate rest for skilled staff, the Railways aims to reduce human errors. The National Institute of Design will create suitable uniforms for various workforce categories. Additionally, the Railways will introduce the Rail Khel Ratna Award for 10 sports persons based on their performance, offering them world-class training. The Railway Sports Promotion Board will receive support to professionally enhance sports promotion and ensure excellent performance by railway athletes.
Summary: The Railway Minister announced the approval of 10 new railway electrification projects as part of the 2012-13 Railway Budget. The projects include Itarsi-Manikpur-Cheoki, Titlagarh-Sambhalpur-Jharsuguda and Angul-Sambalpur, Pakur-Kumedpur including Malda-Singhabad, Nallapadu-Guntakal, Hospet-Guntakal and Torangallu-Ranjitpura, Garwa Road-Chopa-Singrauli, Manheru-Hisar, Amla-Chhindwara-Kalumna, Coimbatore-Mettupalayam, and Andal-Sitarampur via Jamuria-Ikhra. These initiatives aim to enhance railway infrastructure and efficiency across various regions in India.
Summary: The Indian Railways announced a 50% fare concession in AC 2, AC 3, Chair Car, and Sleeper Classes for patients with Aplastic Anaemia and Sickle Cell Anaemia, as part of its social welfare initiatives. This concession is among those offered to over 50 traveler categories, including students, sportspersons, and senior citizens, amounting to over Rs. 800 crore annually. Additionally, Arjuna Award recipients are now eligible to travel on Rajdhani and Shatabdi trains, recognizing their contributions to sports.
Summary: The Railway Minister announced several gauge conversion projects in the Railway Budget 2012-13. Seventeen projects are slated for completion within the year, including routes like Krishnanagar City-Amghata and Kasganj-Bareilly. New projects sanctioned include Ahmedabad-Botad and Dhasa-Jetalsar. Additionally, four projects have been sent to the Planning Commission for approval, such as Dohrighat-Indara and Himmatnagar-Khedbrahma. Seven new surveys for gauge conversion have also been sanctioned, covering areas like Kalol-Kadi and Gandhidham-Anjar-Mundra. These initiatives aim to enhance railway connectivity and efficiency across various regions in India.
Summary: The Railway Minister announced a minor fare increase across all travel classes to minimize the impact on passengers while addressing rising fuel costs over the past eight years. The proposed increases range from 2 to 30 paise per km, depending on the class. For example, suburban second-class fares will rise by Rs.2 for a 35 km trip, while AC I passengers will see a Rs.163 increase for a 530 km journey. Despite these adjustments, the fare hikes will not fully cover the increased fuel costs. A dynamic fuel adjustment component (FAC) is also proposed to address future fuel price changes.
Summary: The Ministry of Railways, Government of India, announced 31 new railway projects to be executed with state cooperation across various states. In Andhra Pradesh, projects include Kotipalli-Narsapur and Cuddapah-Bangalore lines. Chhattisgarh will see the Dallirajahara-Jagdalpur line, while Haryana will have the Jind-Sonipat line. Other projects span states like Himachal Pradesh, Jharkhand, Karnataka, Maharashtra, Rajasthan, Uttarakhand, and West Bengal, featuring new lines, extensions, and electrifications aimed at enhancing connectivity and infrastructure. These projects highlight collaborative efforts between the central and state governments to improve the railway network.
Summary: The Ministry of Railways in India announced the upgradation of 84 stations to Adarsh Stations for the fiscal year 2012-13, as presented by the Railway Minister in the Railway Budget. The initiative aims to enhance station facilities and infrastructure across various regions. Some of the stations included in this upgrade are Ahmednagar, Ayodhya, Coimbatore, Jaipur, Muzaffarnagar, and Ujjain, among others. This development is part of the government's ongoing efforts to improve the overall railway network and passenger experience.
Summary: The Railway Minister announced the introduction of 75 new Express Trains, 21 Passenger Trains, 8 new MEMU services, and 9 DEMU services, along with extending the run of 39 trains and increasing the frequency of 23 trains. This initiative aims to meet the needs and aspirations of the public. Among the new services, 9 AC Express Trains, including double-decker options, will operate between Chennai-Bangalore and Habibganj-Indore. Additionally, a special train, Guru Parikrama, will be introduced for Sikh pilgrimage routes covering Amritsar-Patna-Nanded, catering to a large number of visitors.
Summary: The Railway Minister announced the approval of 11 new railway line projects in the 2012-13 budget. These projects include Bhadrachalam-Kovuur, Kulpi-Diamond Harbour, Unchahar-Amethi, Tarakeshwar-Furfura Sharif, Rohtak-Hansi via Meham, Nandigram-Kandiamari (Nayachar), Akkanpet-Medak, Itahar-Buniyadpur, Nandakumar-Bolaipanda, Mukutmonipur-Jhilimili, and Rajabhatkhowa-Jainti. This initiative aims to enhance connectivity and infrastructure development across various regions.
Summary: The Railway Minister announced the induction of two new Board Members to enhance Indian Railways' efficiency through modernization and resource augmentation. The new roles will focus on Public-Private Partnerships/Marketing and Safety/Research. Over one lakh vacancies will be filled in 2012-13, addressing operational and safety concerns, and clearing backlog vacancies for SC/ST/OBC and physically challenged individuals. The recruitment aims to improve the railways' performance by leveraging talent from top institutes and restructuring the organization along business lines to align with corporate objectives.
Summary: The Pradhan Mantri Rail Vikas Yojana (PMRVY) is being developed to enhance railway infrastructure. During the presentation of the Railway Budget for 2012-13 in Parliament, the Minister of Railways announced that an estimated Rs. 5 lakh crore in additional funding from the government is necessary for the PMRVY.
Summary: The Ministry of Railways in India has allocated Rs. 4,410 crore for capacity augmentation projects as part of the 2012-13 Railway Budget. An additional Rs. 1,102 crore is designated for enhancing passenger amenities, up from Rs. 762 crore in the previous year. Workforce amenities will also see improvements, with funding nearly doubling to Rs. 1,388 crore. Despite a budgetary support of Rs. 24,000 crore, the projected requirement was Rs. 45,000 crore, potentially delaying national projects in Kashmir and the northeast, which require over Rs. 4,000 crore. A significant achievement includes completing an 11 km tunnel in Jammu Kashmir.
Summary: The Ministry of Railways plans to establish a Coaching Terminal at Naihati, the birthplace of Bankim Chandra Chattopadhyay, in honor of his 175th birth anniversary. Announced during the Railway Budget for 2012-13, the initiative includes setting up a museum dedicated to Chattopadhyay. Additionally, a Special Train will operate nationwide to promote the legacy of the creator of "Vande Mataram" to the younger generation.
Summary: The Indian Ministry of Railways announced plans to establish a Logistics Corporation to enhance railway goods sheds and multimodal logistics parks, aiming to provide comprehensive logistics solutions and reduce operating costs for rail users. The Railway Budget for 2012-13 also includes developing new coaching terminals in Kerala, Uttar Pradesh, and West Bengal, with feasibility studies planned. Additionally, a new coaching complex and maintenance facility are proposed in Navi Mumbai in collaboration with the Maharashtra government. The Indian Railway Station Development Corporation will redevelop stations, targeting 100 stations over five years, potentially creating 50,000 jobs, funded through public-private partnerships.
Summary: The travel time between New Delhi and Kolkata is set to decrease from 17 to 14 hours due to modernization efforts by the Ministry of Railways in India. The Railway Budget for 2012-13 includes plans to upgrade rolling stock, including crash-worthy coaches, new electric and diesel locomotives, and advanced wagons. These improvements aim to enhance safety, comfort, and efficiency. An investment of Rs. 1,70,751 crore over five years is planned, with Rs. 18,193 crore allocated for the next year. The upgrades will allow trains to run at speeds of 160 kmph and above, boosting both passenger and freight services.
Summary: The Indian Railways will modernize its signalling systems with advanced technological features. By 2014, 700 additional stations will receive Panel/Route Relay Interlocking, and over 1,500 level crossing gates will be interlocked. Complete track circuiting will occur at 1,250 stations, and axle counters will be installed at 3,000 more stations. Train Protection Warning System (TPWS) will be introduced on over 3,000 route kilometers to prevent collisions. The modernization efforts, including the development of the Train Collision Avoidance System (TCAS), aim to increase passenger train speeds to 160 kmph. The estimated cost for these upgrades is Rs. 39,110 crore over five years.
Summary: The Ministry of Railways in India plans to modernize 19,000 km of railway tracks over the next five years, with an estimated budget of Rs. 63,212 crore. This initiative aims to upgrade tracks, replace and strengthen 11,250 bridges, accommodate heavier freight trains, and achieve passenger train speeds of 160 kmph or more. For the fiscal year 2012-13, Rs. 6,467 crore has been allocated, representing 11% of the total plan outlay. The modernization will focus on high-density network routes, employing advanced technologies and maintenance practices to enhance capacity, reduce congestion, and improve safety and productivity.
Summary: The Indian Railways has identified five key areas for infrastructure development: Tracks, Bridges, Signaling & Telecommunications, Rolling Stock, and Stations & Freight Terminals. These initiatives aim to enhance safety, reduce congestion, increase capacity, and modernize systems, contributing to more efficient and safer railways. The Railway Budget for 2012-13, presented by the Minister of Railways, outlines a record plan outlay of Rs. 60,100 crore. Funding will come from Gross Budgetary Support, the Railway Safety Fund, Internal Resources, and Extra Budgetary Resources, including significant market borrowing through the Indian Railway Finance Corporation.
Summary: The Ministry of Railways in India is implementing a modernization program with a "Mission Mode" approach, as recommended by an Expert Group led by Sam Pitroda. This plan involves creating Missions, each led by a Mission Director, to oversee specific areas for a three-year term, reporting directly to the Railway Board. The program aims to invest Rs. 7.35 lakh crore during the 12th Plan, a significant increase from the previous plan. Funding will come from various sources, including government support, internal resources, and private investments. Measures include setting up corporations for station redevelopment and logistics, and enhancing private investment schemes.
Summary: The Ministry of Railways in India plans to establish an independent Railway Safety Authority as a statutory regulatory body, following recommendations from the Kakodkar Committee. This initiative, announced by the Railway Minister, aims to enhance passenger safety by aligning with international standards. The Minister also proposed creating a Railway Research and Development Council to focus on safety advancements. Acknowledging current safety deficiencies, the Minister emphasized reducing accidents, particularly at unmanned crossings, by forming the Rail-Road Grade Separation Corporation. Additionally, a committee will review safety standards, and three Safety Villages will be established for disaster management skill development.
Summary: The Railway Budget 2012-13, presented by the Railway Minister, outlines a record plan outlay of Rs. 60,100 crore, focusing on modernization, safety, and passenger amenities. It includes the introduction of 75 new express trains, 21 passenger services, and enhancements in suburban services across major cities. The budget emphasizes infrastructure development with 725 km of new lines and significant investments in safety and security. Passenger fares see a minor increase, and new initiatives include green energy stations, special coaches for differently-abled persons, and improved passenger services. The budget also proposes the establishment of new regulatory bodies and development corporations.
Summary: The Railway Budget 2012-13 introduced marginal increases in passenger fares across various classes and enhanced concessions for certain medical patients. Key initiatives included the extension of travel privileges to awardees, increased travel distance under the Izzat Scheme, and acceptance of SMS as proof of reservation. Technological upgrades featured real-time train information systems and new ticket vending machines. Infrastructure improvements included new express trains, station upgrades, and facilities for differently-abled passengers. Environmental initiatives focused on green energy stations and bio-toilets. Safety and security enhancements, recruitment drives, and new manufacturing units were also highlighted in the budget.
Summary: The Wholesale Price Index (WPI) in India for February 2012 increased by 0.4% to 158.4 from the previous month. The annual inflation rate based on the WPI was 6.95%, up from 6.55% in January 2012. Primary articles saw a 0.9% rise, with notable increases in food and non-food articles. Fuel and power prices rose by 0.2%, while manufactured products increased by 0.4%. The inflation rate for manufactured products was 5.75%. Key commodity price changes included increases in copper ore, lignite, and beverages, while some items like dried tobacco and paper pulp saw price declines.
Notifications
Central Excise
1.
06/2012 - dated
13-3-2012
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CE (NT)
Member (Central Excise) authorized to issue orders in terms of notification no. 5/2012 regarding Deterrent measures where duty is paid wrongly or where cenvat facility is misutilized
Summary: The Government of India, through the Ministry of Finance, issued Notification No. 6/2012 on March 13, 2012, authorizing the Member (Central Excise) of the Central Board of Excise and Customs to issue orders under Notification No. 5/2012. This notification pertains to deterrent measures regarding the incorrect payment of duty or misuse of the cenvat facility, in accordance with rule 12CCC of the Central Excise Rules, 2002, and rule 12AAA of the CENVAT Credit Rules, 2004. This supersedes a previous notification from January 19, 2007, and was later rescinded by Notification No. 13/2014 on March 21, 2014.
Customs
2.
07 /2012 - Customs - dated
9-3-2012
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Cus
Regarding extension of Status Holder Incentive Scrip (SHIS) scheme upto 31.03.2013 .
Summary: The Government of India, through the Ministry of Finance, has amended the Customs notification No. 104/2009 to extend the Status Holder Incentive Scrip (SHIS) scheme. The amendment allows the scheme to cover exports made during the fiscal years 2009-10, 2010-11, 2011-12, and now includes 2012-13. This decision, effective from March 9, 2012, is made under the powers conferred by the Customs Act, 1962, and aims to continue promoting exports by extending the benefits of the SHIS scheme to an additional fiscal year.
Income Tax
3.
08/2012-FT&TR-II - dated
16-2-2012
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IT
Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - Tanzania.
Summary: The notification announces the agreement between India and Tanzania to avoid double taxation and prevent fiscal evasion concerning income taxes. Signed on May 27, 2011, the agreement came into force on December 12, 2011, and is effective in India from April 1, 2012. The agreement applies to residents of either or both countries and covers various taxes, including income tax in India and Tanzania. It outlines provisions for taxation on different income types, methods for eliminating double taxation, and procedures for mutual agreements and information exchange. The agreement supersedes the previous 1979 agreement and remains in force until terminated by either country.
VAT - Delhi
4.
3(23)/Fin(Rev-I)/2011-12/DSIII/68 - dated
27-1-2012
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DVAT
Delhi VAT (Amendment) Rules, 2012 – Insertion of 6A, 7, 7A, 42A and amendment of Form DVAT 16, 17, 20, 30 and 31.
Summary: The Delhi Value Added Tax (Amendment) Rules, 2012 introduces changes to the Delhi Value Added Tax Rules, 2005. Key amendments include the omission of certain sub-rules in rules 6A and 7, a revision in the tax rate from 4% to 5% in rule 7A, and the insertion of rule 42A, which mandates auditing for dealers exceeding a specific turnover. Additionally, forms DVAT 16, 17, 20, 30, and 31 are amended or substituted to update registration details, purchase, and sales records, and to specify tax eligibility criteria. These changes are effective upon publication in the Delhi Gazette.
Circulars / Instructions / Orders
Service Tax
1.
153/04/2012 - dated
6-3-2012
Allocation of work relating to Service Tax procedures to the Service Tax wing of the CBEC – regarding.
Summary: The circular from the Central Board of Excise & Customs (CBEC) outlines the allocation of work related to Service Tax procedures to the Service Tax wing. This decision aims to address the growing workload due to an expanded tax base and to ensure timely attention to Service Tax matters. The Service Tax wing will handle amendments to rules, procedural matters, monitoring, litigation comments, and clarifications, among other responsibilities. Other Service Tax-related work, such as budget preparation and revenue analysis, will remain under the Joint Secretary (TRU-II). Communications should be directed to the Commissioner or Director of Service Tax.
Highlights / Catch Notes
Income Tax
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100% EOU loss u/s 10B can offset business income per Section 70; remaining loss set off u/s 71.
Case-Laws - AT : Exemption u/s 10B - 100% EOU - there was a loss in the Unit eligible for deduction u/s. 10B and there was a business income in an another Unit. Therefore, while computing the total income; the business income can be computed only after set off of business loss as per section 70 and if after such set off, still there is a business loss, such loss can be set off against other sources as per section 71 of the I.T. Act - AT
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Tax Authorities Must Initiate TDS Non-Deduction Proceedings Within Specific Time Limits u/ss 201 and 201(1A.
Case-Laws - AT : Non deduction of TDS - Period of limitation u/s 201(3) - proceedings under section 201/201(1A) of the Act, can be initiated only within three years from the end of the assessment year or within four years from the end of the relevant financial year. - AT
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Court Rules Section 10A Deductions Excluded from Total Income; No Set-Off for Unabsorbed Business Losses.
Case-Laws - HC : Exemption u/s 10A - As deduction under section 10A has to be excluded from the total income of the assessee the question of unabsorbed business loss being set off against such profit and gains of the undertaking would not arise. - HC
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Claiming TDS credit doesn't automatically make the income taxable; tax chargeability is assessed independently.
Case-Laws - AT : Merely because credit was claimed for TDS, it does not mean that the corresponding income is chargeable to tax. - AT
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India-Tanzania Tax Agreement: Avoiding Double Taxation and Preventing Fiscal Evasion u/s 90 of the Income-tax Act, 1961.
Notifications : Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - Tanzania. - Ntf. No. 08/2012-FT&TR-II Dated: February 16, 2012
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Court Rules Liabilities in Negative Net Worth Included in Slump Sale Consideration for Capital Gains Tax.
Case-Laws - AT : Capital Gains - Slump sale – whether amount of liability reflected in the negative net worth can be added to determine value of sale consideration - Decided in favor of Revenue. - AT
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Sham Transactions Deemed Not Genuine Can't Be Used for Tax Planning or Avoidance.
Case-Laws - HC : Where a transaction is sham and not genuine, it cannot be considered to be a part of tax planning or legitimate avoidance of tax liability. - HC
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High Court Affirms Tax Commissioner's Authority to Enhance Assessments u/s 251(1)(a) of Income Tax Act.
Case-Laws - HC : Whether the CIT (A), in exercise of power under Section 251 (1) (a) of the Act has the power to enhance the assessment in the manner done in the instant case - held yes - HC
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Court Rules Pre-Block Period Capital Not Undisclosed Income in Block Assessment Case.
Case-Laws - HC : Block assessment - Undisclosed income versus opening capital - block assessment - held that:- the said opening capital accrue to the assessees at a point of time anterior to the commencement of the block period, it cannot be treated as undisclosed income at all. - HC
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Commissioner of Income Tax (Appeals) Grants Relief u/s 40A(7)(b) for Gratuity Fund Contributions and Payments.
Case-Laws - HC : Applicability of 40A(7) - Given the fact that Section 40A(7)(b) of the Act contemplates deduction in respect of the provision made, not only for the purpose of contribution towards the approved gratuity fund, but equally so for the purpose of payment of gratuity payable during the year, rightly the Commissioner of Income Tax (Appeals) granted the relief. - HC
Customs
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Supreme Court Upholds Section 129(6) of Customs Act: Ex-CESTAT Members Can't Appear Before Tribunal Post-Tenure.
Case-Laws - SC : Whether Section 129(6) of the Customs Act, 1962, which stipulates that on demitting office as Member of the CESTAT a person shall not be entitled to appear before the CESTAT, is ultra vires the Constitution of India - held no - SC
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SHIS Scheme Extended: Status Holder Incentive Scrip Valid Until March 31, 2013, per Customs Notification No. 07/2012.
Notifications : Regarding extension of Status Holder Incentive Scrip (SHIS) scheme upto 31.03.2013 . - Ntf. No. 07 /2012 - Customs Dated: March 9, 2012
Indian Laws
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ICAI Member Penalized for Issuing False Certificate; Name Removed from Register for Six Months u/s 80HHC.
Case-Laws - HC : ICAI member guilty of gross professional misconduct - Chartered Accountants Act, 1949 – false certificate u/s 80HHC issued in the Form No. 10CCA - name removed for 6 months - HC
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Central Bank Holds Interest Rates Steady Amid Inflation Concerns and Economic Uncertainty, Emphasizing Fiscal Reforms and Vigilance
News : Mid-Quarter Monetary Policy Review: March 2012
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India's Economic Growth Boosted by Fiscal Policies, Tax Reforms; Focus on Sustainability, Innovation, and Inclusive Development
News : Economic Survey
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Railway Budget 2012-13: Modernization Plans, New Trains, Fare Adjustments, Safety Enhancements, and Public-Private Partnerships
News : Railway Budget 2012-13 at a Glance :
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Railway Budget 2012-13: New Train Services, Station Upgrades, Safety Enhancements, and Dynamic Pricing for Revenue Boost
News : Highlights of Railway Budget 2012-13.
Service Tax
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Court Rules in Favor of Coaching Classes: Service Tax Demand on Advance Fees Dismissed Due to Limitation Period.
Case-Laws - AT : Service Tax - Coaching and Training classes - demand imposed on advance fees collected during the period April 2003 to June 2003 - decided in favor of assessee on the ground of limitation - AT
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No Service Tax on Business Exhibition Services in South Africa and Middle East; Pre-Deposit Waiver Granted.
Case-Laws - AT : Waiver of pre-deposit - Business Exhibition services received by the appellant in South Africa and other middle eastern countries - no service tax - AT
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Hospital's Fee for Doctors' Private Consultations Not Subject to Service Tax Under Business Support Services.
Case-Laws - AT : Stay of Demand - Business Support Services - Business or profession - Sir Ganga Ram Hospital was providing infrastructural support to certain doctors who were allowed to hold private outpatient consultation in the hospital and was charging some amounts from those doctors. - Prima facie no service tax - AT
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Service Tax Demand Invalid Without Prior Notice to Appellant, Despite Compliance Post-Registration.
Case-Laws - AT : Levy of service tax - even if the appellant has discharged the service tax liability, after taking the registration under this category, the question of confirming the demand without putting the appellant on notice is incorrect and not within the provisions of the law - AT
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Indian Service Provider Earns Commission for Export Services, Conserving Foreign Exchange via Indian Railways Benefits.
Case-Laws - AT : Export of services - instead of foreign exchange going out of India, there is conservation of foreign exchange in India to the extent of commission earned by the service provider appellant in view of the arrangement made by the service recipient abroad in that behalf through Indian Railways - benefit of export allowed - AT
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Ambulance Services Exempt from Service Tax; Not Classified as 'Rent-a-Cab' for Passenger Transport.
Case-Laws - AT : Whether hiring of ambulance does not fall under the ambit of Service Tax as ‘Rent-a-Cab’ service - ambulances are not meant for carrying passengers on hire and hence question of levy does not arise - AT
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CBEC Circular No. 153/04/2012 Assigns Service Tax Wing Specific Duties to Improve Tax Administration Efficiency.
Circulars : Allocation of work relating to Service Tax procedures to the Service Tax wing of the CBEC – regarding. - Cir. No. 153/04/2012 – Service Tax Dated: March 6, 2012
Central Excise
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Distributor's Commission and Freight Must Be Included in Central Excise Valuation for Sales at Distributor's Premises.
Case-Laws - AT : Valuation under central excise - sales were taking place at the distributor’s premises and, therefore, the distributor’s commission and freight expenses upto the distributor’s premises would be includible in the assessable value - AT
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DTA to SEZ goods supply counts as physical exports; eligible for Cenvat credit refund u/r 5, Cenvat Credit Rules 2004.
Case-Laws - HC : Refund - Supply of goods from DTA unit to SEZ unit - treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contempla ted under the provisions of Rule 5 of the Cenvat Credit Rule, 2004. - HC
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Section 4A of Central Excise Act: Optional After-Sales Service and Warranty Charges Excluded from MRP Valuation.
Case-Laws - AT : Valuation under 4A of MRP - warranty charges - After sales service charges for four years being optional, not includible for valuation purpose while determining MRP under Section 4A of Central Excise Act, 1944 - AT
VAT
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Court Upholds Sales Tax on Rentals for Electricity Meters at Consumer Locations.
Case-Laws - HC : Sales Tax / VAT on rental of electricity meters - petitioner collects rentals on the meters installed at the place of consumers where electricity is consumed - levy of sales tax upheld - HC
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Cutting Oil Not a "Lubricant" Under Gujarat Sales Tax Act; Classified Under Entry 34, Not Entry 15.
Case-Laws - HC : Classification of utting oil - merely because the product also has a lubricating effect, cannot be classified as "lubricant" under entry 15 of Schedule II, Part A to the Act, sale of cutting oil is classifiable under entry 34 of Schedule II, Part A of the Gujarat Sales Tax Act, 1969 - HC
Case Laws:
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Income Tax
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2012 (3) TMI 194
Interest for delay in deposit of TDS – Rule 30 of the Income Tax Rules obliges such person, if it is the Government, to deposit the deducted amount on the same date of payment - appellant being state government contested that it can not be treated as person and as such has no obligation to pay such interest – Held that:- Since it is a dispute between two Governments, it would be appropriate to sort out the same by the Governments instead of sorting it through Courts. Accordingly, appellant is directed to place the dispute highlighted above before the Secretary Finance of the Central Government. ITO is directed to not to take any step to recover the assessed interest.
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2012 (3) TMI 193
Exemption u/s 10B - Set off of loss of EOU Unit brought forward against profit of the eligible business unit - held that:- Had the Legislature intended that the provisions of sections 70 the business income can be computed only after set off of business loss as per section 70 and if after such set off, still there is a business loss, such loss can be set off against other sources as per section 71 of the I.T. Act, though this is not the present case. Double benefit of adjustment - held that:- for the A.Y. 2008-09 it ought not to be a double disallowance because for A.Y. 2007-08, we have already directed to allow the set off of loss. Once the loss shall be adjusted in A.Y.2007-08, consequence our above decided appeal there should be a direct effect on the computation of income for A.Y. 2008-09. We therefore revert this matter back to the stage of the AO for re-computation of the eligible profit of the said Unit.
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2012 (3) TMI 192
Income escaping assessment - notice u/s 148 issued after expiry of four years - assessee submitted that the assessee he had fully and truly disclosed the facts at the time of original assessment relating to claim of investment allowance and on that basis, assessment order under section 143(1) of the Act was passed - Held that:- The assessee does not discharge his duty by merely producing the books of account or other evidence - it cannot be held that there was true and full disclosure made by the assessee - perusal of the assessment order, no where suggests that the Assessing Officer had dealt with the issues on which reassessment is sought to be made while determining the taxable income of the assessee - it is to be held that the action taken by the Assessing Officer beyond 4 years shall be within limitation.
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2012 (3) TMI 191
Relief u/s 89 - Voluntary retirement scheme for employees - payments to the employees, but without any tax deduction at source, based on Section 89(1) of the Income Tax Act - writ petition filed for the financial year 2000-2001 - the petitioner contented that a Division Bench of this Court has in State Bank of Travancore & Ors. v. Central Board of Director Taxes & Anr. [2005 -TMI - 9572 - KERALA High Court] allowed the claim of another Bank in a similar situation - Held that:- Writ petition is allowed as to follow the binding judgments of a jurisdictional High Court in the above mentioned case and not ignoring merely on the ground that a Special Leave Petition has been filed before the Supreme Court for stay .
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2012 (3) TMI 190
LTCG - exemption u/s 54 - the property was inherited, the assessee took the cost of acquisition as fair market value of the asset as on 1.4.1981 and claimed benefit of indexation from Year 1981 - AO reworked the cost of acquisition by applying cost indexation from the year 1994 when the property was actually passed to him - assessee invested the sale consideration in his new residential house - AO stated that the sale consideration had not been deposited in capital gain account scheme before the due date specified for filing of return of income, which was 31st July, 2008 - the assessee contented when a capital asset is acquired by an assessee by gift, inheritance, partition of an HUF, or other specified mode, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner acquired. Held that:- the assessee became owner of the property on the death of his wife who acquired property from her mother - Under sec. 49(1) where the capital asset becomes the property of the assessee under the modes specified therein, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it - cost of indexation has to be with effect from 1.4.1981, the date on which the cost of acquisition was taken in the hands of the previous owner - the assessee could have furnished the return of income under sec. 139(4) for any previous year at any time before the expiry of one year from the end of the relevant assessment year. The requirement of sec. 54 for exemption of capital gains could be fulfilled within the time limit of sec. 139(4) and not under sec. 139(1) - assessee was entitled to exemption under sec. 54 for investment of capital gains in new residential house.
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2012 (3) TMI 189
Deemed dividend - transfer of amount through journal entries - Revenue pointed out that the amounts were accounted under the head "Advances" both in the books of the assessees as well as in the books of the company, which proved that the amounts are covered by the definition of section 2(22)(e) of the Act - The Commissioner of Income-tax(Appeals) said that the credit entries would not amount to deemed dividends under section 2(22)(e) just for the reason that the credits were passed by means of journal entries. - Held that:- It is not proper on the part of the Commissioner of Income-tax(Appeals) to hold that credit entries made in the accounts of the assessees by the company would not fall under section 2(22)(e) only for the reason that the credits were provided through journal entries - The assessing authority should have examined every journal entry conferring credit to the assessees and verify whether any fund/benefit has been transferred by the company to the assessees directly or indirectly - issue is remitted back to the Assessing Officer to re-examine the nature and character of the journal entries directing the assessee to provide evidence to prove his case.
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2012 (3) TMI 188
Non deduction of TDS - Period of limitation u/s 201(3) - assessee did not deduct tax at source from the salary paid to the aforesaid employees within the prescribed time, the AO treated the assessee company in default in terms of provisions of section 201(1) of the Act and accordingly, raised demand u/s 201(1) and 201(1A) of the Act- Assessee contented that as he paid the tax and tax thereon voluntarily but the acceptance of the liability would not extend the period of limitation nor would it extend the reasonable time that is postulated by the scheme of the Income-tax Act - Held that :- answer to the question of limitation is in the affirmative in favour of the assessee and against the revenue - initiation of proceedings under section 201 of the Act against the assessee in respect of the assessment year 1990-91 was barred by limitation having been initiated beyond a reasonable period of time of four years - proceedings under section 201/201(1A) of the Act, can be initiated only within three years from the end of the assessment year or within four years from the end of the relevant financial year.
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2012 (3) TMI 176
Capital Gains - Slump sale – whether amount of liability reflected in the negative net worth can be added to determine value of sale consideration - whether the “negative net worth” could be treated as Nil or had to be added to the “consideration” for determining capital gain - assessee transferred its “Power Transmission Business” to KEC Int Ltd under scheme of arrangement u/s 391 & 394 of the Companies Act for a total consideration of Rs. 143 crores – same being offered as Capital gains taking negative net worth of Rs 157 Crore to be nil – reference to Special Bench for determination of full value of consideration and capital gains - Held that:- Since capital asset is an undertaking (All assets minus All liabilities), the full value of consideration would be determined by reducing the value of liabilities of the undertaking from the agreed value of all the assets of the undertaking. If one adds the liabilities to this value, one is arriving at the consideration for the “assets” but not the consideration for the “undertaking“. Therefore, full value of consideration of the undertaking should be taken at Rs. 143 crore and not Rs. 300(143+157) crore. In case of a slump sale, Capital gain on transfer of 'Undertaking’ = Full value of consideration received or accruing (All assets minus All liabilities) - 'Net worth’ or in other words the cost of acquisition and cost of improvement (All assets minus All liabilities) of the undertaking. Hence, while sustaining the figure of sale consideration at Rs. 143 crore, the negative net worth is “deducted from” (i.e. “added to“) the full value of consideration. Consequently, the chargeable capital gain is Rs. 300 crores (Rs. 143 crores + Rs. 157 crores) – Decided in favor of Revenue.
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2012 (3) TMI 175
Transaction being sham and not genuine cannot be considered to be a part of tax planning - Assessee borrowed Rs. 48 crores from the G. K. Rathi group and bought shares in four 100% subsidiary companies – shares purchased at unreasonable premium price (at Rs 150 per share when average value is less than Rs 25 per share) - amount received by the said subsidiary companies was transferred back to another company of the G.K. Rathi group – said shares sold for Rs. 5 each in subsequent A.Y. - short-term capital loss claimed – set-off of such loss against other long-term capital gains – AO, CIT (A) then the taxing authorities are entitled to look into surrounding circumstances to find out the reality and apply the test of human probabilities. Supreme Court in case of Vodafone International vs. UOI (2012 - TMI - 208574 - Supreme Court Of India) made it clear that a colourable device cannot be a part of tax planning. Where a transaction is sham and not genuine, it cannot be considered to be a part of tax planning or legitimate avoidance of tax liability. In the present case the purchase and sale of shares, so as to take long term and short term capital loss was found as a matter of fact by all the three authorities to be a sham. See (Sumati Dayal vs CIT (1995 - TMI - 5469 - Supreme court) – Decided against the assessee. In respect of guarantees – Held that:- The surrounding circumstances can be looked at, but not without considering the evidence led by the party in support of its stand. Hence, it would be proper to remand the matter to the Tribunal to reconsider the issue in respect of loss on account of business of providing guarantees and pass an appropriate orders thereon.
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2012 (3) TMI 174
Penalty u/s 271D – loans and deposits received in contavention to Section 269SS – penalty waived by Tribunal accepting contention of assessee that the same is share application money – Held that:- First and the foremost aspect, which has to be considered and examined is whether the amount received was loan or deposit. This aspect has not been considered and examined by the tribunal in spite of the specific findings recorded by the A.O. and the CIT (Appeals). Therefore, an order of remit is passed to the Tribunal to decide the appeal afresh after recording factual finding – Decided in favor of Revenue.
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2012 (3) TMI 173
Writ petition - stay petition - recovery of dues - attachment - notice issued under Section 226(3) attaching the bank accounts - demand contained in notice is for more than Rs.26 crores and according to the Standing Counsel for the respondents substantial amounts are available in the Bank accounts of the petitioners - result of the notices above mentioned, the entire bank operations have been stopped and as a consequence there of, their business operations have also been stopped – Held that:- pendency of the appeals filed by the petitioners, petitioners directed to pay Rs.5 crores in two equal monthly installments - the notice issued by the respondent under Section 226(3) of the Income Tax Act will stand stayed on the payment of the Ist installment, Writ petition is disposed of as above.
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Customs
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2012 (3) TMI 200
Whether Section 129(6) of the Customs Act, 1962, which stipulates that on demitting office as Member of the CESTAT a person shall not be entitled to appear before the CESTAT, is ultra vires the Constitution of India - held that:- the provisions of Section 129(6) of the Customs Act and its operation cannot be faulted with. Another half-hearted attempt was made to raise a contention that the appellants can continue to appear before the Tribunal as they are permitted to do so in terms of Section 146A of the Customs Act, despite the provisions of Section 129(6) of the Customs Act. We are unable to find any merit in this contention as well. The provisions of Section 129(6) of the Customs Act are specific and both these provisions have to be construed harmoniously. We find nothing contradictory in these three provisions. Section 146(2)(c) of the Customs Act refers to the appearance by a legal practitioner who is entitled to practice as such in accordance with law. Section 129(6) places a restriction, which is reasonable and valid restriction, as held by us above. Thus, the provisions of Section 146A of the Act would have to be read in conjunction with and harmoniously to Section 129(6) of the Customs Act and the person who earns a disqualification under this provision cannot derive any extra benefit -contrary to Section 129(6) of the Customs Act from the reading of Section 146A of the Customs Act.
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2012 (3) TMI 184
Plea for reduction in penalty imposed - mis-declaration of the goods imported by assessee – release of 80 % of confiscated goods – Held that:- On undertaking given by assessee that they are not interested in clearing the consignment which is lying with the departmental authorities, we reduce the penalty imposed from Rs.1 lakh to Rs.20,000/- Decided in favor of assessee
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2012 (3) TMI 172
Writ Appeal- appellant imported some electrical goods - officers of the 1st respondent seized the goods due to undervaluation and issued Ext.P3 show cause notice under Section 124 - appellant sought for interim release of the goods pending completion of the proceedings initiated - The provisional release also came to be ordered subject to conditions as per Ext.P7 - appellant contends that conditions imposed. Held that:- if the matter is kept pending, heavy demurage charges to be incurred by the appellant - 2nd respondent shall complete the proceedings initiated against the appellant by issuing show case notice within three weeks from the date of receipt of the copy of the judgment - the Writ Appeal is dismissed.
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2012 (3) TMI 171
Purchase of the vehicle from a "used car" dealer in Dubai - on inspection damaged chassis number and corrected was noticed and over the engine number in the engine block, a metal plate was fixed covering the original number and with a new number - adjudicating officer confiscated the car and levied penalty - importer filed appeal before the Commissioner (Appeals)- to set aside the order of confiscation reducing the fine and personal penalty - department as well as importer filed appeals before the Tribunal - Held that :- The information given by the authorized dealer that car is '2004' in India of Toyota Motors, Japan that it is of 2004 make has to be accepted as conclusive - uphold the order of the Commissioner confirmed by the Tribunal to release the vehicle on payment of redemption fine and personal penalty, besides import duty payable at the applicable rate - no reduction in personal penalty and modification of redemption fine 2,00,000/- and 1,50,000/- respectively.
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Corporate Laws
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2012 (3) TMI 170
Approval of the scheme of amalgamation - held that:- it is not prejudicial to their interest, since they would be continuing in the Transferee-Company and the shareholders would be allotted shares of the Transferee-Company, the rates for which has been worked out by the experts. Thus, taking notice of the basic requirement of the scheme and also considering the fact that neither the Regional Director nor the official liquidator have raised any objections with regard to the scheme, the scheme as proposed requires to be approved. - scheme of amalgamation allowed
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Service Tax
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2012 (3) TMI 198
Period of Limitation - Coaching and Training classes - demand imposed on advance fees collected during the period April 2003 to June 2003 - Service Tax liability on Commercial & Training Classes introduced from 01.07.2003 – SCN issued on 28.06.2005 – Held that:- During the relevant period, there was confusion as regards the leviability of amount collected in advance as Board s circular dt.1.7.2003 had clarified that no Service Tax liability arises on advance payment received, while the Board s circular dt.05.11.2003 reiterates that Service Tax paid on such advance amounts. In such a confused situation, we find that there cannot be any allegation of suppression of the facts on the appellant. Therefore, Demand imposed by issuing the SCN in 2005 seems to be hit by limitation. See CAIIT JEE (CAT JEE) Vs CCE Allahabad (2009 - TMI - 32715 - CESTAT, New Delhi), Noble Institute (Education) Pvt.Ltd. Vs CST Ahmedabad 2008 (2008 - TMI - 4275 - CESTAT, Ahmedabad) – Decided in favor of assessee.
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Central Excise
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2012 (3) TMI 183
Limitation - first appellate authority, while remanding the matter back, has not recorded any finding on the point of limitation claimed by the appellant before him – Held that:- First appellate authority has not considered the appeal in its entirety and in a proper perspective and also not recorded any finding on the point of limitation claimed by the appellant. Hence, matter is remitted back to first appellate authority to decide the issue afresh, after following the principles of natural justice – Appeal allowed by way of remand.
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2012 (3) TMI 182
Reversal of CENVAT Credit attributable to the inputs used in the exempted goods and/or payment of 8% or 10% of the value of the exempted goods - period involved 01.03.2004 to 31.01.2009 – Held that:- Retrospective amendment brought in by the Budget 2008 renders that reversal of CENVAT Credit attributable to the inputs utilized in exempted product is enough and assessee need not to reverse 8% or 10% of the value of the exempted goods. Further, amendment also brought to the provisions of Rule 6 of CENVAT Credit Rules, 2004. In present case, assessee had reversed an amount of Rs.20,14,456/- and interest of Rs.16,10,915/-. Whereas CENVAT attributable to the inputs used in exempted goods comes to Rs.11,81,141/-. We find that adjudicating authority has not considered all these aspects in proper perspective thus, issue needs to be re-considered by the adjudicating authority – Appeal allowed by way of remand.
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2012 (3) TMI 169
Deemed Modvat credit on the inputs in terms of Notification No.58/97-CE, dtd. 30.08.97 - credit was availed by the appellants on the strength of invoices issued by supplier of inputs discharging their duty liability in terms of Section 3A of the Central Excise Act, 1944 read with Rule 96ZP(3) Central Excise Rule, 1944 (scheme commonly known as Compounded Levy Scheme) - credit was denied on the grounds that invoices did not declare that the appropriate duty of excise has been paid on the inputs under the provisions of Section 3A of the Act - Held that :- inputs suppliers are working under the Compounded Levy Scheme who discharge their duty liability at the end of the month in which the goods stand cleared by the input supplier and duty liability in respect of each and every clearance was not being determined and reflected in the invoices - appeal allowed with consequential relief to the appellants to take input credit
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Indian Laws
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2012 (3) TMI 195
ICAI – member guilty of gross professional misconduct falling within the meaning of Clause (7) of Part- I of the Second Schedule u/s 22 r.w.s. 21 of the Chartered Accountants Act, 1949 – false certificate u/s 80HHC issued in the Form No. 10CCAC – Held that:- It is established that no payment was received against the export, therefore, certificate issued by the respondent was false. It is a bogey raised by the respondent that he has verified all the documents and only then issued the certificate. The misconduct is of serious nature. The attempt was thus to dupe the tax authorities and help the assessee to avoid the tax to that extent such a conduct has to be taken seriously. Some penalty needs to be imposed so that it acts as deterrent and such professional misconduct are not committed. Weighing the circumstances, the ends of justice would be subserved by removing his name from the Register of Members for a period of six months.
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2012 (3) TMI 177
Invocation of proviso (b) to Article 311(2) of the Constitution of India to dispense with the inquiry against the appellant to remove him from service - appellant working as sub-ordinate Judge in Garhwa, Jharkhand alleged of not preparing judgments on his own, rather getting it prepared through some body else before delivering the judgments - appellant challenging legality of order and jurisdiction of High Court – Doctrine of pleasure under article 310 - Held that:- Under Articles 310 and 311, public servants are given protection from being dismissed, removed or reduced in rank without holding a proper inquiry or giving a hearing. However, proviso (b) to Article 311(2) provides for dispensing of such condition on reasonable and legal grounds. In present case, High Court on basis of facts was of the opinion that holding of such enquiry should be dispensed with in view of the fact that if an enquiry is held the same may lead to the question of validity of several judgments rendered by the appellant. Because of legal and valid grounds there was no necessity of giving him any opportunity of hearing. Subsequent to that, the Governor decided to invoke the provisions of Article 311(2) (b) of the Constitution of India and dispensed with condition of holding enquiry. Thus, procedure and the pre-conditions laid down for invoking the extra-ordinary power under Article 311(2) (b) having been complied with and properly exercised within the parameters of the provisions – Decided against the appellant.
9911796707
