TMI Tax Updates - e-Newsletter dated: March 19, 2012 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws


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TMI Tax Updates - e-Newsletter March 19, 2012 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Service Tax Highlights / Catch Notes Customs Amendment in the Notification No. 36/2001-Customs (N.T.) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. - Ntf. No. 19/2012-CUSTOMS (N. T.) Dated: March 15, 2012 Visit to Get Source Indian Laws Negative list in Service Tax: Draft Guidance Paper Visit to Get Source Speech of Pranab Mukherjee Minister of Finance. Visit to Get Source Availment of Cenvat credit in case of Abatement - Article Visit to Get Source Budget 2012 and amendment in Service Tax - Article Visit to Get Source Budget 2012 - Excise amendments relating to Branded Metal Jewellery and Ready Made Garments - Article Visit to Get Source Budget 2012 - Amendments related to Customs Duty - Article Visit to Get Source Consideration for transfer of tenancy or leasehold rights -section 50C is not applicable. - Article Visit to Get Source Budget 2012-2013 – Notifications and Clarification - Service Tax, Central Excise and Customs Visit to Get Source Budget 2012-2013 – Customs Notifications Visit to Get Source Budget 2012-2013 – Central Excise Notifications Visit to Get Source Amendment in Baggage Rules, 1998 - Baggage Allowance Visit to Get Source Wealth tax Amendment 2012-13 Visit to Get Source Union Budget 2012-2013 - Strengthening Investment Environment – Infrastructure And Industrial Development Visit to Get Source UNION BUDGET 2012-13 – INDIRECT TAXATION - SERVICE TAX. Visit to Get Source UNION BUDGET 2012-13 – INDIRECT TAXES - EXCISE. Visit to Get Source UNION BUDGET 2012-13 - DIRECT TAX - INCOME TAX. Visit to Get Source UNION BUDGET 2012-13 – INDIRECT TAXES - CUSTOMS. Visit to Get Source UNION BUDGET 2012-2013 – STRENGTHENING AGRICULTURE SECTOR - SOCIAL SECURITY. Visit to Get Source Turnover limit for compulsory tax audit for SMEs raised from Rs. 60 lakh to Rs. 1 crore Visit to Get Source Relief in indirect taxes to sectors under stress; agriculture, infrastructure, mining, railways, roads, civil aviation, manufacturing, health and nutrition, and environment get duty relief Visit to Get Source Union Budget 2012-13 Highlights Visit to Get Source No capital gain tax if investment is made in manufacturing SMEs Visit to Get Source Cascading effect in Dividend Distribution Tax removed Visit to Get Source Peak customs duty rates remains unchanged. Visit to Get Source Propose to set up a common tax code for service tax & excise Visit to Get Source Rate of duty of excise increased from 10% to 12% and 1% to 2% Visit to Get Source Rate of service tax increased from 10% to 12% Visit to Get Source Negative list in service tax introduced. Visit to Get Source Income tax slabs - Upto 2 lacs = nil, from 2 lacs to 5 lacs = 10%, from 5 lacs to 10 lacs = 20%, above 10 lacs = 30% Visit to Get Source New equity savings scheme Visit to Get Source India will become self-sufficient in urea production in five years Visit to Get Source PDS to be computerized to enable better monitoring Visit to Get Source Doubles allocation for tax-free bonds to Rs 60,000 crore for financing infrastructure projects in 2012/13 Visit to Get Source Foreign investment in low cost affordable housing projects Visit to Get Source FDI in aviation is under active consideration Visit to Get Source Rs 10000 crore of tax fee bonds for power sector Visit to Get Source Government to include advance pricing in Finance Bill 2012 Visit to Get Source To implement Direct Tax Code at the earliest Visit to Get Source Efforts continue to arrive at consensus for 51% in retail FDI Visit to Get Source GST to be operational by August 2012 Visit to Get Source Fiscal balance has deteriorated Visit to Get Source Articles The Finance Bill 2012 :Amendments in relation to exemptions under Income-tax Act 1961 BUDGET PROPOSAL IN RELATION TO WEALTH TAX VIDE FINANCE BILL 2012 BUDGET PROPOSAL IN RELATION TO INCOME TAX VIDE FINANCE BILL 2012 Excise Duty on Manufacture of Articles from Precious Metals Availment of Cenvat credit in case of Abatement Budget 2012 and amendment in Service Tax Budget 2012 - Excise amendments relating to Branded Metal Jewellery and Ready Made Garments Budget 2012 - Amendments related to Customs Duty Pains & Gains From Budget 2012-13 Consideration for transfer of tenancy or leasehold rights -section 50C is not applicable. Budget 2012 Highlights - Quick Review Negative List of Services - Service Tax - Budget 2012-13 Union Budget 2012-13 Highlights –preliminary impressions. Budget Summary 2012 Budget 2012 - Excise Recent reforms in Direct Taxation brought in by Budget 2012-2013 Budget 2012-13 Notifications Central Excise 19/2012 - dated 17-3-2012 - CE Amends notification no. 2/2011 CE dated 1.3.2011 - increase of rate from 5% to 6% in relation to certain goods. 18/2012 - dated 17-3-2012 - CE Prescribes peak rate of excise duty as 12% in most of the products and 6%, 14% adn 15% in certain cases 17/2012 - dated 17-3-2012 - CE Rescinds notification no. 2/2008 CE dated 1-3-2008, notification no. 59/2008 CE dated 7-12-2008 and Notification no. 18/2009 CE dated 7-7-2009 16/2012 - dated 17-3-2012 - CE Amends notification no. 1/2011 CE dated 1-3-2011 - Increases rate of duty from 1% to 2%. 15/2012 - dated 17-3-2012 - CE Amends notification no. 8/2003 CE dated 1-3-2003 - SSI Exemption - Prescribes provisions of calculation of turnover in respect of articles of jewellery (other than silver jewellery) 14/2012 – Central Excise - dated 17-3-2012 - CE Amends notification no. 16/2010 CE dated 27-2-2010 - Capacity based rate of duty - unmanufactured tobacco, bearing a brand name - chewing tobacco 13/2012 - dated 17-3-2012 - CE Amends notification no. 42/2008 CE dated 1-7-2008 - Rate of duty Per packing machine per month(Rs. in Lakhs) in respect of pan masala and pan masala containing tobacco, commonly known as gutkha 12/2012 - dated 17-3-2012 - CE Prescribes effective rate of duty on goods falling under chapter 1 to 96 11/2012 - dated 17-3-2012 - CE Exemption form NCCE (National calamity Contingent Duty) in respect of Other than filter cigarettes, of the length not exceeding 65 millimetres 10 /2012 - dated 17-3-2012 - CE Effective rate of duty in respect of Other than filter cigarettes, of the length not exceeding 65 millimetres. and Filter cigarettes 09/2012 - dated 17-3-2012 - CE Prescribes effective rate of duty in respect of Other than filter cigarettes, of the length not exceeding 65 millimetres 08/2012 - dated 17-3-2012 - CE Amends notification no. 31/2011 CE dated 24-3-2011 - Exempts return of branded ready made garments 07/2012 - dated 17-3-2012 - CE Effective rate of duty for certain goods falling under under Chapter 52 to 63 06/2012 - dated 17-3-2012 - CE Amends notification no. 64/95 CE dated 16-3-1995 - Exemption to goods supplied for defence and other specified purposes 05/2012 - dated 17-3-2012 - CE Amends notification no. 23/2003 CE dated 31-3-2003 - EOUs/EHTP/STP Units - Excise Exemption on Goods Cleared to DTA 18/2012 - dated 17-3-2012 - CE (NT) Amends Cenvat Credit Rules, 2004 17/2012 - dated 17-3-2012 - CE (NT) Amends notification no. 20/2001 CE(NT) dated 30-4-2001 - Tariff value in respect of articles of apparel, not knitted or crocheted, all sorts. 16/2012 - dated 17-3-2012 - CE (NT) Amends notification no. 42/2001 CE(NT) dated 26-6-2001 - Conditions and procedures for export, except to Bhutan without payment of duty 15/2012 - dated 17-3-2012 - CE (NT) Amend notification no. 31/2007 CE(NT) dated 2-8-2007 - conditions, safeguards and procedures for supply of items l produced or manufactured in an EOU unit 14 /2012 - dated 17-3-2012 - CE (NT) Amends notification no. 45/2001 CE(NT) dated 26-6-2001 - specifies the conditions, safeguards and procedures for Export under bond to Bhutan 13/2012 - dated 17-3-2012 - CE (NT) Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 12/2012 - dated 17-3-2012 - CE (NT) Amends notification no. 16/2011 CE(NT) dated 18-7-2011 - Amends form ER-1 11/2012 - dated 17-3-2012 - CE (NT) Amends Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 10/2012 - dated 17-3-2012 - CE (NT) Amends Chewing Tobacco and Un-manufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 09/2012 - dated 17-3-2012 - CE (NT) Fixation of tariff value in respect to articles of jewellery (other than silver jewellery), falling under sub-heading No. 7113 08/2012 - dated 17-3-2012 - CE (NT) Amends central excise Rules, 2002 - Correction in rule 8, rule 8A, and 12BB and omission of sub-rule (1) and explanation 2 of the Rule 12AA 07/2012 - dated 17-3-2012 - CE (NT) Amends notification no. 49/2008 CE(NT) to prescribe rebate from MRP in respect of goods falliing under heading 2402,2523.69 and 64 Customs 22/2012- Customs - dated 17-3-2012 - Cus Rescinds notification no. 23/2010 Cus, 22/2011, 35/2011, 02/2012 and 03/2012 21 /2012- Customs - dated 17-3-2012 - Cus Exempts import of goods from additional duty leviable u/s 3(5) 20/2012-Customs - dated 17-3-2012 - Cus Effective rate of duty in respect of dredgers falling under heading 8905 10 00 - for which the dredger has been granted a licence by the Director General of Shipping for stay in India. 19/2012-Customs - dated 17-3-2012 - Cus Exempts dredgers falling under heading 8905 10 00 - where said goods taken on lease by the importer for use after import. 18/2012-Customs - dated 17-3-2012 - Cus Amends Project Imports Regulations, 1986 17/2012-Customs - dated 17-3-2012 - Cus Amends notification no. 42/96 Cus dated 23-7-1996 - projects for assessment under heading 9801 16/2012-Customs - dated 17-3-2012 - Cus Amends notification no. 25/99 Cus dated 28-2-1999 - Nil duty or 5% duty on specified goods when imported into India for use in the manufacture of the finished goods 15/2012-Customs - dated 17-3-2012 - Cus Amends notification no. 25/2005 Cus dated 1-3-2005 - Exmption to specified goods of Chapter 84, 85 and 90 and all goods for the manufacture thereof 14 /2012-Customs - dated 17-3-2012 - Cus Exemption from whole of Secondary and Higher Education Cess 13/2012-Customs - dated 17-3-2012 - Cus Exemption from whole of Education Cess 12/2012 –Customs - dated 17-3-2012 - Cus Prescribes effective rate of duty on import of goods 11/2012-Customs - dated 17-3-2012 - Cus Amends notification no. 39/96 Cus dated 23-7-1996 - Exemption to specified goods imported by Defence, Coast Gaurd, Deptt. of Revenue, Police Forces, HAL, specified ordnance Factories and for ATVP, IGMDP, SAMYUKTA, LCAP, SANGRAHA, DIVYA DRISHTI and DHANUSH Programmes. 10/2012-Customs - dated 17-3-2012 - Cus Amends notification no. 27/2011 dated 1-3-2011 - Effective rate of export duty 22/2012 - dated 17-3-2012 - Cus (NT) Amends Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 21/2012 - dated 17-3-2012 - Cus (NT) Baggage (Amendment) Rules, 2012 - increase in the limits 20/2012 - dated 17-3-2012 - Cus (NT) Amendment to notification no. 16/2011 Cus(NT) dated 1.3.2011 - prohibition of import of goods - Filter rod of a kind used in the manufacture of cigarettes or bidis and 19/2012 - dated 15-3-2012 - Cus (NT) Amendment in the Notification No. 36/2001-Customs (N.T.) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. Indian Laws 01/2012-M & TP - dated 17-3-2012 - Indian Law Amends notification no. 2/2003-M&TP , dated the 1st March, 2003 issued under Medicinal and Toilet Preparartions (Excise Duties) Rules, 1956 01/2012-Clean Energy Cess - dated 17-3-2012 - Indian Law Amends the Clean Energy Cess Rules, 2010, Service Tax 15/2012 - dated 17-3-2012 - ST Service tax on reverse charge mechanism - w.e.f. 1.7.2012 14/2012 - dated 17-3-2012 - ST Exempts import of technology to the extent of amount of cess payable on the said import of technology - w.e.f. 1.7.2012 13/2012 - dated 17-3-2012 - ST Effective rate of service tax after abatement - w.e.f. 1.7.2012 12/2012 - dated 17-3-2012 - ST Exempts various services from whole of service tax - w.e.f. 1.7.2012 11/2012 - dated 17-3-2012 - ST Amends Service Tax (Determination of Value) Rules, 2006 - Section 66B 10/2012 - dated 17-3-2012 - ST Amends Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - Rate increased from 4% to 4.8% 09/2012 - dated 17-3-2012 - ST Regarding exemption of services in relation to transport services by rail 08/2012 - dated 17-3-2012 - ST Regarding exemption of services in relation to transport services by rail 07 /2012 - dated 17-3-2012 - ST Regarding exemption of services in relation to transport services by rail 06/2012 - dated 17-3-2012 - ST Effective rate of service tax for Transport of passenger services by air 05/2012 - dated 17-3-2012 - ST Amends notification no. 6/2005 ST dated 1-5-2005 - Determination of aggregate value for claiming exemption upto 10 lacs 04/2012 - dated 17-3-2012 - ST Amends Point of Taxation Rules, 2011 03/2012 - dated 17-3-2012 - ST Amends Service Tax Rules, 1994, 02/2012 - dated 17-3-2012 - ST Rescinds notification no. 8/2009 ST dated 24-2-2009 - effective rate of service tax shall be 12% 01/2012 - dated 17-3-2012 - ST Amends notification no. 42/2011 ST dated 25-7-2011 - exempts club or association in relation to common facility set-up for treatment and recycling of effluents and solid waste discharged. Circulars / Instructions / Orders Service Tax - D. O. F. No 334/1/2012-TRU - dated 16-3-2012 Clarification regarding changes made or proposed in Budget 2012-2013 Customs - EXPLANATORY NOTES (CUSTOMS) - dated 16-3-2012 EXPLANATORY NOTES (CUSTOMS) Customs - D.O.F.No.334/ 3/2012-TRU - dated 16-3-2012 Clarification regarding changes made or proposed in Budget 2012-2013 Central Excise - EXPLANATORY NOTES (CENTRAL EXCISE) - dated 17-3-2012 EXPLANATORY NOTES (CENTRAL EXCISE) Central Excise - D.O.F.No.334/ 3/2012-TRU - dated 16-3-2012 Clarification regarding changes made or proposed in Budget 2012-2013 News Budget 2012-2013 – Service Tax Notifications India Africa Revise Trade Target to US$ 90 billion by 2015 Cotton Technical Assistance Programme in the C-4 Countries Launched India Africa Stress Centrality of Development in Doha Round India-Africa Business Council meets for the First Time 2nd Meeting of the India-Africa Trade Ministers. Negative list in Service Tax: Draft Guidance Paper Service Tax: Draft Guidance Paper: A Taxation of Services based on Negative List. Introduction. Service Tax: Guidance Note 2 – What is Service?. Service Tax: Guidance Note 3 – Taxability of services. Service Tax: Guidance Note 4 – Negative List of Services. Service Tax: Guidance Note 5 – Declared Services. Service Tax: Guidance Note 6 – Exemptions. Service Tax: Guidance Note 7 – Rules of Interpretation. Service tax: Exhibit A1: Negative List of Services. Service Tax: Exhibit A2: Proposed exemptions under Mega Notification. Service tax: Exhibit A3: Gist of other exemptions. Service Tax: Draft Guidance Paper “B” Place of Provision of Services Rules, 2012. Service Tax: DRAFT PLACE OF PROVISION OF SERVICES RULES, 2012. Service Tax: Common registration formalities with Central excise and draft amendments to Service Tax Rules 1994. EST Registration Form and EST Return for Central Excise and Service Tax. Speech of Pranab Mukherjee Minister of Finance. Budget 2012-2013 – Notifications and Clarification - Service Tax, Central Excise and Customs Budget 2012-2013 – Customs Notifications Budget 2012-2013 – Central Excise Notifications Amendment in Baggage Rules, 1998 - Baggage Allowance Wealth tax Amendment 2012-13 Union Budget 2012-2013 - Strengthening Investment Environment – Infrastructure And Industrial Development UNION BUDGET 2012-13 – INDIRECT TAXATION - SERVICE TAX. UNION BUDGET 2012-13 – INDIRECT TAXES - EXCISE. UNION BUDGET 2012-13 - DIRECT TAX - INCOME TAX. UNION BUDGET 2012-13 – INDIRECT TAXES - CUSTOMS. UNION BUDGET 2012-2013 – STRENGTHENING AGRICULTURE SECTOR - SOCIAL SECURITY. Union Budget 2012-13. Amendments to be Moved to Banking Laws and Insurance Laws. Government Takes Steps to Finalize Pricing and Investment Policies for Urea. Delhi-Mumbai Industrial Corridor Receives Us $ 4.5 Billion from Japan. Manufacturing Sector Provided Relief in Customs Duty Customs Duties on Imported Plant and Machinery for Iron Ore Plants Reduced to 2.5 Per Cent. RS. 5000 crore India opportunities venture fund with SIDBI Announced Two SME Exchanges Launched in Mumbai Ministries and CPSES to Make Minimum of 20% Purchase From MSEs. Health and Nutrition Gets Major Boost in the Budget 2012-13; Six Life Saving Drugs Exempted from Excise Duty. Concessions and Exemptions Extended to Energy Saving Devices, Plants and Equipments Required for Solar Thermal Projects. ECBS to Part Finance Power Project DEBT Inter-Ministerial Group for Periodical Group of Allocated Coal Mines. Financial Package of Rs. 3884 Crore for Waiver of Handloom Loans Two Mega Handloom Clusters to be Set up in Andhra Pradesh and Jharkhand Rs.500 Crore Geo-Textile Pilot Scheme and Weavers’ Service Centre for North-East. Excise Duty on ‘Demerit’ Goods Hiked as a Measure for Additional Resource Mobilisation. Union Budget Focuses on Rationalisation Measures in Indirect Taxes. ECB Allowed for Low Cost Housing Rs. 4,000 Crore Allocated for Rural Housing Fund Indirect Finance Under Priority Sector Doubled. Budget Aims at Creating Enabling Atmosphere for All Sections Baggage Allowance Increased in the Budget. ECB for Working Capital Allowed in Civil Aviation Direct Import of ATF by Indian Carrierspermitted 49% Participation in Equity by Foreign Airlines Under Consideration. Rajiv Gandhi Equity Savings Scheme Launched. 14% Hike in Allocation for Road Transport & Highways ECB to be Allowed for Capital Expenditure on O&M of Toll Roads 8,800 Km Target Set For NHDP. Several Steps Proposed to Deepen the Reforms in Capital Market. Government Undertakes Financial Sector Legislative Reforms. Harmonized Master List of Infrastructure Approved Infrastructure Debt Fund of Rs. 8000 Crore Launched Defence Psus Can Form JVs FOR PPPs. Rs 15,888 Crore Provided for Capitalization of Public Sector Banks/RRBS and Other Financial Institutions. Rs. 50 Lakh Crore Allocated to Infrastructure in Twelfth Plan; 50% Expected from Private Sector Tax Free Bonds for Financing Infrastructure Doubled to Rs. 60,000 Crore More Sectors Eligible for Viability Gap Funding. Financial Inclusion Scheme ‘Swabhimaan’ to be Extended to Habitations with Population of More Than 1000 in North Eastern and Hilly States and More Than 2000 in Other Habitations as Per Census 2011. Scheme for Capitalisation of Financially Weak Rrbs Extended by Another Two Years. Efforts to Arrive at a Broad Based Consensus on Allowing FDI in Multi-Brand Retail Trade Up to 51%. Advance Pricing Agreement Introduced. Service Tax Exempted on Copyrights Relating to Recording of Cinematographic Films. Aadhaarenrolments to Rise by 40 Crores in the Next Year, Adequate Funds Assured. Curbing the Black Money A Priority Concern for the Government; Number of Proactive Steps To Tackle the Malaise Announced; White Paper to be Laid in Current Session Itself: FM. Service Tax Exempted for Items on Negative List Health Care, Services Provided by Charities, Religious Persons, Independent Journalists, Sportspersons Among Others also Exempted from Service Tax. Farmers Have Reasons to Smile: Agriculture Credit Increased to Rs. 5,75,000 Crore, Farmers to Get a Smart Card to Get Easy Money From ATMs. One Page Common Return for Central Excise and Service Tax Proposed. Service Tax Rate Raised from 10 Per Cent to 12 Per Cent. New Missions Proposed in the 12th Five Year Plan Amalgamating Host of Activities inthe Agriculture Field. Duty on Large Cars Enhanced from 22 Per Cent to 24 Per Cent. Plan Outlay for Agriculture & Cooperation Increased by 18%. Basic Customs Duty Reduced in Agriculture & Relataed Sectors. Fiscal Deficit to be Brought Down to 5.1% of GDPIN 2012-13 From 5.9% In 2011-12. Full Exemption from Basic Customs Duty Given to Certain Infrastructure Sectors. Gross Tax Receipts Estimated at Rs.10,77,612 Crore-19.5% Increase Over 2011-12 Re Indirect Tax Revenue Growth Estimated at 26.7% &Direct Tax Revenue Growth at 13.9% Over 2011-12. Total Expenditure Estimatedrs. 14,90,925 Crore. Computerised PDSTO Become Operational by December 2012. Panchayats to be Strengthened Through Rajiv Gandhi Panchayat Sashaktikaran Abhiyan. Multisectoral Plan to Fight Malnutrition in 200 High Burden Districts. Measures Proposed for Skill Development and Augmenting Funds for SMEs Turnover Limit for Compulsory Tax Audit Raised to Rs. One Crore. Government to Achieve Vaccine Security. Swarnajayanti Gram Swarojgar Yojana Restructured into National Rural Livelihood Mission. Lumpsum Grant Under National Family Benefit Scheme Doubled. STT Proposed to be Reduced by 20 Per Cent GAAR PANEL Mooted to Counter Aggressive Tax Avoidance Schemes Levy of Alternate Minimum Tax Proposed to be Extended. To Promote Investment, Weighted Deduction for Expenditure in R&D and AGRI-Extension Services Proposed Sunset Date for Tax Exemption in Power Sector Extended. Slew of Measures Proposed to Deter Generation and Use of Unaccounted Money Tax Collection at Source on Cash Purchase of Bullion/Jewellery Above Rs. 2 Lakh Tax Collection at Source on Trading in Coal, Lignite and Iron Ore Unexplained Money to be Taxed at 30 Per Cent. Measures Introduced to Allow Corporates to Access Lower Cost Funds; Promote Higher Level of Investments in Several Sectors Rate of Withholding Tax on Interest Payments on ECBs Proposed to be Reduced to 5 Per Cent From 20 Per Cent Restriction on Venture Capital Funds to Invest in Specified Sectors Removed Rate of Investment Linked Deduction of Capital Expenditure Proposed to be Enhanced to 150 Per Exemption Limit for Individual Taxpayers Raised to Rs. 2 Lakh Upper Limit of 20 Per Cent Tax Slab Raised to Rs. 10 Lakh Deduction up to Rs. 10,000 Proposed for Savings Bank Interest Senior Citizens not Having Income from Business Exempted from Payment of Advance Tax , Buy Backs, Stock Exchange Listings Allowed to PSUs in Divestmentmode Rupees 30,000 Crores to Raised Through Disinvestment. Government Keen on Early Enactment of DTC Bill Model Legislation for GST on the Anvil National Information Utility to be Operational by August. GENERAL BUDGET 2012-13 Unviable, Ineffective Subsidies may be Revisited; Central Subsidies to be Brought Down to 1.75 Per Cent of GDP in three Years Fertilizer Management System to Roll Out this Year Aadhaar- Enabled Payments in Over 50 Districts in Six Months. Dip in Tax Revenue & Increased Subsidies hit Fiscal Balance Amendments Introduced to FRBM ACT . Union Budget 2012-13 Summary. Union Budget 2012-13 Highlights Case Laws: Income Tax 2012 (3) TMI 227 Validity of revisionary powers exercised by Commissioner u/s 263 on ground that A.O. has not examined aspect of full value of consideration and that high-yielding asset could not be disposed off at such a low value – assessee claimed long-term capital loss on sale of immovable property in year 2003 for 70 lacs, purchased in year 1997 for 69.63 lacs - Held that:- A.O. is both an investigator and an adjudicator. If the A.O. fails to conduct enquiry, he commits an error and the word 'erroneous' includes failure to make the enquiry. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. An order is not erroneous and prejudicial to the interest of Revenue, unless the CIT hold and records reasons why it is erroneous. Therefore, we upheld the order of Tribunal setting aside the order of CIT since CIT has not examined the said aspect himself and has not given any finding/reason for observing that the order passed by the A.O. was erroneous – Decided against the Revenue. 2012 (3) TMI 212 Finance lease vs Operating lease – whether lessor is entitled to depreciation on assets leased by it in finance lease – assessee, a bank, purchased a boiler and gave it on lease to Indo-Gulf Fertilisers and claimed depreciation on it on the basis that it was the owner thereof – Revenue contended that it is not a case of operating lease and hence no granting of depreciation – Held that:- Finance lease is for a fixed period & non-cancellable. Lessee uses the asset for its entire economic life & all risks and rewards incidental to ownership are transferred to the lessee even though title may or may not be eventually transferred to him. There is a fixed obligation on the lessee for payment of lease money. On facts, the assessee’s lease agreement had all the characteristics of a finance lease. Further, RBI Circular No.FSCBC 18/24-01- 001/93-94 dated 14.02.1994 states that equipment leasing activity should be treated by banks “on par with loans and advances”. Therefore, in view of decision in case of Association of Leasing & Financial Services Companies v. Union of India & Ors (2010 - TMI - 78066 - Supreme Court Of India), and Asea Brown Boveri Limited v. IFCI (2004 - TMI - 106804 - Supreme Court Of India), lease agreement under consideration is that of finance lease and not operating lease. Only the lessee can be treated as owner of the asset in case of a finance lease and is entitled to claim depreciation as per law. No depreciation can be allowed to the lessor in case of a genuine finance lease. Reality Behind Present Lease Agreement – Held that:- A bare perusal of various clauses of the agreement clearly transpires that this lease agreement has been entered into with the sole purpose of enabling the assessee to artificially fulfill the twin requirements of ownership and user of the asset so as to claim depreciation, to which it was not otherwise entitled as per law and thereby reduce its income in a mala fide manner. The law permits tax planning and not tax avoidance. Therefore, it is held it was a case of mere advancing of loan by the assessee to Indo Gulf Fertilizers. There was, in fact, no genuine leasing of boiler, neither operating nor finance. In that view of the matter also no depreciation is admissible to the assessee-lessor – Decided against the assessee. 2012 (3) TMI 211 Validity of reopening of assessment previously framed after scrutiny – assessment reopened on ground that ‘works contractor’ was not eligible for deduction u/s 80-IB(10) - Explanation to s. 80-IB(10) inserted in year 2009 w.e.f. 1.4.2000 - assessee contesting change of opinion by A.O. - A.Y. 06-07 – Held that:- It is now a settled law that if an explanation is added to a section of a statute for the removal of doubts, the implication is that the law was the same from the very beginning and the same is further explained by way of addition of the Explanation. Thus, it is not a case of introduction of new provision of law by retrospective operation. We find that the petitioner had disclosed all the materials relevant for the purpose of getting the benefit u/s 80IB and there was no suppression of materials. In spite of full disclosure, the A.O. gave benefit of the provision by considering the materials on record and thus, it cannot be said that any income escaped assessment in accordance with law. If the A.O. while passing the original assessment order, chose not to give any finding in this regard, that cannot give him or his successor in office a reason to reopen the assessment. It is a mere formation of second opinion on the selfsame materials without any “tangible material” - Decided in favor of assessee 2012 (3) TMI 210 Disallowance of interest u/s 36(1)(iii) - the assessee gave interest free advances to its sister-concerns - AO observed that the assessee had not charged any interest on such advances whereas substantial amount of interest was paid on the funds borrowed - Held that:- it is manifest that if the assessee has interest free funds as well as interest bearing funds at its disposal, then the presumption would be that investments were made from interest free funds available with the assessee (East India Pharmaceutical Works Ltd. v. CIT [1997 -TMI - 5570 - SUPREME Court]. - it is observed that the interest free funds available at the disposal of the assessee are far in excess of the interest free loans advanced to the sister-concerns. Respectfully following the mandate of the Hon'ble jurisdictional High Court in the case of Reliance Utilities & Power Ltd. (2009 - TMI - 32150 - HIGH COURT BOMBAY), we order for the deletion of the addition. Disallowance of interest u/s 40(a)(ia) for non deduction of TDS u/s 194A - held that:- As per Section 145 income under the head 'Profits and gains of business or profession' is to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee considering a person to become entitled to deduction when liability in respect of any expenditure is incurred - in the mercantile system of accounting, deduction is allowed on accrual of liability - when the assessee is admittedly following mercantile system of accounting it cannot be disputed that the impugned interest expenditure has accrued within the year, it is to be allowed irrespective of the fact that assessee has passed necessary entries in the books of account or not - the assessee did not credit such interest in the books of account under any account - rather the deduction has been claimed on the basis of mercantile system of accounting straightway in the computation of income, without routing it through books of account, which has been held by us to be allowable. - Once there is no liability to deduct tax at source u/s 194A, the provisions of section 40(a)(ia) cannot be attracted. 2012 (3) TMI 209 Capital receipt versus revenue receipt - Whether the receipt from transfer of trade marks, copyrights and designs received is to be chargeable to capital gains tax? - Held that:- (i) Right to manufacture, produce or processing of biscuits is a different right from trade mark, brand name and designs. - (ii) One cannot presume otherwise, when the Legislature itself has, in clear terms, mentioned its intention in the Act and the Memorandum explaining the provisions of the Act. The amendment made to sec.55(2)(a) by the Finance Act, 2001 is only prospective and applicable from assessment year 2002-03 only since the appeal of the assessee relates to assessment year 2001-02 this amendment cannot be applied retrospectively - the assessee, while transferring trademark, patents and designs to BIL has not transferred right to manufacture, produce or process biscuits - the assessee continued to carry on manufacturing and trading business is evident from sales tax assessment orders it is incorrect to hold that the assessee transferred its right to manufacture - assessee is entitled to claim the amount of ₹ 30 crores received from BIL as non-taxable capital receipt for the assessment year and the same is not liable for long term capital gains tax. 2012 (3) TMI 208 Transfer pricing - Proviso to section 92-C(2) - downward variation of 5 per cent in determining the arm's length price inter alia, include the exclusion from the comparables selected by the TPO - Held that :- Assessing Officer should examine the mean margin of left out comparables and of the assessee with reference to the figures adopted by the TPO. If the remaining difference as computed as per our directions, between these two remains less than 5%, then, the benefit of proviso to Section 92C(2) will be given to the assessee and no addition will be called for. Excessive computation of interest under section 234-B by the ld. AO - Held that :- restore this issue to the file of the assessing officer to re-compute interest under section 234-B as per law after giving a reasonable opportunity of being heard to the assessee Interest of refund - adjustment u/s 57(iii)- held that:- We also do not find force in the contention of the assessee that since the payment of tax was made out of overdraft facility, therefore, interest receipt on income tax refund should be adjusted against interest paid on overdraft facility as according section 57(iii) only such expenditure (not being in the nature of capital expenditure) can be allowed if it is laid down or expanded wholly and exclusively for the purpose of making or earning of such income. Payment of Income tax cannot be said to be made for earning of interest, hence the case of the assessee will also be out of the purview of section 57(iii). - Decided against the assessee. Interest under section 234-B of the Act is not to be calculated on tax on the total income determined under regular assessment under section 143(3) of the Act - Held that :- interest on Income Tax refund of ₹ 15,229,404 is to be netted off against the interest payment of ₹ 18,509,964 and since the interest received by the appellant is less than the interest expense for the year under appeal, no part of the interest on Income Tax refund of ₹ 15,229,404 is to be excluded while computing profits of business eligible for deduction under section 10-B of the Act. 2012 (3) TMI 207 Whether the interest received by the assessee from the date of taking over possession of the assessee's land to the date of passing an award under the Land Acquisition Act, 1894 is liable to be treated as a capital receipt - assessee an individual doing business of trading in cycles and cycle parts and also derives income from agricultural land owned by him - assessee's agricultural land was taken possession of by the Government on October 31, 1988, with his consent that interest would not be payable to the assessee up to October 30, 1988, or till the date of the award, whichever is earlier - Held that :-title in the property had not passed on to the Government it may be said that the owner was given interest in place of his right to retain possession of the property - In such a case, the interest received would be a capital receipt. 2012 (3) TMI 206 Development of software - manufacture and export - deduction under section 80HHC of the Income-tax Act - Revenue contented order of the AO that computer software recorded on magnetic tapes cannot be considered as "goods" for the purposes of section 80HHC of the Act in view of the introduction of section 80HHE in the Act - Held that :- As per Section 80HHC an assessee, being an Indian company or a person (other than a company) resident in India,is engaged in the business of export out of India of any goods or merchandise to which this section applies whereas 80HHE defines that an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of computer software or its transmission from India to a place outside India by any means and providing technical services outside India in connection with the development or production of computer software - there is no substantial or material difference in provisions of section 80HHC(1) and section 80HHE(1)-because section 80HHE specifically deals with the export of computer software with effect from April 1, 1991,it does not mean that the operation of section 80HHC of the Act is excluded prior to April 1, 1991 - assessee was entitled to the benefit of section 80HHC Customs 2012 (3) TMI 205 Import of Gold without deceleration and payment of duty - the petitioner/passenger at the green channel was suspected as trying to clear dutiable goods without declaration and payment of duty - baggage was checked found concealed 10 gold bars with foreign markings wrapped in carbon paper each weighing 10 tolas - Held that:- the petitioner is a Srilankan Passport Holder and is not entitled to bring gold into India - the gold in question was not declared to the Customs on arrival - there was an attempt to smuggle - the petitioner being a foreign national is not entitled to import the gold in terms of the 1993 order as it will apply only to the passenger of Indian origin or a passenger holding a valid passport issued under the Passport Act, 1967.- Writ Petition is dismissed 2012 (3) TMI 204 Not following the orders of the higher Appellate authorities -Imported items of the asseess had been taken up for investigation by the Revenue - goods had been detained - Revenue stated that there is a mis-declaration of the cargo - petitioner had been given an option to redeem the goods, on payment of a fine u/s 125 of the Customs Act, 1962, and a sum of Rs.5 lakhs had been imposed on the petitioner and a sum of Rs.1 lakh had been imposed on the deponent within a period of 30 days from the date of receipt of the order - petitioner, as well as the deponent filed separate appeals, before the Office of the Commissioner of Customs (Appeals) - petitioner furnished a copy of the said order, to the second respondent to release of the imported consignments and to issue the Detention Certificate, for the waiver of rent and demurrage charges,no action had been taken by the respondents petitioner prefer the present writ petition before this Court - Held that :- Department concerned should give effect to the orders of the higher appellate authorities, which are binding on them, by paying utmost regard to judicial discipline, mere fact of the filing of an appeal against such orders and the pendency of such an appeal cannot be shown as a sufficient reason for not following the orders of the higher appellate authorities - respondents are directed to release the goods in question within Ten days from the date of receipt of a copy of this order - open to the petitioner to make a representation to the appropriate authority, with regard to the issuance of a Detention Certificate, for the waiver of the demurrage and detention charges . Corporate Laws 2012 (3) TMI 202 Criminal liability for misstatements in prospectus and Penalty For False Statements - the directors of the company did not utilize the funds from the public issue for the purpose mentioned in the prospectus - funds for leased assets and the purchase of office space have not been used but have been diverted to investments for their own purposes - the company shifted registered office to another leased premises with no intimation to RBI, DSE and Income Tax Office - petitioners contented that office could not be purchased because the deal failed due to volatility in the property market - petitioners have resigned from the directorship of the company before filling of the complaint and hence no liability on them - complaint lodged by the ROC is barred by time and is filed after the expiry of the limitation period - Held that :- period of limitation in such offences will begin not from the date of filling of prospectus,but from the date of filling the balance sheet on which the complaint has been based,i.e prescribed limitation period of three years - whether the directors have resigned or not is a question of fact which cannot be gone into by this court and only the trial court, during trial can decide this issue - the onus of notifying the various agencies about the change of address lied on the petitioners which they have not been able to discharge petitioners cannot shift their liability arising out of their own inaction by stating that there was lack of communication - No illegality in order and petition is dismissed. Service Tax 2012 (3) TMI 201 Demand of Service tax as GTA - Transportation of the Transformers - agreement with U.P. Power Corporation Limited for repair and testing of damaged Transformers - respondent has lifted the damaged Transformers by their own Trucks and charged a sum from U.P. Power Corporation on account of "maintenance and repair" of the old and damaged Transformers. - Held that :- respondent has entered into an agreement with the U.P. Power Corporation Limited for repair and maintenance of the damaged Transformers inclusive of loading, unloading, handling and insurance but without lifting the Transformers, repair is not possible and to be considered integral part of the repair - no question for charging the Service Tax as per Section 65(50b) as no services were taken from any third party.
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