TMI Tax Updates - e-Newsletter
April 2, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
Income Tax
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Income-tax (Fourth Amendment Rules, 2012 – Depreciation restricted to 15% on wind mills installed after 31-3-2012. - Ntf. No. 15/2012 Dated: March 30, 2012
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Income-tax (third amendment) Rules, 2012 - amendment in rule 12 and substitution of forms sahaj (itr-1), ITR-2, ITR-3, SUGAM (itr-4s), ITR-4 and itr-v. - Ntf. No. 14/2012 Dated: March 28, 2012
Customs
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5th Corrigendum of Notification No. 21/2002-Customs. - Ntf. No. Corrigendum Dated: March 28, 2012
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Request for an Extended Period of Warehousing under Section 61 of Customs Act, 1962 - Reference from Shipyards - Reg. - Cir. No. F. No. 473/02/2011-LC Dated: February 29, 2012
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Refund of 4% CVD (SAD)-Extension of time upto 30th June 2012, for using re-credited 4% CVD (SAD) amount in DEPB-Regarding. - Cir. No. 10/2012-Customs Dated: March 29, 2012
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Seeks to amend Notification No.16/2011-Cus (N. T.) - Prohibits import of Acetate tow and Filter Rod except use in manufacturing of specified goods. - Ntf. No. 27/2012 - Customs (N.T.) Dated: March 28, 2012
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Appointment of Common Adjudicating Authority. - Ntf. No. F.No.437/08/2010-Cus.IV Dated: March 28, 2012
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Seeks to amend Notification 12/2012 – Customs - Prescribes effective rate of duty on import of goods. - Ntf. No. 24/2012-Customs Dated: March 28, 2012
DGFT
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Aayat Niryat Form 2E(ANF 2E) – Application for Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) Export Licence – Introduction of Provision for On-line filing. - Cir. No. 25 Dated: March 29, 2012
FEMA
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Trade Credits for Imports into India – Review of all-in-cost ceiling. - Cir. No. 100 Dated: March 30, 2012
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External Commercial Borrowings (ECB) Policy – Review of all-in-cost ceiling. - Cir. No. 99 Dated: March 30, 2012
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Discontinuation of Supplying Printed GR forms by Reserve Bank. - Cir. No. 98 Dated: March 30, 2012
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Overseas Direct Investments by Indian Party – Rationalisation. - Cir. No. 96 Dated: March 28, 2012
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Overseas Investments by Resident Individuals – Liberalisation / Rationalisation. - Cir. No. 97 Dated: March 28, 2012
Service Tax
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Clarification on Point of Taxation Rules - regarding. - Cir. No. 154/5/ 2012 – ST Dated: March 28, 2012
Central Excise
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Clarification Regarding Mega Power Project (MPP) exemption – reg. - Cir. No. 963/06/2012-CX Dated: March 29, 2012
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2012 (4) TMI 54
Deduction u/s 80IB - Housing projects – assessee constructed buildings A, B, C and D and did not claimed deduction on ground of approval being granted prior to 01.10.1998 – approval for additional 'E' building received on 11.10.2002 - Revenue contended that 'E' building being continuation of A, B, C and D buildings, the project must be held to have commenced prior to 1st October 1998 hence no deduction – deduction also denied on ground of area of plot and size of the flats – Held that:- Construction of 'E' building constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of 'E' building merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question. In present case, total area of plot for 5 buildings is 2.36 acres – Revenue contending proportionate vacant area for E building would be less than one acre – Held that:- Section 80IB(10) does not suggest that the plot of land must be vacant. Deduction is available on construction of a housing project on a plot having area of one acre, irrespective of the fact that there exist other housing projects or not. Further, as contended by Revenue that two flats were merged and size of flat exceeded 1000 sq ft – It is found that there was no merger of flats. Therefore, Tribunal rightly allowed deduction u/s 80IB – Decided in favor of assessee.
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2012 (4) TMI 53
Reopening - Set off of business loss ignoring the provisions of section 90(2) - held that:- From the prescription of section 71, it is palpable that there is no bar in allowing set off of loss under the head "Profits and gains of business or profession" against income under the head "Income from other sources". This section applies to all assesses, whether resident or non-residents, so long as income of non-resident assesses is computed under the provisions of the Act. The present assessee has also chosen to be covered under the Act. It is seeking loss under the head 'Profits and gains of business or profession' to be set off against 'Income from other source'. There is hardly any difficulty in holding that the Assessing Officer was not justified in taxing 'Income from other sources' amounting to Rs. 12.57 crore without allowing its set off against the business loss of Rs. 48.80 crore. - Decided in favor of assessee. Regarding reassessment - it is abundantly clear that where an assessment order is passed u/s 143(3), no action can be taken under this section after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax escaped assessment by reason of failure on the part of the assessee inter alia to disclose fully and truly all material facts necessary for his assessment - The reassessment has been initiated on the score that the loss so declared by the assessee was liable to be considered as 'Capital gain' and not 'Business income' and hence its set off was not permissible against income from other sources - It is a trite law that change of opinion cannot be a reason to reopen the completed assessment - Appeal is allowed
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2012 (4) TMI 52
Nature of DEPB credit and premium received on transfer of DEPB – impact on eligible profits for section 80HHC – alleged non-satisfaction of conditions prescribed in the third proviso to Section 80HHC(3) - Held that:- DEPB credit falls under Clause (iiib) of Section 28, whereas the premium received thereon on transfer will represent profits chargeable u/s Clause (iiid) and the deduction u/s 80HHC has to be computed accordingly. It was held that only 90% of the “profits” can be excluded by applying Explanation (baa) below Section 80HHC – Decided in favor of assessee. Applicability of third proviso to Section 80 HHC(3) is not examined and have been referred back to the Assessing Officer.
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2012 (4) TMI 51
Method of accounting - works contract – denial of project completion method – rejection of books of account – addition made - assessee have shown running payment and expenses against WIP in Balance sheet and excluded it from P/L A/c - Held that:- CIT(A) while confirming addition made contradictory statements – on one hand allowed project completion method & on other hand denied it. Accordingly, it is clarified that in case assessee had not claimed loss in the P/L A/c, the same will not be reduced. In case he had claimed this loss, it will be disallowed. Also, amounts related to payments received/bills raised and the expenditure incurred will be excluded from P/L A/c. Further, Completed contract method is not contrary and can be adopted and applied when an assessee follows mercantile system of accounting. However, we remand the matter to the tribunal to examine the other aspects relating to computation of taxable income on the basis of completed contract method – Decided partly in favor of assessee.
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2012 (4) TMI 50
DTAA between India and Netherlands - Capital gain - release and relinquishment of tenancy rights - The applicant is a Dutch citizen since 1984 and holds a card of Person of Indian Origin since 6.10.2003 - As regards the amount received on release of tenancy rights, the tenancy rights are in respect of real estate and would be gains derived from alienation of immovable property. As the immovable property is situated in India, the gains are taxable in India under Article 13.1 of the DTAA Regarding capital gain - since the value of the shares is derived principally from immovable property situated in India, the same are taxable under Article 13.4 of the DTAA in India - TDS already paid on the sale of shares is to be allowed credit against any tax demanded by the Revenue, upon its proper verification - Ruling is given
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2012 (4) TMI 49
Refund of the tax amount with interest - the petitioner submitted that petitioner's applications submitted on 06.06.2008, 06.10.2008, 25.11.2008, 16.12.2009 and 27.04.2011 are pending consideration before the authority under Section 132B(4) of the Income Tax Act, 1961 - If the authorities have not decided these applications for such a long time, then it is a serious matter but we are not taking immediate action and in future there may be harsh order against the officers who have not decided the applications - Petition is allowed
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2012 (4) TMI 48
Reassessment - Assessment was completed u/s 143(3) - The investigation had been conducted and on the basis of information received, the Assessing Officer formed a prima facie or tentative opinion that the assessee had received bogus credit entries of Rs.42,03,250/- from the parties mentioned in the table - the information provided by the Directorate of Income Tax Investigation was not available with the Assessing Officer during the course of the first/original proceedings - Decided against the assessee. Regarding approval u/s 151 - assessee submits that one of the conditions raised by the assessee was that there was no valid approval under Section 151 of the Act and the said aspect has not been examined by the tribunal as they had decided the appeal as noticed above on a different contention/argument. It will be open to the tribunal to examine the question whether or not there was a valid approval under Section 151 of the Act and decide the appeal of the Revenue on merits. - Matter remanded back to tribunal.
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Customs
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2012 (4) TMI 60
Redemption fine - Penalty - the respondent refuses to allow the petitioner to clear the goods on the ground that the imported goods comprises of hazardous electronic waste - The grievance of the petitioner in this writ petition is that despite the appellate order, the respondent is not permitting clearance of the goods, although the petitioner is willing to pay the redemption fine and penalty - The only contention raised by the respondent is that against the appellate order, the respondent has already approached the Tribunal with an appeal and, therefore, the goods cannot be released until the appeal is disposed of - that is no ground to refuse the relief to the petitioner in accordance with the appellate order obtained by him insofar as there is no order staying the appellate order yet - Petition is disposed of
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2012 (4) TMI 59
Differential duty - Writ petition for a Mandamus directing the respondents to release the goods namely 42.260 kilograms of Slack Wax, imported vide Bill of Entry No.5526310, dated 21.12.2011 on the value declared by the petitioner at USD 16,904.00 - the claim of the petitioner is that they had imported 42.260 kilograms of Slack Wax from M/s.Baykim Chemicals, Turkey, vide invoice No.70221, dated 19.08.2011 - While examining the claim of the petitioner for provisional release, it is to be seen what are all the circumstances under which the import was done and thereafter, the value so declared by the petitioner is a matter to be taken into account - The only reason for non releasing of the goods is that the petitioner has undervalued the goods at USD 400 per MT. Now the Directorate of Revenue Intelligence, Thoothukudi, on investigation found that the value of goods is USD 1058 per MT - the goods in question is not a prohibitory item under the provisions of the Act and having regard to the foregoing reasons and discussions and considering the circumstances of the case, provisional release of the goods is ordered with reasonable conditions.
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2012 (4) TMI 43
Demand - Notification Nos.13/81-Cus dated 9/2/1981 and 53/97-Cus dated 3/6/1997 - Assessee, a 100% Export Oriented Unit (EOU) failed to fulfill the export obligation even after importing duty free import of raw materials to the tune of Rs.3.94 crores - The Tribunal held that the extension of the Bonding period could be granted even after the expiry of the bond period in appropriate cases and accordingly, granted extension of the bond period to the assessee. It is not in dispute that in the present case, the respondent-assessee had neither sought re-warehousing of the goods nor sought extension of the bond period. - matter remanded back to tribunal for fresh decision.
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Corporate Laws
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2012 (4) TMI 47
Annual general meeting - the 7th to 12th annual general meetings of the company could not be held. On 28th May, 2008 the company issued notices for holding these annual general meetings on 27th and 28th June, 2008 at diverse timings specified in the notices. - Sajal was aggrieved by issuance of these notices and approached the Company Law Board by filing an application to restrain holding these meetings. The Company Law Board allowed that application on 25th June, 2008. The company and Kamal and his group were restrained from holding these meetings on 27th and 28th June, 2008 further to the notice dated 28th May, 2008. Held that:- Board of directors to be constituted as per the direction - in view of the Supreme Court order read with the Company Law Board order and the Companies Act, 1956 Mr. Sajal Dutta would retire by rotation but would be deemed to be re-elected at the general meeting. - Board of directors will issue fesh notice holding all the 7th to 12th AGM. The Company Law Board (CLB) fell into great error in altogether preventing holding meetings as mentioned in the above notices. It ought to have permitted them to be held
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2012 (4) TMI 46
Petition u/s 100 to 105 - Rule 46 of the Companies (Court) Rules, 1959 - Reduction of share capital - Upon the respondent Company thereafter filing the petition aforesaid for approval of its action of reduction of share capital, initially 24 shareholders including the appellant filed objections - Held that: the valuation of the shares, since the Board of Directors of the respondent Company itself had not accepted the valuation at Rs. 836/- per share of the Accountants engaged by the respondent Company and had increased the valuation to Rs. 940/- and further since the respondent Company when faced with the objections had further increased the said valuation to Rs. 1,500/- but nevertheless find that there can be no better indice of valuation than the market forces - The acceptance by all the other public shareholders except the appellant of the price of Rs. 1,500/- clearly establishes that though the price of Rs. 940/- offered may not have been the correct price but the price of Rs. 1,500/- clearly was - Appeal is dismissed
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2012 (4) TMI 45
Registrar of Companies (ROC) received a complaint regarding the affairs of M/s. Tianjin Tianshi India Pvt. Ltd. (the Company) being irregular and illegal - a report was sent by ROC to the Central Government in terms of section 234 (6) of the Act seeking advice for prosecution of company u/s 234 of the Act - It was submitted that the alleged offences being punishable with fine only, the limitation of taking cognizance under Section 468(2) Cr.PC was six months - It was submitted that the alleged offences being punishable with fine only, the limitation of taking cognizance under Section 468(2) Cr.PC was six months - There is no dispute with regard to the proposition of law that the powers of this Court under Section 482 Cr.PC were to be exercised sparingly and in exceptional circumstances where there appeared to be glaring injustice or manifest error committed by the trial court Regarding non-issuance of notice under Section 234 of the Act to the petitioners, it is seen that ROC issued a letter dated 24.2.2004 to the company to enquire about its affairs - the contention of the petitioner that cognizance by the Trial Court was barred by the limitation, the Trial Court record must be perused - The period of limitation for taking cognizance of the offences commences when the knowledge of the commission of offence is gained by the prosecuting agency - Held that: present offence arises out of a failure to comply with the statutory rule and such liability will continue until the requirement is complied with - Petition is allowed
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Service Tax
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2012 (4) TMI 57
Writ petition - The learned counsel appearing on behalf of the petitioner had submitted that it would suffice, if the respondent is directed to consider the representation of the petitioner on merits, within a specified period - Held that:- the respondent is directed to consider the representation of the petitioner on merits and in accordance with law, within a period of two weeks from the date of receipt of a copy of this order - Petition is disposed of
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2012 (4) TMI 56
Application for stay - Demand - Suppression of facts - The department was of the view that the service undertaken by the appellants is liable to be taxed under the category of "Manpower Recruitment or Supply Agency Service" for the period prior to 01.05.2006 and under the category of "Ship Management Services" w.e.f 01.05.2006 - Board's Circular no. 334/1/2008-TRU dated 29.02.2008 - As per the agreement entered into by the appellant with their customers, it is seen that the appellant has to arrange for Master, officers and crew on-board the vessels as required under the Merchant Shipping Act, 1958 and any other International Maritime Act and as per manning standards - The very fact that the appellants have collected the Service Tax from their customers such as M/s ABG Shipping Co. and M/s Pranik Shipping without remitting the same to the exchequer clearly shows that they were fully aware of their service tax liability CBE & C in their letter dated 29.02.2008 has clarified that introduction of a later entry under the Service Tax does not ipso facto mean that the said activity was not covered under the previous entry though they were specifically included under the definition of taxable services - the appellant has not made out any prima facie case for grant of complete waiver of pre-deposit. Inasmuch as the appellant has collected the amount of service tax form some of their clients, the balance of convenience lies in favour of the Revenue by way of direction to deposit Rs. 85 Lakhs
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2012 (4) TMI 55
Overseas commission agent services received – 'Business Auxillary Services' - services provided being before 18.04.2006 - Held that:- Liability under Finance Act 1994 for availing service of foreign agents arise after 18.04.2006 following Apex Court decision in case of Indian National Shipowners Association v. Union of India (2010 - TMI - 78723 - Supreme Court of India) - Decided in favor of assessee
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Central Excise
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2012 (4) TMI 44
Waiver of pre-deposit - In the present case, by a showcause notice dated 24th June 2008, the assessee was called upon to showcause as to why the price charged by Thomson India to Tata Sky Limited (instead of the price charged by the assessee to Thomson India) in respect of the goods cleared during the period from 1st April 2007 to 23rd January 2008 should not be treated as the transaction value of the goods sold by the assessee to Thomson India under Rule 10A of the 2000 Rules and the duty be recovered accordingly - Advocate appearing on behalf of the assessee submitted firstly that in the present case, the sale effected by the assessee is governed by the provisions contained in Section 4(1)(a) of the Act and, therefore, the transaction value alone should be the basis for determining the central excise duty liability - the Adjudicating Authority concluded that the price of the raw materials purchased by the assessee are controlled by the Thomson India and, therefore, Thomson India indirectly supplied the inputs to the assessee through its sister concerns set out in the approved Vendors List at the price controlled / approved by the Thomson India - the prima facie view of the CESTAT that the Adjudicating Authority was justified in holding that Thomson India supplied the inputs to the assessee by persons authorized by Thomson India and, therefore, the assessee being a jobworker manufacturing goods on behalf of Thomson India would be covered under rule 10A of the 2000 Rules cannot be faulted.
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2012 (4) TMI 42
Recovery Rules - father of the Petitioner during his life time had by a deed of Gift gifted a property to her daughter (petitioner)- a notice of demand was addressed to the Petitioner’s father to pay Central Excise duty and penalty on the basis of a Certificate No.01/2011-12 dated 2 May 2011 else the procedure for attachment under the Recovery Rules 1995 would follow - the Petitioner was informed by notice that arrears of duty and penalty are recoverable from the Company; in the Municipal record the property stands in the name of the Petitioner’s father and as she was in occupation of the said property - petitioner contented that neither she nor her father was a defaulter of Excise duty under Section 142 (1) and the notice itself which very clearly states that the arrears of duty and penalty are recoverable from the company - Respondents have filed an affidavit that an agreement exists Mukherjee Brothers and Kapoor family who together controlled the said company, the shares of the Kapoor family were transferred to Mukherjee Brothers provided that the Mukherjee family would be responsible to discharge the Excise duty liabilities of the said company -Held that :- as per the Recovery Rules, 1995 “Defaulter” means any person from whom government dues are recoverable under the Act and in this case neither the Petitioner nor her father who was a Director of the company, were defaulters hence recovery rules will be applicable for the company - It is an undisputed position that duty and penalty are arrears of the company as per the agreement - allow the petition of assessee.
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2012 (4) TMI 41
Availability of turnover discounts – Commissioner dismissed appeal for non-compliance with the stay order – pre-deposit confirmed - Held that:- Identical issue came before Tribunal in 2011 and unconditional stay was granted. Since Commissioner has not decided the appeal, matter is remanded back for decision on merits without insisting of any pre-deposit.
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CST, VAT & Sales Tax
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2012 (4) TMI 58
Demand - whether imposing/charging of interest under Section 30(4) of the Maharashtra Value Added Tax Act 2002 in respect of the late payment of tax for the years 2005-06, 2006-07 and 2007-08 is valid in law - Consequent to the Intimation, on 20 August 2009 the Petitioner filed revised returns for the years 2005-06, 2006-07 and 2007-08 and also paid the differential tax demanded consequent to the audit, aggregating to ₹ 41,38,416/- along with interest thereon under Section 30(3) of the Act - The demand for interest is not for the period prior to 1 July 2009 as the interest is being charged not with regard to a delay (period/time wise) in making the payment of tax to the State but is charged at a flat rate of 25 per cent of the additional tax payable as per the revised returns - In the present case, the interest is being charged at a flat rate and has no relation to the length of time(delay) in making the payment of tax - Petition is dismissed
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