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TMI Tax Updates - e-Newsletter
February 13, 2012
Case Laws in this Newsletter:
Income Tax
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Non-compete fees - capital expenditure or revenue expenditure – warding off competition in business will constitute capital expenditure.... - HC
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When moneys are paid/spent for purchase of stock-in-trade then also the provisions of Section 40A(3) will apply since this amounts to expenditure.... - HC
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TDS on Interest paid/credited by the Housing Board - delayed allotment of flats – though it was termed as interest on delayed payment, it was actually a revenue receipt and therefore the provisions of Section 194A of the Income tax Act would have no application .... - HC
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Deduction under 80IA on internet services and internet telephone - provisions of 80IA(3) are not applicable to the present assessee, it having commenced its business much prior to 1.4.2005.... - HC
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TDS - payment to truck owners without tax deduction - Assessee has obtained Form 15-I and filed during the course of assessment proceedings but only failed to file before the concerned Assessing Officer. - No disallowance.... - AT
DGFT
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Amendment in SION, A1790 and A1834. - Cir. No. 98(RE:2010)/2009-2014 Dated: February 10, 2012
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Fixation of a new SION (C–2048) and addition / deletion / amendment in 5 SIONs of Engineering Product Group (Product Code ‘C’) in the Hand book of Procedures V.2 (2009-14) - Cir. No. 97 (RE-2010)/2009-14 Dated: February 9, 2012
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Import policy of arms and ammunition for Specified Sportspersons / Sport Bodies, amendment thereof. - Ntf. No. 95 (RE-2010)/2009-2014 Dated: February 9, 2012
Corporate Law
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Filing of conflicting returns by contesting parties – clarification regarding. - Cir. No. 01/2012 Dated: February 10, 2012
Service Tax
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Service tax on construction services - regarding. - Cir. No. 151 /2 /2012-ST Dated: February 10, 2012
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Whether loading/Unloading of coal on tippers by pay loaders and manual labor can be taxed under Cargo Handling Services - In the given case there was use of manual labor means thus Services liable to Tax. .... - AT
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Authorization by committee of commissioner - appeal before tribunal - The intent and spirit of the law is that the committee has to thread bare examine the issues/points which has caused prejudice to the interest of Revenue and with proper reason shall come to a conclusion that the order appealed is neither legal or proper for which remedy of appeal by Revenue is to be sought. Unless such process known to law is followed, we shall have no hesitation to dismiss the appeal of Revenue.... - AT
Central Excise
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Valuation - Assessee manufacturer of M.V Parts - drawing supplied by the customers for product manufactured by the manufacturer, the cost thereof is not includible in the assessable value. ... - AT
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Liability to pay interest u/s 11AB of the Central Excise Act on the differential amount of duty paid by assessee under supplementary invoices - interest levied from the date of clearance of the goods to the date of payment of differential duty.... - AT
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Revenue encashed the bank guarantee while the appeal was pending - Not to order refund of the amount due to encashment of BG even while the appeal of the petitioner is pending, in our considered opinion, amounts to adding insult to injury. .... - HC
VAT
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Sales Tax - non fixing of stage of tax - that there is no notification in the official Gazette by the Chief Commissioner and therefore, the vital pre requisite of Section 15 of the Central Sales Tax, namely, that the tax shall not be levied at more than one stage, has not been satisfied in respect of turnover of the cotton yarn.... - HC
Case Laws:
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Income Tax
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2012 (2) TMI 101
Whether entire amount received on sale of the Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB – Held that:- Not the entire amount but the sale value less the face value of the DEPB will represent profit on transfer of DEPB. See Topman Exports vs CIT(2012 - TMI - 210467 - SUPREME COURT OF INDIA) – Decided in favor of assessee. Computation of deduction u/s 80HHC - 90% exclusion of net interest/rent or gross interest/rent – Held that:- Ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business. Matter remanded back to A.O. to work out the deductions – Decided in favor of assessee
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2012 (2) TMI 100
Whether entire amount received on sale of the Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB for the purpose of the computation of deduction u/s 80HHC – Held that:- DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 – Decided in favor of assessee.
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2012 (2) TMI 99
Deduction - Assessee exporter of leather garments - AO denied exemption under 8HHC as sale value of Duty Entitlement Pass Book(DEPB) represents transfer under Section 28(iiid) - CIT(A) affirmed AO - Tribunal relied on decision of M/S Topman Exports(Tribunal Mumbai) and upheld order of CIT - Held That:- Judgement of CIT vs Kalpataru Colours and Chemicals (2010 - TMI - 76895 - BOMBAY HIGH COURT) reversed and M/s Topman Exports (2009 - TMI - 208946 - ITAT MUMBAI) and Ram Honda Power Equip (2007 - TMI - 2891 - HIGH COURT, DELHI was upheld.
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2012 (2) TMI 98
Double Taxation Avoidance Convention between India and UK – Cost Contribution Agreement ("CCA") with SIPCL (company incorporated in UK) for availing General Business Support Services (General BSS) - determination of nature of payments made to SIPCL and its taxability - FTS or royalty – whether tax to be withhold u/s195 - Held that:- The special knowledge and use of expertise on the part of SIPCL is clearly evident from the explanation of each service as is provided by the Applicant. In our opinion, the services being rendered are consultancy services. Therefore, payments made to SIPCL for availing the General BSS under the CCA would constitute income in the hands of SIPCL and is in the nature of fees for technical services within the meaning of Article 13.4 (c) of the DTAC between India and UK; and not in the nature of royalty within the meaning of the term in Explanation 2 to Clause (vi) of Section 9(1) of the Act and under Article 13 of DTAC. Further, payment received by SIPCL is chargeable to tax in India and the declaration provided by SIPCL that it does not have a Permanent Establishment (PE) in India in terms of Article 5 of DTAC, we rule that the applicant is under obligation to withhold tax u/s 195 of the Act.
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2012 (2) TMI 97
Option u/s 23(4) to choose one property as self-occupied - assessee in possession of 3 properties out of which one is partly let out and partly self occupied – property at Malviya Nagar, Delhi stated to be self-occupied in ROI – assessee during assessment proceedings exercised the option u/s 23(4) in favor of property at GK-1 and offered Malviya nagar property as deemed to be let out – Revenue contending otherwise - Held that:- In addition to aforesaid, even Palam Vihar property is stated to be partly let out and partly self occupied in ROI. We find that neither the AO nor CIT(A) recorded any findings as to which are the properties in the instant case which fall within the purview of s. 23(2) In these circumstances, we restore the matter to the file of the AO with the directions to identify the properties which fall within the purview of s. 23(2) and allow the assessee option mentioned in s.23(4) - Decided in favor of assessee for statistical purposes.
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2012 (2) TMI 96
Penalty u/s 271(1)(c) – dis-allowance u/s 40A(2)(b) on estimate basis – Held that:- Assessee has made complete disclosure of payment of commission in its relevant tax audit reports. However, Revenue without pointing out any material to show that no such payment was made or the same was denied by the recipient, while invoking the provisions of section 40A(2)(b) allowed the payment of commission on estimate basis at the rate of 5% as against 12.5% claimed by the assessee. Thus, there is no dispute that the dis-allowance of commission is purely on estimate basis. Therefore, we hold that there is no concealment on the part of the assessee which may call for levy of penalty u/s 271(1)(c) and accordingly the penalty stands deleted. See CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 - TMI - 75701 - Supreme Court) – Decided in favor of assessee.
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2012 (2) TMI 95
Best judgment assessment - CIT (A) while upholding various dis-allowances gave partial relief – deleted dis-allowance made on account of unexplained credit – Revenue contending that CIT(A) admitted the additional evidence in contravention of Rule 46A – assessee contesting upholding of various dis-allowances – A.Y. 05-06 - Held that:- When the relevant books of accounts/vouchers have not been produced before the AO or the CIT(A) nor the relevant evidence has been examined by these authorities, we consider it fair and appropriate to vacate the findings of CIT(A) and restore the matter to the file of the AO to decide afresh. Further with regard to transfer of amount from share application money to general account not categorized by CIT(A) as cessation of liability in A.Y. 07-08 – Held that:- Since the Revenue have not placed before us any material controverting the aforesaid findings of facts recorded by the CIT(A) so as to enable us to take a different view in the matter therefore, appeal of revenue is dismissed – Decided in favor of Revenue & assessee for statistical purposes.
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