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TMI Tax Updates - e-Newsletter
February 4, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Central Excise
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
DGFT
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Fixation of Standard Input-Output Norms (SION) for the export product “Articles made of Thermo Plastic Elastomer (TPE)”. - Cir. No. 95 /(RE-2010)/2009-2014 Dated: February 2, 2012
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Fixation of Standard Input Output Norms (SION) of Food Products (Product Code: ‘E’) in the Handbook of Procedures V.2 (2009-14). - Cir. No. 92 (RE-2010)/2009-2014 Dated: February 1, 2012
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Amendment of Standard Input Output Norms (SION) of Food Products (Product Code: ‘E’) in the Handbook of Procedures V.2 (2009-14). - Cir. No. 93 (RE-2010)/2009-14 Dated: February 1, 2012
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Amendment of Standard Input Output Norms (SION) of Food Products (Product Code: ‘E’) in the Handbook of Procedures V.2 (2009-14). - Cir. No. 94 (RE-2010)/2009-14 Dated: February 1, 2012
FEMA
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Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR. - Cir. No. 74 Dated: February 1, 2012
Case Laws:
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Income Tax
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2012 (2) TMI 18
Revisionary powers of Commissioner u/s 263 - AO accepted the return of loss filed by assessee in pursuance of notice issued u/s 148 and accepted that assessee had proved the source to invest Rs.20 lacs in FDR (reason for re-opening) and accordingly no addition was made – A.O. also accepted increase in share application money and established geniuness of share application money by issuing summons u/s 131 to person on random basis and statements were recorded – Tribunal quashed the order of CIT(A) - Held that:- Order of the A.O. cannot be regarded as erroneous even if he had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition has been made on account of the reasons for reopening i.e. investment in FDR, which were recorded before issue of notice u/s 148. As the AO did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under Section 263 of the Act – Decided against the Revenue.
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2012 (2) TMI 16
Plea for waiver of penalty u/s 271(1)(c) – undisclosed income traced during search – assessee owned unaccounted transactions – divergent of opinion among the lower authorities as well as the Tribunal while deleting or sustaining the addition - whether the penalty is automatic, even if the assessee corrects his mistake or discretion vested in the officer should be used to not levy the penalty - Held that:- The present case is most befitting case to exercise such discretion. Divergence of opinion among authorities concerned shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further as seen from the facts of the case, to avoid litigation the assessee accepted the additions or made fresh offer in the course of the proceedings before the lower authorities. After the A.O. had the clinching evidence of concealment then the offer may not have been accepted and the same should have been proceeded on the basis of material available on record. The lower authorities relied on proceedings before A.O. for levying the penalty. The same do not constitute admission for the purpose of levying penalty. The addition made on the basis of more or less on the offer made by the assessee and the A.O. did not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable and the same is deleted – Decided in favor of assessee.
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2012 (2) TMI 15
Revenue expenditure vs deferred revenue expenditure - manufacturing and trading in pharmaceuticals products - pharmaceuticals products registered in foreign countries for 5 years - registration amount paid in lumpsum in the first year – Revenue contending it to be deferred revenue expenditure – Held that:- Assessee has been regularly incurring expenditure on registration of pharmaceuticals products in foreign countries. A similar addition made was deleted by CIT(Appeals) in the A.Y. 2003-04 and 2004-05 . Similarily in A.Y. 2005-06, deletion made was appealled by Revenue before Tribunal but was dismissed and no further appeal was preferred before this Court. It therefore, appears that the aforesaid expenditures are being claimed from year to year. Even if the plea of the revenue is accepted, the net effect may be marginal or minimum – Decided against the Revenue
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2012 (2) TMI 14
Nature of Income - Capital gain vs Business income – Insurance agent – purchase & sale of shares – Held that:- Applying the ratio of the various decisions to the facts of the present case with regard to intention of assessee, frequency of transactions, treatment in Balance sheet, borrowed funds etc, it becomes abundantly clear that the transactions in the shares and mutual funds were made by the assessee as investor and not as a trader, therefore, the profit earned from the said transactions is short term capital gain, not business income. Order of A.O. & CIT are set aside and it is directed to A.O. to treat the income as income from short term capital gains and not business income. See CIT vs Gopal Purohit ([2010 (11) TMI 222 - SUPREME COURT]), Sarnath Infrastructure (P.) Ltd. v. ACIT [2007 (12) TMI 261 - ITAT LUCKNOW-B]- Decided in favor of assessee.
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2012 (2) TMI 13
Restriction on appearance before tribunal - Rule 13E states taht, "The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not practice before the tribunal after retirement from the service of the Tribunal" - whether such restriction is ultra virus - held that:- Till the next date of hearing, operation of the impugned rule 13E as well as the judgment in the case of Concept Creations shall remain stayed in so far as they impose a complete ban on the practice by retired members before the Tribunal. - Thus, it would be open for the retired members to practise before the Benches of Tribunal where they had not remained posted and held courts temporarily or on regular basis.
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Customs
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2012 (2) TMI 12
Classification of super concentrate, a constituent of the antifreeze coolants – assessee submitting super concentrate will fall classification under heading 3824 90 90 – residuary entry – imported product cannot itself be used as anti-freeze coolant - addition of MEG and others is also necessary to reach the desired concentration - Held that:-Rule 2(a) of the General Rules for Interpretation cannot apply to these goods, since it refers to articles presented unassembled or disassembled. Rule 2(b) refers to mixtures and combinations of materials and substances. The rule further states that the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. To apply this rule, therefore, one has to first see whether the goods in question, prima facie, fall for classification under two or more headings. Therefore, on the basis of meaning of the word “preparations” and the inapplicability of rule 2(a), their classification under heading 3820 00 00 is ruled out. The goods are undeniably products of chemical industry. Consequently, their classification will have to be under the residuary entry of chapter 38 of the tariff i.e. Heading 3824 90 90 – Decided in favor of assessee.
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Central Excise
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2012 (2) TMI 11
Eligibility to avail the credit of balance 50% of the amount of duty paid on the capital goods in the subsequent financial year, without installing the same and putting it into use – reference made to larger bench – A.Y. 2003-04 – Held that:- In view of decision in case of CCE vs. Ispat Industries Ltd (2006 -TMI - 489 - CESTAT, MUMBAI) it is held that the condition imposed under the relevant Cenvat Credit Rules, for taking credit of balance of 50% of amount of duty on capital goods in subsequent financial years, in case the capital goods are lying in the factory for installation and the process of erection was being carried out has to be considered as the capital goods were in possession and use for manufacture. - Decided in favor of assessee.
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