TMI Tax Updates - e-Newsletter
March 15, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Central Excise
Indian Laws
Articles
By: rajkumar shukla
Summary: The Finance Act, 1994, mandates that individuals liable to pay service tax must register under Section 69. Rule 4 of the Service Tax Rules, 1994, specifies that registration applications must be submitted within 30 days of the tax being levied, using Form ST-1. Exceptions exist for certain taxable services, with deadlines extending to December 31, 1998, and March 31, 2005. The requirement to register arises when service value exceeds Rs. 10 lakhs, or exemptions are not claimed. However, the first proviso of Rule 4 does not specify "liable to pay," raising questions about registration obligations for those not required to pay tax.
News
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.
Summary: The Government of India has approved special grants for various Agricultural Universities since 2006-07. Punjab Agricultural University received 100 crore in 2006-07. GB Pant University of Agriculture Technology and Tamil Nadu Agricultural University each received 50 crore in 2007-08. Mahatma Phule Krishi Vidyapeeth was granted 100 crore in 2008-09. SKUAS T Srinagar received 100 crore in 2010-11 and an additional 32 crore in 2011-12. Kerala Veterinary and Animal Sciences University was allocated 100 crore in 2011-12. This information was disclosed by the Minister of State for Finance in a written reply to the Rajya Sabha.
Summary: The Indian government has implemented a multi-pronged strategy to expand banking services to previously unserved rural areas. The Reserve Bank of India has instructed Scheduled Commercial Banks to allocate at least 25% of their new branches to unbanked rural centers annually. Following the 2010-11 budget announcement, over 73,000 villages with populations above 2,000 were targeted for banking services by March 2012, involving Public Sector, Regional Rural, Private Sector, and Cooperative Banks. By January 2012, over 62,000 villages had received banking services through branches or business correspondents, as reported by a government official in the Rajya Sabha.
Summary: The Reserve Bank of India's March 2012 bulletin includes five articles covering national income trends, the North-East monsoon, international banking statistics, investment portfolios of scheduled commercial banks, and India's foreign trade. Key findings reveal a decline in GDP growth to 6.9% in 2011-12 due to external factors and reduced domestic investment. Despite a deficient North-East monsoon, agricultural production remained strong. International banking statistics showed growth in liabilities and assets, with a significant portion in US dollars. Scheduled commercial banks saw an 8.9% increase in investments, while India's trade deficit widened to $133.2 billion due to rising imports, particularly petroleum.
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.
2.
05/2012 - dated
12-3-2012
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CE (NT)
Deterrent measures where duty is paid wrongly or where cenvat facility is misutilized
Summary: The Government of India issued Notification No. 5/2012 under the Central Excise (Non-Tariff) regulations, detailing deterrent measures for misuse of CENVAT facilities or incorrect duty payments. It specifies actions against manufacturers, dealers, or exporters involved in offenses like non-invoiced goods removal, false CENVAT credit claims, or issuing non-genuine invoices. Penalties include withdrawal of monthly duty payment facilities, restrictions on CENVAT credit use, and mandatory record-keeping. For repeated offenses, stricter measures like invoice countersigning may be imposed. The notification applies when the duty or credit involved exceeds ten lakhs rupees, with procedures for imposing penalties outlined.
3.
04/2012 - dated
12-3-2012
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CE (NT)
Amends Central Excise Rules, 2002 - Rule "12CC" shall be substituted by "12CCC".
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has issued Notification No. 4/2012-CENTRAL EXCISE (N.T.) amending the Central Excise Rules, 2002. Rule 12CC is replaced with Rule 12CCC, which grants the Central Government the authority to impose restrictions to prevent duty evasion and defaults. This includes measures such as suspending registrations and withdrawing facilities for manufacturers, dealers, and exporters. These changes are effective upon publication in the Official Gazette. The amendment is made under the powers conferred by section 37 of the Central Excise Act, 1944.
4.
03/2012 - dated
12-3-2012
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CE (NT)
Second Amendment in the CENVAT Credit Rules, 2004.
Summary: The Government of India, through the Ministry of Finance, has amended the CENVAT Credit Rules, 2004, effective from the date of publication in the Official Gazette. The amendment introduces Rule 12AAA, granting the Central Government authority to impose restrictions in cases of CENVAT credit misuse. This includes measures like restricting credit utilization, suspending dealer registration, and withdrawing certain facilities. The amendment aims to prevent misuse of CENVAT credit provisions and safeguard public interest. The rules were initially published in 2004 and last amended in February 2012.
Customs
5.
09/2012-Customs - dated
9-3-2012
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Cus
Duty free re-import of cut & polished diamonds into India after certification/grading by the laboratories / agencies as notified in the Foreign Trade Policy.
Summary: The Government of India exempts duty on re-imported cut and polished diamonds certified by designated laboratories, as per the Foreign Trade Policy. This exemption applies if the diamonds are re-imported by exporters with a minimum three-year track record and an annual turnover of five crore rupees. The diamonds must weigh at least 0.25 carats, be re-imported within three months of export, and match the original export invoice in value and dimensions, with minor variances allowed. The exemption also extends to authorized Indian offices handling exports and re-imports on behalf of exporters, subject to specific conditions.
6.
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.
VAT - Delhi
7.
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.
FEMA
2.
91 - dated
13-3-2012
Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR .
Summary: The circular issued by the Reserve Bank of India (RBI) addresses Category-I Authorized Dealer banks regarding the Deferred Payment Protocols between the Government of India and the former USSR, dated April 30, 1981, and December 23, 1985. It updates the Rupee value of the Special Currency Basket, initially set at Rs. 71.456679 on January 20, 2012, to Rs. 68.838139 effective from February 9, 2012. Banks are instructed to inform their clients about this revision. The directions are issued under the Foreign Exchange Management Act, 1999, and do not affect any other legal permissions or approvals required.
3.
92 - dated
13-3-2012
Opening of Diamond Dollar Accounts (DDAs) – Change in periodicity of the reporting.
Summary: The Reserve Bank of India has revised the reporting requirements for Authorized Dealer Category-I banks concerning Diamond Dollar Accounts. Previously, banks were required to submit monthly reports detailing the opening and closing of these accounts. Effective from the quarter ending March 2012, the reporting frequency has been changed to quarterly. The reports must be submitted to the Chief General Manager-in-Charge, Foreign Exchange Department, by the 10th of the month following the relevant quarter. Other conditions from previous circulars remain unchanged. These instructions are issued under the Foreign Exchange Management Act, 1999.
Customs
4.
08/2012 - dated
13-3-2012
Ban on export of Cotton (Tariff Code 5201 and 5203)- reg.
Summary: The circular announces the withdrawal of a previous ban on the export of cotton under Tariff Codes 5201 and 5203. The Directorate General of Foreign Trade (DGFT) has lifted the ban, allowing exports, provided that contracts are registered with the DGFT beforehand. The Central Board of Excise and Customs instructs all relevant customs and excise officials to closely monitor compliance with these conditions. Field formations are to be given appropriate instructions to ensure the new regulations are followed effectively.
Highlights / Catch Notes
Income Tax
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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
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High Court Permits Adjustment of Business Loss Against House Property Income u/s 71, Despite Business Closure.
Case-Laws - HC : Brought forward and Setoff of business expenditure and business loss against “Income from House Property“ when business has already closed in earlier year - Section 71 - adjustment allowed - HC
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High Court Confirms Excise Duty Exemption Doesn't Affect Manufacturing Status for Section 80IA Deduction Eligibility.
Case-Laws - HC : The fact that the excisable products are exempt from the payment of excise duty cannot be a ground to hold that the products in question are not manufactured by the assessee - Deduction u/s 80IA allowed - HC
Customs
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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
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Customs Authorities Ban Cotton Exports Under Tariff Codes 5201 & 5203 to Regulate Trade Compliance.
Circulars : Ban on export of Cotton (Tariff Code 5201 and 5203)- reg. - Cir. No. 08/2012-Customs Dated: March 13, 2012
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India Permits Duty-Free Re-Import of Certified Diamonds Post-Grading as Per Notification No. 09/2012-Customs.
Notifications : Duty free re-import of cut & polished diamonds into India after certification/grading by the laboratories / agencies as notified in the Foreign Trade Policy. - Ntf. No. 09/2012-Customs Dated: March 9, 2012
FEMA
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Circular No. 91 Updates 1981 & 1985 India-USSR Deferred Payment Protocols: Tax Implications Under FEMA Explained.
Circulars : Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR . - Cir. No. 91 Dated: March 13, 2012
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New Reporting Schedule for Diamond Dollar Accounts per Circular No. 92 (March 13, 2012) to Streamline Submissions.
Circulars : Opening of Diamond Dollar Accounts (DDAs) – Change in periodicity of the reporting. - Cir. No. 92 Dated: March 13, 2012
Corporate Law
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Arbitration Clause Doesn't Automatically Dismiss Company Winding-Up Petition; Court Can Proceed Despite Agreement.
Case-Laws - HC : Petition for winding up of companies - Existence of arbitration clause is not a ground to dismiss the application seeking an order of winding up of the respondent-company. - HC
Indian Laws
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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.
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RBI March 2012 Bulletin: Insights on India's Economy, Monetary Policy, Global Impacts, and Banking Sector Performance
News : RBI releases its Monthly RBI Bulletin for March 2012
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Auditing firm fined for non-compliance with financial reporting standards, highlighting the importance of regulatory oversight.
None : E&Y fined and reprimanded over audit work
Service Tax
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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
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Appellant Must Arrange Warehousing and Insurance; Annual Sales Commission Taxable Under Current Regulations.
Case-Laws - AT : Appellant agrees to arrange at his own cost suitable godowns for warehousing the products and also to arrange insurance of the goods in the joint name with the principal - Appellants are entitled for annual commission on the volume of sales - held as taxable - AT
Central Excise
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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
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Central Excise Notification 05/2012 Enforces Restrictions to Prevent Evasion and Default in Excise Duty Payments.
Notifications : Imposition of restriction to prevent evasion of, and default in payment of, duty of excise on a manufacturer, first stage and second stage dealer or an exporter in case of certain offence - Ntf. No. 05/2012 - Central Excise (N.T.) Dated: March 12, 2012
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Central Excise Rules 2002 Amended: Rule 12CC Replaced with 12CCC per Notification No. 04/2012-CENTRAL EXCISE (N.T.
Notifications : Amends Central Excise Rules, 2002 - Rule “12CC“ shall be substituted by “12CCC“. - Ntf. No. 04/2012-CENTRAL EXCISE (N.T.) Dated: March 12, 2012
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CENVAT Credit Rules Amended: New Procedures for Manufacturers and Service Providers to Avail Input Credit.
Notifications : Second Amendment in the CENVAT Credit Rules, 2004. - Ntf. No. 03/2012-CENTRAL EXCISE (N.T.) Dated: March 12, 2012
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Rule 4 Prevails for Valuing Excisable Goods: Aligns with Section 4 of Central Excise Act, 1944 for Accurate Assessment.
Case-Laws - AT : Determination of value of excisable goods - clearances to sister unit for captive consumption as well as to independent buyers - in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. - AT
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Job Workers Not Liable for Duty on Scrap from Machining Inputs or Castings.
Case-Laws - AT : Duty liability on the scrap generated at the end of job workers during the course of machining of the inputs/castings - assessees are not liable to pay duty on the scrap generated at the job workers' end. - AT
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Goods with Nil Duty Rate Remain Excisable; Nil Rate Does Not Alter Excisable Status.
Case-Laws - AT : Even if attracting nil rate of duty, the goods remain excisable and they do not become non-excisable. Therefore, just because the goods listed in the schedule attract nil rate of duty, it cannot be said that they become non-excisable. - AT
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Excise Duty Demand u/s 4 Overturned for Goods Altered by Dealers Before Sale Under MRP Scheme.
Case-Laws - AT : Demand of duty under Section 4 of the Central Excise Act - Goods cleared under MRP scheme u/s 4A - packaged form was opened at the dealers end for addition and mixing of the desired colourants, prior to the delivery to the ultimate customer - Demand on the basis of valuation u/s 4 set aside. - AT
VAT
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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 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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2012 (3) TMI 168
A society formed for advancement of music, other fine arts and traditional arts - assessee applied for renewal of its approval under Section 80G of the Act - Assessee registered under Section 12AA - The Department contented receipts of the assessee from sponsorship fees, sale of tickets and music coaching was in excess of Rs. 10 lakhs and application for renewal of approval under Section 80G of the Act rejected - Held that :- assessee's object was development of music and other fine arts based on Indian culture and assessee was not carrying on any trade, commerce or business, when it was collecting fees from persons who were attending the programmes - denial of renewal of application under Section 80G of the Act, when its registration under Section 12AA of the Act was intact, was unjustified [Mylapore Fine Arts Club v. Dy. DIT(E) in I.T. Appeal No. 1706/Mds/2010 ] - advancement of traditional musical culture of Tamil Nadu and conducting music programmes sponsored by various persons and sponsorship fee so received, distributed among the artists, can never be considered as an activity in the nature of trade, commerce or business - assessee was eligible for renewal of approval under Section 80G of the Act - appeal filed by the assessee is allowed.
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Customs
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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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2012 (3) TMI 162
Re-import of goods being returned by foreign purchaser as find not suitable for consumption - Port Health Officer conform not upto the standards prescribed by the Prevention of Food Adulteration Act - Petitioner filed writ petition to allow release of goods under Bill of Entry No.4605474 dated 12.9.2011 and to reexamine the goods- Held that :- food item not find suitable by foreign buyers and same confirmed by Port Health Officer - dump the same on unsuspecting public in India cannot be permitted - writ petition is dismissed.
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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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2012 (3) TMI 160
Prosecution of eight Directors of M/s. Metlex Ceramics Ltd. (in liquidation) on the ground that no Statement of Affairs had been filed by any of these Directors in spite of the company being ordered to be wound up - Held that :- The Official Liquidator has filed the report and as per the details as of today except Sh. S.L. Chopra it would not be possible to proceed against any other Directors - if the appellant or Sh. S.L. Chopra are also allowed to go scot free and are not even tried, the effect of that would be as if none of the Directors had any responsibility and/or duty to file the statement of affairs; such a situation cannot be accepted - Once the appellant assumed the position of a Director and some evidence has come on record in the form of signing the documents, prima facie it would lead to the conclusion that she was taking part in the day to day affairs of the company - no merit in this appeal and is accordingly dismissed - Official Liquidator to take up the matter before Learned Company Judge against Sh. S.L. Chopra
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Central Excise
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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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2012 (3) TMI 159
Pre-deposit of Duty along with penalty u/s 11AC - manufacture of Chewing Tobacco (Khaini) under the brand name of Raja falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 - Revenue contented that one of the raw materials i.e. lime used is first dissolved in the water and after filtration of dissolved limestone, the filtered lime water is further put to use for making khaini by dissolving other raw materials in this end - 50% of the production so recorded on the ground that addition of water results in 50% of excess production and duty stands confirmed against them on the findings of excess production and clearance - Held that;- appreciating the order of the Settlement Commission laying down that such water addition to lime and the other material results in 10% excess production of final product - the appellant to deposit Rs. 3.50 crores within a period of 12 weeks from the date of order passed.
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2012 (3) TMI 158
Dispute of quantification - SSI Exemption - Held that:- Excise duty actually paid at the time of clearance of goods from the factory, in terms of Notification No.175/86 is not required to be included in the total demand, in as much as that already stands paid by the appellants. Once they cross the nil rate of duty slabs and start paying concessional rate of duty under the second slab, the entire clearances thereafter have to be treated as having been cleared on payment of concessional rate. Similarly after crossing the final slab requiring the appellants to pay full rate of duty, the clearances affected thereafter are required to be considered as having been made on full rate of duty. - set aside the impugned order and remand the matter to Commissioner for correctly quantifying the demand of duty.
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Indian Laws
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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.
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