EASY EXIT SCHEME, 2011 (EES,2011)

Dear All,

Opportunity to the Companies, for getting their names strike off from the Registrar of Companies under "Easy Exit Scheme, 2011" (EES, 2011)

The Ministry of Corporate Affairs has re-launched an EASY EXIT SCHEME, 2011 (EES, 2011) to ensure a timely updation of Filing obligations by the Companies.

The EASY EXIT SCHEME, 2011 (EES, 2011) offers an easy EXIT route to a defunct Company who is not carrying on any business and want its name to be Struck off  from the Registrar of Companies. The interested Companies need to file an online Application under the Easy Exit Scheme (EES), 2011 after complying with certain conditions. It is open for a very short time period of one month only from 1st January, 2011.

A similar scheme was introduced earlier from 30th May, 2010 to 31st August, 2010 during which many companies availed of the scheme, whereas many others missed the opportunity.Here's another oppurtunity which may be availed well in time by the interested Companies.

For further details please go through the file attached with this mail or log on to mca.gov.in

 

Thanks & Regards

CA Subhash Ch. Saraf

Saraf & Chandra

Service Tax on job work on exempt excisable goods - More Views

Mr. Sumit Batra, Advocate had raised a query : A is manufacturer of goods which are exempt from payment of excise duty. A gets some work done from B on job work basis. Is A liable to pay service tax for job work from B, in case B does not pay to the govt.?      Responses were received from following eminent experts :    Mr. B.N.Gururaj, Advocate & Author of Books on IDT :   "Some work" was got done by A through B. Does it result in bringing into existence excisable goods, as defined in section 2(d) of the CE Act, 1944? If the answer is affirmative, the said 'some work' will hop out of "Business Auxiliary Service" entry. There will be no service tax liability. On the other hand, if the result of processing is not bringing into existence any excisable goods, service tax would be chargeable by B.   Excisable goods are defined in section 2(d) as goods specified in the First Schedule or Second Schedule of the CE Tariff Act, 1985, as leviable to duty of excise. Thus, even if the goods are exempt, if the subject goods resulting from the work done finds entry in the CET, it would satisfy the condition of  exclusion clause in BAS definition. In effect no service tax would be payable.   If the excisable goods emerge in the hands of B, the fact that the final product is exempt in the hands of A is not relevant. On the other hand, if excisable goods do not emerge in the hands of B, and A's final product is exempt, service tax would be payable on the job charges billed by B on A. It is incorrect when most people refer to the word "manufacture" when BAS has been amended to refer to "Excisable Goods". Reference has to be to bringing into existence any 'excisable goods'. Exemption to final product has nothing to do with service tax liability. On the other hand, if the process falls within the scope of BAS, such provided for eventual use of processed goods in the manufacture of exempt final product would require payment of service tax. Proviso to Notification No. 8/2005-ST may be referred.   Mr. T R Rustagi, former Chief Commissioner in CBEC : It seems to me that in the context of job work, the relevant taxable service is business auxiliary service. It seems that no service tax is attracted if the job work amounts to 'manufacture'. Even if the goods are exempt, 'manufacture' does take place in the process of job work. V S Datey,  Author of books on Indirect Taxes and Corporate Laws :  A is not liable since liability of service tax is of service provider and not service receiver (except in case of reverse charge in case of GTA and import of service)   Even liability of B is arguable since the words used are 'payable' and not 'actually paid'. Thus, it can be argued that it is sufficient if the products are such that they are dutiable (Of course litigation prone) CA Ravi Holani  : It is not specified whether the process or operations carried out is amounting to manufacture in terms of the Central Excise Act,1944 which is the acid-test, whether excise duty is payable or exempted has no relevance.  CA Pradeep Jain :  Since he is exempt from payment of excise duty (must by virtue of exemption notification) which implies that the process undertaken by job worker will be amounting to "manufacture". If this is the situation then  the service tax is not payable under "BAS".   For queries of jobwork, first of all we must see whether the process amounts to manufacture under Central excise duty. There are two view on the same. One is judicial view wherein a new product with a different name, character and use should emerge. Secondly, we should see the deemed definition in chapter notes and should also see if the product is covered under MRP based valuation under Section 4A.   Further, if the process does not amount to manufacture, we have to see whether the job worker getting job work challan under Rule 4(5)(a) of Cenvat credit rules or under notification 214/86-C.E. dated 1.3.1986. This implies that the manufacturer must be paying duty after job work. In that situation the exemption under notification 8/2005-St is available.   If the same is not the situation, then jobworker has to pay service tax. However, the benefit of threshold exemption under notification 6/2005-ST is still available to him.   Here also, the job work in textile industry is exempt from service tax.   Mr. Madhukar Hiregange :  If the process carried on by the JW amounts to manufacture then no service tax otherwise it could be liable unless exempted under not.14/05. Exemption under Not.8/05 not available.   Mr. Gokul Kishore, Associate Editor of Service Tax Review : It depends on whether the job work undertaken by B amounts to manufacture as per Section 2(f) of Central Excise Act, 1944 or not. If the job work activity amounts to mfr, then Service tax liability does not arise as BAS as per Sec. 65(19) of FA, 1994 excludes it.   If it does not, then B as job worker is liable and may be eligible for exemption under Notfn No. 8/2005-S.T. subject to satisfaction of conditions therein. But this exemption in this case may not be admissible as the condition of removal of goods by principal on payment of duty is not fulfilled.   There is no question of A or somebody else paying the tax on behalf of some other person which is liable to be paid by B for the taxable service, if any, provided by him. Liability does not get shifted due to default by person liable as per law.   Mr. Pankaj Jain , Senior IDT Officer : The service appears to be covered in BAS (production / processing on behalf of client) and not covered in notification 8/2005.   Whether query has any complex ingredient ?   Nitesh Jain : Only B is responsible for ST - one cannot shift ones tax liability to another so no way A can be held responsible for a liability which belongs to B.   A.K.Parthasarathy, Tax Consultant :  Taxable service rendered by Mr.B attracts levy of service tax under the section 65 (105) :  "taxable service" means any service provided or to be provided -(zzb) to a client, by  any person in relation to business auxiliary service. However, if goods manufactured by Mr. A attracts "NIL" rate of excise duty then, Mr. B has to pay the service tax subject to minimum exemption limit of Rs. 10 Lakhs. Manish Wadhwa, IDT Officer :  Leviability of service tax on job work in respect of goods which are exempted from excise duty is a very complicated and controversial topic and an opinion cannot be given offhand without knowing the nature of the jobwork being undertaken and the complete aspects of the transaction. However briefly the activity is leviable to service tax under clause (v) of the Business Auxiliary Services- Production or processing of goods for, or on behalf, of the client. This is subject to the condition that the activity of production or processing does not amount to manufacture (of excisable goods) within the meaning of clause 2(f) of the central excise act 1944. However prima facie in the case under reference since the manufacturer A is manufacturing excisable goods which are exempted by some notification, it would appear that the activity would not be covered under service tax. Further discussion invited. Mr. Sumit Batra has been requested to clarify the grey areas. Kind regards, Rebecca Andrews

Whether ST payable on Job Work where Goods Exempt from Excise Duty

 

Mr. Sumit Batra, Advocate had raised a query : A is manufacturer of goods which are exempt from payment of excise duty. A gets some work done from B on job work basis. Is A liable to pay service tax for job work from B, in case B does not pay to the govt.?    Responses were received from following eminent experts :    Mr. B.N.Gururaj, Advocate & Author of Books on IDT :   "Some work" was got done by A through B. Does it result in bringing into existence excisable goods, as defined in section 2(d) of the CE Act, 1944? If the answer is affirmative, the said 'some work' will hop out of "Business Auxiliary Service" entry. There will be no service tax liability. On the other hand, if the result of processing is not bringing into existence any excisable goods, service tax would be chargeable by B.   Excisable goods are defined in section 2(d) as goods specified in the First Schedule or Second Schedule of the CE Tariff Act, 1985, as leviable to duty of excise. Thus, even if the goods are exempt, if the subject goods resulting from the work done finds entry in the CET, it would satisfy the condition of  exclusion clause in BAS definition. In effect no service tax would be payable.   If the excisable goods emerge in the hands of B, the fact that the final product is exempt in the hands of A is not relevant. On the other hand, if excisable goods do not emerge in the hands of B, and A's final product is exempt, service tax would be payable on the job charges billed by B on A.   Mr. T R Rustagi, former Chief Commissioner in CBEC : It seems to me that in the context of job work, the relevant taxable service is business auxiliary service. It seems that no service tax is attracted if the job work amounts to 'manufacture'. Even if the goods are exempt, 'manufacture' does take place in the process of job work. V S Datey,  Author of books on Indirect Taxes and Corporate Laws :  A is not liable since liability of service tax is of service provider and not service receiver (except in case of reverse charge in case of GTA and import of service)   Even liability of B is arguable since the words used are 'payable' and not 'actually paid'. Thus, it can be argued that it is sufficient if the products are such that they are dutiable (Of course litigation prone) CA Ravi Holani  : It is not specified whether the process or operations carried out is amounting to manufacture in terms of the Central Excise Act,1944 which is the acid-test, whether excise duty is payable or exempted has no relevance.  CA Pradeep Jain :  Since he is exempt from payment of excise duty (must by virtue of exemption notification) which implies that the process undertaken by job worker will be amounting to "manufacture". If this is the situation then  the service tax is not payable under "BAS".   For queries of jobwork, first of all we must see whether the process amounts to manufacture under Central excise duty. There are two view on the same. One is judicial view wherein a new product with a different name, character and use should emerge. Secondly, we should see the deemed definition in chapter notes and should also see if the product is covered under MRP based valuation under Section 4A.   Further, if the process does not amount to manufacture, we have to see whether the job worker getting job work challan under Rule 4(5)(a) of Cenvat credit rules or under notification 214/86-C.E. dated 1.3.1986. This implies that the manufacturer must be paying duty after job work. In that situation the exemption under notification 8/2005-St is available.   If the same is not the situation, then jobworker has to pay service tax. However, the benefit of threshold exemption under notification 6/2005-ST is still available to him.   Here also, the job work in textile industry is exempt from service tax.   Mr. Madhukar Hiregange :  If the process carried on by the JW amounts to manufacture then no service tax otherwise it could be liable unless exempted under not.14/05. Exemption under Not.8/05 not available.   Mr. Gokul Kishore, Associate Editor of Service Tax Review : It depends on whether the job work undertaken by B amounts to manufacture as per Section 2(f) of Central Excise Act, 1944 or not. If the job work activity amounts to mfr, then Service tax liability does not arise as BAS as per Sec. 65(19) of FA, 1994 excludes it.   If it does not, then B as job worker is liable and may be eligible for exemption under Notfn No. 8/2005-S.T. subject to satisfaction of conditions therein. But this exemption in this case may not be admissible as the condition of removal of goods by principal on payment of duty is not fulfilled.   There is no question of A or somebody else paying the tax on behalf of some other person which is liable to be paid by B for the taxable service, if any, provided by him. Liability does not get shifted due to default by person liable as per law.   Mr. Pankaj Jain , IDT Expert : The service appears to be covered in BAS (production / processing on behalf of client) and not covered in notification 8/2005.   Whether query has any complex ingredient ?   Nitesh Jain : Only B is responsible for ST - one cannot shift ones tax liability to another so no way A can be held responsible for a liability which belongs to B.   A.K.Parthasarathy, Tax Consultant :  Taxable service rendered by Mr.B attracts levy of service tax under the section 65 (105) :  "taxable service" means any service provided or to be provided -(zzb) to a client, by  any person in relation to business auxiliary service. However, if goods manufactured by Mr. A attracts "NIL" rate of excise duty then, Mr. B has to pay the service tax subject to minimum exemption limit of Rs. 10 Lakhs. Further discussion invited. Mr. Sumit Batra has been requested to clarify the grey areas. Kind regards, Rebecca Andrews

ITR VOL 330 PART 1 AND

 

INCOME TAX REPORTS (ITR)

Volume 330 : Part 1 (Issue dated 3-1-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Cash credits --Books of account--Failure to produce--Presumption--Income-tax Act, 1961, s. 68-- Vijay Kumar Talwar v. CIT . . . 1

High Court --Appeal--Only when substantial question of law involved--When finding of fact would give rise to question of law--Income-tax Act, 1961, s. 260A-- Vijay Kumar Talwar v. CIT . . . 1

Purchase of immovable property by Central Government --Transfer--Definition--Lease for 9 years renewable at option of lessee for a further period of 9 years--Amounts to lease for more than 12 years--Parties obliged to submit Form 37-I within 15 days of draft agreement--Income-tax Act, 1961, s. 269UA(f)(i)-- Govind Impex P. Ltd. v. Appropriate Authority, Income-tax Department . . . 10

Question of law --When finding of fact gives rise to question of law-- Vijay Kumar Talwar v. CIT . . . 1

HIGH COURTS

Advance tax --Interest--Interest leviable with respect to tax on assessed income and not income declared--Disallowance of claim under sections 80HHC and 80-IB--Bona fide belief that income not taxable in view of sections 80HHC and 80-IB--Not a valid ground--Interest chargeable--Income-tax Act, 1961, s. 234B-- Jacob Export House v. CIT (P&H) . . . 53

Assessment --Notice under section 143(2)--Mandatory--No proof of sending notice--Assessment null and void--Income-tax Act, 1961, s. 143(2)-- CIT v. CPR Capital Services Ltd . (Delhi) . . . 43

Business expenditure --Assessee sole selling agent of manufacturing companies--Exhibition of products manufactured by its principals--Assessee incurring part of expenditure of exhibition under agreement with principals--Expenditure for purposes of business--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Micromatic Machine Tools P. Ltd. (Delhi) . . . 47

----Retrenchment benefit paid to workers on closure of one unit--Finding that units interdependent--Expenses to be allowed--Income-tax Act, 1961, s. 37-- CIT v. Pfizer Ltd. (Bom) . . . 62

Charitable purpose --Application of income to charitable objects--Depreciation--Claim to depreciation for determining percentage of funds to be applied for purposes of trust--Allowable--Not a case of double benefit--Income-tax Act, 1961, s. 11-- CIT v. Market Committee, Pipli (P&H) . . . 16

----Exemption--Assessee-trust engaged in renting building owned--Business income if utilized towards achievement of object of assessee-trust it would be incidental to achievement of object--Assessing Officer to decide as to whether such business income used for attainment of object--Matter remanded--Income-tax Act, 1961, s. 11-- Director of Income-tax (Exemptions) v. Willington Charitable Trust (Mad) . . . 24

----Application of income to charitable objects--Depreciation--Assessee claiming depreciation be reduced from income for determining percentage of funds to be applied for purposes of trust--Permissible--Not a case of double benefit--Income-tax Act, 1961, s. 11-- CIT v. Tiny Tots Education Society (P&H) . . . 21

Export --Special deduction under section 80HHC--Computation of special deduction--Conversion charges not includible in turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Coimbatore Twisters Pvt. Ltd. (Mad) . . . 45

----Special deduction--Export turnover--Definition--Fluctuation in foreign exchange rates--Surplus owing to difference between Indian currency equivalent at time of raising invoices and Indian currency equivalent at time of realization--Part and parcel of export turnover and total turnover--Income-tax Act, 1961, s. 80HHC-- Raghunath Exports (P) Ltd . v. CIT (Cal) . . . 57

----Special deduction--Insurance claim on stock-in-trade--Not independent income nor receipt of a nature similar to brokerage, commission, interest, rent or charges--Insurance claim part of business income--Not liable to be reduced to the extent of ninety per cent. while calculating eligible profits--Income-tax Act, 1961, s. 80HHC, Expln. (baa)-- CIT v. Pfizer Ltd . (Bom) . . . 62

----Special deduction--Sundry receipts--Matter remanded --Income-tax Act, 1961-- CIT v. Pfizer Ltd. (Bom) . . . 62

Income from house property --Rental income--Tribunal in earlier year finding that income received from sub-letting is income from house property--Finding of fact--Income-tax Act, 1961-- CIT v. Pfizer Ltd. (Bom) . . . 62

Income from undisclosed source s--Burden of proof--Sale of assets of assessee--On basis of letters recovered in search of third party, inference of enhanced consideration drawn--No corroborative evidence to show assessee received additional sum--Assessee's contention that letters forged--Failure to summon persons concerned for cross-examination by assessee--Addition not proper--Income-tax Act, 1961-- Bangodaya Cotton Mills Ltd . v. CIT (Cal) . . . 104

Industrial undertaking --Special deduction under section 80-IB--Condition precedent--Profits should be derived from industrial undertaking--Meaning of "derived from"--Interest subsidy received from State Government--Not derived from industrial undertaking--Assessee not entitled to special deduction in respect of such subsidy--Income-tax Act, 1961, s. 80-IB-- CIT v. Gheria Oil Gramudyog Workers Welfare Association (HP) . . . 117

Penalty --Concealment of income--Revised returns after survey operations showed concealment of income--Imposition of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- LMP Precision Engg. Co. Ltd. v. Deputy CIT (Asstt.) (Guj) . . . 93

----Concealment of income--Tribunal holding that addition result of disallowance and not concealment of particulars of income--Finding of Tribunal that addition based on disallowance without any material on record--Matter remanded--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. N. S. Ichoponani (P&H) . . . 125

Precedent --Effect of Supreme Court decisions in Liberty India v. CIT [2009] 317 ITR 218 and CIT v. Sterling Foods [1999] 237 ITR 579-- CIT v. Gheria Oil Gramudyog Workers Welfare Association (HP) . . . 117

Reassessment --Notice--Limitation--Effect of sections 147 and 149--Income escaping assessment exceeding Rs. 1 lakh--No failure to disclose material facts necessary for assessment--Notice for assessment year 1995-96 in March 2002--Notice barred by limitation--Income-tax Act, 1961, ss. 147, 148, 149-- Dhampur Sugar Mills Ltd . v. Asst. CIT (All) . . . 72

Refund --Interest on refund--Assessee voluntarily paying tax on transport subsidy--Claim before Commissioner (Appeals) that transport subsidy was not assessable--Claim allowed by Commissioner (Appeals)--Refund consequent on order of Commissioner (Appeals)--Assessee responsible for delay in refund--Interest payable from date of appellate order--Income-tax Act, 1961, s. 244A-- CIT v. Assam Roofing Ltd. (Gauhati) . . . 87

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 11 --Charitable purpose--Application of income to charitable objects--Depreciation--Assessee claiming depreciation be reduced from income for determining percentage of funds to be applied for purposes of trust--Permissible--Not a case of double benefit-- CIT v. Tiny Tots Education Society (P&H) . . . 21

----Charitable purpose--Application of income to charitable objects--Depreciation--Claim to depreciation for determining percentage of funds to be applied for purposes of trust--Allowable--Not a case of double benefit-- CIT v. Market Committee, Pipli (P&H) . . . 16

----Charitable purpose--Exemption--Assessee-trust engaged in renting building owned--Business income if utilized towards achievement of object of assessee-trust it would be incidental to achievement of object--Assessing Officer to decide as to whether such business income used for attainment of object--Matter remanded-- Director of Income-tax (Exemptions) v. Willington Charitable Trust (Mad) . . . 24

S. 37 --Business expenditure--Assessee sole selling agent of manufacturing companies--Exhibition of products manufactured by its principals--Assessee incurring part of expenditure of exhibition under agreement with principals--Expenditure for purposes of business--Deductible-- CIT v. Micromatic Machine Tools P. Ltd. (Delhi) . . . 47

------Business expenditure--Retrenchment benefit paid to workers on closure of one unit--Finding that units interdependent--Expenses to be allowed-- CIT v. Pfizer Ltd. (Bom) . . . 62

S. 68 --Cash credits--Books of account--Failure to produce--Presumption-- Vijay Kumar Talwar v. CIT (SC) . . . 1

S. 80HHC --Export--Special deduction under section 80HHC--Computation of special deduction--Conversion charges not includible in turnover-- CIT v. Coimbatore Twisters Pvt. Ltd. (Mad) . . . 45

----Export--Special deduction--Export turnover--Definition--Fluctuation in foreign exchange rates--Surplus owing to difference between Indian currency equivalent at time of raising invoices and Indian currency equivalent at time of realization--Part and parcel of export turnover and total turnover-- Raghunath Exports (P) Ltd . v. CIT (Cal) . . . 57

S. 80HHC, Expln. (baa) --Export--Special deduction--Insurance claim on stock-in-trade--Not independent income nor receipt of a nature similar to brokerage, commission, interest, rent or charges--Insurance claim part of business income--Not liable to be reduced to the extent of ninety per cent. while calculating eligible profits-- CIT v. Pfizer Ltd . (Bom) . . . 62

S. 80-IB --Industrial undertaking--Special deduction under section 80-IB--Condition precedent--Profits should be derived from industrial undertaking--Meaning of "derived from"--Interest subsidy received from State Government--Not derived from industrial undertaking--Assessee not entitled to special deduction in respect of such subsidy-- CIT v. Gheria Oil Gramudyog Workers Welfare Association (HP) . . . 117

S. 143(2) --Assessment--Notice under section 143(2)--Mandatory--No proof of sending notice--Assessment null and void-- CIT v. CPR Capital Services Ltd .(Delhi) . . . 43

S. 147 --Reassessment--Notice--Limitation--Effect of sections 147 and 149--Income escaping assessment exceeding Rs. 1 lakh--No failure to disclose material facts necessary for assessment--Notice for assessment year 1995-96 in March 2002--Notice barred by limitation-- Dhampur Sugar Mills Ltd . v. Asst. CIT (All) . . . 72

S. 148 --Reassessment--Notice--Limitation--Effect of sections 147 and 149--Income escaping assessment exceeding Rs. 1 lakh--No failure to disclose material facts necessary for assessment--Notice for assessment year 1995-96 in March 2002--Notice barred by limitation-- Dhampur Sugar Mills Ltd . v. Asst. CIT (All) . . . 72

S. 149 --Reassessment--Notice--Limitation--Effect of sections 147 and 149--Income escaping assessment exceeding Rs. 1 lakh--No failure to disclose material facts necessary for assessment--Notice for assessment year 1995-96 in March 2002--Notice barred by limitation-- Dhampur Sugar Mills Ltd . v. Asst. CIT (All) . . . 72

S. 234B --Advance tax--Interest--Interest leviable with respect to tax on assessed income and not income declared--Disallowance of claim under sections 80HHC and 80-IB --Bona fide belief that income not taxable in view of sections 80HHC and 80-IB--Not a valid ground--Interest chargeable-- Jacob Export House v. CIT (P&H) . . . 53

S. 244A --Refund--Interest on refund--Assessee voluntarily paying tax on transport subsidy--Claim before Commissioner (Appeals) that transport subsidy was not assessable--Claim allowed by Commissioner (Appeals)--Refund consequent on order of Commissioner (Appeals)--Assessee responsible for delay in refund--Interest payable from date of appellate order-- CIT v. Assam Roofing Ltd. (Gauhati) . . . 87

S. 260A --High Court--Appeal--Only when substantial question of law involved--When finding of fact would give rise to question of law-- Vijay Kumar Talwar v. CIT (SC) . . . 1

S. 269UA(f)(i) --Purchase of immovable property by Central Government--Transfer--Definition--Lease for 9 years renewable at option of lessee for a further period of 9 years--Amounts to lease for more than 12 years--Parties obliged to submit Form 37-I within 15 days of draft agreement-- Govind Impex P. Ltd. v. Appropriate Authority, Income-tax Department (SC) . . . 10

S. 271(1)(c) --Penalty--Concealment of income--Revised returns after survey operations showed concealment of income--Imposition of penalty--Valid-- LMP Precision Engg. Co. Ltd. v. Deputy CIT (Asstt.) (Guj) . . . 93

----Penalty--Concealment of income--Tribunal holding that addition result of disallowance and not concealment of particulars of income--Finding of Tribunal that addition based on disallowance without any material on record--Matter remanded-- CIT v. N. S. Ichoponani (P&H) . . . 125

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 7 : Part 1 (Issue dated : 3-1-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Powers of Tribunal--Rectification of mistake--Tribunal holding that assessee cannot be permitted to claim benefit of closing stock by changing method of valuation in assessment proceedings under section 153A--Not a mistake apparent from record--Application under section 254(2) not maintainable--No power to review its order--Income-tax Act, 1961, ss. 153A, 254(2)-- Charchit Agarwal v. Asst. CIT (Delhi) . . . 35

Best judgment assessment --Estimation of income--Accounting--Rejection of accounts--No estoppel against acceptance of net profit rate by assessee--Assessing Officer applying net profit rate without considering past history where lower net profit rate approved--Direction of Commissioner (Appeals) to apply net profit rate at 8 per cent. considering past history reasonable--Income-tax Act, 1961, ss. 144, 145(3)-- Asst. CIT v. Kanhiya Lal Choudhary (Jaipur) . . . 61

Business expenditure --Disallowance--Payments in cash exceeding prescribed limit --Payments by distributor to service provider--No expenditure incurred since no purchases of goods or services on acceptance of delivery of SIM cards or service products--Transaction of principal to agent--Section 40A(3) not applicable--Income-tax Act, 1961, s. 40A(3)-- S. Rahumathulla v. Asst. CIT (Cochin) . . . 41

----Disallowance--Payments liable to deduction of tax at source--Small fraction of total expenditure representing labour charges--Not a contract for services or labour--Disallowance deleted--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

----Disallowance--Securities transaction tax--Rebate--Securities transaction tax paid and share trading income assessed under profits and gains of business--Disallowance under section 40(a)(ib)--Not bar to allow rebate under section 88E--Evidence of payment furnished during assessment not rebutted by Department--Sufficient compliance with provision--Direction to allow rebate proper--Income-tax Act, 1961, s. 88E-- ITO v. Chunilal T. Mehta (Kolkata) . . . 50

----Sales commission--Evidence regarding receipt of commission by assessee--Commission retained by assessee offered for taxation--No evidence regarding retention of money involved in payment of commission to sub-agent--Failure on part of Department to prove payments to sub-agents against public policy--Disallowance not justified --Income-tax Act, 1961, s. 37-- Deputy CIT v. Satya Prakash Arora (Delhi) . . . 95

Capital gains --Exemption--Sale of property--Capital Gains Deposit Scheme--Sale consideration deposited in scheme--Purchase of house property by availing of loan against deposit scheme--Sale consideration deposited in specified account before date for furnishing return--House property purchased within time-limit--Assessee entitled to exemption--Income-tax Act, 1961, ss. 54F(4), 139-- P. Thirumoorthy v. ITO (Chennai) . . . 10

Deduction of tax at source --Commission--Payments to concessionaires for sale of milk products--Transaction between assessee and concessionaires principal to principal --Payments not commission--Tax not to be deducted at source--Income-tax Act, 1961, s. 194H-- ITO v. Mother Dairy Food Processing Ltd. (Delhi) . . . 16

----Payment made for purchase of printed packing material to suppliers--No work involving skill or secrecy--Sale--Section 194C not attracted--Income-tax Act, 1961, s. 194C-- ITO v. Mother Dairy Food Processing Ltd. (Delhi) . . . 16

Depreciation --Higher depreciation--Computers--Specialised machines manufactured by specialists used in printing activity--Not "computers"--Assessee not entitled to higher depreciation --Income-tax Act, 1961, ss. 32, 36(1)(xi), Expln . -- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

Double taxation avoidance --Capital gains--Long-term capital gains on sale of shares in Indian company--Assessee claiming to be Mauritius based company--Whether effective place of management of assessee in Mauritius--Authenticity and relevance of documents relating to board meetings in Mauritius to be examined--Evidence to be brought on record--Matter remanded--Double Taxation Avoidance Agreement between India and Mauritius, arts. 4, 13--Income-tax Act, 1961-- SMR Investments Ltd. v. Deputy Director of Income-tax (Delhi) . . . 23

Industrial undertaking --Special deduction under section 80-IB--Determination of initial assessment year for purposes of section 80-IB--Period of ten years to be reckoned from date of approval by prescribed authority--Income-tax Act, 1961, s. 80-IB(8A), (14)(c)--Circular No. 794, dated August 9, 2000-- Asst. CIT v. S. K. Dynamics Pvt. Ltd. (Delhi) . . . 80

----Special deduction--Assessee engaged in business of scientific research and development--Approved by Government of India for benefit of deduction under section 80-IB(8A)--Conditions under section 80-IB(2) need not be fulfilled--Assessee entitled to deduction of income derived from transfer of technology developed by itself--Income-tax Act, 1961, s. 80-IB(8A)--Income-tax Rules, 1962, r. 18DA(1)(e)-- Asst. CIT v. S. K. Dynamics Pvt. Ltd. (Delhi) . . . 80

----Special deduction--Computation of --Royalty and lease rent to be excluded from profits of business --Only balance net interest income to be excluded from profits of business if nexus between interest income on deposits and interest expenditure on borrowings established--Matter remanded--Income-tax Act, 1961, s. 80-IB-- Videotex International P. Ltd. v. Asst. CIT (Chandigarh) . . . 32

Penalty --Acceptance of loans or deposits in cash exceeding prescribed limit--Assessee facing acute financial difficulties and in exceptional and unavoidable circumstances forced to accept cash deposits--All entries either trade entries or general voucher entry for squaring off accounts of trade and not a loan or deposit--Section 269SS not attracted --Penalty cannot be imposed--Income-tax Act, 1961, ss. 269SS, 271D-- Asst. CIT v. Western India Ceramics P. Ltd. (Ahmedabad) . . . 69

----Cash loans exceeding prescribed limit--Cash loans for purpose of disbursing salary to employees--No material by Department to prove contrary--Deletion of penalty justified--Income-tax Act, 1961, ss. 269SS, 271D-- Deputy CIT v. Rupen Das (Kolkata) . . . 55

Words and phrases --"Computer system"-- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Mauritius :

Arts. 4, 13 --Double taxation avoidance--Capital gains--Long-term capital gains on sale of shares in Indian company--Assessee claiming to be Mauritius based company--Whether effective place of management of assessee in Mauritius--Authenticity and relevance of documents relating to board meetings in Mauritius to be examined--Evidence to be brought on record--Matter remanded-- SMR Investments Ltd. v. Deputy Director of Income-tax (Delhi) . . . 23

Income-tax Act, 1961 :

S. 32 --Depreciation--Higher depreciation--Computers--Specialised machines manufactured by specialists used in printing activity--Not "computers"--Assessee not entitled to higher depreciation -- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

S. 36(1)(xi), Expln. --Depreciation--Higher depreciation--Computers--Specialised machines manufactured by specialists used in printing activity--Not "computers"--Assessee not entitled to higher depreciation -- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

S. 37 --Business expenditure--Sales commission--Evidence regarding receipt of commission by assessee--Commission retained by assessee offered for taxation--No evidence regarding retention of money involved in payment of commission to sub-agent--Failure on part of Department to prove payments to sub-agents against public policy--Disallowance not justified-- Deputy CIT v. Satya Prakash Arora (Delhi) . . . 95

S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Small fraction of total expenditure representing labour charges--Not a contract for services or labour--Disallowance deleted-- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Payments by distributor to service provider--No expenditure incurred since no purchases of goods or services on acceptance of delivery of SIM cards or service products--Transaction of principal to agent--Section 40A(3) not applicable-- S. Rahumathulla v. Asst. CIT (Cochin) . . . 41

S. 54F(4) --Capital gains--Exemption--Sale of property--Capital Gains Deposit Scheme--Sale consideration deposited in scheme--Purchase of house property by availing of loan against deposit scheme--Sale consideration deposited in specified account before date for furnishing return--House property purchased within time-limit--Assessee entitled to exemption-- P. Thirumoorthy v. ITO (Chennai) . . . 10

S. 80-IB --Industrial undertaking--Special deduction--Computation of--Royalty and lease rent to be excluded from profits of business--Only balance net interest income to be excluded from profits of business if nexus between interest income on deposits and interest expenditure on borrowings established--Matter remanded-- Videotex International P. Ltd. v. Asst. CIT (Chandigarh) . . . 32

S. 80-IB(8A) --Industrial undertaking--Special deduction--Assessee engaged in business of scientific research and development--Approved by Government of India for benefit of deduction under section 80-IB(8A)--Conditions under section 80-IB(2) need not be fulfilled--Assessee entitled to deduction of income derived from transfer of technology developed by itself-- Asst. CIT v. S. K. Dynamics Pvt. Ltd. (Delhi) . . . 80

----Industrial undertaking--Special deduction under section 80-IB--Determination of initial assessment year for purposes of section 80-IB--Period of ten years to be reckoned from date of approval by prescribed authority--Circular No. 794, dated August 9, 2000-- Asst. CIT v. S. K. Dynamics Pvt. Ltd. (Delhi) . . . 80

S. 80-IB(14)(c) --Industrial undertaking--Special deduction under section 80-IB--Determination of initial assessment year for purposes of section 80-IB--Period of ten years to be reckoned from date of approval by prescribed authority--Circular No. 794, dated August 9, 2000-- Asst. CIT v. S. K. Dynamics Pvt. Ltd. (Delhi) . . . 80

S. 88E --Business expenditure--Disallowance--Securities transaction tax--Rebate--Securities transaction tax paid and share trading income assessed under profits and gains of business--Disallowance under section 40(a)(ib)--Not bar to allow rebate under section 88E--Evidence of payment furnished during assessment not rebutted by Department--Sufficient compliance with provision--Direction to allow rebate proper-- ITO v. Chunilal T. Mehta (Kolkata) . . . 50

S. 139 --Capital gains--Exemption--Sale of property--Capital Gains Deposit Scheme --Sale consideration deposited in scheme--Purchase of house property by availing of loan against deposit scheme--Sale consideration deposited in specified account before date for furnishing return--House property purchased within time-limit--Assessee entitled to exemption-- P. Thirumoorthy v. ITO (Chennai) . . . 10

S. 144 --Best judgment assessment--Estimation of income--Accounting--Rejection of accounts--No estoppel against acceptance of net profit rate by assessee--Assessing Officer applying net profit rate without considering past history where lower net profit rate approved--Direction of Commissioner (Appeals) to apply net profit rate at 8 per cent. considering past history reasonable-- Asst. CIT v. Kanhiya Lal Choudhary (Jaipur) . . . 61

S. 145(3) --Best judgment assessment--Estimation of income--Accounting--Rejection of accounts--No estoppel against acceptance of net profit rate by assessee--Assessing Officer applying net profit rate without considering past history where lower net profit rate approved--Direction of Commissioner (Appeals) to apply net profit rate at 8 per cent. considering past history reasonable-- Asst. CIT v. Kanhiya Lal Choudhary (Jaipur) . . . 61

S. 153A --Appeal to Appellate Tribunal--Powers of Tribunal--Rectification of mistake--Tribunal holding that assessee cannot be permitted to claim benefit of closing stock by changing method of valuation in assessment proceedings under section 153A--Not a mistake apparent from record--Application under section 254(2) not maintainable--No power to review its order-- Charchit Agarwal v. Asst. CIT (Delhi) . . . 35

S. 194C --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Small fraction of total expenditure representing labour charges--Not a contract for services or labour--Disallowance deleted-- S. T. Reddiar and Sons v. Deputy CIT (Cochin) . . . 1

----Deduction of tax at source--Payment made for purchase of printed packing material to suppliers--No work involving skill or secrecy--Sale--Section 194C not attracted-- ITO v. Mother Dairy Food Processing Ltd. (Delhi) . . . 16

S. 194H --Deduction of tax at source--Commission--Payments to concessionaires for sale of milk products--Transaction between assessee and concessionaires principal to principal--Payments not commission--Tax not to be deducted at source-- ITO v. Mother Dairy Food Processing Ltd. (Delhi) . . . 16

S. 254(2) --Appeal to Appellate Tribunal--Powers of Tribunal--Rectification of mistake--Tribunal holding that assessee cannot be permitted to claim benefit of closing stock by changing method of valuation in assessment proceedings under section 153A--Not a mistake apparent from record--Application under section 254(2) not maintainable--No power to review its order-- Charchit Agarwal v. Asst. CIT (Delhi) . . . 35

S. 269SS --Penalty--Acceptance of loans or deposits in cash exceeding prescribed limit--Assessee facing acute financial difficulties and in exceptional and unavoidable circumstances forced to accept cash deposits--All entries either trade entries or general voucher entry for squaring off accounts of trade and not a loan or deposit--Section 269SS not attracted--Penalty cannot be imposed-- Asst. CIT v. Western India Ceramics P. Ltd. (Ahmedabad) . . . 69

----Penalty--Cash loans exceeding prescribed limit--Cash loans for purpose of disbursing salary to employees--No material by Department to prove contrary--Deletion of penalty justified-- Deputy CIT v. Rupen Das (Kolkata) . . . 55

S. 271D --Penalty--Acceptance of loans or deposits in cash exceeding prescribed limit--Assessee facing acute financial difficulties and in exceptional and unavoidable circumstances forced to accept cash deposits--All entries either trade entries or general voucher entry for squaring off accounts of trade and not a loan or deposit--Section 269SS not attracted--Penalty cannot be imposed-- Asst. CIT v. Western India Ceramics P. Ltd. (Ahmedabad) . . . 69

----Penalty--Cash loans exceeding prescribed limit--Cash loans for purpose of disbursing salary to employees--No material by Department to prove contrary--Deletion of penalty justified-- Deputy CIT v. Rupen Das (Kolkata) . . . 55

Income-tax Rules, 1962 :

R. 18DA(1)(e) --Industrial undertaking--Special deduction--Assessee engaged in business of scientific research and development--Approved by Government of India for benefit of deduction under section 80-IB(8A)--Conditions under section 80-IB(2) need not be fulfilled--Assessee entitled to deduction of income derived from transfer of technology developed by itself-- Asst. CIT v. S. K. Dynamics Pvt. Ltd. (Delhi) . . . 80

CA RAJU SHAH

CPE COMLIANCE DATE EXTENDED TO 31.3.2011

DEAR MEMBERS,

Extention of last date for complying with the requirements of CPE hours credit from 31st December, 2010 to 31st March, 2011 - (27-12-2010)

For information of the members

Sub:   Extention of last date for complying with the requirements of CPE hours credit from 31st December, 2010 to 31st March, 2011

This is for kind information of the members that the Council of the Institute has decided to extend the CPE Block period of 3 years ending on 31st December, 2010, by three months, i.e. to 31st March, 2011.

Secretary Continuing Professional Education Committee of ICAI

 Click here for announcement : http://icai.org/new_post.html?post_id=6714&c_id=219

Regards,
-------
CA.C.V.PAWAR

0253-2319641. M-9423961209

Case law-Ability to pay demand is no bar for grant of stay on recovery

---------- Forwarded message ----------
From: Dhaval desai dhaval.desai26@gmail.com

KEC International Limited vs. ACIT (ITAT Mumbai)

The assessee filed a stay application before the Tribunal. The Department opposed by relying on the observations of the Supreme Court in CCE vs. Dunlop India 154 ITR 172 (SC) and contended that as paucity of funds had not been sufficiently demonstrated, for this reason alone stay should not be granted. HELD rejecting the Department's contention and granting stay while following B. N. Nobis & Co vs. JCIT 71 TTJ 153 (Kol):

(i) While the Supreme Court has decried 'the practice of granting interim orders merely because assessee is able to show a good prima facie case', the observations have to be understood in the context of the case which was one of indirect taxation where the burden had already been passed on to the consumer. Also it was a case of a Writ Petition under Article 226 & not that of an appellate jurisdiction. The observations of the Supreme Court in the context of grant of stay in writ proceedings does not have binding force on, or even direct relevance to, the principles governing grant of stay during appellate proceedings though it does provide guidance on principles governing the decision to grant stay;

(ii) The Court has made it clear that though there are no hard and fast rules regarding grant of stay, prudence, discretion and circumspection are called for and stay should not be granted as a matter of course. Considerations about balance of convenience, question of irreparable injury and implications to public interest have to be borne in mind;

(iii) The Supreme Court's observations in Dunlop cannot be interpreted to mean that the Tribunal is denuded of the powers to grant stay until case for financial stringency is successfully made out by the applicant. There is no conflict in holding this view as also adhering to the settled principles governing grant of stay which lay down thatfinancial constraints of the applicant are important, even if not sole of qualifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of Revenue's rights of recovery being prejudiced by waiting till the outcome of appeals.

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Posted By Dhaval desai to T+ at 12/25/2010 11:45:00 PM