Dear Professional Colleagues,

 

          I am listing below gist of important circulars, judgments and other inputs for your information and use and for suggestions/comments if any.

 

With regards

R.Satyanarayana M.Com, AICWAI

Associate Membership No. 6518

Email: Satyanarayana.yadav@rediffmail.com

Mobile 9820333670

 

INCOME-TAX :

 

v                 Income-Tax Dept. cannot claim priority over secured creditors for its dues. 

            ASST. CIT VS. OFFICIAL LIQUIDATOR OF MINAL OIL AND INDUSTRIES LTD. & ORS. [(2007) 136 COMP. CAS 399 (GUJ.)

 

v                 Set-off of Refund - Section 245 – Adjustment of demand against refund due to the Assessee can be exercised only after giving the opportunity to assessee of being heard by giving an intimation to assessee in writing of the proposed action by the Assessing Officer.

            GLAXO SMITHKLINE ASIA (P) LTD. VS. CIT & ORS. [2007] 208

            CTR (DEL.) 1.

 

v                 For the purposes of deduction under Section 80HHC (Clause baa) interest will be 90% of net interest income i.e. interest income less interest expenses.

            CIT VS. SHRI RAM HONDA POWER EQUIPMENT [2007] 289 ITR 475 [DEL]

 

v                 Judicial discipline requires that judgment rendered by a co-ordinate Bench should be followed by another co-ordinate Bench.

            ASHOK ORGANICS INDS. LTD. VS. DENA BANK & ORS. (2007)

            135 COMP. CAS 203 (BOM)

 

v                 In case of refunds arising out of Appellate orders, assessing officers are required to grant refund without any claim by assessee.

 

v                 Supreme Court has ruled that Excise Duty and Sales Tax can not form part of total turnover of the company under Section 80HHC under Income Tax Act, 1961.

            COMMISSIONER OF INCOME TAX, COIMBATORE VS. LAXMI MACHINERY WORKS CASE.

 

v                 Payment received under Optional Early Retirement Scheme (OERS) qualifies for exemption under Section 10(10C) and balance qualifies for relief u/s. 89(1).

            Shri Petric F. Britto & 221 others Vs. ITO 26 (1) (2)

            ITAT `K’ Bench, Mumbai  ITAT No. 4493/Mum./206

 

v                 Compensation for additional project work received pursuant to arbitration award after PE ceased to exist is taxable.

            Van Oord Dredging & Marine Contractors BV Vs. DDIT

            105 ITD 97 (Mum.)

 

v                 The Finance Bill 2007 received the assent of President of India on the 11th May, 2007 and shall come into effect from 11th May, 2007.

 

v                 Individuals having salary pension and interest income, are required to file ITR-1 in respect of financial year 2006-07 (AY 2007-08) and they are not required to enclose Form-16 i.e. TDS Certificate issued by employer.

          However, they are required to report transactions captured in annual information return and necessary details are available in said ITR on this account. (Section  17 of ITA read with Rule 3 of ITR)

 

v                 In order to make TDS return transparent, Govt. wants to introduce on-line system and do away with use of intermediaries in submitting the TDS returns.

 

v                 Companies can exercise option to certify TDS certificates (Form 16) by way of digital signature.

            CBDT Circular No. 2/2007 dtd. 21.05.2007

 

v                 When the rent recovered from the employee for accommodation provided by the company is less than 15% of the salary, it would result into concession.  In all such cases, perquisite value of the concession is to be worked out which is equal to 20% of the salary minus rent recovered from the employee.

 

v                 Interest for default in payment of FBT :  The computation of interest payable for shortfall in payment of FBT has been modified.  In addition, interest will be payable on 1st April of Assessment Year, where the advance FBT is less than 90% of the tax assessed.  The amendment is effective from 1st June, 2007.

 

 

EXCISE :

 

v                 When the sales are ex-factory, then the freight and insurance charges incurred by manufacturer on behalf of the client, can not be included in the assessable value.

            NATIONAL HEAVY ENGINEERING CO-OP. LIMITED VS. COMMISSIONER OF CENTRAL EXCISE, PUNE-II {2007}

            (210) ELT 139 TRI-MUMBAI.

 

v                 Beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively.

          COMMISSIONER OF CENTRAL EXCISE VS. MYSORE ELECTRICALS INDS. LTD. (2007) 204 ELT 517 (SC), and SUCHITRA COMPONENTS LTD. VS. COMM. OF CENTRAL EXCISE (2007) 8 RC 204 (SC)

 

v                 In the absence of any malafide intention when there is usage and accounting of large number of inputs, and in some cases excess and some other cases shortages, duty can not be collected on shortages ignoring excesses.

            DENSOKIRLOSKAR INDUSTRIES PVT. LTD. U/S. CCE Bangalore

            195 ELT 102.

 

v                 New procedure governing the movement of indigenous goods from factory of manufacture or warehouse to a unit set up under EOU/ EHTP/ STP/ BTP Scheme has been announced and these units can obtain goods without payment of duty by making application to the proper officer of Excise Dept. and by issuing certificate in CT-3.

            Circular No. :  851/9/2007-CX dtd. 3rd May, 2007

            F.No. DGEP/EOU/401/2006.

 

 

SALES-TAX :

 

v                 Selling dealer will be exempted from the requirement of printing counterfoils or duplicate of bills or cash memos after getting the permission of Commissioner of Sales Tax to maintain records of bills and cash memos on electronic system. 

            CIRCULAR 23T OF 2007 DTD. 12.03.07 ISSUED BY COMMISSIONER OF SALES TAX, MUMBAI.

 

v                 Dealers are required to calculate and pay interest @ 1.25% p.m. or part thereof along with the tax paid after the due date to avoid levy of penalty by Sales Tax Authorities.

            Circular 27d of 2007 dtd. 20.03.07 issued by Commissioner of Sales Tax, Maharashtra)

 

v                 CENVAT credit based on input excise duty paid at higher rate by mistake is allowable Excise at the higher rate of duty paid. 

          Nahar Industrial Enterprises Ltd. Vs. CCE Chandigarh 2007 (5) STR 385 (Tri-Del)

 

v                 VAT :  Govt. has formed a Joint Working Group for preparing roadmap for introducing the Goods and Service Tax (GST) and the same will be Co-chaired by Parthasarthi Shome, Advisor to the Finance Minister and Satish Chandra, Secretary of the Empowered Committee of State Finance Ministers on VAT.

 

 

 

SERVICE-TAX :

 

v                 Advances received for services are liable for service tax vide Sec.67(3) of Finance Act, 1994.

 

v                 Service Tax paid for outward transportation of finished goods manufactured are treated as input services and Service Tax paid on transportation of finished goods from factory to customer’s premises is admissible as CENVAT.

            2006 (4) S.T.R. J109, J111.

 

v                 Summons in respect of Service Tax matters for calling information can only be issued after obtaining prior written permission from an officer not below the rank of Dy. Commissioner with reasons for issuance of summons recorded in writing.

            C.B.E. & C. Instruction in F.NO.137/39/2007-CX-4 dated 26.02.2007.

 

v                 Service Tax on running of immovable properties for commercial use is payable on the rental amount received less the amount of property tax paid.

 

v                 Fees for late filing ST-3 Return : 

          To avoid proceedings for delay in submitting of the Service Tax return i.e. submission after the due date, prescribed amount is required to be paid which is on sliding scale depending on the number of days delayed.

            Notification No. 20/2007 dtd. 12th May, 2007.

 

v                 For Levy or Service Tax in execution of a works contract, the assessable value shall be equal to gross amount charged for the works contract less the value of property in goods involved in the execution of the said works contract.

          Notification No. 29/2007-Service Tax, F. No. B1/7/2007/TRU dtd. 22nd May, 2007.

 

v                 The person liable to pay service tax in relation to works contract service, shall have the option to discharge the service tax liability on the works contract service provided or to be provided by paying the amount equal to 2% of the gross amount charged for the works contract instead of paying service tax at the rate specified in Section 66 of the Act and will not be eligible for any Cenvat benefit.

            Notification No. 32/2007-Service Tax,  F. No. B1/2007-TRU dtd. 22nd May, 2007.

 

v                 Seven services listed in the budget 2007-08 will come into effect from 1st June, 2007.

          Notification No.23/2007-Service Tax dtd. 22.05.07 and F No. B1/16/2007-TRU dtd. 22nd May, 2007 & Notification No. 25/2007-CE, 27/2007-CE(NT) dtd. 12.05.07.

 

v                 Assessing officers are required to ensure that any interest payable under Section 244 A of the Income Tax Act is granted simultaneously with the grant of refund.

            Circular No. 385/08/2007 IT (B) Ministry of Finance.

 

v                 Bill showing value inclusive of Service Tax not permissible.

          83 of Finance Act, 1994 and 12A of Central Excise Act, 1944.

 

v                 48 circulars and instructions of Service Tax have been withdrawn by Government.

            CBFC Circular 93/04/2007-ST dated 10th May, 07.

 

 

 

CUSTOMS :

 

v                 Antidumping duty is imposed on imports of Zinc Oxide from Peoples Republic of China.

            Notification No. 64/2007 – Customs dtd. 7th March, 07. 

 

v                 If the value of any inputs or capital goods before being put to use on which Cenvat Credit has been taken is written off fully or whether any provision for fully write-off, the manufacturer shall pay an amount equal to Cenvat credit taken in respect of such input or capital goods. 

            Notification No. 26/2007 – Central Excise (NT) dtd. 11th May, 07.

 

 

OTHERS :

 

IMPORT – EXPORT :

 

v                 The popular Duty Entitlement Passbook (DEPB) has been extended till March, 2008.

 

v                 Duty-free import of products under target plus scheme is revised allowing exporters of goods to import only goods that will be used as input for manufacturing exported goods

            M.F.(D.R.) Letter F. No. 605/66/2006-DBK dated 8.5.2007 (see page T40)

 

RBI :

 

v                 Banks are permitted to make advance remittance upto USD 10 Lac or its equivalent without a B.G. / stand by LC, subject to conditions specified for import of goods into India.

 

v                 Govt. has issued a circular granting waiver of requirement of BG in respect of imported goods to be warehoused in public or private bonded warehouses.

            Circular 18/2007 – Customs dtd. 24th April, 07.

 

v                 W.e.f. 1st April, 07, companies will be required to pay charges for loans sanctioned to them but not utilized.  As banks are required to set-aside capital for un-utilized portion of the loans under the new capital adequacy guidelines.  So far only loans availed attracted capital expenditure norms.  As a result, banks have asked companies to re-assess their loan requirement sanctioned to them, otherwise banks will levy charge on un-drawn portion of the loan.

 

v                 Banks are allowed to remit around USD100,000.- per Financial Year for any permitted current or capital account transactions vide A.P. (Dir Series) Circular No.51 dtd. 8th May, 2007.

 

COMPANY LAW :

 

v                 The last date for filing of Director Identification Number (DIN) in Form 1 and Form 3 has been extended to 30th June, 2007.

 

v                 Govt. has constituted a National Advisory Committee on Accounting Standards to assist the Central Govt. for the formulation and laying down the accounting policies and Accounting Standards for adoption by companies under the Companies Act, 1956 and Shri Yezdee H. Malegaon has been appointed as Chairman of the said Company.

                        Notification F:1/5/2001 – CL IV dtd. 9th March, 2007.

 

 

v                 Accounting Standard Board of ICAI has issued guidance note on implementing AS-15, employee benefits (revised 2005). 

            F. No. 1/4/2006 /CL-V dtd. 29th March, 2007.