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

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INCOME-TAX :

                                        

v                 Govt. has raised the threshold limit for exemption on TDS on the interest paid to Senior Citizens’ (60 years & above) Savings Scheme to Rs.10,000/- from the current level of Rs.5,000/- in a Financial Year.

 

v                 Form-16 is not required to be enclosed with the Income Tax Returns even if refund is claimed.

 

v                 Process of filing application for exemption by Trusts on or after 1st June, 2007 will entitle them exemption of Income Tax for the financial year in which the application is made and not for earlier years.

 

v                 Dividend Distribution Tax must be added to profit for computing Minimum Alternate Tax (MAT).

 

v                 Government extends date for FBT payment on ESOPs to September 15, 2007 from 15th June, 2007.

 

v                 The mandatory requirement of giving PAN Card details for investment in Mutual Funds fixed earlier as 02.07.2007, has been extended to 31st Dec., 2007.

 

v                 Failure to deposit tax deducted at source with government attracts penalty if the deposit is not made within the prescribed period.

            Madhumilan Syntex Ltd. Vs. Union of India – 290 ITR 199 

 

v                 Mere construction by way of extension of the old existing house would not mean constructing a residential house and hence do not qualify for deduction under Section 54F of Income Tax Act, 1961.

            CIT Vs. V. Pradeep Kumar and another – 290 ITR 90 (Mad)

 

v                 8% savings (taxable) bonds ‘03 would attract TDS on interest exceeding Rs.10,000/- during the Financial Year.

            Notification F4 (10-W&M/2003) dtd. 31st May, 2007.

 

v                 Employers can issue TDS Certificate by digital signature. However, employers are required to have a control Number with log maintained and also to ensure that the TAN and PAN are correctly mentioned in such Form-16 bearing digital signatures.

            Circular 2/2007 dated 21st May, 2007 – F. No. 142/6/07-TPL.

 

v                 Provision for warrantee liability in respect of goods sold during the year can not be considered as Contingent Liability.

            IBM India Ltd. Vs. CIT (Appeal)

            105 ITD 1 (Bang) / 290 ITR (AT) 183 (Bang.)

 

v                 Licence fees for use of computer software is an intangible Asset within the meaning of s.32(1)(ii) and hence is capital expenditure in nature and eligible for depreciation.

            Sudarshan Chemical Industries Ltd. Vs. ACIT,    108 TTJ 28 (Pune)

 

v                 The purchase of application software which enables the assessee to carry out his business operation efficiently and smoothly, though there was an enduring benefit, it did not result into acquisition of any capital asset and therefore the payment for the software is a revenue expenditure.

            IBM India Ltd. Vs. CIT – 105 ITD 1 (Bang)

 

v                 Concessional Capital Gains Tax rate of 10% on long term capital gains are not available to non-residents transferring the shares of the Indian company and hence such long term capital gains attract tax @20%.

            BASF Aktiengesellschaft Vs. DDIT – 12 SOT 451 (Mum)

 

v                 Premium paid on leasehold land on lease for 99 years, is a capital expenditure.

            JCIT Vs. Mukand Ltd. – 13 SOT 558 (Mum)(SB)

 

v                 CBDT has issued a circular giving clarifications on differentiation between shares held as stock-in-trade and shares held as investment.

            Circular No. 4/07 dated 15.06.2007.

            (F. No. 149/287/2005 TPL)

 

v                 For the purpose of computing deduction u/s. 80 HHC, Sales Tax and Excise Duty can not form part of `total turnover’.

            CIT Vs, Lakshmi Machine Works

            160 Taxman 404 (SC) / 290 ITR 667 (SC)

 

v                 CBDT had notified revised rule 6DD relating to circumstances in which payment of sum exceeding Rs.20,000/- may be made otherwise than by an account payee cheque drawn on bank or account payee bank draft.

            CBD Circular No. 208/ 2007 dated 27.06.2007

 

v                 The amount paid to co-operative housing society for getting NOC is treated as necessary expenditure for transfer of flat and hence allowable as an expenditure under Section 48 of IT Act.

            Damodar G. Nagalia Vs. ACIT,  2007 12 SOT 599

 

v                 Bad debts not realisable due to bad financial position of the debtors companies like cases of companies which are under liquidation are entitled as allowable business expenditure.

            CIT Vs. Kerala State Industrial Development Corpn. Ltd.

            2007 (209) CTR 371 (Kerala)

 

EXCISE :

 

v                 Export Oriented Units (EOUs) having fiscal export turnover of more than Rs.15 Crores, which import raw material or procure it from domestic market, are exempted from physical verification by Excise officials.

 

v                 Cenvat Credit allowed on original invoice can not be denied subsequently on escalation invoice.

            Kisan Sahakari Chini Mills Ltd. Vs. Commissioner of Central Excise, Lucknow.         107 (212) E.L.T. 140 (Tri. Delhi)

 

v                 New settlement commission rules have been notified by the Government.  The new rules stipulate payment of additional duty liability accepted by the applicant before approaching the settlement commission.

            Notification 28/2007 – CA (NT) and 54/2007-CUS (NT) both dated 20th May, 2007.

            Notification covers both issues under Central Excise as well as Customs.

 

v                 Refund arising on account of excess payment of duty due to arithmetical error can not be considered as duty and hence refund of such cases are not hit by provisions of unjust enrichment. 

            Commissioner of Central Excise, Belgaum Vs. Gokak Mills Ltd.  2007 (212) E.L.T. 56 (Tri. – Bang.)

 

v                 In case of bulk liquid cargo imports, short receipt of goods due to loss in transit may happen.  Shore tank receipt quantity and not ullage report to be taken as basis for levy of Customs Duty vide Bar Circular No. 95/2002-Cus., Notification No. 16/2000-Cus.

            Commissioner of Central Excise, Ludhiana Vs. Amrit Enterprises Ltd.           2007 (212) E.L.T. 74 (Tri. – Del.)

 

v                 Cenvat Credit is admissible based on first stage and second stage registered dealers.  However, the invoice issued by the dealer should contain information about manufacturer to avoid suspicion and denial of Cenvat benefit by the Department.

            Trade Notice No. 10/07 dated 18.5.97 issued by Commissioner of Central Excise, Delhi-IV.

 

v                 Assessees (DTA) are entitled to Cenvat Credit of entire duty paid when supplies are made by 100% EOU.

            Ispat Metallics India Ltd. Vs. Commissioner of Central Excise, Raigad.  {2007 (212) E.L.T. 282 (Tri. Mumbai)}

 

v                 To assess value of clearance for exemption to be availed by SSI Units, value of exempted goods during the previous financial year are also required to be added to arrive at the aggregate value of clearances of excisable goods under clearance.

            Southern Electronics (Bang.) P. Ltd. Vs. CCE (Appeals), Bangalore.    2007 (212) E.L.T. 276 (Tri. Bang.)

 

v                 Appellant is entitled to interest on deposits made from the date of expiry of three months from Tribunal order till the date of payment of amount and there is no need to apply for refund claim.

            Mahindra & Mahindra Ltd. Vs. Commissioner of Central Excise, Hyderabad.     2007 (6) S.T.R. 413 (Tri. Bang.).

 

v                 Recredit of the duty charged on the invoice on account of cancellation of the order by the customer requires intimation when duty is debited from PLA and not from RG 23A Part II.

            Commissioner of Central Excise, Surat Vs. Uniflex Cable Ltd.

            2007 (212) E.L.T. 393 (Tri. Mumbai)

 

v                 Availing 50% of duty paid on capital goods in the first year and availing depreciation in respect of balance 50% of duty on which Cenvat credit not taken, does not involve violation of provisions of Cenvat Credit Rules, 2004.

            Suprajit Engineering Ltd. Vs. Commissioner of Central Excise, Bangalore.                 2007 (212) E.L.T. 394 (Tri. Bang.)

 

v                 Appellant can not be directed to reverse excess credit equivalent to differential duty calculated on discount amount given at later stage as per normal trade practice or mutual agreement.

            Brown Kraft Inds. Ltd. Vs. Commissioner of Central Excise, Thane-II.   2007 (212) E.L.T. 369 (Tri. Mumbai)

 

SALES-TAX :

 

v                 As per J. J. Irani Committee Report submitted in May, 2005, Govt. proposes to introduce a separate field of Valuation professionals, “Valuation Professionals’ Board” and shall introduce a code of conduct for them.

 

v                 To prove stock transfers, registers maintained under Central Excise Rules are not sufficient.

            Carborandum Universal Ltd. Vs State of Kerala  148 STC 339

 

v                 Trade Circular has been issued detailing procedure for online submission of application for delivery of the statutory forms (C/F/H/EI/EII) under the Central Sales Tax Act, 1956 at the place of business of the dealer.

            Circular No. 17T of 2006 dtd. 28.06.2006 and Trade Circular No. 44T of 2007 dtd. 14.06.2007.

 

v                 Government vide Notification No. VAT-1506/CR-135/Taxation-1 dtd. 30th Nov. 2006 notified certain products to be Motor Spirits and `Other Petroleum Products’ without indicating which of the products are Motor Spirits and which are Other Petroleum Products.  State Govt. now issued corrigendum notification which makes it clear that the products at Sr.1-6 in the notification VAT/Notifications/1006/110/Adm-3 dtd. 15.03.07 are `Motor Spirits’ and the products at Sr.7 to 12 are `Other Petroleum Products’.

 

v                 Maharashtra State Govt. has issued Notification indicating that Taxpayers Identification Number (TIN) needs to be quoted (instead of PIN code-based MVAT/ CST Registration No.) in Returns, Tax Invoice and other statutory forms w.e.f. 01.06.07 otherwise dealers will be liable for penalty.

VAT/TIN/1007/121/Adm-3 Trade Circular No. 39T of 2007 dtd. 9th May, 07.

 

v                 The Commissioner of Sales Tax has clarified that the facility of concessional rate of tax for sales to the Central and State Govt. shall not be available under the Maharashtra Value Added Tax (MVAT) Act w.e.f. 1st May, 2007.

            Trade Circular 35T of 2007 dated 26.04.2007.

 

v                 MVAT refund due for the financial year 2006-07 can be adjusted towards 2007-08 MVAT payable.           

            Circular 41T of 2007 dated 21.5.07 Maharashtra Sales Tax Authorities.

However, procedure for such adjustment is indicated in Circular No. 42T of 2007 dated 31.05.2007.

 

v                 Maharashtra Sales Tax Dept. extended the date of filing audit report in Form 704 for the Financial Year 2005-06 upto 27th July, 2007 and for revised returns this date is extended to 31st August, 2007.

            Trade Circular 49T of 2007 dated 30th June, 2007.

 

 

SERVICE-TAX :

 

v                 Finance Ministry is planning to issue two master circulars which will come into effect from 1st July, 2007.

 

v                 Circular has been issued by Government describing the procedure to be followed in respect of mentioning truck No. on consignment note in respect of small consignments (consignment of less than truck load).

            Circular No. 95/6/2007-ST dated 11th June, 2007.

 

v                 Entry and exit load charges on mutual funds not liable to Service Tax.

            C.B.E.&C. Circular No. 94/5/2007-ST dated 15.05.2007.

 

v                 Rent received in advance from 1st June, 2007, attracts Service Tax.

            Notification No. 24/2007 – ST dated 22.05.07.

 

v                 Finance Ministry has clarified that all back-office work is to be treated as export in the case of transactions with a foreign party, provided the respondent of the service is located overseas.

 

v                 Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 notified by Central Government Notification No. 32/2007-ST dated 22/05/07.

 

v                 Sale of SIM Cards is a sale of goods and cannot be considered as an auxiliary service for the purpose of Service Tax.

            BPL Mobile Communications Ltd. Vs. CCE (2207) 80 RLT 351 (CESTAT-Mum.)

 

v                 Mere supply of technology pertaining to design, engineering and technical specifications under a contract, does not amount to `Consulting Engineer Services’.

            Kirloskar Electric Co. Ltd. Vs. CCE

            (2007) 6 STR 173 (Tri. Bang.)

 

v                 If tax is deposited before issuance of show cause notice- Interest and penalty not leviable under Section 75 and 76 of Finance Act, 1994.

            Hemant N. Talekar Vs. Commissioner of Central Excise, Mangalore

            2007 (6) S.T.R. 378 (Tri. Bang.)

 

 

COMPANY LAW :

 

v                 Listed companies now permitted to send abridged accounts to shareholders, however, shareholders can still write to the company and ask for the complete accounts which the companies have to oblige.

            SEBI/CFD/DIL/LA/2/2007/26/4 dated 26.04.2007.

 

CUSTOMS :

 

v                 The transaction value arrived at after negotiation, taking into account resale price of imported goods in India could not be rejected.  Further, transaction value can not be rejected on grounds that identical goods have been imported at higher prices.

            Bayer India Ltd. Vs. CC 190A ELT 240 (Tribunal Mumbai)

 

v                 New Form of application has been introduced for the purpose of seeking Advance Ruling.

            Notification No. 21/2007 – Customs dated 6th March, 2007.

 

v                 The Exemption from Customs Duty for commercial samples has been enhanced from Rs.60,000/- to Rs.75,000/-.

            Notification No. 74/2007-CUS dated 21st May, 2007.

 

v                 No specific amendment to Customs Law having being made as in Excise Law bar of unjust enrichment is not applicable to refunds consequent to finalization of provisional assessment.

            Bhavita Chemicals Pvt. Ltd. Vs. Commissioner of Customs, Mumbai

            2007 (212) E.L.T. 34 (Tri. - Mumbai)

 

 

 

RBI :

 

v                 RBI has notified a circular on rationalization of Forms for overseas direct investment vide RBI 86/07/426 AP (DIR series)         Circular No. 68 dtd. 01.06.2007.

 

v                 Circular giving liberalization for overseas direct investment has been issued by RBI.

            A.P. (DIR SERIES) Circular No.75 dated 14th June, 2007.

 

           

 

OTHERS :

 

v                 IRDA is working on common market wordings for insurance policies as a second phase of de-tariffing to avoid confusion among the insured at the time of making decisions.