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Online PR News – 31-August-2009 – – Case Laws-Direct Tax Laws -From Itat

Business expenditure - For an expenditure to be allowable under section 37(1), it may be incurred ‘voluntarily’ and without any ‘necessity’ and if it is incurred for promoting business and to earn profits, assessee can claim deduction under section 37(1), even though there was no compelling necessity to incur such expenditure - Deputy Commissioner of Income-tax v. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. - [2009] 32 SOT 9 (PUNE) [IT APPEAL NOS. 534 (PUNE) OF 1998, 693, 862 TO 864 (PUNE) OF 2001, 20 (PUNE) OF 2003 AND 955 (PUNE) OF 2005 & C.O. NO. 19 (PUNE) OF 1999]

Special Bench of ITAT on interpretation of section 28(iiid) of IT Act, 1961 with reference to profit on transfer of DEPB entitlements - The word ‘profit’ in section 28(iiid) refers to the excess of sale proceeds over the face value of DEPB; therefore, in the scheme of section 80HHC, the face value of DEPB cannot be reduced from the purchase cost but is separate income under section 28(iiib); which accrues at the time of making application pursuant to exports; only the profit element on the sale of DEPB, that is the amount in excess of sale proceeds over the face value is covered under section 28(iiid) - Topman Exports v. ITO [ITA No. 5769/Mum/2006]

From Sc/Hc

Supreme Court on deletion of penalty imposed under section 271(1)(c) of IT Act, 1961 - The penalty spoken of in section 271(1)(c) is neither criminal nor quasi criminal but a civil liability; albeit a strict liability; such liability being civil in nature, mens rea is not essential - CIT v. Atul Mohan Bindal [Civil Appeal No. 5769 of 2009]

Securities Laws -From Sc/Hc

Summoning of directors of accused company for offences under SEBI Act - Mere allegations contained in a line or two against the directors without specifying the violative act committed by any of the directors would not suffice to make the directors offenders so as to summon them for the offences under SEBI Act; mere bald averments in the complaint do not make the directors offenders; minimum averments to be made in a complaint has to contain that the person sought to be arraigned as an accused was in charge of the affairs of the company or responsible for the conduct of its business in such capacity at the time when the offence was committed, before he is deemed to be guilty of an offence committed by the company - Rashima Verma v. SEBI [Crl. MC No. 3080 of 2007]

Service Tax -From Cestat

Levy of service tax on business auxiliary service rendered by a services provider to its foreign principal - Business auxiliary service provided by a service provider in terms of section 65(105) (zzb) of Finance Act, 1994 is taxable for the rationale that the principal to whom the marketing support is given by the service provider, ultimately makes available of goods or services to the consumers in India; therefore, whether service is directly provided by a foreign principal providing service in India through its agent in India makes no difference under service tax law when service tax is a vat and that too destination based consumption tax as per Apex Court judgment in Air India Federation of Tax Practitioners v. Union of India [2007] 10 STT 166 (SC) - Microsoft Corpn. (I)(P.) Ltd. v. CST [Service Tax/Stay No. 2721/2008 In Appeal No. ST/866/2008]

Cargo handling service - Where assessee had entered into an agreement with client for transportation of raw materials from railway siding to client’s raw material yard and ground hopper of blast furnace and sinter plant, prima facie, assessee could not be said to have rendered cargo handling service and there should be total waiver of requirement of pre-deposit in filing appeal - SRC Projects (P.) Ltd. v. Commissioner of Central Excise - [2009] 21 STT 437 (CHENNAI - CESTAT) [FINAL ORDER NO. 474 OF 2009, STAY ORDER NO. 296 OF 2009, APPLICATION NO. S/PD/29 OF 2009 & APPEAL NO. S/49 OF 2009]

Consulting engineer - Technical know-how and licence to use same received from foreign collaborators for manufacture or sale of products in exchange for royalty or technical know-how fees cannot be held as provision of service and, therefore, cannot be liable to service tax as engineering consultancy service - Commissioner of Service Tax v. Larsen & Toubro Ltd. - [2009] 21 STT 459 (CHENNAI - CESTAT) [FINAL ORDER NO. 984 OF 2008 & IN APPEAL NO. S/155 OF 2006]

Corporate Laws

Competition Commission of India (General) Amendment Regulations, 2009 (No. 5 of 2009) - Notification No. L-3(2)/REGLN-GEN. (AMDT.)/2009-10/CCI, dated 20-8-2009

Competition Commission of India (Determination of Cost of Production) Regulations, 2009 (No. 6 of 2009) - Notification No. L-3 (5)/REG-COST/2009-10/CCI, dated 20-8-2009

Securities Laws

Exchange Traded Interest Rate Futures - Circular No. SEBI/DNPD/Cir-46/2009, dated 28-8-2009

Service Tax

Admissibility of credit of Service Tax paid as recipient under section 66A of the Finance Act, 1994 - Letter F.No.354/148/2009-TRU, dated 16-7-2009

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