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Interest paid on capital borrowed to acquire tenancy rights and earn rental income deductible
Feb 16, 2010: The ITAT has ruled that if an assessee borrows capital and, subsequently, uses it to acquire tenancy rights and, consequently, rental income, any interest paid on the debt is expenditure incurred for earning income and can be deducted.
 8In this case, the assessee, Ratan Hira Associates, is, among other things, involved in the business of subletting premises for rent. The assessee borrowed a sum of money, out of which half was given to an outgoing tenant to vacate the premises, which, subsequently, earned the assessee rental income, while the remainder was kept as a refundable security deposit with the owner of the premises, as per agreement. The assessee filed its return, claiming that the interest paid on money borrowed to acquire a capital asset as an allowable expenditure. This stand was not accepted by the AO, who deleted the deduction. The CIT(A), however, cited the findings in the assessee's own case in AY 2004-05, and allowed the deduction, whereupon the Income Tax Department brought the case on appeal to the Tribunal.
 8The ITAT, noting the case cited by the CIT(A), and lack of an appropriate rebuttal from the Department, has ruled in favor of the assessee, and has dismissed the appeal.   Details
Expenses incurred after business set up to be treated as revenue expenses
Feb 16, 2010: The ITAT has ruled that for tax purposes, all relevant expenses incurred by an assessee merely after setting up a business is to be treated as revenue expenses and allowed to be deducted. The actual date of commencement of business is not important.
 8In this case, the assessee, ITV Interactive, is in the business of allowing users to select songs over Cable TV by using an automated phone system. The assessee claimed that its infrastructure was ready by the year 2000-01, a year for which it claimed administrative and operational expenses on its income tax return. The case was, subsequently, reopened under Section 148, upon which the AO claimed that since the assesee had not actually commenced business, the expenditure in question was capital expenditure, disallowing the deduction. The CIT(A) held the same view, upon which the assessee brought the case to the Tribunal.
 8The ITAT, citing the judgments in a Delhi High Court case, involving ESPN Software, and a Gujarat High Court case, involving Hotel Alankar, opined that the tax authorities had erred in applying the test for commencement of business instead of testing whether the assessee had set up its business during the assessment year. Since it is clear that the assesee had set up its infrastructure during the year, and was in a position to earn customers and revenue, any subsequent expenses would be treated as revenue expenses and allowed. Since, in this case, the exact date of setting up of the business is not clear, the case has been remanded to the AO, with the instructions that expenses incurred before that date is to be treated as capital expenditure, while the ones incurred afterwards are to be treated as revenue expenses. The appeal has, thus, been allowed for statistical purposes.   Details
No TDS applicable for payments disbursed to representative, if individual payments to laborers below threshold
Feb 16, 2010: The ITAT has ruled that if payments to a group of laborers are made via means of a representative, then if the individual wage payments are below the threshold limit, no TDS is to be deducted from the amount disbursed to the representative.
 8In this case, the assessee, Laxmi Protein Products, was disallowed deductions with respect to contract wage disbursals, for the years 2005-06, 06-07 and 07-08, on the ground that payments were made to the labor representative, without witholding TDS, as required by Section 194C of the Income Tax Act. The CIT(A), noting that the arrangement of making payments to a representative, who, in most cases, was an employee was a company, for further disbursals to the wage-earners, was merely one of convenience. As there was no evidence of a contractual relationship between the representatives and the company, the CIT(A) felt that it could not be said that the labor was contracted out to the representative, and hence allowed the deduction. The IT Department, subsequently, approached the Tribunal.
 8The ITAT, observing that evidence has been submitted by the assessee, proving that the applicable amounts were distributed to the laborers by the representatives, opined that as each individual labor payment was less than the threshold limit stipulated in Section 194C, no tax is supposed to be deducted. The appeal of the Department, thus, has been dismissed.   Details
AAI imports of flight calibration aircraft duty free
Feb 16, 2010: The Ministry of Finance has allowed the duty free import of aircraft by the Airports Authority of India for flight calibration purposes, provided the authority submits an undertaking to the Customs department, during import of the same, that if the aircraft is used for any other purpose, appropriate duty would be remitted to the department. The aircrafts, imported under the concession, may not be sold or transferred to any other entity.
 8Imports of parts needed to service, repair and maintain such aircrafts have also been exempted from duty.   Details
Foreign Agency Commission on exports goods is 10% of FOB value
Dec 22, 2009:  8A circular released by the Tax Research Unit of the Department of Revenue, under the Ministry of Finance, has clarified that for the purpose of service tax refund, the maximum allowable foreign agency commission on export goods continues to be 10% of the FOB value of export goods.
Proposal to regulate 'Courier Imports and Exports (Electronic Declaration and Processing ) Regulations, 2009' by Ministry of Finance: Draft Circular
Dec 22, 2009:  8A draft circular has been released by the Ministry of Finance, proposing to regulate Courier Exports & Imports in Customs Stations where declarations and the subsequent processing are automated. These proposed regulation will be known as `Courier Imports and Exports (Electronic Declaration and Processing ) Regulations, 2009.   Details
Amendment to West Bengal VAT Rules 2005
Dec 17, 2009:  8Government of West Bengal has issued several amendments in the West Bengal VAT Rules 2005 Chapter 8 in Part 1.
    Details
Amendments to Rajasthan VAT Act
Dec 17, 2009: 8Government of Rajasthan has issued several amendments to the VAT act. These are as follows:
 (1)Serial 178 in Schedule IV of Vat Act to be deleted.
 (2)Amendment to Notification F 12(94)FD/Tax/07-69 dated 31st August 2009 after existing clause 3.2, new clause 3.3 is added   Details
UP VAT Act Notification : 'Molasses' deleted from Schedule II, Part C of the U. P. Value Added Tax Act
Dec 17, 2009: 8According to Notification No. KA.NI.-2-258/XI-9(1)/08-U.P.Act-5-2008-Order-(44)-2009 released on December 4, 2009, under the Uttar Pradesh Value Added Tax Act, 2008, in the list of industrial inputs given in Part C of the Notification, 'molasses'  (S.No.264) has been deleted.   Details
Amendment of Customs (N. T.) Notification No. 36/2001
Dec 16, 2009: 8The Ministry of Finance has released a customs non-tariff notification No.182/2009, dated December 15, 2009, amending an existing notification No.36/2001 dated August 3, 2001.   Details
Amendments to Customs Notification no. 20, 21 and 69
Dec 14, 2009:

8Amendments have been made to Customs Notification no. 20/2006, dated March 1, 2006 of the Ministry of Finance. In this notification, the following entry has been inserted in the table after s.no. 65, 'goods specified against s.no. 400A of the Table annexed to notification no. 21/2002-Customs'.

  Details
CBDT Double Taxation Agreement - Notification No. 93 / 2009
Dec 13, 2009: 8According to Notification No. 93 / 2009, dated December 9, 2009, all jurisdictions of the Ministry of Finance in Taipei, along with the India-Taipei Association in Taipei and the Taipei Economic and Cultural Centre in New Delhi, have been notified, respectively, as specified territories and associations, for the purpose of applicability of the double-taxation agreement between the two countries, vide clauses (a) and (b) of Explanation 2 to section 90A of the Income-tax Act, 1961.   Details
Amendment of Excise Notification No. 50/2003: Ministry of Finance
Dec 09, 2009: 8The Ministry of Finance has released central excise notification no. 27/2009 amending an existing notification no. 50/2003 dated 10th June 2003. In Annexure II of Notification No. 50/2003, under heading 1. STATE OF UTTARAKHAND, in sub-heading (8)DISTRICT PAURI GARHWAL, in Category (B), in the Table, against serial number 38, in column (4), for the entries  7, 6, 2, 8, bythe entries  46, 47, 52, 2 and 8.
Amendment to Central Excise Notification 6/2006: Ministry of Finance
Dec 08, 2009: 8The Ministry of Finance has issued notification no. 26/2009 that amends a prior central excise notification no. 6/2006 dated 1st March 2006. In this notification, in the table against S. No. 7, in column (3), in item (3), for the figure and letters "20cm", the figure and letters "10cm" shall be substituted.
Seizure of goods against impugned orders not allowed: Ministry of Finance
Dec 08, 2009: 8The Ministry of Finance has issued a circular regarding the prospective implementation of orders in which valuation or classification of goods is involved. This circular has amended a previous circular numbered 824 /1 /2006, issued on 16th January 2006.   Details
Amendment to Schedule 1: Andhra Pradesh VAT Act
Dec 07, 2009:  8The Government of Andhra Pradesh has amended entry no. 45 of Andhra Pradesh VAT Schedule 1. This entry was denoted as:
 "45. Cotton Fabrics., man made fabrics and woollen fabrics"
 8Now it has been amended to:
 "45 Cotton Fabrics, Man-made Fabrics, Woolen fabrics, Textile made-ups, bed sheets, pillow covers, towels, blankets, travelling rugs, curtains, Zari and embroidery articles."   Details
Rescission of Customs Notification No. 62/2009: Ministry of Finance
Dec 07, 2009:  8The Ministry of Finance has issued a notification rescinding customs notification no. 62/2009 dated 15th June 2009, with effect from 2nd December 2009. However, the rescindment would not be retrogative in nature.   Details
Schedule IV of the Andhra Pradesh VAT Act amended
Dec 07, 2009: 8The Government of Andhra Pradesh has amended entry at S.No. 9 in Schedule IV of the Andhra Pradesh VAT Act. This entry was denoted as:
 "9. Bamboos, Casuarina poles, eucalyptus logs and cut sizes thereof." The amendment is as follows:
 'After the words, "Bamboos", the words "Cane (Rattan)" shall be inserted. '   Details
Electronic filing of Refund Application - Form 501 mandatory
Dec 07, 2009: 8The Government of Maharashtra has issued a trade circular clarifying that it is mandatory for all dealers that need to file Refund Application in Form 501 (as per section 51 of the Maharashtra VAT Act) to do so electronically. This is effective from 1st December, 2009.   Details
Periodicity conditions for filing returns: Maharashtra VAT Circular
Dec 07, 2009: 8A VAT Trade Circular issued by the Government of Maharashtra has clarified that the Sales Tax Department of Maharashtra has to display the periodicity of filing of returns for the year 2009-2010 by 15th December 2009 on the website www.mahavat.gov.in. If discrepancies are noted by the relevant dealers, revised returns are to be filed. If the same are filed by 31st January 2010, then no penalty is applicable.   Details
Customs : Notification defines fertilizer imports more precisely
Dec 06, 2009:

8The Central Board of Excise and Customs has amended notification No. 20/2006-Customs released by the Ministry of Finance (Department of Revenue) Government of India on March 1, 2006. In the said notification, in the table, against serial no. 4, the original entry in column 3, ` Fertilizers and all goods for manufacture of fertilizers` has been substituted with the new entry `Fertilizers and all inputs/ raw materials for use in the manufacture of fertilizers`.

  Details
Service Tax : Notification
Dec 06, 2009:

8According to a notification released by the Ministry of Finance, service tax will not be payable from September 1, 2009 to September 22, 2009 on business auxiliary services provided by a service provider to a service receiver during the course of manufacture or processing of alcoholic beverages.

  Details
CBEC Notification: No. 176/2009-CUSTOMS (N. T.)
Dec 03, 2009: 8The Central Board of Excise and Customs (CBEC) has made amendments in Notification No. 36/2001-Cus (N. T.) dated August 3, 2001passed by the Ministry of Finance, Department of Revenue, Government of India, wherein a table has been substituted with new tariff value per metric tonne. The table shows no change in tariff values for crude palm oil, RBD palm oil, crude palmolein, RBD palmolein crude soyabean oil but the tariff value for brass scrap and poppy seeds have been affixed at $3402/tonne and $2144 per tonne.   Details
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