Newsletter for the Month of August - 2011

1 August2011

Bangalore Branch of SIRCof the Institute of Chartered Accountants of India

2August2011

3 August2011


DISCLAIMER : The Bangalore Branch of ICAI is not in anyway responsible for the result of any action taken on the basisof the advertisement published in the newsletter. The members, however, bear in mind the provision of the code of ethics whileresponding to the advertisements. The views and opinions expressed or implied in the Branch Newsletter are those of the authors

and do not necessarily reflect that of Bangalore Branch of ICAI.

CALENDAR OF EVENTS - August & September 2011Date/Day Topic /Speaker Venue/Time CPE Credit

Note : High Tea at 5.30 pm for programmes at 6.00 pm at Branch Premises.

Advertisement Tariff for the Branch NewsletterColour full pageOutside back ` 30,000/-Inside back ` 24,000/-

Advt. material should reach us before 22nd of previous month.

Inside Black & WhiteFull page ` 15,000/-Half page ` 8,000/-Quarter page ` 4,000/-

Editor : CA. Venkatesh Babu T.R.

Sub Editor : CA. Ravindranath S.N.

03.08.11 Point of Taxation Rules under Service Tax Branch PremisesWednesday CA. Lakshminarayan G 06.00pm to 08.00pm

06.08.11 Impact Seminar on Revised Schedule VI & Branch PremisesSaturday XBRL - Opportunities for CA's 10.00am to 01.00pm

CA. Amarjit Chopra & CA. Jayashree NarayananDetails at page no: 18 Delegate Fee: Rs.250/-

10.08.11 Issues under Section 44AB & 44AD of the Branch PremisesWednesday Income Tax Act 1961 06.00pm to 08.00pm

CA. Naveen Khariwal

12.08.11 Workshop on XBRL ITT South Centre,Friday & Friday - 06.00pm to 08.00pm Bangalore Branch of SIRC13.08.11 & Saturday - 10.00am to 05.00pm of ICAI, Sanjay Towers,Saturday Details at page no: 6 Delegate Fee: Rs.2,500/- #216, Near Nettakallappa Circle,

Restricted to 45 participants Basavanagudi, Bangalore-4

15.08.11 Independence Day Flag Hoisting & Celebrations Branch PremisesMonday CA. Harish Kumar Shetty, Chief Guest 09.30am onwards ——

Past Chairman, Bangalore Branch of SIRC of ICAI

17.08.11 Discussions on NBFCs, Unincorporated Bodies, Branch PremisesWednesday Fictitious Emails, Multi Level Marketing 06.00pm to 08.00pm

Companies, Exception Reports to be submittedby Chartered Accountants to the RBI- RBI Officials, NBFC Division

24.08.11 Code of Ethics - Emerging Issues Branch PremisesWednesday CA. Vinay Mruthyunjaya 06.00pm to 08.00pm

29.08.11 CPE Teleconference on “Internal Audit” Branch PremisesMonday CA. Raj Kumar Adukia, Central Council Member 11.00am to 01.00pm

& CA. Sanjeev Sood

07.09.11 Companies Audit Report Order (CARO) Branch PremisesWednesday CA. Vikas Oswal 06.00pm to 08.00pm

2 hrs

3 hrs

2 hrs

8 hrs

2 hrs

2 hrs

2 hrs

2 hrs

4August2011

Intellectual Property Rights orIPR, as commonly referred to, are abundle of Rights granted to a person,either natural or legal, for a propertythat is predominantly created out ofthe Intellect. The Intellect is animmeasurable parameter and is oftencategorised as an intangible. But thetransformed Intellect is measurableand becomes tangible. It is for thetangible form of the Intellect thatRights are granted.

For example: the formation ofbeautiful scenery in the mind is anintangible entity, whereas capturingthe scenery on a canvas renders ittangible or in other words perceivable.The act of rendering the sceneryimagined onto a canvas results in thecreation of an Intellectual PropertyRight, referred to as Copyright. It,therefore, can be concluded that it isnot mere idea that is granted a Rightbut the Right is granted for expressionof idea. Similarly, the thought ofcreation of a touch sensitive displayscreen is intangible entity but reducingit to practise through development ofa model that is touch sensitive istangible and is the subject matter ofPatent. Goodwill is intangible butpromoting goodwill through sale ofquality goods recognisable by a nameis tangible and is the subject matter ofTrademarks.

Thus Intellectual PropertyRights include Patents, Trademarks,Copyrights, Design, GeographicalIndicators, Trade secrets, TraditionalKnowledge, Plant varieties,

semiconductor chips.Each of theregistered/unregistered IntellectualProperty (IP) has a different scope andvalue:Copyrights have a long butlimited validity time, say 100yrs;Trademarks are perpetual; Patents andDesigns have limited validity of 20and 15yrs; Plant varieties too have alimited validity of maximum of 15yrs;Geographical Indicators doesn’t havea time bar and Trade secrets remainsecret as long as they are kept a secret.In a broader perspective, IP alsoincludes goodwill, reputation,skilledhuman resources, management team,and distributor networks associatedwith an organization, institution,company or an individual.

From a Chartered Accountant’sperspective it is important to know theroutes of acquisition, extent ofprotection and rights associated witheach of the IP and impact of these onmatters regularly handled by theprofessional. In this article we shallfocus on two aspects related to IP,which affects the execution of dutiesof a Chartered Accountant, namely 1.Registration of Company Name and2.Audit and Valuation specific to IP.

1. Registration of Company Name:As per Circular 45/2011 dated 8th July2011 issued under S.20 of theCompanies Act, 1956, No companyor an LLP can be registered with anundesirable name. The circular furtherdetails that “ a name is consideredundesirable, if it is identical to orresembles with i) name of companyin existence…….; ii) name of LLP in

existence……; iii) registeredTrademark or a Trademark which issubject of an application forregistration of any other person underthe Trademarks Act 1999.

Further the circular also mandates thata person applying for name underdigital signature has to give a writtendeclaration, amongst other things, thatthe proposed name(s) is/are notinfringing the registered Trademark ora Trademark which is application forregistration, of any other person underthe Trademarks Act 1999. On the otherhand, if the application for name issubmitted through a CharteredAccountant/Company Secretary thenthe professional should certify that theproposed name is not an undesirablename, failing which penalties asapplicable may be levied on the failingprofessional. Hence, in this regard, itis of importance to conduct a thoroughTrademark search and ensure that thename applied for is not undesirable.

2. Audit and Valuation specific toIP: Intellectual Property, like anyother property or commodity can betraded through Sale of goods, Transferof Know-how, Grant of Licenses,setting up of Joint Ventures, M&A’sand FDI. Any Traded commodityshould be valued to ensure a properand justified trade, hence it is ofparamount importance to understandthe economics of IP development &life cycles and its related technicalaspects including IP portfolioManagement Matrix to do justice toeconomic –financial accountingvaluations. Conduction of an IP Auditand subsequently valuation of the IPaudited is critical in understanding thefinancial implications of owning anIP. The question is who are thepersons who would be interested inthe financial implications of IP assetof a company, organization or anindividual?

UNDERSTANDINGINTELLECTUAL PROPERTYRIGHTS – A CA’S PERSPECTIVENarendra Bhatta HL, MSc, MPhil, PGDIPRL,Registered Patent Attorney

5 August2011


1. Promoters and shareholders:Interested in mechanisms aimed atreducing the excess cost of capital.

2. Capital Market Regulators:Need tovalidate the systematic losses to theless informed persons and thinvolume of trade in IP intensivecompanies.

3. Standards of IP Auditing:CurrentlyIndian Standards for Accountingdoes not mandate accounting forIP in the annual audits and reports,hence lack of understanding of IPand its relevance to accounting.

4. Policy makers:A thoroughexamination of the attributes of IPand specific harmful consequencesrelated to intellectual Propertiesshould be concerned about.

Virtually every business relies ona broad array of intellectual propertyassets in today’s informationeconomy. The assets are no longerstored in the research anddevelopment department. Every areaof the corporation is involved in theuse of intellectual property, includinghuman resources, IT, marketing,sales, and research. An IP Audit is aneffort to account for all IP owned orin possession of a company,organization and/or an individual. AnIP Audit is conducted under any oneor more of the followingcircumstances: Prior to any businessdealing or new project; Introductionof new rights or change in law/statutes; Need for development/reassessment of IP policies; As resultof law suit or Prior to Valuation.

The emphasis in an IP auditwould be a) To create an IP policy thataccurately reflects institutional assetsand needs; b) To highlight existing IPpractices and make adjustmentsaccordingly; c) For the sheer joy ofinventory: what do you have? Wheredid it come from?; d) To trigger and

facilitate creative projects using found“assets” and/or e) To monitorcompliance (for your use of thirdparty IP and vice versa).

The key steps in an IP Audit include

1) Identification of IP: Involvesidentifying, describing anddefining intangible assets, bothmeasurable and non measurable;

2) Establishment of ownership of IP:to establish who or what entityowns the intellectual property andto what extent;

3) Identifying legal protection ofIP:Developing and recordingstrategies on how to best protectany unregistered intellectualproperty;

4) Assessment of liability associatedwith IP:Consideration of anyliabilities or risks associated withthe intellectual property identified;

5) Recording of IP and

6) Valuation of Intellectual property.

Every asset owned has a definiteappreciation or depreciation, as thecase may be, to the value associatedwith it. As regards IP, during valuationand accounting, thereis neither appreciationnor depreciationinvolved. Insteadintangible assets areamortized. A recog-nized intangible assetshall be amortizedover its useful life tothe reporting entityunless that life isdetermined to beindefinite. If anintangible asset has afinite useful life, butthe precise length ofthat life is not known,that intangibles assetshall be amortized

over the best estimate of its useful life,for which a thorough understanding ofthe IP involved is essential.

The method of amortization shallreflect the pattern in which theeconomic benefits of the intangiblesasset are consumed or otherwise usedup. If that pattern cannot be reliablydetermined, a straight-lineamortization method shall be used. Anintangibles asset shall not be writtendown or off in the period of acquisitionunless it becomes impaired during thatperiod. Hence understanding thenuances of IP acquisition andenforcement is essential for propervaluation of IP. The valuation of anyIP is built on four basic principles

• Purpose – Why are we valuing theasset?

• Description – What is the asset?

• Premise – How will the asset beused?

• Standard – Who is the assumedbuyer of the asset?

The table below summarizes thebasis of valuation and its applicationareas:

6August2011

Results of an IP valuation mayvary depending on the purpose forwhich the IP is valuated and hencecannot be generalized. But it isimportant to account for each of IPowned separately. An exclusive IPbalance sheet is beneficial in twoaspects. Firstly, to keep the balance

sheet in compliance with theinternational accounting standards offinancial reporting and secondly, incase of an opposition by theTrademark registry for registration ofa Trademark, a crucial evidence forgranting/denying registration of aTrademark is a certificate issued by

the CA indicating income generatedand expenditure incurred with respectto the trademark under opposition.

The objective of the article is tocreate awareness that a thoroughunderstanding of IPR is essential fora Chartered Accountant’s professionin today’s business world.

Two Days Workshop onXBRL - Extensible Business Reporting Language

Organised by CPE Committee jointly with CMII of ICAIHosted by Bangalore Branch of SIRC of ICAI

at ITT South Centre, Bangalore Branch of SIRC of ICAI,Sanjay Towers, #216, Subbarama Chetty Road, Near Nettakallappa Circle, Basavanagudi, Bangalore – 04

on Friday, 12th August & Saturday, 13th August 2011Programme Structure - XBRL

DAY 1 – Friday,12th August 2011(06.00pm to 08.00pm)Time Session details CPE Hrs06.00pm to Technical Session I08.00pm An overview on XBRL 2 Hrs

• What is XBRL • Advantages of XBRL• XML/XBRL Basic Concepts • Global XBRL Initiatives

DAY 2-Saturday, 13th August 2011(10.00am to 05.00pm)Time Session details CPE Hrs10.00am to Technical Session II12.00am XBRL Taxonomies 2 Hrs

• Structure of taxonomies • Tagging• Indian GAAP Taxonomy • Dimensions• Attributes/Characteristics of Elements

12.00am to Technical Session - III02.00pm Instance documents 2 Hrs

• Creation of instance documents • XBRL Instance Validation and Viewing02.00pm to Lunch03.00pm03.00pm to Technical Session -IV05.00pm XBRL Tool

• Overview of XBRL Generation Process • Taxonomy Editing and Extensions 2 Hrs

8 HrsCPE

Delegate Fees: Rs.2,500/-For further details please contact:

Ms. Rajalakshmi C R, Tel: 080-30563500 / 3513Email: [email protected]

Restricted to 45 participants on First Come First Serve Basis

Training provided by :

India’s first and only XBRL solutionscompany recognized by HMRC U.K

7 August2011


TAX UPDATES JUNE 2011CA. Chythanya K.K., B.com, FCA, LL.B., Advocate

VAT, CST, ENTRY TAX,PROFESSIONAL TAX

PARTS DIGESTED:

a) 16 KCTJ – Part 3

b) 70 KLJ – Part 6

c) 38 VST – Part 1 & 2

d) 40 VST – Part 4 & 5

e) 41 VST – Part 1 & 3

f) 6 GST – Part 2

Reference / Description

2011-12 (16) KCTJ 56 : EssarTelecom Infrastructure Pvt. Ltd. v.Union of India - In the instant casethe High Court of Karnataka has heldthat providing of cellular telephonytowers on rent to various serviceproviders falls under the purview ofSection 2(29)(d) of the KVAT Act asdeemed sale and therefore the saidtransaction was exigible to tax, astransfer of right to use the goods,under the said Act, regardless of thefact that the same transaction was alsotaxed under the Service Tax Act.Withdue respect, the aforesaid decisionrequires review a for two reasons.Firstly, there cannot be payment ofsales tax as well as service tax inrespect of very same subject matter.Secondly, the towers beingpermanently fastened to the land/building would become immovableproperty and hence cease to be goods.

2011-12 (16) KCTJ 69 (P&H) HC:Nokia India Pvt. Ltd. v. State ofPunjab and Others - In the instantcase the High Court held that“Cellular Telephone” would include“Battery Chargers” when suppliedalong with cell phones in a composite

package for the purpose of taxationunder the VAT Act. The Court was ofthe view that the essential characterof the goods in question in acomposite transaction comprising ofdifferent components had to bedetermined with reference to maincomponent of higher value. The Courtnoted that in the instant case thebattery charger was sold as acomposite package along with the cellphone. Further, compared to the valueof the cell phone, the value of thecharger was insignificant and the cellphone could not be used without thecharger. Therefore the charger couldnot be excluded from the entry forconcessional rate of tax which appliedto cell phones and parts thereof.Theaforesaid decision accords with thedominant test theory and is usefulparticularly in cases where a productis sold as a composite consisting ofseveral items.

2011 (70) Kar. L.J. 769 (Tri.) (DB):IBM India Pvt. Ltd. v. State ofKarnataka - In the instant case, theAssessee under contract only took upwork of installation of softwarepurchased by its customer fromvarious vendors on assessee’s adviceand ensured that the software soinstalled was appropriately integratedin system of customer. The Tribunalin such a case held that the aforesaidcontract of Software implementationservice was purely a service contractnot involving sale of customisedsoftware or transfer of property in anyother goods deemed to be sale andtherefore the said transaction was notexigible to tax under the KVATAct.The above decision is a much

awaited relief as the department hasthe tendency to call any softwareservice as Works contract.

[2011] 41 VST 107 (Ker) HC: Stateof Kerala v. Thampi & Company -In the instant case the High Court ofKerala has held that for the purposesof computation of taxable turnover inthe case of a works contract nodeductions could be allowed inrespect of depreciation of machineryand tools. It was noted that as perSection 5C(1)(c)(ii) of the KeralaGeneral Sales Tax Act what areallowable under the said Section wereonly charges incurred by thecontractor for taking on hiremachinery or tools or similarexpenses and the concept ofdepreciation was not visualisedtherein. As per the Court depreciationwas an allowance which abusinessman was entitled to in thecomputation of his profit. Ifdepreciation were to have beenallowed the same would have beenspecifically provided for the inSection. The reason being as per thesaid Section only those charges paidfor obtaining the machinery or toolswere allowable and no notionalexpenditure could be allowed.Theaforesaid decision does not accordwith the principles of decision in thecase of Gannon Dunkerley 88 STC204 SC. If a machinery has been usedin executing works contract,depreciation thereof has to benecessarily allowed. In the absenceof not providing depreciation, aportion of profits relating to Labourmay attract VAT which isimpermissible.

8August2011

INCOME TAXPARTS DIGESTED:a) 333 ITR – Part 4 & 5b) 334 ITR – Part 1 to 3c) 198 Taxman – Part 5 to 7d) 199 Taxman – Part 1 to 3e) 8 ITR (Trib) – Part 4 & 5f) 9 ITR (Trib) – Part 3 to 8g) 130 ITD – Part 1 to 4h) 138 TTJ – Part 1 to 5i) 43-A BCAJ – Part 3j) 4 International Taxation–Part 5

Reference / Description[2011] 333 ITR 445 (Delhi) HC: CITv. Jubilant Securities P. Ltd. - In theinstant case the Delhi High Courthaving regard to CBDT Circular No.4 of 2007, dated 15.06.2007, held thatan assessee could hold shares of aparticular company on both portfoliosas an investment or stock-in-trade.Since the findings of fact recorded bythe lower authorities showed that theassessee was maintaining twoportfolios so far as the shares inquestion were concerned and since thesame were recorded as investmentfrom the date of purchase itself (havingbeen recorded at cost – as against costor market value which ever is loweras was applicable to stock-in-trade) theprofit resulting from the sale of thesame was taxable as capital gains andnot as business income.[2011] 333 ITR 492 (Ker) HC: CITv. Sakthi Metal Depot - In the instantcase the Assessee after claimingdepreciation on a building (asset) for21 years and thereafter discontinuesthe claim just 2 years prior to the saleof the asset. The discontinuance is dueto the fact that the assessee does notuse the said building for the purposeof his business any longer. In such ascenario the Kerala High Court heldthat the profit on sale of the saiddepreciable asset would be regardedas short-term capital gains (and notlong term capital gain) as per theprovisions of Section 50. The Court

was of the view that the non-obstanteclause with which Section 50 beginsmakes it clear that it is an exceptionto the definition of short-term capitalasset which means that even thoughthe duration of short-term capital assetis more than the period mentioned inSection 2(42A), the asset referred totherein would be treated as short-termcapital asset.[2011] 333 ITR 497 (Karn) HC: CITand another v. KroneCommunication Ltd. - In the instantcase the High Court of Karnataka inthe context of writing off of bad debtsheld that the law applicable after04.04.1989 was that it was sufficientif the debt was written off in theaccounts for the claim of deductionunder Section 36. Therefore it is nolonger necessary that the assessee hasto first prove that it was a trade debtand secondly, it was irrecoverable andthirdly, it was actually written off forthe purpose of claiming the saiddeduction.[2011] 333 ITR 508 (Guj) HC: CITv. Himgiri Foods Ltd. - In the instantcase the Gujarat High Court held thatwhere a revised return under Section139(5) was filed after intimationunder Section 143(1)(a) but withintime limit as allowed under the formerSection the AO was duty bound toaccept the same. The Court noted thatSection 143(1B) mandated that if afterthe issuance of an intimation, arevised return was filed by theassessee under Section 139(5) then itwas incumbent upon the AO toprocess the revised return and amendthe intimation issued under Section143(1)(a). The Court further observedthat the validity of the revised returncould not be lost when the same wasfiled within the prescribed period. TheCourt noted that an intimation underSection 143(1)(a) could not beequated with an assessment framedunder Section 143(3).

[2011] 334 ITR 13 (Delhi): CIT v.Govind Nagar Sugar Ltd. - In theinstant case the Delhi High Court hasheld that the precondition of filing ofthe return of loss for the purpose ofthe benefit of carry forward of lossapplies only to business loss and notloss on account of depreciation. TheCourt was of the view that thelimitation as stipulated under Section139(3) for the purpose of Section 80applied only in case of business lossas covered under Sections 72, 73, 74& 74A. The Court noted that the effectof Section 32(2) was that unabsorbeddepreciation of a year became part ofthe depreciation of the subsequentyear by legal fiction and when it sobecomes a part of the current year’sdepreciation it is liable to be set offagainst any other income, irrespectiveof the fact that the earlier year’s returnwas filed in time or not.[2011] 334 ITR (St) 3: DIT v. Cablesand Wireless Networks India P. Ltd.- In the instant case their LordshipsS. H. Kapadia C. J. I., K. S. RadhaKrishnan and Swatanter Kumar JJ.dismissed the Department’s specialleave petition against the ruling datedJune 30, 2009 of the AAR reported in315 ITR 72. The AAR, on the questionwhether payments made by theassessee to C&W of UK would amountto royalty for the purpose of the Actand the DTAA between India and U.K., ruled that as the assessee would notbe in physical control and possessionof the international telecommunicationnetwork owned by the U.K. company,the payments made for use of suchnetwork could not be consideredroyalty within the meaning of therelevant provisions of the Act as wellas the treaty. Further, since there wasno secret process or formula involvedin data transmission the assessee couldnot be considered as constituting adependent permanent establishment ofthe U. K. company in India.

9 August2011


[2011] 334 ITR 109 (Kar.): CIT &another v. ITC Hotels Ltd - In theinstant case the Karnataka High Courthas held that the expenditure onraising convertible debentures is to beregarded as revenue expenditure. TheCourt note that even if the debenturehad to be converted into shares at alater date, the expenditure incurred forcollection of the debentures had to betreated as a revenue expenditure.[2011] 334 ITR 138 (Delhi]: CIT v.Rajiv Shukla - In the instant case theDelhi High Court has held that theassessee was entitled to exemptionunder Section 54F in respect of theinvestment of the net considerationreceived from the transfer ofdepreciable asset (being a flat)[2011] 334 ITR 157 (Kar.): SamiLabs Ltd. v. Assist. CIT - In theinstant case the Karnataka High Courtin the context of deduction underSection 10B held that the conditionsas stipulated under Section 10B(2)had to be fulfilled in the year whenthe manufacture or production hasbegun and fulfilment of the saidconditions in the subsequent yearswould be of no avail. The Courtobserved that the conditions shouldbe satisfied in initial year ofmanufacture or production and in thecontext of the condition of value ofmachinery and plant the same had tobe fulfilled in the initial year ofmanufacture. The Court noted thateven though the purchase of newmachinery, consequent to which thevalue of used machinery etc. wasreduced to less than 20 %, but thesame being in a subsequent year (ofthe year when manufacture orproduction began), the Assessee wasnot entitled to exemption underSection 10B.[2011] 334 ITR (St.) 306: CIT v.Stefan Johanson - In the instant casetheir Lordships S.H. Kapadia C.J.I.,K.S. Radhakrishnan and Swatanter

Kumar JJ. dismissed the Department’sspecial leave petition against thejudgment dated October 15, 2009 ofthe Bombay High Court reported in320 ITR 190. The High Court in theaforesaid judgement had held that thedeductor having already dischargedtax liability with interest payable underSection 201(1A), no further interestcould be claimed by the Departmentfrom the employee either underSection 234A or Section 234C.It isinteresting to note that liability theunder Section 234A also has beendispensed with when in fact interestunder the said Section is levied fordefault in furnishing the return ofincome and the same has no bearingto the liability to tax under the Act.[2011] 334 ITR (St.) 307: CIT v.Jindal Photo Investment Ltd. - In theinstant case their Lordships S.H.Kapadia C.J.I., K.S. Radhakrishnanand Swatanter Kumar JJ. dismissedthe Department’s special leavepetition against the judgment datedDecember 2, 2009 of the Delhi HighCourt in ITA No. 1271 of 2009. TheHigh Court in the aforesaidjudgement had held that, where theassessee had held the shares inquestion for a considerably long timeand shown the shares as investmentunder head “Non-current assets” asfrom the date of acquisition thereof,that where the earnings from the saleof the shares were used to repay loansand that therefore the income or losson sale of shares was “Capital gains”and not “Profits and gains frombusiness or profession”.[2011] 334 ITR (St.) 308: CIT v.Gopal Purohit - In the instant casetheir Lordships S.H. Kapadia C.J.I.,K.S. Panicker Radhakrishnan andSwatanter Kumar JJ. dismissed theDepartment’s special leave petitionagainst the judgment dated January 6,2010 of the Bombay High Court inITA No. 1121 of 2009. The High

Court in the aforesaid judgement hadheld that it was open to an assessee tomaintain two separate portfolios, onerelating to investment and anotherrelating to business of dealing inshares. Where a finding of fact hadbeen arrived at by the Tribunal asregards the two distinct types oftransactions namely, those by way ofinvestment and those for the purposesof business, there should beuniformity in treatment andconsistency when facts andcircumstances were identicalparticularly in the case of the assesseeand that entries in books of accountalone were not conclusive indetermining the nature of income.Asimilar view has been taken by theDelhi High Court in the case ofJubilant Securities (supra).[2011] 334 ITR (St.) 310: CIT v. GulfAir Company - In the instant casetheir Lordships S.H. Kapadia C.J.I.,K.S. Radhakrishnan and SwatanterKumar JJ. dismissed theDepartment’s special leave petitionagainst the judgment dated October29, 2009 of the Delhi High Court inITA No. 391 of 2008. The High Courtin the aforesaid judgement had heldthat cargo service, route navigationalfacility charges and terminationnavigational landing charges and thehotel stay charges would not constituterent under Section 194-I.[2011] 334 ITR (St.) 310: CIT v. NIITLtd. - In the instant case their LordshipsS.H. Kapadia C.J.I., K.S.Radhakrishnan and Swatanter KumarJJ. dismissed the Department’s specialleave petition against the judgmentdated Septmeber 22, 2009 of the DelhiHigh Court in ITA No. 1107 of 2008reported in 318 ITR 289. The HighCourt in the aforesaid judgement hadheld that where the broad objective ofagreement between the assessee andthe franchisee was to share the revenueand not to hire the premises provided

10August2011

by the assessee, the assessee was notliable to deduct the tax under Section194-I in respect of the amount sharedby the assessee and remitted to thefranchisee for infrastructure claims.[2011] 334 ITR (St.) 311: DGIT v.Export Promotion Council forHandicrafts - In the instant case theirLordships S.H. Kapadia C.J.I., K.S.Panicker Radhakrishnan andSwatanter Kumar JJ. dismissed theDepartment’s special leave petitionagainst the judgment dated May 11,2010 of the Delhi High Court in W.P.(C) No. 2969 of 2010. The High Courtin the aforesaid judgement hadallowed the writ petition of theassessee holding that it was not opento the Director General (Exemption)to have refused exemption underSection 10(23C) of the Act forassessment year 2008-09, when theassessee had withdrawn theinvestment in IEM in compliancewith the provisions of Section 11(5)of the Act, and had directed theDepartment to grant exemption for theyear in question. The Supreme Courtdismissed the special leave petition onthe peculiar facts of this case.[2011] 334 ITR 341 (Delhi) HC : CITv. Ranbaxy Laboratories Ltd.- In theinstant case the Delhi High Court inthe context of allowability of businessexpenditure in the context of Section43B(b) held that, where the liabilityaccrues from year to year and thepension amount was payable to theemployees on retirement/resignationthe assessee was entitled to deductionunder the said Section. The Courtconcurred with the view of the CIT(Appeals) that the pension scheme ofthe assessee did not envisage anyregular contribution to any fund ortrust or any other entity and that thepension scheme provided that thepension would be paid by theappellant to its employees on theirattaining the retirement age or

resigning after having renderedservices for specified years. Thus itwas observed that the liability on thesame accrued from year to year.[2011] 334 ITR 351 (P&H): CIT v.Arun Kapoor - The instant case dealtwith the aspect of interest liabilityunder Sections 234B and 234C in acase where search and seizureoperations were carried out. Thesearch was carried out after the closeof the financial year and at the end ofwhich the assessee surrenderedcertain additional amounts as income.Further the assessee also made arequest for adjustment of advance taxliability against the seized cash. TheHigh Court held that though theassessee was entitled to benefit ofpayment out of the seized cash fromthe date of his application, theassessee was liable to pay interestunder Section 234B of the Act on thetax liability determined on the incomeassessed by the Assessing Officer.Similarly the assessee was also liableto pay interest under Section 234C interms thereof and would be entitledto benefit of payment out of the seizedcash from the date of makingapplication for adjustment of theseized cash towards tax liability.[2011] 334 ITR 355 (P&H): CIT v.Ashok Kumar - The instant case dealtwith the aspect of interest liability underSections 234A and 234B in a casewhere search and seizure operationswere carried out. The Assessee made arequest for the adjustment of theadvance tax payable out of cash seized.The said request was made prior to thedue date for payment of instalment ofadvance tax. The High Court in such acase held that the Assessee was entitledto adjustment and therefore no interestcould be charged under Sections 234Aand 234B.[2011] 334 ITR 358 (Delhi): CIT v.R.J. Wood P. Ltd. - In the instant casethe Delhi High Court was dealing with

the taxability of amount receivedtowards arrears of rent in the light ofSection 25B which had been insertedw.e.f. 01.04.2001. The Court held thatthe arrears of rent received insubsequent years cannot be spread overthe respective previous years to whichthey pertain and had to be taxed in theyear of receipt. Further the Court heldthat the maintenance and other chargespaid by the assessee were deductiblefrom the rent while computing theannual letting value of the property.[2011] 198 Taxman 376 (Cal.): ABNAmro Bank, N.V. v. CIT - In theinstant case the High Court ofCalcutta was dealing the liability todeduct tax under Section 195 readwith Articles 5 and 7 of the DTAA ofIndia with Netherlands. The Assessee-Company was incorporated inNetherlands and was having itsbranch office in India. In the courseof its banking activities the assessee’ssaid branch in India remittedsubstantial funds to its head office aspayment of interest. The Court heldthat by virtue of Articles 5 and 7 ofthe DTAA the permanentestablishment and the head officehave to be taken as separate entitiesfor all purposes and therefore thepermanent establishment and the headoffice could be treated as one entityfor the purpose of deduction of taxunder Section 195(1).Further theCourt noted that in order to attract theprovisions of Section 195, the saidremittance of interest must result inincome which is chargeable under theAct. Since in the instant case by virtueof the DTAA, the head office of theassessee was not liable to pay any taxunder the Act, there was no obligationon the part of the assessee’s Indianbranch to deduct tax while making theaforesaid remittance of interest.[2011] 8 ITR (Trib) 434 (Bangalore):Tally Solutions P. Ltd. v. Dy. CIT -In the instant case the Bangalore

11 August2011


Tribunal has held that capitalexpenditure on scientific research wasdeductible under Section 35(1)(iv) ofthe Act. The Tribunal noted that theAO in his order had accepted that theassets used were the means for thedevelopment of the software. The AOhowever had disallowed theexpenditure by presuming that onlyrevenue expenditure was allowable.[2011] 9 ITR (Trib) 487 (Chennai):Assist. CIT v. Smt. C. Rajini&Dy.CIT v. C. Subba Reddy (HUF) - Inthe instant case the Assessee was aproperty developer who had acquiredthe land by paying full considerationto land owner. The assessee thereafterundertook certain housing project andall the work in connection with projectwas done by the assessee. TheChennai Tribunal held that theassessee being the de facto owner ofland, deduction under Section 80-IB(10) could not to be denied. Furtherthe Tribunal held that the car parkingarea was not to be included inreckoning permissible area ofresidential unit for the purpose ofdeduction under the aforesaidSection.The Assessee was a director intwo companies holding substantialshareholding in both. There was atransfer of sum from one Company toanother at instance of assessee. Furtherthe Assessee had substantial creditbalance with the said Company. In thelight of the said facts the Tribunal heldthat the amount could not be regardedas loan or deposit and hence the samewas not taxable as deemed dividendunder Section 2(22)(e).The assesseeduring the course of executing thehousing project collected certain sumsfrom every buyer towards flat owners’association corpus fund. The Tribunalheld that the same was a capital receiptand not income in assessee’s hands.[2011] 9 ITR (Trib) 692 (Delhi): ITOv. Indian Hockey Federation - In theinstant case the Delhi Tribunal

observed that the learned Departmentalrepresentative could not controvert thestand of the assessee that the mainobject of the assessee Federation wasto promote and develop the game ofhockey in the country; that the assesseewas not involved in any kind ofbusiness activity to earn profit or gains;and the major source of its income wasgrant from the Government of India.Therefore, the Tribunal held that theprovision of Section 44AB requiringcompulsory audit of account was notapplicable in the instant case of theassessee and hence the provisions ofSection 271B could not be invoked inits case.[2011] 130 ITD 230 (Mum.)9taxmann.com 96 (Mum.): Dy. CITv. Chaturbhuj Vallabhdas (HUF) -In the instant case the MumbaiTribunal has held that in order toinvoke the provisions of Section 55A,the only requirement is that afterconsidering nature of asset and relevantcircumstances, the AO should opinethat it is necessary to refer valuationof the asset to the Valuation Officer.Therefore, the Tribunal set aside theassessee’s contention that since itsclaim relating to valuation of asset wasbased on registered valuer’s report, AOcould not refer valuation to DVO. TheAssessee-HUF entered into anagreement with a developer in respectof land owned by it. As per the termsof development agreement, thedeveloper was to provide three flatsand tilt car parking to assessee. TheAssessee claimed deduction underSection 54 in respect of capital gainagainst the said flats. The AO held thatthe assess had not fulfilled theconditions as provided in Section 54because transfer of property inquestion took place in month ofDecember 2003 and the new propertywas not acquired or constructed byAssessee till November 2007;therefore, claim of deduction was not

admissible. However the Tribunalnoted that since the assessee acquiredthe right in the said flats at the time ofdevelopment agreement and purchaseconsideration was paid in shape ofproperty transferred in favour ofdeveloper, it was to be held thatacquisition of property by assessee waswithin prescribed time and thereforethe assessee was entitled to deductionunder Section 54. However, theTribunal restricted the benefit ofdeduction to only one flat followingthe special bench decision in the caseof Susheela Jhaveri 292 ITR (AT) 1anddistinguishing the decision ofKarnataka High Court in the case ofAnand Basappa 309 ITR 329 (Karn)HC[2011] 138 TTJ (Del) 304: Dy. CITv. Select Holiday Resorts (P) Ltd. -In the instant case 100% shares ofIIPL, which was holding 98% sharesof the Assessee Company, were heldby four persons of the family whowere having the control andmanagement of the IIPL as well as ofthe Assessee Company. Due to themerger of IIPL into the AssesseeCompany, IIPL came to an end, andas a result of which the shares ofamalgamated Company were allottedto the shareholder of IIPL. Such beingthe case the Delhi Tribunal noted thattherefore there was no change in themanagement of the Company whichremained with the same family (set ofpersons) who were exercising thecontrol earlier. The Tribunal furtherobserved that the change in more than51% of share holding was due tomerger of two companies and thatthere was no change in control andmanagement. Therefore, it was heldthat Section 79 being inapplicable inthe instant case the Assessee Companywas eligible for set off brought forwardlosses against the current year income.[2011] 138 TTJ (Pune) 373:Honeywell Automation India Ltd. v.

12August2011

Dy. CIT - In the instant case the PuneTribunal has held that a direct stayapplication before the Tribunal wasmaintainable and that there was norequirement of law that the assesseeshould necessarily approach the CIT andwait for his decision before approachingthe Tribunal for grant of stay.[2011] 138 TTJ (Mumbai)(UO) 49:ITO v. Om Namah Shivay Builders &Developers - In the instant case theMumbai Tribunal having regard to theprovisions of Section 45(4) held that thedifference between the fair market valueof work-in-progress of the project andthe value as per books was assessableunder the head “Capital gains” in a casewhere the assets were taken over by apartner on dissolution of a firm. TheTribunal noted that though the deed wasstyled as a “retirement deed”, in effect itwas a deed of dissolution because when

all except one partner retire from thefirm there could not in law be apartnership in existence.[2011] 4 International Taxation 514(Mum.-ITAT): Siemens Aktience-sellschaft v. Dy. CIT - In the instantcase the Mumbai Tribunal held thatthe question as to whether incomefrom ‘fees for technical services’ and‘royalty’ was to be assessed on cashbasis or accrual basis was purely aquestion of law. The Tribunal notedthat the language employed by articleVII A of Indo-German DTAA impliedthat the ‘royalty’ and ‘fees fortechnical services’ should be reckonedfor taxation only when they werereceived and not otherwise.Therefore, it was held that the fees fortechnical services should be taxedonly on receipt basis as offered by theassessee and not on accrual basis.

SICASA PROGRAMMES – August 2011 Date & Timing Topic Delegate fee Venue

6th August 2011 Usage of Auditors’ Edition of Tally.ERP9 Rs.100 ITT South Centre -Saturday By Tally BAP (Auditor edition) team No.216, “SanjayTowers”10:30 am to 12:30 pm II Floor, Subbarama Chetty

Road, Nettakallappa Circle,Basavanagudi, Bangalore-4

19th August 2011 Tax Audit under Income Tax ActFriday by CA. Vijay Raja10:00 pm to 3:00 pm Rs.250 Branch Premises

3:00 pm to 5:00 pm VAT Auditby CA. Naveen Rajpurohit

For registration contact Ms. Rajalakshmi, Tel: 080-30563500/3513, email: [email protected]

RANK HOLDERS - BANGALORE BRANCH OF SIRC OF ICAIFINAL MAY 2011 EXAM

SL.NO Reg.no Roll.no NAME Marks Obtained Rank %

1 SRO0224067 24169 MOHIT BAJAJ 559 15 69.88

2 SRO0226091 24229 GEETHA.G 553 20 69.13

3 SRO0222625 24106 KRISHNA UPADHYA.S 542 27 67.75

4 SRO0232591 23189 VINAY 526 43 65.75

OBITUARY

We deeply regret to inform

sad demise of our member

CA. B.R.Virupaksha Goud,

(CA. B.R.V. Goud)

M.No.06204

on 24-07-2011.

May his soul rest in peace.

13 August2011


RECENT JUDICIALPRONOUNCEMENTS ININDIRECT TAXESN.R. Badrinath, Grad C.W.A., F.C.A.Madhur Harlalka, B. Com., F.C.A

SERVICE TAX

The appellant was engaged in‘Commercial or IndustrialConstruction’ and ‘Construction ofResidential Complex’ services prior to1-6-2007, but did not obtain service taxregistration or pay any service tax onthese services. This was based on thecontention that these services wereprovided as ‘Works contracts’involving transfer of property in goodson which Sales Tax/ VAT had beenpaid, such services were not coveredby Section 65(105)(zzq) and65(105)(zzzh) and hence were nottaxable till 31-5-2007. ‘Works contractservices’ became taxable u/s65(105)(zzzza) w.e.f. 1-6-07. Therespondent issued a show cause noticeand ordered pre-deposit. TheCommissioner adjudicated the showcause notice and confirmed the servicetax demand, interest and penalty. Therespondent submitted that servicesmentioned in clause (ii)(a) to(ii)(d) ofthe definition of ‘Works contract’ asgiven in explanation to Section65(105)(zzzza) are also covered by thedefinition of ‘erection, installation orcommissioning service’; ‘commercialor industrial Construction’ and‘construction of residential complex’.They also submitted that there isnothing in any provision of the FinanceAct, 1994 from which it can be inferredthat the taxable services, as defined,have to be pure services not involvingthe use or supply of any goods or suchservices would not be taxable if thesame involve use or supply of any

goods or materials. The Tribunal heldthat prior to 1-6-07 in the absence ofany definition of the term ‘workscontract’ in the Finance Act, 1994, thisterm has to be understood in thegeneric sense, i.e. a contract for workand labour which would be nothing butservice contract whether involving theuse of goods or not. The pre-depositwas partly waived. Further, thesubmission of the appellant thatbuildings for HAL, BSNL are notcommercial buildings was held notcorrect. [B. Rama Rao & Company vsCCEx, Hyd-IV, 2011(23) S.T.R.49(Bangalore Tribunal)]

The appellant was a recipient ofGoods Transport Agency (GTA)services hence, was liable to payservice tax as per Rule2(1)(d)(v) of theService Tax Rules, 1994. Further, theappellant was neither a manufacturerof dutiable final products nor providerof any taxable service. The appellantavailed CENVAT credit of the servicetax paid on a number of “inputservices” during the period from 1-4-2005 to 31-3-2007. Taking recourse toexplanation to Rule 2(p) (prior toamendment on 19-4-2006) of theService Tax Rules, 1994 the appellantconsidered the GTA services as “outputservices” and discharged the servicetax liability through CENVAT creditavailed on the “input services”. Theexplanation to rule 2(p) was deletedw.e.f. 19-4-2006. Subsequently it wasalso amended to exclude GTA servicesfrom the definition of ‘output service’w.e.f. 1-3-2008. Rule 3(1) of the

Cenvat credit rules, 2004 provides thatcredit of service tax paid on “inputservices” can be taken only if the inputservices received are used in or inrelation to manufacture of finalproducts or providing of taxableservices. The Tribunal observed that acombined reading of Rule 2(p) andRule 2(r) of the Service Tax Rules,1994 indicates that the “provider ofoutput service” under Rule 2(q) is theperson who actually provides sometaxable service. Thus, a person who isnot providing taxable service cannotbe considered a “provider of outputservice”. It was held that GTA servicesreceived prior to the amendment in rule2(p) cannot be regarded as outputservices and Cenvat credit of servicetax cannot be taken on input servicesas the appellant does not fulfil thecondition mentioned in Rule 3(1) ofthe Cenvat credit rules, 2004. Theservice tax on GTA services paidthrough Cenvat credit was ordered tobe recovered and paid in cash. Sincethe appellant regularly filed ST-3returns and in the absence of any fraud,collusion, wilful mis-statement etc,penalty under section 78 was waived.[ITC Ltd vs. CCEx, Guntur 2011 (23)S.T.R. 41 (Bangalore Tribunal)]

The name of the respondent companywas changed without change in itsconstitution. It was held that creditallowed under its previous name can betransferred to the respondent companyin its new name. The appeal filed by therevenue for dis-allowing the Cenvatcredit and imposing penalty was rejectedby the Tribunal. [CCEx, Coimbatore vsSri Varahiamman Steels (P) Ltd. 2011(23) S.T.R.91 (Bangalore Tribunal)]

The appellant was engaged in‘Business Auxiliary Services’ and‘Business Support Services’. Thesewere data retrieval and migration onbehalf of clients abroad. Entire outputservices of the assessee were exported.

14August2011

The assessee accumulated credit of theservice tax paid on the input servicessuch as Telecom service, IT service,Management and maintenance &repair service, Chartered Accountantservice, Manpower recruitmentservice, Outdoor catering service.General insurance service, Securityservice, Technical inspection &certification service and Assetmanagement service. It claimed refundof the Cenvat credit availed on theinput services under Rule 5 of theCenvat credit rules, 2004 read withNotification No.5/ 2006 – C.E. (N.T.)dated 14-3-2006. The originalauthority allowed credit pertaining toTelecom service, IT service andManagement, maintenance & repairservice. Credits on other services weredenied. The lower appellate authorityalso confirmed this order. The Tribunalrelying on various favourable judicialpronouncements on admissibility ofthese services as input services heldthe case in appellant’s favour. [UtopiaIndia Pvt Ltd vs. Commissioner ofService tax, Bangalore 2011 (23)S.T.R.25 (Bangalore Tribunal)]

The appellant was an exporter andclaimed refund of service tax paid forCourier service, Banking service andGTA service. The refund claim wasrejected by the respondent on theground that there is no proper linkagebetween the documents produced forclaiming credit and actual export thathas taken place. The Tribunal held that,what is required to be seen is whetherbasic document namely shipping billand other enclosures are available withthe claim and it is not necessary that inrespect of each and every service taxclaim, separate copies of documents areproduced. No purpose will be servedin requiring the claimants of refunds toproduce multiple copies of samedocuments in respect of each and everyclaim of service tax credit. However,

the case was remanded back to theoriginal adjudicating authority to verifythe claim once again. [IntasPharmaceuticals Ltd vs. Commissionerof Service tax, Ahmedabad 2011 (22)S.T.R. 641 (Bangalore Tribunal)]

The appeal was filed by the revenuein the High Court of Punjab & Haryanaagainst the order of the CESTAT, NewDelhi. The assessee made a shortpayment of service tax for the periodform 1-4-2002 to 31-3-2005. Showcause notice was issued confirming thedemand and imposing penalty undersection 76 and section 78 of theFinance Act, 1994. On appeal, theCommissioner(Appeals) upheld thedemand, penalty under section 78 wasreduced to 25% on the ground that theamount was deposited within onemonth and penalty under section 76was set aside on the ground thatpenalty under section 76 as well assection 78 could not have beenimposed simultaneously. Therevenue’s appeal against the order ofthe Commissioner (Appeals) wasdismissed by the Tribunal. After anamendment of Section 78 w.e.f. 10-5-2008, penalty under section 78 andsection 76 have become mutuallyexclusive. The revenue contended thatthe same is not applicable in the caseof the assessee as it pertains to a periodprior to the amendment. The HighCourt cited the case of CCEx vs. M/sPannu Property Dealers, Ludhianawherein it was observed that eventhough technically the scope ofsections 76 and 78 may be different,the fact that penalty has been leviedunder section 78 should be taken intoaccount for not levying penalty undersection 76. Section 78 provides forhigher penalty and therefore is morecomprehensive. Accordingly, the HighCourt held that no substantial questionof law arose and the appeal wasdismissed. [CCEx vs. First Flight

Courier Ltd. 2011 (22) S.T.R. 622(Punjab and Haryana High Court)]

The Appellant was a recipient ofGoods Transport Agency (GTA)services and was claiming exemptionunder Notification No. 32/2004 – S.T.dated 3-12-2004 and NotificationNo.01/2006 – S.T. dated 1-3-2006.The benefit was denied fromSeptember 2005 on the ground that theappellant did not comply with theconditions stipulated by the Circularissued by the CBEC with regard to theconditions for claiming benefit of thenotification. The Circular required theappellant to have a declaration fromthe service provider that he had notavailed the benefit under the CenvatScheme nor the benefit extended underNotification No. 12/2003 endorsed oneach consignment note. The appellanthad filed a consolidated certificate tothat effect and not a separate one foreach consignment. The Tribunal reliedon the judicial pronouncements of theTribunal on similar disputes in the caseof Texport Garments vs. CST,Bangalore [2010 (18) S.T.R. 47(Tri-Bang)] and the CCE, Vizag vs. M/sA.P.Paper Mills Ltd [2010 (17) S.T.R.242 (Tri-Bang)]. The Tribunal held thatthe Notification benefit should beallowed also for the period after theissue of the Circular based on theconsolidated declaration obtained fromthe GTA. The Circular of CBECcannot prescribe a condition notpresent in the Notification. Thus,appeal was held in favour of theassessee. [Arani Agro Oil IndustriesLtd. Vs CCEx, Visakhapatnam (22)S.T.R. 624 (Bangalore Tribunal)]

VALUE ADDED TAX

The appellant is engaged in providinginfrastructure service in relation tocellular telephone. It has entered intocontract with various telecom/ cellularoperators for erection and constructionof tower sites and leasing out the space

15 August2011


on such sites to various telecom/cellular operators such as BSNL, Airtel,Vodafone etc. The revenue proceededto levy tax on the premise that there isa transfer of right to use the telecomnetwork towers. It issued notices to theappellant proposing to impose VATstating that such transaction falls underthe definition of ‘deemed sale’ undersection 2(29)(d) read with Section 3 and4(1)(b) of the Karnataka Value AddedTax Act, 2003.The appellant contendedthat such activity is considered as‘service’ and it was paying service taxon such service contract. It contendedthat this activity cannot be consideredas sale within the meaning of Section2(29)(d) of the Act. The appellantreferred to various decisions renderedon the issue of what is movable andimmovable. The honourable High Courtaffirmed the finding of the revenue thatthe consideration received by theappellant for renting of the towers is inthe nature of ‘lease of movable’. It alsoheld that having regard to the nature ofthe agreement entered into and thenature of the transaction, the effectivecontrol is with the appellant and thecomponent of delivery is also involvedand the maintenance and overall controlis with the appellant. Therefore, it couldbe specifically said that the right to usethe goods has been transferred by theappellant to the telecom companies andas such VAT is imposable.[M/s EssarTelecom Infrastructure Pvt Ltd Vs. UOI2011 (16) KCTJ 56 (Karnataka HighCourt)]

Several writ petitions were filed inthe Gauhati High Court on the issuewhether penalty can be imposed on a“transporter”, who facilitates and/ orabets evasion of tax by a dealer andbecause of whose such default, evasionof tax takes place. Section 13A of theTripura Sales Tax, 1976 and Section77 of the Tripura Value Added tax Act,2004 provides for such penalty

provisions. The petitioners challengedthe imposition of penalty by thedepartment on the ground that thepetitioners had transported theconsignment without obtaining fromthe dealer, copies of valid permitspertaining to a period prior tointroduction of TVAT Act. Thepetitioners contended that no taxableliability can be imposed under theTVAT Act in as much as the transactiontook place before the TVAT Act cameinto force. Based on varioussubmissions by the parties and relyingon various judicial pronouncements,the Court held that, the provisionsimposing penalty on a transportercannot be said to be outside theancillary and subsidiary powers of theState legislature. Tax can be imposedon transporters by treating atransporter as a dealer by creating legalfiction so as to treat in prescribedcircumstances, a transporter as a dealerand/ or by raising a legal presumptionthat the taxable goods, handled by atransporters, have been delivered to adealer without any valid permit or byraising a legal presumption that thetransporter concealed the actualparticulars of the goods transported byhim and the goods have been sold,within the state, by the dealer withoutmaking payment of tax for such sale.It was also held that imposition of“tax” on transporters under Section13A of the TST Act, 1976 and Section77 of the TVAT Act, 2004 are ultravires the entry of List II of the SeventhSchedule to the Constitution of India.The provisions for levy of penalty upto150 percent of the tax involved wereintra vires entry 54 of List II of theSeventh Schedule to the Constitutionof India. The provisions of the TSTAct, 1976 and Section 77 of the TVATAct, 2004 do not have the effect ofrendering the decision of the SupremeCourt in Tripura Goods Association

Vs. Commissioner of Taxes [1999] 112STC 609 (SC) ineffective. Theassessment orders and notices wereheld as impugned and the taxauthorities were directed to examinethe question of imposition of penalty,only if the petitioners had violated thelegal obligations cast by the statute. [T.R. Freight Movers Vs. State ofTripura and Others 2011(41) VST513(Gauhati High Court)]

The appellant was a registered dealerengaged in civil execution workscontract in Karnataka for both privateand government bodies on turnkey basisunder the Karnataka Value Added TaxAct, 2003. The appellant claimed to betaxed at a concessional rate of 4 percentas provided under Section 15 of theCentral Sales Tax Act, 1956, on the partof the contract receipt which included“iron and steel used in the execution ofworks contract”. The revenuecontended the part of taxable workscontract receipt should be taxed at 12.5percent under Section 4(1)(c) of theKVAT Act and not 4 percent as claimedby the appellant. The tribunal held thatmerely because iron and steel aredeclared goods under the CST Act,benefit of reduced rate of tax of 4percent cannot be extended overlookingthe fact that iron and steel were notincorporated into works in the sameform, but incorporated in the form offabricated structures and value of suchincorporated steel and iron is inclusiveof expenses on bar bending, hire chargesof machinery etc. Further, the appellanthad not raised invoices indicating ironand steel deemed to be sold in nascentform and this information is notascertainable from his running accountbills. Hence, imposition of tax at 12.5percent on entire taxable workscontract receipt was held as proper.The concessional rate of 4 percent isapplicable in case of simple sale andpurchase of declared goods i.e. iron

16August2011

and steel and it does not refer todeemed sale of goods along with othergoods and ingredients as in the caseof execution of works contract. Therewas also an issue of determining thetaxable turnover of the appellant. Thetribunal held that addition of 22.84per cent towards gross profit topurchase value of goods transferredin the execution of works contract wasbased on the profit and accounts ofthe appellant. Hence, it was inorder.[P.G.Shetty ConstructionsTechnologies Pvt Ltd, Mysore Vs.State of Karnataka 2011 (70)Kar.L.J.816 (Tri) (DB)]

Dear Professional Colleagues,

The Committee for Members in Industry is organisingCampus placements in the month of August – Sep 2011for the newly qualified CAs. The details are as below

Schedule for Campus Interview August-September,2011

The CMII provides opportunity to the employers tointeract with newly qualified Chartered Accountants andmakes all arrangements at its centres, thereby providing acost effective mode of recruiting newly qualified CharteredAccountants. An organisation and firms of CharteredAccountants can participate in one or more centres.

Start Date for filling up initial details (Candidate whohave qualified in November 2010, May 2010 or whoseresults were declared in revaluation/re verification after 26th March, 2011 and completing their articleship orGMCS between 1st May, 2011 to 31st October,2011 :1st July 2011 to 25th July 2011.

Date of candidate registration for May, 2011 CA Finalqualified (and others as mentioned above) candidates: 26th to 30th July, 2011

Opening of database for Companies at S No. 1: 1st August 2011

Resubmission and editing of selected portion of online formby the candidates who have opted one bigger and onesmaller centre before merger with the centre of their secondchoice (its mandatory for inclusion of data with smallercentre: 23rd and 24th August, 2011 (upto 11:00 midnight).

Opening of database for Companies at S No. 4 and 5:26th August, 2011

Campus Interview Dates

Sl. Centre Dates*No.

1 Bangalore, Chennai, 16,17,18,19 &Hyderabad, Kolkata, 20 August,Mumbai and New Delhi 2011

2 Bhubaneswar, Coimbatore 1 & 2and Ernakulam September, 2011

3 Baroda, Chandigarh, 2 & 3 Indore, Kanpur, and Nagpur September, 2011

4 Ahmedabad and Jaipur 5, 6 & 7September, 2011

5 Pune 9, 10 & 12September, 2011

CA K RaghuChairman, CMII

Announcement for Campus Placement ProgrammeAugust-September, 2011

For Bangalore Centre:Kindly Contact: Mr. Jagadish Kumar. N S, Assistant Secretary @ 9342732548 / 080 3056 3545

The Southern India Regional Council of ICAICordially invites you for the

43rd REGIONAL CONFERENCE OF SIRC OF ICAI

JNANA SANGAMAMHosted by: The Coimbatore Branch of SIRC of ICAI

On Aug 19 & 20, 2011 at CODISSIA Complex, CoimbatoreAugust 19th and 20th 2011, this year all the more important – being the Regional Conferenceof SIRC of ICAI organised in the Diamond Jubilee year of SIRC, and this year being hosted bythe Coimbatore Branch in its Golden Jubilee year, in the home town of our distinguished NationalPresident CA.G.Ramaswamy and also being a city that is greatly known as the Temple ofLearning of the South. The hosts are working to give you the most memorable event, that willremain in your hearts for a very long time. Unique learning experiences, real time interactions,knowledge sharing platforms, peek into the future exhibits, the list is continuing to grow, andthey are going this extra mile – ONLY FOR YOU ! Come Celebrate Coimbatore, Celebrate anexperience of learning Come build friendships that last a lifetime. Jnana Sangamam promisesto be a Confluence of Wisdom, to learn from each other, to work towards the glory of theprofession that is so dear to us. There is learning, fun, sharing and much more for all theseniors and the fresher’s who have just joined our fraternity.

Delegate Fees : Rs. 2,500/-

12 Hrs

CPE

17 August2011


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18August2011

IMPORTANT DATES TO REMEMBER DURING THE MONTH OF AUGUST 2011

5th August 2011 Payment of Excise Duty for July 2011

Payment of Service Tax for July 2011 by Corporates

6th August 2011 E-Payment of Excise duty for July 2011

E-Payment of Service Tax for June 2011 for corporates

7th August 2011 Deposit of TDS/TCS Collected during July 2011

STPI Monthly Returns

10th August 2011 Monthly Returns for Production and Removal of Goods and CENVAT Credit for July 2011

Monthly Return of excisable Goods Manufactured & Receipt of Inputs & Capital Goodsby Units in EOU,STP,HTP for July 2011

Monthly Returns of Information relating to Principal Inputs for July 2011 by Manufacturer of SpecifiedGoods who Paid Duty of Rs.1 Crore or More during Financial Year 2010-11 By PLA/CENVAT/Both

15th August 2011 Payment of EPF Contribution for July 2011

Return of Employees Qualifying to EPF during July 2011

20th August 2011 Monthly Return and Payment of Profession Tax Collected During July 2011

Monthly Return and Payment of CST and VAT Collected During July 2011

21st August 2011 Deposit of ESI Contributions and Collections for July 2011

25th August 2011 Consolidated Statements of Dues and Remittances Under EPF and EDLI for the July 2011

Monthly Returns of Employees Joined the organisation during July 2011

Monthly Return of Employees left the organisation during July 2011

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One stop solution for all yourelectrical works contact :

Mr. G. RudreshProprietor

M/s. Suma Electricals#1763, 17th Cross, Prashanth Nagar,

T. Dasarahalli, Bangalore – 5600057.Mob: 9844004057, Phone: 22210984/22104144

3 Hrs

CPE

Impact Seminar onRevised Schedule VI and XBRL

Hosted ByBangalore Branch of SIRC of

The Institute of Chartered Accountants of IndiaUnder the aegis of

Committee for Members in IndustryOn Saturday, 06th August 2011between 10.00am & 01.00pm

at Branch Premises

Topic Speaker

Revised Schedule VI CA. Amarjit Chopra,of the Companies Act Past President, ICAI

XBRL – Opportunities CA. Jayshree Narayanan,for Chartered Sr. Director, DeloitteAccountants

Delegate Fees: Rs.250/-For further details please contact:

Ms. Rajalakshmi C R,Tel: 080-30563500 / 3513

Email: [email protected]

Congratulations

CA. Ostawal Jeevrajis nominated as theHonorary Director,Accounts and Finance,Bharatiya Vidya BhavanCentral Office,Mumbai.

19 August2011


20August2011

Documents

Newsletter for the Month of August - 2011