Download pdf - Bangalore Branch of SIRC of the Institute of Chartered ...bangaloreicai.org/downloads/nl/201109_newsletter.pdf · of the Institute of Chartered Accountants of India. September 2

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Bangalore Branch of SIRCof the Institute of Chartered Accountants of India

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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 - September & October 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.

07.09.11 Companies Audit Report Order (CARO) Branch Premises

Wednesday CA. Vikas Oswal 06.00pm to 08.00pm

09.09.11 CPE Teleconference on “Tax Audit under Branch Premises

Friday Section 44AB & 44AD” 11.00am to 01.00pm

CA. Sanjay Agarwal, Central Council Member &

CA. Siddarth Jain, New Delhi

14.09.11 Revenue Recognition and Branch Premises

Wednesday Related Party Disclosures - AS9 & AS18 06.00pm to 08.00pm

CA. Pradeep M S

16.09.11 CPE Teleconference on “Revised Schedule VI” Branch Premises

Friday CA. B Ganesh, Hyderabad 11.00am to 01.00pm

21.09.11 Minimum Alternative Tax (MAT) Branch Premises

Wednesday CA. Prashanth G S 06.00pm to 08.00pm

28.09.11 Taxation of Trust Branch Premises

Wednesday CA. S Ananthapadmanabhan 06.00pm to 08.00pm

05.10.11 No Study Circle Meeting on account of Ayudha Pooja - Branch HolidayWednesday

08.10.11 Tax holiday benefit under Section 10A & 10 B Branch Premises

Saturday Computation mechanism & recent judicial controversies 10.00am to 01.00pm

CA. Ishita Bhaumik & CA. Prashant JainDelegate Fee: Rs.250/-

12.10.11 Paradigm shift for Finance Branch Premises

Wednesday CA. Manoj Ladi 06.00pm to 08.00pm

2 hrs

3 hrs

2 hrs

2 hrs

2 hrs

2 hrs

2 hrs

2 hrs

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

VAT, CST, ENTRY TAX,PROFESSIONAL TAX

PARTS DIGESTED:

a) 16 KCTJ – Part 4b) 41 VST – Part 5c) 42 VST – Part 1 to 3

Reference / Description

[2011] 42 VST 330 (Mad) HC : V.Win Garments v. Addl. DeputyCommercial Tax Officer - In theinstant case the Madras High Courthas held that to claim the exemptionfrom sales tax in respect of saleseffected outside India it was notmandatory to produce the agreementbetween the foreign buyer and theIndian seller. The Court opined that theclaim of exemption could beconsidered on basis of Form H andother documents such as bill of ladingfurnished by dealer. The aforesaidjudgement was based on the premisethat all that was required on the partof the dealer was to prove the factumof the transaction and once the sameis done with sufficient and satisfactorydocuments, the value thereof would beexempt and there was no rule/requirement to insist upon theagreement with the foreign buyer.Theabove decision brings a much sought-after relief as it may be impractical tofurnish the purchase orders placed bythe importers on the exporters. Theassessee being a penultimate seller tothe exporter, would not have thepurchase orders with him.

[2011] 42 VST 335 (Karn) HC:Kennametal India Ltd. v. Addl. CCT(Appeals) - In the instant case theHigh Court of Karnataka has held that

transport of special commodities(namely iron and steel) without therequisite Form VAT 505 and VAT 515was in contravention of Section 53(2)of the KVAT Act and therefore liableto penalty. It was the contention of thedealer that the goods carried weregoods rejected by the buyer beingreturned. However the saidtransaction was not substantiated bymeans of any correspondence ordocuments (the documents submitteddid not specifically prove that thevehicle was carrying rejected goodsbecause the invoices were also raisedon the appellant as consignor with theother party being named as theconsignee). The invoices and therecords indicated sale of goods. It washeld that invoice or excise gate passalone carried was not sufficient andthat the levy of penalty wasjustified.The aforesaid decision is apointer for understanding theimportance of carrying necessarydocuments during the transit of goods.Non-carriage of necessary documentscould result in unnecessary levy ofpenalty which is avoidable otherwise.

INCOME TAX

PARTS DIGESTED:a) 334 ITR – Part 5b) 335 ITR – Part 1 to 3c) 199 Taxman – Part 4 to 7d) 200 Taxman – Part 2e) 10 ITR (Trib) – Part 1 to 4f) 130 ITD – Part 5 to 9g) 131 ITD – Part 1 to 3h) 138 TTJ – Part 6i) 139 TTJ – Part 1j) 60 TCA – Part 1k) 5 International Taxation-Part 1

Reference / Description

[2011] 335 ITR 132 (Delhi) HC : CITv. Jaypee DSC Ventures Ltd. - In theinstant case the Delhi High Court hasheld that the interest earned on fixeddeposits placed with the bank asperformance guarantee; a conditionfor being awarded contract work, wasnot assessable as income from othersources. It was observed that the bankguarantee was furnished as acondition precedent to entering intothe contract and was to be kept aliveto fulfil the obligations. It was not thecase where the assessee had made thedeposit of surplus money lying idlewith it in order to earn interest. Thesaid interest was earned from the fixeddeposit which was a prerequisite tosecuring a contract to earn income andtherefore the same could not beassessed as income from othersources.The aforesaid decision hasbrought out the fine principle that thetaxability of interest under the head‘income from other sources’ will beonly by exception and not by rule. Itis only when the interest income is notfound taxable under the precedingheads, the same could be brought totax under the residuary head.Ironically, this is the decisionrendered by the Courts off late in thematter of taxability of interest. TheDepartment seems to treat interest asincome from other sources in everycase without exception which practiceis not envisaged in the Act.

[2011] 335 ITR (St.) 1 (SC) : CIT v.UWE Jarosch - In the instant case thesupreme court dismissed theDepartment’s special leave petitionagainst the judgment dated June 16,

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2009 of the Bombay High Court inITA No. 778/2009. The High Courtfollowing 313 ITR 187 had held thatwhen a duty was cast on the payer topay tax at source, on failure thereofby the payer no interest could beimposed on the payee-assessee.

[2011] 335 ITR (St.) 1 (SC) : CIT v.Till Becker - In the instant case theSupreme Court dismissed theDepartment’s special leave petitionagainst the judgment dated July 7,2009 of the Bombay High Court inITA No. 1001/2009. The High Courtfollowing 313 ITR 187 had deletedthe interest levied under Sections234B and 234C.

[2011] 335 ITR (St.) 3 (SC) : CIT v.Flour Daniel India (P) Ltd. - In theinstant case the Supreme Courtdismissed the Department’s specialleave petition against the judgmentdated Nov 30, 2009 of the Delhi HighCourt in ITA No. 1119/2008. TheHigh Court, following 309 ITR 317,had held that the transaction was inthe nature of licensing of softwarewithout transfer of “substance ofrights” or proprietary rights ordilution of the proprietary right of theparent company in the software andtherefore the payment made to theparent company qualified fordeduction as revenue expenditure.

[2011] 335 ITR 364 (P&H) HC : CITv. Subhash Kumar Jain - In theinstant case the P&H High Court hasheld that Revisionary powers of theCommissioner could not be exercisedunder Section 263, (citing theassessment order to be erroneous andprejudicial to the interests of therevenue) so far as the case where theAO had not initiated penaltyproceedings in the assessment order.It has been held that where theCommissioner finds that the AO hadnot initiated penalty proceedings he

could not direct the AO to initiatepenalty proceedings under Section271(1)(c), by drawing powers underSection 263.Special leave petitionagainst the said decision wasdismissed by the apex court CIT v.D’Costa [1984] 147 ITR (St.) 1. Thesame view was reiterated by the DelhiHigh Court in CIT v. SudershanTalkies [1993] 201 ITR 289 (Delhi)and followed in CIT v. Nihal ChandRekyan [2000] 242 ITR 45 (Delhi).The Rajasthan High Court in CIT v.Keshrimal Parasmal [1986] 157 ITR484 (Raj), the Gauhati High Court inSurendra Prasad Singh v. CIT [1988]173 ITR 510 (Gauhati) and theCalcutta High Court in CIT v.Linotype and Machinery Ltd. [1991]191 ITR 337 (Cal) have followed thejudgment of the Delhi High Court inJ. K.D’ Costa’s case [1982] 133 ITR7 (Delhi).However, the MadhyaPradesh High in Addl. CIT v. IndianPharmaceuticals [1980] 123 ITR 874(MP) which has been followed by thesame High Court in Addl. CIT v.Kantilal Jain [1980] 125 ITR 373(MP) and Addl. CWT v. NathoolalBalaram [1980] 125 ITR 596 (MP)has adopted diametrically the oppositeapproach.The initiation of penalty forconcealment is on the basis of thesatisfaction of assessing authority.Such satisfaction cannot be borrowedsatisfaction or substitutedsatisfaction. Therefore, theCommissioner cannot consider thedecision of the assessing authority ofnot initiating penalty as erroneous.

[2011] 199 Taxman 345 (SC) (Mag.):CIT v. Deepak Verma (SLP) - In theinstant case the Apex Court dismissedthe Department’s special leavepetition against the judgment of theDelhi High Court in CIT v. DeepakVerma [2010] 194 Taxman 265(Delhi). The High Court had held that

in order to characterize a particularpayment received from an employeron termination of employment as‘profit in lieu of salary’, it has to benecessarily shown that the saidamount is due or received as‘compensation’. If the payment ismade as ex-gratia or voluntary by anemployer out of his own sweet willand is not conditioned by any legalduty or legal obligation, either onsympathetic grounds or otherwise,such payment is not be to treated as‘profit in lieu of salary’ under sub-clause (i) of Section 17(3).Theaforesaid decision dismisses a wrongnotion that anything that is paid bythe employer to the employee willhave to be regarded as salaryregardless of the contract ofemployment. Any sum paid by theemployer de hors the employmentcontract may not partake thecharacter of salary.

[2011] 130 ITD 230 (Mum.)9taxmann.com 96 (Mum.) : Dy. CITv. Chaturbhuj Vallabhdas (HUF) -In the instant case the Tribunal notedthat the assessee acquired the right inthe flats at the time of developmentagreement and the purchaseconsideration was paid in the shapeof property transferred in favour ofthe developer. Therefore the Tribunalheld that the acquisition of theproperty by the assessee was withinthe prescribed time as enumeratedunder Section 54 of the Act.Theaforesaid decision clarifies that in atypical joint development agreementwhere the landlord gets hisconsideration in terms of residentialflats, condition of section 54 shall betaken to have been complied with.

[2011] 130 ITD 573 (Luck.)11taxmann.com 24 (Luck.-ITAT):Association for Advocacy and LegalInitiatives v. CIT - In the instant case

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the Tribunal held that in view of theomission of proviso to Section80G(5)(vi) with effect from 1-10-2009, approval once granted underSection 80G(5) shall continue to bevalid in perpetuity unless and until ashow-cause notice is issued byconcerned Commissioner, showinghis intention to withdraw suchapproval already granted.

[2011] 131 ITD 22 (Visakh)9taxmann.com 175 (Visakh.-ITAT):Assist. CIT v. Essar Steel Ltd. - Inthe instant case the Tribunal noted thatby the amendment brought in byFinance Act, 2002, in Section 92C(2)(incorporating a proviso dealing withthe buffer of 5% etc.) Circular no. 12dated 23.08.2001, dealing with therelevant aspect among others, hadbecome otiose. In view of above, theTribunal held that the assessee couldnot place reliance on the said Circularand for the relevant year underassessment only proviso to section92C(2), as amended by Finance Act,2002 was applicable. Further it washeld that since, in the instant case,only one price had been determinedunder ‘most appropriate method’ theassessee was not entitled toconcession, as prescribed in provisoto Section 92C(2).It is respectfullysubmitted that the bandwidthprovided by the proviso to section92C(2) stands on a different footingas compared to the circular. Further,the aforesaid circular having not beenwithdrawn, it cannot be understoodas ineffective.

[2011] 131 ITD 103 (Mum.)10taxmann.com 144 (Mum.-ITAT):ITO v. TCFC Finance Ltd. - In theinstant case the Tribunal was dealingwith the method of computation ofbook profit under Section 115JBwherein a provision has been adjustedin the balance sheet. The Tribunal

held that if the amount set aside asprovision for diminution in the valueof any asset, appears on the debit sideof the profit and loss account, thesame implies that the amount of netprofit as per the profit and lossaccount is after the amount of suchprovisions, then such amount wouldhave to be added back to the net profitfor computing the ‘book profit’ as perExplanation 1 to Section 115JB(2).The Tribunal opined that there is noother requirement in the language ofthe Section for the addition or non-addition of the amount of provisionsfor diminution in the value of anyasset to the amount of net profit asshown in the profit and loss account,depending on the way in which suchprovision has been shown in thebalance sheet. It was held that thereflection of the amount of provisionfor diminution in the value ofinvestment separately on the liabilityside of the balance sheet or by way ofreduction from the figure ofinvestment on the asset side of thebalance sheet is totally alien forcomputing book profit. What isrelevant for the purpose is to find outif any provision for diminution in thevalue of any asset has been debited tothe profit and loss account. If it is sodebited, the same will automaticallystand added to the amount of net profitfor working out the amount of bookprofit.

[2011] 131 ITD 142 (Ahd.)11taxmann.com 420 (Ahd.-ITAT):Amaltas Associates v. ITO - In theinstant case the Tribunal was dealingwith the deduction under Section 80-IB in respect of infrastructuredevelopment undertakings. TheCommissioner (Appeals) had upheldthe findings of the AO and observedthat according to developmentagreement between assessee and said

society, assessee was authorized tobuild only 94 units but it hadconstructed 110 units and claimeddeduction on same. He furtherobserved that for claiming deductionunder said the Section maximum builtup area is 1500 square feet but onbasis of DVO’s report open terrace,in front of pent house which wasanalogous to balcony/verandah, wasincluded in built-up area of flat; he,therefore, held that built-up areaexceeded prescribed limits andrejected deduction. The Tribunal heldthat the definition of built-up area asprovided in Act is inclusive ofbalcony being not open terrace. Sinceopen terrace was not a part of balcony/verandah it was held that the lowerauthorities were not justified indenying deduction to assessee byconsidering same as part of built-uparea.

[2011] 139 TTJ (Del) 48: CareerLauncher (India) Ltd. v. Assist. CIT-In the instant case the Tribunal wasdealing with the disallowance underSection 40(a)(ia) for failure to deducttax under Section 194C. The assesseewas offering tuition to students bygranting licence to franchisees tooperate the professional learningcentre. As per the agreement, 75percent of the profit from theoperation of the centre was to beretained by the licensee and 25percent was to be handed over to theassessee. The Tribunal held that it wasnot a case where the licensee wasdoing any work for the assessee evenwithin the wider meaning of the term“work” as understood in commonparlance. It was a case of running ofstudy centre and to apportion profitsthereof between the assessee and thelicensee and therefore the provisionsof Section 194C were not applicableand consequently no disallowance

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under Section 40(a)(ia) was calledfor.In the aforesaid interestingjudgement, it has been clarified thatin a typical profit-sharing/revenuesharing arrangement, it is not aquestion of one person paying toanother. Therefore, the question ofdeduction of tax at source does notarise.

[2011] 139 TTJ (Del) (UO) 10: Dy.CIT v. MRO (India) (P) Ltd. - In theinstant case the Tribunal was dealingwith the liability to deduct tax underSection 195 and the consequentdisallowance under Section 40(a)(ia).The Assessee had paid a New Zealandcompany a certain sum of money onaccount of services rendered by themto the assessee to facilitate to get theDNA test reports of prospectiveIndian immigrants required to besubmitted to the US Embassy. TheTribunal noted that no material hadbeen brought on record to suggest thatthe payment made by the assessee tothe New Zealand company could betermed as payment for royalty or feesfor technical services. The Tribunalopined that the nature of paymentmade by the assessee to the NewZealand company was of liaisoningand co-ordinating and therefore theAssessee was not under an obligationto deduct tax at source under Section195 and consequently nodisallowance under Section 40(a)(ia)was called for.

[2011] 11 taxmann.com 431 (Mum.-ITAT) [2011] 5 InternationalTaxation 89: Yahoo India (P.) Ltd. v.Dy. CIT - In the instant case theassessee-company was engaged in thebusiness of providing consumerservices such as search engine,content and information on widespectrum of topics, e-mail, chat, etc.During the year under consideration,the Department of Tourism of India,

through an advertisement agency,intended to display a banneradvertisement on portal owned byYahoo Holdings (Hong Kong) Ltd.(YHHL) and for that purpose, it hiredthe services of the assessee-companyto approach YHHL to provideuploading and display services forhosting banner advertisement toYahoo Hong Kong portal. TheAssessee-company, in turn, hired theservices of YHHL for uploading anddisplay of banner advertisement on itsportal and made payment to YHHLfor such services without deductingtax at source. The revenue authoritiesheld that the payment was in natureof ‘royalty’ within meaning of clause(iva) of Explanation 2 to Section9(1)(vi) and same being taxable inIndia in hands of YHHL, assessee wasunder an obligation to deduct tax atsource from the said payment.TheTribunal held that since uploading anddisplay of banner advertisement on itsportal was entirely the responsibilityof YHHL and the assessee had noright to access portal of YHHL,payment made by the assessee toYHHL for services rendered foruploading and display of banneradvertisement of Department ofTourism of India on its portal was notin nature of royalty taxable in Indiaand, therefore, the assessee was notliable to deduct tax at source fromsuch payment.

[2011] 11 taxmann.com 43546 SOT52 (Mum.-ITAT) (URO) [2011] 5International Taxation 90: AtosOrigin IT Services Singapore Pte.Ltd. v. Assit. DIT (Intl. Taxation) -In the instant case the assessee a taxresident of Singapore had entered intoa hubbing agreement for providingdata processing support to StandardChartered Bank (SCB), a non-residentcompany engaged in business of

banking in India. The AO on a perusalof the agreement noted that thoughSCB India was not in physicalpossession of infrastructure owned bythe assessee for purpose of dataprocessing, it did have constructivecontrol over same because it couldutilize same as per terms of theagreement. It was also observed byhim that the equipments were at thedisposal of SCB India and it was a caseof renting out of disc space in hardwaresystem and, therefore, payment madeby SCB was royalty as per article12(3)(a) of the DTAA between Indiaand Singapore. On appeal, theCommissioner (Appeals) upheld orderof the AO.The Tribunal held that inview of decision of the Tribunal in theassessee’s own case in IT Appeal No.1457/Mum./2008 for assessment year2004-05 in which the Tribunal allowedcase of the assessee holding thatamount receivable by the assessee wasnot taxable as royalty, order of theCommissioner (Appeals) was to be setaside.

[2011] 11 taxmann.com 10545 SOT494 (Mum.-ITAT)[2011] 5International Taxation 92: StandardChartered Bank v. Dy. DIT (IT) - Inthe instant case the Tribunal wasdealing with the liability in respect ofpayment made by an Indian Companyto a Singapore Company forproviding data processing services.The Tribunal was of the view thatunless there was material to establishthat the circuit equipment throughwhich data processing support wasprovided by the said SingaporeCompany could be accessed and putto use by the assessee by means ofpositive acts, consideration paid fordata processing services would notfall within category of ‘royalty’ inclause (iva) of Explanation 2 toSection 9(1)(vi).

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SICASA PROGRAMME – SEPTEMBER 2011Date & Timing Topic Delegate fee Venue

10th September 2011 Fundamentals of MS-Access as Rs.100 ITT South Centre, # 216,Saturday Relevant to Audit data Analysis “SanjayTowers”, II Floor,04:00 pm to 07:00pm By Mr. Vijay Tambad B.E. Subbarama Chetty Rd,

Netkalappacircle, Basavanagudi,Bangalore-560004

For registration please contact:Ms. Rajalakshmi, Tel:080-3056 3509, email:[email protected]

ICAI CAMPUS INTERVIEW AT BANGALORE – A SNAPSHOTCA. K. Raghu, Chairman, CMII of ICAI &Chief Coordinator – Placement Programme

The Committee for Members in Industry of the Institute conducted campus interviews at Hotel Bangalore Internationalfrom 16th August to 20th August 2011. A total of 16 Companies participated in the placement programme at BangaloreCentre.

The organizations participated were as under –

Public Sector Companies IT/ ITES Companies Other Companies

• MMTC • Wipro Ltd • ITC• Hewlett Packard • JSW

• TVS Motors• Titan Industries• Narayana Hrudayalaya• HPCL

Banking Sector CA Firms• Bank of Maharashtra • S.R Baliboi & Associates• Vijaya Bank • PWC• Corporation Bank • Deloitte Haskins & Sells

• BSR & Co

Highlights:

1. 427 Candidates attended the Campus Interviews and received 132 offers. 129 offers were accepted by thecandidates.

2. The candidates were mostly from the States of Karnataka, Kerala, Tamilnadu, Andhra Pradesh, Maharashtra,West Bengal, Uttar Pradesh and Rajasthan.

3. The highest pay package offered was Rs 13.94 lacs by ITC and average pay package offered was 6.0 lacs

4. I had the opportunity and occasion on 17th August 2011 and interacted with the executives of the companies &the candidates.

This initiative was supported by the Bangalore Branch under the Chairmanship of CA T R Venkatesh Babu.

We would like to wish all the candidates a very bright career ahead.

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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 selling SIM cardsto its franchisees and was paying thesales tax to the state, activating SIMcards in the hands of the subscriberson a valuable consideration andpaying service tax only on theactivation charges. The Department ofSales Tax, Kerala sought to levy salestax on the activation charges and theDepartment of Central Excise soughtto levy service tax on the value of SIMcards. Being aggrieved, the appellantfiled appeals before the respectiveappellate authorities under the KGSTAct and Central Excise Act, 1944. Theappeals were held against theappellant by the lower appellateauthorities. The appellant proceededto file appeal before the Kerala HighCourt. As regards the sales tax issue,the sales tax authorities conceded theposition before the High Court thatno assessment of sales tax would bemade on the value of SIM cardsupplied by the appellant to theircustomers irrespective of the factwhether they have filed the returnsand remitted tax or not. The HighCourt held, further, it also cannot bedisputed that even if sales tax waswrongly remitted and paid that wouldnot absolve them from theresponsibility of payment of servicetax, if otherwise there is a liability topay the same. The honourable HighCourt with respect to the service taxissue held that, both the selling of SIMcards and the process of activation are

‘services’ provided by the mobilecellular telephone companies to thesubscriber, and squarely fall withinthe definition of ‘taxable service’ asdefined in section 65(72)(b) of theFinance Act. They are also exigible toservice tax on the value of ‘taxableservices’. Aggrieved by the HighCourt’s order, the appellantapproached the Supreme Court, whichheld that, the High Court has givencogent reasons for coming to theconclusion that service tax is payableinasmuch as SIM card has no intrinsicvalue and it is supplied to thecustomers for providing mobile serviceto them. The value of SIM cards formspart of the activation charges as noactivation is possible without a validfunctioning of the SIM card and thevalue of taxable services is calculatedon the gross total amount received bythe operator from the subscribers.Therefore, the Supreme Court held thatthe appeal did not have any merit andthe same was dismissed. [Idea MobileCommunication Ltd Vs. CCEx, Cochin(2011-TIOL-71-SC-ST)]

The appeal was filed by the CCE,Hyderabad against the order of theCommissioner (Appeals) sanctioningservice tax refund to the respondent,who exported goods through amerchant exporter. The adjudicatingauthority had rejected the refundclaim partially on the ground thatrelevant respondent had not producedproof of export. The respondentproduced copies of the Form ARE-1

to the Commissioner (Appeals) as theoriginals were retained by themerchant exporters to settle their bondaccounts with the Department. Basedon the proofs submitted, theCommissioner (Appeals) granted therefund. The appellant contended thatexports through merchant exportersare not eligible for refund as perBoard’s supplementary instructionsand the lower appellate authority erredin holding that, there should not beany co-relation between inputs usedand goods exported The Tribunal heldthat having established the fact thatthe goods cleared from the factorypremises under relevant ARE-1s wereexported and accepted by thedepartment at the merchant exporter’splace, the lower authorities werecorrect in granting the refund. Asregards the refund of the Cenvat crediton input services, a plain reading of theprovisions of Rule 5 of the CenvatCredit Rules read with NotificationNo.5/2006 as amended makes it veryclear that there is no requirement forco-relation between inputs used and thegoods exported. If that be so, thequestion of restricting the refund claimto the extent of input services used/consumed during the month/ quarterseems to be misplaced. Hence, theappeal was dismissed. [CCE,Hyderabad vs. M/s Ravi Foods Limited2011-TIOL-CESTAT-Bangalore]

The Appellant is engaged in thebusiness of manufacturing andrepairing Hydraulic Service Trolley(HST). The Appellant was registeredunder service tax laws as a providerof service under the category“Maintenance and Repair”. M/s HALBangalore had entered into a contractfor maintenance and repair of HSTowned by the Indian Air Force. Theyhad subcontracted this activity to theAppellant. For the period 29-09-04 to

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03-03-2005, the Appellant receivedRs.72,17,994/- from HAL formaintenance and repair done by theAppellant. The Appellant did not payservice tax on the said amount underthe belief that sub-contractors do nothave to pay service tax as perclarifications given by CBEC in abooklet published as “FrequentlyAsked Questions and Answers”. TheAppellant had intimated this stand tothe department along with the billnumbers under which the said amountwas received. The Appellant did notinclude the amount in the ST-3 returnfiled by them. The Appellant wasissued with a Show Cause Noticedated 10-03-2006, demanding servicetax amounting to Rs.7,36,236/- on thesaid amount of Rs.72,17,994/-. Inadjudication proceedings this demandwas confirmed along with interest.Further a penalty equal to the saidamount was imposed under section 76of Finance Act 1994. The Appellantfiled an appeal with theCommissioner of Central Excise whoconfirmed the duty demand but setaside the penalty. Aggrieved by theorder of the Commissioner (Appeal)the appellant filed an appeal beforethe Tribunal. The appellant submittedthat the show cause notice was timebarred as it was not issued within oneyear from the date of issuing theinvoice. The revenue contended thatthe time limit of one year is applicablefrom the date of filing the ST-3 returnand not the date of issuing the invoice.The Tribunal on analyzing theprovisions of section 73, held that the‘relevant date’ for deciding the timelimit would be last date on which thereturn is to be filed. Hence, the showcause notice is not time barred.Further, the appellant contended thatthey were not the main contractors butwere only subcontractors, thus they

were not liable to pay service tax. TheTribunal considering the decision inthe case of Semac Pvt Ltd vs. CST-2006 (4) STR 475 Tri (Bang) held thatif the main contractor has paid servicetax, the sub-contractor need not paytax again on the same service. But, inthe appellant case this argument didnot arise, but if evidence wasproduced to this effect then thedemand on the appellant is notmaintainable. The appellant alsocontended that the work executed bythem involved supply of materials andhence they were eligible forexemption under Notification 12/2003-ST for the value of materialsupplied. But this claim was not madein the adjudication proceedings; theymade this claim in the first appealalongwith necessary supportingdocuments to prove the value ofmaterials sold. However, theCommissioner (Appeals) did notconsider this plea. The Tribunal reliedon the decision of the Apex Court inShare Medical care vs. UOI-2007(209) ELT 321 wherein it was held thatexemption can be claimed at any stageof proceedings. It was held that thecommissioner (Appeals) erred in notconsidering the claim of the Appellantfor exemption when evidenceregarding value of goods sold wasapparently produced by the Appellant.The Tribunal set aside the order andremanded the matter to theadjudicating authority to take intoconsideration the arguments of theAppellants and to decide whether theimpugned activity carried out by theAppellant would fall within thedefinition of ‘Maintenance and Repair’as it stood at the relevant time.[M/sIndfos Industries Ltd vs. CCE, Noida2011-TIOL-929-CESTAT-Delhi]

The appellant is engaged in theexecution of works contract and has

filed an appeal against the order ofthe revenue demanding service tax tothe tune of Rs. 18,96,429. Thisdemand partly relates to the levy ofservice tax on material supplied by thecontractee. The appellant contendedthat the material shall not form part ofthe assessable value of taxable servicesince the appellant has no ownershipof the material for which he does notretransfer the same by providing theservice warranting a demand. Thetaxability of the value of materialsupplied by contractee in respect of theservice provided under Finance Act,1994,has been decided by Tribunalagainst assessee in the case JaihindProjects Ltd. vs. Commissioner ofService Tax, Ahmedabad reported in2010(18)STR-650(Tri.-Ahmd.),Ahmebabad. But when similar suchmatters came up before Delhi Bench,members of Bar mentioned that theissue in principle being underchallenge before Hon’ble High Courtof Delhi, we are not insisting pre-deposit on the controversy. TheTribunal ordered a waiver ofrequirement of pre-deposit in respectof demand of Rs.4,14,743 composedin the demand of Rs. 18,96,429/-. Withrespect to the balance demand, theappellant contended that the serviceswhich are taxable under different entryhave suffered tax under the entrycommercial or industrial constructionservice and construction of complexservice. Therefore, pre-deposit maynot be insisted for wrongclassification and taxation. TheTribunal held, that intention of theRevenue behind issuing the Board’sCircular No. 128/10/2010-ST dated24.08.10 was to provide a moreconvenient classification of the pastactivity considered to be taxableunder the frame of works contract.Prior to the introduction of ‘works

11 September2011


contract’ service, the long termservice rendered was to be classifiedunder appropriate heading dependingon the nature of the activity carriedout by the assessee. Prima facie thisdoes not alter the levy by anyargument of retrospectivity or anyprospectivity of application of the law.Hence, there is no reason to waive therequirement of pre-deposit.[VedContractors Pvt Ltd vs. CCE, Delhi-II 2011-TIOL-1008-CESTAT-Delhi]

The appellant was given a sub-contract by M/s. Noida Toll BridgeCompany Ltd. (NTBC ) for specifiedfunctions relating to operations ofDelhi-Noida toll bridge ( DNDbridge). The appellant was permittedand authorized by NTBCL to collecttoll from the persons who are usingthe bridge. NTBCL under anagreement with Noida authority underthe Government of UP by anagreement executed construction oftwo bridges connecting Delhi andNoida under Built, Operate, Own andTransfer (BOOT) basis. Under thesaid agreement, NTBCL wereassigned and authorized to recoverpre-determined fee from the users ofthe said road and NTBCL were alsoat liberty to sub-contract aforesaidassigned function to other personsalso. In terms of such assignment, theappellant entered into contract withNTBCL to collect the fees from theusers of the bridge and also to carryout various specified functions. Interms of the contract, NTBCLallowed the appellant to retain 11%of the actual gross fees collected fromthe users of DND Bridge. Theappellant took over the operation andmaintenance of DND bridge. TheCommissioner came to the conclusionthat the agreement entered by theappellant with NTBCL clearlyindicates that the appellant is required

to carry out various services whichwould fall under the category of BASmainly “any customer care servicesprovided on behalf of client” upto 10/9/2004 and post 10/9/2004, it would fallunder the category of any customer careservices provided on behalf of the clientand or a service incidental or auxiliaryto any activity specified in sub-clauses(i) to (vii) of BAS. The AdjudicatingAuthority-Commissioner confirmed thedemand and imposed a penalty of Rs. 1Crore. Aggrieved by the order, theappellant appealed before the Tribunal.Tribunal found that NTBCL wasdeclared as owner of the DND bridgeby the Noida authority under the Govt.of UP. The owner had given rights ofcollection of toll tax to the appellant andto retain a percentage of it and remitthe balance. It can be seen that theappellant herein is collecting an amountas toll from the users of the DND bridge.The users of toll fee paid bridge cannotbe considered as customers. Thepersons who are using the DND bridgedo not fall within the purview ofdefinition of ‘customer’ as defined inthe Advanced Law Lexicon. TheTribunal also held that, first andforemost, it is to be noted that NTBCLis not a client of the appellant as theappellant is not promoting any customercare service of NTBCL. There is novisible activity done to please the userof the DND bridge to take care of theirneeds or something which is done,which induces them to come again andagain to the said DND bridge. It maybe noted that the users of DND bridgemay be paying the toll fees reluctantlyas that is the only means to connect thetwo banks of the rivers. The Tribunalfound strong force in the contentionraised by the respondent that the activityof the appellant would be covered underthe ‘Management, Maintenance andRepair of immovable property

services’. Such services are liable to betaxed from 16/06/2005. A categorywhich is specifically covered under theservice tax liability from a specific datecannot be taxed under any otherheadings prior to that date is the lawwhich has been settled by the HighCourt of P&H in the case of CCE Vs.Lal Path Lab (P) Ltd. Therefore, theappeal was allowed. [M/s Intertoll IndiaConsultants Pvt Ltd vs. CCE, Noida2011-TIOL-1005-CESTAT-DEL]

CENTRAL EXCISE ANDCUSTOMS

The appellant commencedproduction of Texturised PolyesterFilament Yarn from July 2008. Theydid not take Central Exciseregistration and filed a declarationdated 2.6.2008 under Rule 9 ofCentral Excise (No.2) Rules, 2001intimating the Deputy Commissionerthat they are availing full exemptionfrom payment of whole of CentralExcise duty under Notification No.30/04-CE dated 9.7.2004. They clearedthe goods for home consumption aswell as exports without payment ofduty of excise by availing exemptionunder Notification No.30/04 upto01.09.2009 and thereafter the goodswere exported under the DEPBscheme. The appellant obtainedregistration on 09.10.2009 and fileda refund claim on 26.10.2009. Thelower adjudicating authority rejectedthe refund claim on the ground thatthe goods were not exported under abond or letter of undertaking and also,the appellant was not registered withthe Central Excise. The lowerappellate authority also rejected therefund claim. The appellant filed anappeal with the Tribunal. The Tribunalfor the purpose of deciding whetherthe appellant is eligible for Cenvatcredit for the period when they werenot registered, relied upon the

12September2011

decision of J.R. Herbal Care IndiaLimited vs. CCE, Noida – 2010 (253)ELT 321 (Tri. – Del) and held that theaction of the appellants in takingcredit has to be upheld. Even in caseof clandestine removals, even if dutyis paid subsequently, Cenvat credit oninputs will be available to the assessee/manufacturer subject to the conditionthat proper documents showing thepayment of duty are available. Thesecond ground taken for rejection isthat the goods were not exported underbond or LUT. The Tribunal relied uponthe decisions of the Himachal PradeshHigh Court in the case of CCE vs.Drish Shoes Limited and RajasthanHigh Court’s decision in the case ofCommissioner vs. Suncity Alloys PvtLtd wherein it was held that refund ofinput credit is admissible whenexempted goods are executed withoutexecution of bonds and whenexempted goods are cleared for exporton payment of duty, manufacturer canclaim rebate. The Tribunal based onthe judicial precedents held thatprocedural requirements should notcome in the way of legitimate claimfor refund. Accordingly, the appeal wasallowed.[M/s Well Known PolyestersLtd vs. CCE, Vapi 2011-TIOL-989-CESTAT-Ahmedabad ]

The appeal was filed by the revenueagainst the order of the Commissioner(Appeals) who held that the showcause notice issued by the appellantfor recovery of demand is fully barredby limitation and the imposition ofpenalty and demand of interest wasset aside. The show cause notice wasissued on 1.2.05 demanding duesfrom 2000-2001 onwards. The auditreport was made available as early asin July 2002 and the respondents werefiling RT-12 or ER-1 without anydelay. The revenue invoked theextended period of limitation under

proviso to Section 11A of the CentralExcise Act on the ground that therespondent had suppressedinformation from the revenue. TheTribunal held that in the instant case,the respondents were filing allperiodical returns and submitteddocuments to audit. The revenuefailed to demonstrate what had beensuppressed from the revenue by theassessee. The Tribunal relied on thejudgement in the case of HonourableSupreme Court in the case ofPushpam Pharmaceuticals Co. vs.Collr of C.E., Bombay [1995 (78)ELT 401 (SC)] wherein it was heldthat mere omission to disclose thecorrect information is not asuppression of facts unless it wasdeliberate to escape from payment ofduty. Where the facts are known toboth the parties, it cannot be held thatthere was suppression of facts. TheTribunal held that there is nojustification for invoking the extendedperiod under the provisions of Section11A resulting in making demandsbarred by limitation. Therefore, theappeal filed by the revenue wasdismissed. [CCE, Ahmedabad vs. M/s Midco Ltd 2011-TIOL-990-CESTAT-Ahmedabad]

The appellant had imported secondhand goods (shuttleless looms), whichwas confiscated by the Customsauthorities on the ground that theirimport requires a licence, with optionto redeem on payment of a fine andimposition of penalty. Theconfiscation was under Section 111(d)and penalty was imposed underSection 112(a) of the Customs Act,1962. The appellant had soughtclarification from the DGFTregarding requirement of coverageunder a licence as the machines wereshipped prior to the date of release of

the new EXIM policy under whichrestrictions on the age of machinewere lifted. The office of the Dy.DGFT had clarified that in the caseof the present appellants, date onwhich Bill of Entry has been filedshould be considered as the cut offdate for deciding the importability ofthe item and not the Bill of Lading,in general, for import effected withthe payment of duty and not under anyof the export promotion scheme.Therefore, the Tribunal held thatlicence was not required for theimport of shuttleless loom importedby the appellants and set asideconfiscation and penalty and allowedthe appeal. [M/s Raj fabrics vs.Commissioner of customs, Tuticorin2011-TIOL-1002-CESTAT-Madras]

The appellant filed the appealagainst the show cause notice issuedby the revenue, wherein duty has beendemanded from the appellants on thesamples drawn by them for testingpurpose, which were not cleared bythem; thereafter, the demands wereconfirmed against the applicants. TheTribunal in the applicant’s own casefor the earlier period had observedthat if the samples have been drawnand the same has been retained in thefactory for testing purpose and theassessee is maintaining a record of thesame and the goods get destroyedduring testing, no duty is payable bythe assessee. Considering this case,the Tribunal in the instant case heldthat prima facie the applicants do nothave any liability to pay duty on thesamples drawn by them for testingpurposes and retained the same in theirfactory. Therefore, the entire demandof duty, interest and penalty waswaived. [Hindustan Coca-ColaBeverages Pvt Ltd vs. CCE, thane2011-TIOL-923-CESTAT-Mumbai]

13 September2011


Details of Certificate Course on IFRS at Bangalore Centre

Course Coordinator for Bangalore Centre:

CA. K. Raghu, Central Council Member, ICAIEmail: [email protected] [email protected]

The Demand draft may be drawn in favour of “The Secretary, The Institute of Chartered Accountants of India”,payable at New Delhi. Candidates may kindly send the Registration Form duly filled in all respect (available at thewebsite of the Institute at: http://www.icai.org/addupdate/regform.php) duly filled in along with the fee to:

The Nodal Officer, Certificate Course on IFRS, Technical Directorate, The Institute of Chartered Accountants ofIndia, ICAI Bhawan, Indraprastha Marg, Post Box. No. 7100, New Delhi - 110 002, Email: [email protected]

For Registration & other details contact : Assistant Secretary, ICAI, Bangalore, Ph : 30563541 / 542

We are pleased to announce that 7th Batch at Bangalore Centre of Certificate Course on IFRS is scheduled to take placeFrom 24th September 2011 subject to the minimum registration of 50 candidates. The other details are mentioned below:

• Days of Class RoomEach consecutive Saturday/Sunday total four weeks

• Duration of the course100 Hours consisting of:60 Hours of E-Learning40 Hours of Class Room Teaching

• CPE HoursThe CPE credit of 90 Hours (30 Structured +60 Unstructured) will be given to the participants.

• Venue of the Course: Would intimated in due course• Fee Structure

Participation fee (members) - Rs. 30,000/-Non Members – Rs. 50, 000/-

We are pleased to announce that 2nd Batchat Bangalore Centre of Certificate Courseon International Taxation is scheduledcommence from 24th September 2011subject to the minimum registration of 50candidates. The other details arementioned below:A. GeneralThe Certificate Course on InternationalTaxation shall comprise of a course oftheoretical/ practical training and acertificate in the appropriate form shall begranted to those who qualify for the same,as hereinafter provided.B. Duration of the Course200 hours consisting ofWorkshop (including case study) 100 hrsSelf Study 100 hrsC. Eligibility for AdmissionNo candidate shall be admitted to the saidcourse unless he is a member of the ICAIat the time of admission.D. Names of the cities where the courseis to be conductedThe above-mentioned Certificate Coursebeing organized by the Committee onInternational Taxation of ICAI at variousplaces across the country initially at Delhi,Mumbai, Hyderabad, Chennai, Bangalore,Kanpur, Kolkata and thereafter in other

Details of Certificate Course on International Taxationcities.E. RegistrationRegistration will be on first come first servebasis. The registration form along with therequisite fee may be sent to the NodalOfficer at the mentioned address.F. Overall schemeThe participants would be required to attendthe workshop on Saturday and Sunday.They would also be required to devote timefor self study and case study given to them.Participants would be grouped for preparingcase studies. The participants mustcomplete the self study hours and case studyfor appearing in the Assessment test.G. Course feeRs. 25000/- (Rupees Twenty five thousandonly) inclusive of first assessment fee shallbe payable at the time of Registration.Course fee once paid is non-refundableunder any circumstances.H. EvaluationParticipants who successfully complete theworkshop with at least 90% of attendancewould be eligible to appear in theAssessment test.I. Periodicity of ExaminationsAssessment shall be conducted after thecompletion of workshop at such date andtime as may be decided by the Committee.

J.Eligibility to qualifyA candidate has to secure 60% marks inaggregate in the Assessment test.K. Limit to the number of attempts forthe Assessment test There will be no limitto the number of attempts for the assessmenttest. The participants can re-appear for thetest and the re-appearance fee will be Rs.1000/-. The participants will be allowed tore-appear for the test only after six monthsfrom the first attempt.L. No. of seatsFor every session -50M. CPE Hours100 CPE Hours will be provided to all theregistered members as per the CPEguidelines.Course Coordinator for Bangalore Centre:CA. K. RaghuCentral Council Member, ICAIEmail: [email protected] further details please contactCommittee on International TaxationICAI Bhawan, A-94/4, Sector -58,Noida-201301Tel :0120-3045923,Email: [email protected] orFor Registration & other details contact :Assistant Secretary, ICAI, BangalorePh : 30563541 / 542

14September2011

PCC / IPCC AND FINAL PRE-EXAM CRASH COURSEFOR NOVEMBER 2011 EXAM

We are glad to know that you have registered for PCC / IPCC / CA Final Course and would be appearing for Nov 2011exams. Few of you might have taken coaching classes at our Institute. Many students have requested us for organizingspecial classes; Pre-exam crash course for the benefit of the students appearing for Nov 2011 examinations, apart fromthe regular coaching classes. Accordingly we have fixed up special sessions on the following subjects and have invitedrenowned faculty members to conduct the sessions.

PCC / IPCC Timings: 10.00 am to 06.00 pm

SL No DATE DAY SUBJECT MEMBERS OF THE FACULTY

1. 06.09.11 TUESDAY COSTING & FINANCIAL MANAGEMENT CA. VINAYAK ASUNDI - BELGAUM

07.09.11 WEDNESDAY COSTING & FINANCIAL MANAGEMENT CA. VINAYAK ASUNDI - BELGAUM

2. 08.09.11 THURSDAY BUSINESS & CORPORATE LAWS Mr. M. K. BHASKAR – CHENNAI

09.09.11 FRIDAY BUSINESS & CORPORATE LAWS Mr. M. K. BHASKAR – CHENNAI

3. 10.09.11 SATURDAY ADVANCED ACCOUNTING CA. K. SHANMUGHANATHAN - CHENNAI

11.09.11 SUNDAY ADVANCED ACCOUNTING CA. K. SHANMUGHANATHAN - CHENNAI

4. 12.09.11 MONDAY INCOME TAX CA. P. RAMASAMY - CHENNAI

13.09.11 TUESDAY INCOME TAX CA. P. RAMASAMY - CHENNAI

5. 14.09.11 WEDNESDAY INFORMATION TECHNOLOGY CA. ANAND P. JANGID – BANGALORE

15.09.11 THURSDAY INFORMATION TECHNOLOGY CA. ANAND P. JANGID - BANGALORE

FINAL Timings: 10.00 am to 06.00 pm

1. 14.09.11 WEDNESDAY INFORMATION SYS CONTROL & AUDIT Mr. B.V.N. RAJESHWAR - CHENNAI

15.09.11 THURSDAY INFORMATION SYS CONTROL & AUDIT Mr. B.V.N. RAJESHWAR - CHENNAI

2. 16.09.11 FRIDAY ACCOUNTS CA. MALAY KUMAR PANDA - BANGALORE

17.09.11 SATURDAY ACCOUNTS CA. MALAY KUMAR PANDA - BANGALORE

3. 18.09.11 SUNDAY CORPORATE LAW CA.S. SRIKANTH - CHENNAI

19.09.11 MONDAY CORPORATE LAW CA.S. SRIKANTH - CHENNAI

4. 20.09.11 TUESDAY MAFA CA. VINAYAK ASUNDI - BELGAUM

21.09.11 WEDNESDAY MAFA CA. VINAYAK ASUNDI - BELGAUM

5. 22.09.11 THURSDAY INCOME TAX CA. SURESH T. G. - CHENNAI

23.09.11 FRIDAY INCOME TAX CA. SURESH T. G. - CHENNAI

6. 24.09.11 SATURDAY COST MANAGEMENT CA. K. HARIHARAN - CHENNAI

25.09.11 SUNDAY COST MANAGEMENT CA. K. HARIHARAN - CHENNAI

7. 26.09.11 MONDAY INDIRECT TAXES CA. A.S. HARIHARA KUMAR - CHENNAI

27.09.11 TUESDAY INDIRECT TAXES CA. A.S. HARIHARA KUMAR - CHENNAI

8. 28.09.11 WEDNESDAY QUANTITATIVE TECHNIQUES Mrs. MALATHY SUNDARARAJAN - BANGALORE

29.09.11 THURSDAY QUANTITATIVE TECHNIQUES Mrs. MALATHY SUNDARARAJAN - BANGALORE

THE FEE FOR THE PRE EXAM CRASH COURSE IS AS FOLLOWS:

Final:Both Group Subjects Rs.2000/-, II Group Subjects Rs.1500/-, IPCC and PCC : All the Subjects Rs.1200/-,

I Group Subjects Rs.1000/-, Single Subject Rs.500/- Single Subject Rs.400/-

Mode of payment: CASH / DD in favour of “BANGALORE BRANCH OF SIRC OF ICAI” PAYABLE AT BANGALORE.To register please contact: Ms. Rajalakshmi / Ms. Geethanjali (080-30563509/513 / [email protected])

CA. Venkatesh Babu T R CA. Shivakumar H CA. Ravindranath S NChairman Chairman, SICASA Secretary

15 September2011


As you are aware, Central Exciseis a duty payable on manufacture ofexcisable goods. However, in respectof goods cleared from the factory, alegal fiction has been infused in termsof which the payment of duty is deferredtill such time, the goods are removedfrom the factory. Nevertheless, amongstothers, in respect of capital goods whichare not cleared from the factory but arecaptively consumed within the factoryof manufacture, an exemption isprovided in Notification 67/95 CE dated16.03.1995 subject to the condition thatthe Capital Goods are manufactured andused within the factory.

Analysis

From the above, the following emerge:

The goods in question shouldqualify as ‘capital goods’ underthe CENVAT Credit Rules.

The capital goods should bemanufactured within the factory

The capital goods somanufactured should be usedcaptively in the factory

Insofar as it relates to thecondition as to its use within thefactory, it is generally understood as,that the capital goods should have beenmanufactured by the manufacturer offinal products himself on his ownaccount and the same should be usedwithin the factory. This has usuallybeen the stance taken by thedepartmental officials.

The relevant text of thenotification imposing this condition

CENTRAL EXCISE DUTYEXEMPTION ON CAPTIVECONSUMPTION OF CAPITAL GOODS

is indicated hereunder for betterappreciation – “capital goods asdefined in the CENVAT Credit Rules,2002, manufactured in a factory andused within the factory of production”.From the reading of the notification, itis noted that the capital goods shouldbe “manufactured in a factory” and the“capital goods should be used withinthe factory of production”. While aplain reading of the condition suggeststhat the capital goods should bemanufactured by the manufacturer offinal products on his own account andshould be used within the same factoryfor further production, a thread bareanalysis of the notification, suggests avariation to the understanding, viz.,even such capital goods which aremanufactured by the manufacturer offinal products, but not on his ownaccount but at the instance of the buyerof capital goods and the final products,shall be eligible for the exemption,however, subject to the condition thatthe capital goods are used by themanufacturer captively within hisfactory. It must be noted that:

The Notification does not stipulatethat, to be eligible for the benefitof exemption under NotificationNo. 67/95, the Capital Goodsshould be manufactured by themanufacturer of final productshimself on his own account;

The language used in thenotification suggests that it wouldsuffice if the Capital Goods areused captively within the factory

of production for furthermanufacture of other goods;

The exemption is available basedon the place of use of capitalgoods, viz., within the factory ofproduction, and that theownership of capital goods andthe arrangement for manufactureof the same is not relevant.

The Hon’ble Tribunal hasanalysed the same in the case of ElconClipsal India Ltd, (2002 (146) E.L.T.360 (CESTAT Delhi)), wherein it washeld that the exemption is availableon the basis of place of the use ofcapital goods, viz., “within the factoryof production” and that the exemptioncannot be denied on the ground thatthe manufacturer issued invoices totheir customers for getting paymentagainst the same.

An illustration of exemption onexcise duty under this notification isprovided as follows - X enters into acontract for manufacture of certaincapital goods (as defined in Rule 2(a)of CENVAT Credit Rules) within thefactory premise of Y for use withinthe factory of Y. Capital goodsmanufactured by X are not removedfrom the factory of Y, but are used byY in further manufacture of finalproducts within the same factory.Subsequently X issues an invoice onY for the goods sold to X. As long asthe capital goods are within thefactory of Y, the exemption of exciseduty under this notification cannot bedenied on the ground that goods havebeen sold by X to Y.

Thus, the exemption frompayment of Central Excise Dutyunder this notification can be availedon capital goods, irrespective ofwhether the capital goods (as definedin Rule 2(a) of CENVAT CreditRules) are manufactured by a supplier

Badrinath NR. B.Com., Grad C.W.A., F.C.A.Siddeshwar Yelamali, B.Com., A.C.A

16September2011

for captive use or manufactured by adealer on his own account. However,it is necessary that such capital goodsare captively used within the factoryof production and such capital goodsare not removed from the factory ofproduction, viz., the factory wheresuch capital goods were manufactured.

Other Remarks:

The exemption under thisnotification would be available to

captively consumed capital goodseven if such Capital Goods are usedin the manufacture of exempted finalproducts. This benefit is apparentlyunavailable to goods other thancapital goods under this notification,viz., if other goods which aremanufactured within the factory arecaptively used and if the finalproducts are exempt from CentralExcise Duty, this exemption isunavailable for captively used goods.

The Notification refers to‘Capital Goods’ as defined underCENVAT Credit Rules, 2002. It is tobe noted that the CENVAT CreditRules, 2002 has since been rescindedand replaced with CENVAT CreditRules, 2004 with effect from10.09.2004. In this regard, it is ourview that the same has to beharmoniously read as ‘Capital Goodsas defined under the CENVAT CreditRules. 2004’.

PCC MAY 2011 EXAM

Sl.No. Reg.No. Roll.No. NAME Marks Obtained Rank %

1 SRO0260939 23911 PRADEEP.S.M 382 8 63.67

2 SRO0232890 24112 PRANAV PANSARI 370 19 61.67

3 SRO0209254 23936 PRAVEEN.C.P 364 25 60.67

4 SRO0242741 23888 SWETHA.S 363 26 60.50

5 SRO0273037 23969 NIRANJAN.L 359 30 59.83

6 SRO0249313 24559 GOWRAV 353 36 58.83

7 SRO0209221 24572 SOUMYA.S.S.V 353 36 58.83

8 SRO0222378 24629 SWETHA.G 353 36 58.83

9 SRO0143031 24660 SOWMYA.P 349 40 58.17

10 SRO0243746 24033 LALIT ANTHONY BRAGANZA 348 41 58.00

11 SRO0253875 24404 PRADEEP JAIN.R 346 43 57.67

12 SRO0247885 24048 RAMYASHREE.S.M 344 45 57.33

13 SRO0270475 24062 RAGHAVENDRA PRASAD.D 344 45 57.33

14 SRO0224070 24658 YESHWANTHA.R 344 45 57.33

15 SRO0224518 24500 SABARIDAS.M 343 46 57.17

16 SRO0257952 24056 VANDANA.B 341 48 56.83

17 SRO0224595 24584 AMRUTA PRASAD KULKARNI 341 48 56.83

18 SRO0248745 24476 VANI.G.K 340 49 56.67

19 SRO0253053 23923 PRANEET BHAT 339 50 56.50

20 SRO0229584 23933 SANJAY SINDHIA.M.H 339 50 56.50

21 SRO0163594 24416 SUBHASH.S.NAYIK 339 50 56.50

IPCC MAY 2011 EXAMSl.No. Reg.No. Roll.No. NAME Marks Obtained Rank %

1 SRO0308532 128890 NUPUR KEDIA 526 24 75.14

2 SRO0319044 130155 SWETHA.S 518 30 74.00

3 SRO0287966 128532 GANESH.B 508 40 72.6

RANK HOLDERS - BANGALORE BRANCH OF SIRC OF ICAI

Congratulations

17 September2011


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WE ARE REGISTERING AUTHORITYFOR TCS DIGITAL SIGNATURE.

Get TCS Digital Signature [DSC]within 30 minutes.**

for Rs 250.00 per DSC. use at MCA21 and/or

e-Filing of Income Tax ReturnsFor A.Y 11 12.

** log on to WWW.dandekerconsulting.in .Contact us : email [email protected].

Talk toAlamelu on 9740079967

between 9.30 AM to 06.0 PM.

Deepti khurana 9886583002 between 01.30 PM to 4.30 PM

Hema Malini on 9663203860 between 4.30 PM to 7.30 PM .

We are hereby informed by Official Liquidator, HighCourt of Karnataka, Ministry of Corporate Affairs, Govt.of India that the Hon’ble Company Court desires toconstitute a new panel of CA s for the purpose of utilizingtheir services in Company Court.

The format to apply for the aforesaid assignment is givenbelow.

Format to Apply:

Notice

Applications are invited from the practicing CharteredAccountants to reconstitute a new panel by Hon’ble HighCourt of Karnataka (Company Court).

Bio – Data

1) Name of the applicant

2) Address for communication

3) Email ID and Mobile No for contact

4) Registration No.

5) Work Experience

6) Any other information

(Signature of the applicant)

Empanelment of CA's - Hon'ble Company CourtNature of work involved

1. Filing of Income Tax returns of the Companies underliquidation (Presently there are about 311 companiesin Liquidation)

2. E-Filing of TDS3. Attending all Tax appeal matters / Tribunals in Income

Tax Department4. Scrutinizing the records and submitting a report for

Misfeasance5. Scrutinizing of claims received from the secured

creditors/workmen etc.6. Scrutinizing of Books and records for submission of

report under Section 391-394(1) Sub-section(2) of theCompanies Act, 1956

7. Any other work entrusted by the Hon’ble High Court/ Official Liquidator

Your application should be sent to(on or before 15-09-2011) :Sri. S. Ramakantha, The Official Liquidator,High Court of Karnataka,Corporate Bhavan, 12th Floor, Raheja Towers,M G Road, Bangalore-1

18September2011

IMPORTANT DATES TO REMEMBER DURING THE MONTH OF SEPTEMBER 20115th Sept. 2011 Payment of Excise Duty for August 2011

Payment of Service Tax for August 2011 by Corporates6th Sept. 2011 E-Payment of Excise duty for August 2011

E-Payment of Service Tax for August 2011 for Corporates7th Sept. 2011 Deposit of TDS/TCS Collected during August 2011

STPI Monthly Returns10th Sept. 2011 Monthly Returns for Production and Removal of Goods and CENVAT Credit for August 2011

Monthly Return of excisable Goods Manufactured & Receipt of Inputs & Capital Goods by Units inEOU, STP, HTP for August 2011Monthly Returns of Information relating to Principal Inputs for August 2011 by Manufacturer ofSpecified Goods who Paid Duty of Rs.1 Crore or More during Financial Year 2010-11 By PLA/CENVAT/Both

15th Sept. 2011 Payment of EPF Contribution for August 2011Return of Employees Qualifying to EPF during August 2011Monthly Return (VAT 120) and Payment of VAT/COT for the month of August 2011.Payment of Second installment of Advance Income Tax by Corporate assessee and First suchinstallment by non-corporate assessees.

20th Sept. 2011 Monthly Return and Payment of Profession Tax Collected During August 2011Monthly Return (VAT 100) and Payment of CST and VAT Collected During August 2011

21st Sept. 2011 Deposit of ESI Contributions and Collections for August 201125th Sept. 2011 Consolidated Statements of Dues and Remittances Under EPF and EDLI for the August 2011

Monthly Returns of Employees Joined & Left the organisation during August 2011 under ESI30th Sept. 2011 Filing of Return of income/wealth by

a) Corporate Assesseesb) Individual or HUF carrying on business or profession subject to compulsory audit u/s 44AB.c) Firm or Co-operative society or AOP/BOI subject to auditd) Individual or HUF being working partner in a firm subject to audite) Return of Net wealth by assessee subject to audit.

OBITUARY

We deeply regret to informsad demise of our member

CA. Vandana Khemka( M.No. : 410136)

on 12.07.2011

May her soul rest in peace.

An appeal to the members

XIX Batch of Course onCorporate Accounting, Finance & Business Laws

Duration:October 2011 to March 2012(78 Sessions)

Timings: 08.30am to 01.30pm(only on Saturdays)

Course Fee: Rs. 20000/-

Course Contents:• Corporate Finance• Strategic Cost Management• Financial Reporting and Analysis• Financial Services• Concepts and Practice of

Automated Information Systems• Corporate Business Laws

For Whom: The course is open for Nonmembers who are currently working in thefield of Finance/Accounts. Applicants forthis course should have at least 2 yearsexperience in the finance function.Knowledge of accounting terms, principlesand procedures are essential as the coursewill cover areas that are comparativelyadvanced in nature.We request you to pass on this informationto your clients: Finance/ AccountsExecutives to avail the benefits of thiscourse. For details contact Branch onTel. 080-30563511/512e-mail: [email protected]

19 September2011


20September2011