Blore Br Oct 10 Newsletter - bangaloreicai.org · Date/Day Topic /Speaker Venue/Time CPE Credit ......

1 October2010

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Bangalore Branch of SIRCof the Institute of Chartered Accountants of India

October2010

3 October2010

CPE AND OTHER PROGRAMS - October-November 2010Date/Day Topic /Speaker Venue/Time CPE Credit

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 those of Bangalore Branch of ICAI.

Note : High Tea at 5.30 pm for programmes at 6.00 pm at branch premises.

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06.10.10 Greed & unbridled financial innovation Branch Premises 2 hrsWednesday led to an evaporation of confidence 06.00pm to 08.00pm

CA. Dinesh Agrawal

09.10.10 One Day Seminar on Branch Premises 6 hrsSaturday “Practice & Procedures before the CESTAT” 09.30am to 05.30pm

Delegate fee: ` 700/- Details on Back Inner Cover

13.10.10 Discussion on Foreign Contribution Regulation Branch Premises 2 hrsWednesday Act (FCRA) - 2010 06.00pm to 08.00pm

CA. Mark A D’Souza

18.10.10 to Workshop on “Direct Tax Code Branch Premises 20 hrs22.10.10 Delegate fee: ` 1000/- 04.00pm to 08.00pmMonday toFriday Details Page No: 18

22.10.10 Seminar on Hotel Bangalore International, 3 hrsFriday “Capacity Building Measures for CA Firms” Race Course Road,

Delegate fee: ` 250/- Bangalore Details on Back Inner Cover 09.30am to 05.30pm

27.10.10 Discounted free Cash Flow method Branch Premises 2 hrsWednesday under new FDI Rules 06.00pm to 08.00pm

CA. Amithraj A N & CA. Krishna Prasad

30.10.10 STPI – Beyond March 31, 2011 … Branch Premises 4 hrsSaturday Structuring options 09.30am to 01.30pm

Delegate fee: ` 250/- Details Page No: 18

03.11.10 Life in taxing world: A dilemma of Branch Premises 2 hrsWednesday tax collector and tax practitioner 06.00pm to 08.00pm

Dr. Sibichen K Mathew,IRS, Addl Commissioner of Income Tax

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TAX UPDATES AUGUST 2010CA. Chythanya K.K., B.Com, FCA, LL.B, Advocate

VAT, CST, ENTRY TAX,PROFESSIONAL TAX

PARTS DIGESTED:

a) 2010-11(15) KCTJ Part 5b) 2010 69 Kar. L. J. Part 7c) 27 VST – Part 2 to 7d) 31 VST – Part 5e) 32 VST – Part 1 to 5f) 4 GST – Part 1

Reference/Description

2010-11 (15) KCTJ 226 : Order No.KSA. CR. 178/09-10 dated 05-08-2010 (Proceedings of the CCT) Theaforesaid proceeding was pursuant tothe judgement of the HonourableHigh Court of Karnataka in the caseof Suman Enterprises, Shimoga v.State of Karnataka & another 2010(69) Kar. L. J. 1 (HC). In the said case,the High Court held that Section 18-A of the KVAT Act was violative ofArticle 19(1)(g) of the Constitution ofIndia. Having so held, the said Sectionhas become inoperative andconsequently, all the notificationsissued by the Commissioner ofCommercial Taxes under the saidSection have also become legally notenforceable. Therefore vide theaforesaid order all the notificationspreviously issued under the Sectionhave been withdrawn.

2010 (69) Kar. L. J. 1 (HC) : SumanEnterprises, Shimoga v. State ofKarnataka & another In the instantcase the High Court of Karnataka heldSection 18-A of the KVAT Act to beviolative of Article 19(1)(g) of theConstitution of India and ultra viresthe provisions of the Act. It further

held that the Notification No. KSA.CR 76/2008-09, dated 28-07-2008(dealing with purchase of iron & steel,hardware, timber, plywood, veneers,particle board, laminated sheets, panelboards and similar articles of woodfor use in the executive of civil workscontract) issued by the Commissionerof Commercial Taxes vide powersconferred by the said Section had tobe quashed as being violative ofArticles 14 and 19(1)(g) of theConstitution of India and being ultravires the provisions of the Act. It maybe noted that Section 18A of theKVAT Act is a provision dealing withdeduction of tax at source in the caseof certain goods. The said Sectionrequires a registered dealer in the Statepurchasing specified goods fromanother registered dealer in the Stateto deduct from amount payable toselling dealer, amount of taxmentioned in “tax invoice” issued byselling dealer and remit the saidamount to the Revenue. Further thesaid Section called upon thepurchasing dealer to issue a certificateof deduction to selling dealer, toenable selling dealer to claim refundif due. This according to the HighCourt resulted in injustice both topurchasing dealer and selling dealer,inasmuch as tax collected from themexceeded their tax liability. The HighCourt further observed that theprovision for refund of tax collectedin excess from selling dealer did notmitigate initial injustice of collectingtax in excess of the actual tax liability.In aforesaid case, the Karnataka HighCourt rendered a welcome decisionruling that mere possibility of refundat a later stage does not justify

deduction of tax at source when theimpugned amount is not chargeableto tax at all.

[2010] 32 VST 489 (Karn) : T. V.Sundaram Iyengar & Sons Ltd. Stateof Karnataka & another In the instantcase the High Court of Karnataka heldthat the Rule 3(2)(c) of the KVATRules requiring the disclosure ofdiscounts allowed, on a sale, in thetax invoice, was not unconstitutionaland the same was valid.However, thedivision bench in the case of State ofKarnataka v. Reliance Industries Ltd.,Bangalore 2010 (68) Kar. L.J. 337(HC) (DB) has held that discountsallowed through a credit note wouldbe eligible for deduction and thisdecision was not noted in theaforesaid case.

INCOME TAX

PARTS DIGESTED:

a) 325 ITR – Part 4 & 5b) 326 ITR – Part 1 to 3c) 191 Taxman – Part 4 & 5d) 192 Taxman – Part 1 to 3e) 4 ITR(Trib) – Part 5 to 8f) 5 ITR(Trib) – Part 1g) 122 ITD – Part 1 to 3 &

Part 6 to 8h) 123 ITD – Part 1i) 125 ITD – Part 5 to 7j) 131 TTJ – Part 4 to 6k) 132 TTJ – Part 2l) 42-A BCAJ – Part 5

Reference/Description

[2010] 325 ITR 451 (Karn) : CIT &another v. Indo Nissin Foods Ltd. Inthe instant case the High Court ofKarnataka dealing with the aspect ofdeduction of tax at source underSection 192(1) in the case ofemployees of a Japanese Company

5 October2010

working for an Indian assessee, heldthat the Indian assessee was not liableto deduct tax at source on salaryreceived by the Japanese employeesfrom their Japanese employer. Thereasoning of the Court was that sincein the instant case when the paymentwas not made by the respondent/assessee or the amount was not paidby the foreign company through theassessee, the assessee was notrequired to deduct the tax at sourceunder Section 192(1) of the Act.It maybe noted that the decision of theSupreme Court in the case of Eli Lilly312 ITR 225 was not referred to bythe Karnataka High Court. Therefore,although the decision of KarnatakaHigh Court seems reasonable,considering the fact that the saiddecision has been rendered withoutapplying the binding precedent caselaw, the same may not stand the testof scrutiny in the Supreme Court.

[2010] 325 ITR 456 (Ker): CIT v.Nelson Trust In the instant case theTrust deed provided for operation ofthe Trust till the beneficiary attained21 years of age. However the solebeneficiary on attaining majority (i.e.18 years of age) revoked the Trust andcarried on business as a proprietor. Inthe said circumstances the KeralaHigh Court held that the assessmenton the Trust was not permissiblethereafter (i.e. post such revocation).The Court observed that Section 78(a)of the Indian trusts Act, 1882,provides for the revocation of Trustand states that where the beneficiariesto a Trust are competent to contract,the same may be revoked by consentof all of them. In the instant case therewas only a single beneficiary andtherefore the Department could notinsist that the Trust would operate till

the said beneficiary attained 21 yearsof age when the said beneficiary hadopted out of it on attaining the agecompetent to contract (18 years of age).

[2010] 325 ITR 535 (Delhi) : CIT v.Shambhu Mercantile Ltd. In thecontext of Section 94 dealing withavoidance of tax by certaintransactions in securities andparticularly in the context of sub-section (7), the Delhi High Court heldthat the 3 conditions as stipulatedunder clause (a), (b) and (c) of the saidsub-section were to be treatedcumulatively for the purpose ofdisallowance of loss, if any, whichwas occasioned as a result of thepurchase and sale of such security orunit to the extent the same exceededthe amount of dividend or incomereceived or receivable. Therefore asper the said judgement both thepurchase of the securities/units andthe sale of the same have to be withinthe stipulated period from the recorddate.Thus, the aforesaid provisiondealing with dividend stripping andbonus stripping would apply only ifall the conditions of the saidprovision of satisfied.

[2010] 325 ITR 550 (Bom): CIT v.Smt. Alka Bhosle The said case gaindealt with a similar aspect of readingthe provisions of Section 94(7) andits sub-clauses. The assessee hadpurchased certain units within aperiod of 3 months from the recorddate and the sale of the same had takenplace after the expiry of a period ofthree months from the record date.Therefore the High Court of Bombayheld that Section 94(7) would not beapplicable since the conditionsprescribed in clauses (a) (b) and (c)of sub-section 7 were cumulative innature.

[2010] 325 ITR 610 (Mad) : TubeInvestments of India Ltd. & anotherv. Asst. CIT (TDS) & Others In theinstant case the Madras High Courtheld that the Section 40(a)(ia), dealingwith disallowance of interest,commission or brokerage, rent,royalty etc. in cases where tax wasdeductible on the said payments andthe same has not been deducted orafter deduction has not been paid tothe Government exchequer, was notdiscriminatory or arbitrary. Theprovision was valid and notambiguous and the same could not beread down. It was not against Article14 of the Constitution ofIndia.Ironically, while upholding theconstitutional validity, the High Courtseems to have been carried away bythe proviso and assumed that theproviso is the cure for all the ills of theprovision. The various circumstanceswhere such proviso may not really helpthe taxpayer had not been considered.Further, what was forgotten was thatthe deductor was in fact dischargingonerous responsibility and is helpingthe state in collecting its revenue. Thereare already sufficient provisions to takecare of situation where he fails todischarge the obligation. Therefore,the disallowance sought to be broughtby the impugned section 40a(ia) istotally uncalled for and same cannotbe defended merely on the basis that asimilar provision like section 40a(i)remained unchallenged for a fewdecades

[2010] 326 ITR 193 (AAR) : TimkenCompany, In re In the instant casethe applicant was a US basedCompany. After an initial jointventure between Timken USA andTISCO, the applicant undertook amaiden public issue in 1991 andstarted commercial production one

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year later. Timken USA acquired theequity shares of the applicant fromTISCO. The applicant proposed totransfer certain equity shares inTimken India, which it has held formore than 12 months, to TimkenMauritius.On the aforesaid facts, theAuthority for Advance Ruling heldthat Section 115JB was not designedto be applicable in the case of theapplicant, a foreign company, whichhad no presence or permanentestablishment in India. The provisionsof Section 115JB were not applicableto the sale of shares of a listedcompany, Timken India, which hadsuffered securities transaction tax andaccordingly tax exempt under Section10(38) of the Act.It is thenaccordingly held that the MAATprovisions do not apply to the case ofa foreign company unless such foreigncompany has a permanentestablishment in India

[2010] 326 ITR 229 (Mad) : N.Meenakshi v. Asst. CIT In the instantcase the assessee sold its property toa Government concern. However, thevaluation adopted by the stamp dutyauthorities was higher than theconsideration received by theassessee. At the request of the assesseea reference was made to the valuationofficer under Section 50C during thecourse of the assessment proceedings.However the assessing officer passedthe order of assessment by adoptingthe higher value even before thevaluation report was submitted by thevaluation officer. In the saidcircumstance the Madras High Courtheld that such an assessment orderwas liable to be quashed.Anotherinstance of intervention of thejudiciary to check the brazen high-handedness of the department.

[2010] 191 Taxman 439 (Mad) : CIT,Chennai v. A.K. Khosla The instantcase reviewed Section 17(3) of theAct dealing with ‘profits in lieu ofsalary’. In the said case the assesseewas a chartered electrical engineeremployed as chief executive officerin a Company. He retired from thesaid Company on 31-1-2001 andreceived certain amount as non –compete fee, for not takingemployment in any competingorganization. In the saidcircumstances the High Court ofMadras observed that if the object ofpayment was unrelated to theemployer-employee relationship, thenthe same would not fall withinexpression ‘profit in lieu of salary’under Section 17(3)(i). Further sinceSection 17(3)(iii) which deals withjoining bonus/severance pay cameinto effect only from the Assessmentyear 2002-2003 onwards, the samehas only prospective effect andtherefore would not apply to theinstant case of the assessee.

[2010] 6 taxmann.com 41 (Mum -ITAT): Dy. CIT v. Starlite In theinstant case the Mumbai Tribunal heldthat is was mandatory for the assesseeto follow one of the prescribedmethods and demonstrate that theinternational transaction entered intoby it with an associated enterprise wason arms length price (ALP). TheTribunal observed that the assesseewas not absolved of its statutory dutyin determining the ALP by merelystating that none of the methods asprescribed under Section 92C couldbe applied to it by citing ‘excuses’ forthe same!However, the aforesaiddecision does not throw any light onwhat should be the approach when nomethod prescribed is suitable and no

comparable uncontrolledtransactions available

[2010] 192 Taxman 65 (Delhi) : CITv. ILPEA Paramount (P) Ltd. In thecontext of determining the book profitunder Section 115JB of the Act, theDelhi High Court held that, provisionfor doubtful debts and provision fordoubtful advances were nothing butprovisions for diminution in the valueof asset. The same were specificallycovered under clause (g) ofExplanation to the said Section andconsequently the aforesaid provisionswere to be included in the book profitwhile making computation underSection 115JB.

[2010] 192 Taxman 67 (Punj &Har): CIT, Faridabad v. Smt. ShwetaBhuchar In the instant case thePunjab & Haryana High Court heldthat the value adopted or assessed byany authority of the State Governmentfor the purpose of payment of stampduty in respect of land or building atthe time of execution of the transferdeed could not be taken as the saleconsideration received for the purposeof Section 48 of the Act. Therefore itwas held that no additions could bemade by the assessing officer merelybecause the State Governmentassessed the price of the property at amuch higher value for the purposesof payment of stamp duty.Thus, it washeld that section 50 C cannot be usedfor the purpose of making additionunder section 69. The role of section50 C is confined to computation ofcapital gains.

[2010] 192 Taxman 80 (Kar): CIT,International Taxation, Bangalore v.Sonata Information Technology Ltd.In the context of Section 248 of theAct dealing with the appeal by a

7 October2010

person denying liability to deduct taxin certain cases and Section 195, theHigh Court of Karnataka observed theassessing authority has not beenconferred with the power to assess theincome of the non-resident assessesin the course of examination of anapplication under Section 195(2).Therefore the scope of an appealunder Section 248 could never bebeyond the scope of examination ofnature of obligation under Section195(2) cast on a resident payer.Therefore in an appeal under Section248, dispute relating to chargeabilityalone could be the subject matter andnot a possibility of assessing incomeof a non-resident in the hands of aresident payer. In the course of itsjudgement the High Court observedthat it was an obvious case that wherean application was made by theresident payer under Section 195(2),the chargeability of the receipt wasconceded and it was only in such asituation an application wasenvisaged under Section 195(2). Ifhowever the chargeability itself wasin dispute, the same was a questionwhich was within the scope of sub-section (1) of Section 195 and thesame did not have to travel to sub-section (2) of the said Section.Onemay note the complete U-turn ascompared to the Samsung case.

[2010] 192 Taxman 309 (Delhi) :DIT (Exemption) v. BagriFoundation In the instant case theDelhi High Court held that theadditional condition by way ofExplanation to Section 11(2) insertedwith effect from 1-4-2003 was intendedto apply only to accumulations in excessof 15% under Section 11(2) and notaccumulations upto 15% under Section11(1)(a). Therefore, even if donationsare made by the assessee-trust to another

Trust from out of the accumulationsfrom previous years and not out ofsurplus reserves, the same would stillnot be liable to be included in theincome of the assessee so far as the saidaccumulations were not beyond theaccumulation of 15% permitted bySection 11(1)(a).Further, there is noprohibition in making such donationsfrom out of the current income and aslong as the said donations are inpursuance of objects of the trust, thesame may be treated as application ofincome

[2010] 192 Taxman 317 (Delhi) :Maruti Suzuki India Ltd. v. Addln.CIT, TPO In the context of referenceto the Transfer Pricing Officer (TPO)under Section 92CA of the Act, theDelhi High Court held that in a casewhere the TPO/AO proposes to makeadjustments to income of the assesseeby revising the arm’s length pricecomputed by him, he needs to give anotice the assessee conveying thegrounds on which the adjustment isproposed to be made, followed by anopportunity to reply to that notice andproduce evidence to controvert thegrounds on which the adjustment isproposed. In this decision, the HighCourt also specified circumstancesunder which adjustment will had tobe made in respect of use of marketingintangibles and expenditure onadvertising and sales promotion

[2010] 5 ITR (Trib) 57 (Bangalore):Advanta India Ltd. v. Dy. CIT In theinstant case the assessee was engagedin the business of research, productionand sale of hybrid seeds. It carried outresearch to find out the suitablegeneric composition of seeds in therespective local environment. All theprimary operations were carried on bythe assessee in its own lands or the

lands leased by it, under its own directsupervision and guidance engagingcasual labour and the hybrid seedswere grown by the farmers in theirown lands but leased out to theassessee-company. In the saidcircumstance the Bangalore Tribunalheld that both the basic as well assecondary agricultural operationswere carried on by the assessee andtherefore the entire income wasagricultural income as per Section2(1A) of the Act. The Tribunalobserved that the method of contractfarming did not take away thecharacter of the basic operationswhich were agricultural in nature.Further it observed that the fact thatthe assessee was followinginternational technology, marketingexpertise, integrated scientific andcommercial activity did not have anyrole in deciding the nature of income.

[2010] 5 ITR (Trib) 96 (Bangalore):Intellinet Technologies India P. Ltd.v. ITO In the instant case theBangalore Tribunal held that in thedetermination of export turnoverunder Section 10A, the broughtforward loss and unabsorbeddepreciation of the earlier years hadto be set off before allowing thededuction under the saidSection.Ironically, while deciding so,the honourable tribunal did notchoose to follow the line of similardecisions taken by the same bench inthe past. The judicial proprietydemands that wherever a divisionbench disagrees with the view ofanother division bench, a referenceought to have been made to thespecial bench.

[2010] 5 ITR (Trib) 106 (Delhi) :Perot Systems TSI (India) Ltd. v. Dy.CIT In the instant case dealing with

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international transaction underSection 92B and the determination ofthe ALP under Section 92C, the DelhiTribunal observed that in the case ofinterest free loans advanced to foreignassociated enterprises, the saidtransactions were in the nature of debtand not quasi-equity. Lending orborrowing money between twoassociated enterprises was coveredwithin the ambit of internationaltransaction. Further the Tribunalobserved that the RBI’s approval onthe said transaction was not a seal onthe true character of the transactionfrom the perspective of transferpricing regulations.In this landmarkdecision, the tribunal held that theforeign associated enterprise wouldbe liable to pay tax in India in respectof assumed interest computed onarm’s-length basis even in respect ofinterest free advances given to theIndian subsidiary. Interestingly, nocorresponding expenditure could beallowed in the hands of the Indiansubsidiary in terms of section 92 (3).

(2010) 131 TTJ (Chennai) 472:Lohia Metals (P) Ltd. v. Asst. CIT Inthe instant case the assessee heldshares as stock-in-trade till 31stMarch, 2004 which were convertedinto investments on 1st April, 2004.The assessee claimed exemption ofcapital gains on sale of shares as long-tem capital gains under s. 10(38) onthe ground that the shares were ownedfrom the date of allotment andtherefore, the holding period had tobe counted from the date of allotmentof shares and not from the date theywere converted from stock-in-tradeinto capital asset. The ChennaiTribunal held that the claim of theassessee was not sustainable. Itobserved that the capital asset cameinto existence only from 1st April,2004, before which it was merely astock-in–trade which could not betreated as a capital asset. Further italso observed that the definitionSection of ‘capital asset’ underSection 2(14) specifically excludedstock-in-trade. It was therefore held

that the holding period prescribed ins. 2(42A) had to be reckoned whenthe shares became capital asset andsince in the instant case the period ofholding was a per the aforesaidSection, the same was a short-termcapital asset and therefore it wascorrect to deny the claim ofexemption under Section 10(38).

(2010) 132 TTJ (Ahd) 233: MadhuIndustries Ltd. v. ITO In the contextof depreciation and classification ofasset, the Ahmedabad Tribunalobserved that electrical installationconsisting of electrical wires, switches,plugs, cables, MCB box and electricalitems could not function independentlyand so they were a part of plant andmachinery. It was therefore held thatthe aforesaid items could not beclassified under furniture and fittings.The assessee was therefore eligible fordepreciation @ 25 per cent and not @15 per cent.Logical extension of thenexus between the functioning of theasset and its classification.

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9 October2010

SERVICE TAX

Cenvat Credit of Service Tax

The appellants were registered asproviders of advertisementservices and had availed credit onthe documents which were notaddressed to them but addressedto other premises of theappellants. Hence show causenotice was issued demanding thereversal of such service tax creditwith interest and penalty whichwas confirmed by theAdjudicating Authority. However,it was held that if a person isdischarging service tax liabilityfrom his registered premises, thebenefit of Cenvat credit on theservice tax paid cannot be deniedon the ground that the saidinvoices are in the name of branchoffices. Accordingly, theimpugned order was set aside andthe appeal was allowed withconsequential relief. [ManipalAdvertising Services PrivateLimited v CCE, Mangalore. 2010(19) STR 506 (Tri-Bangalore)]

The appellants were engaged inthe manufacture of non-alloy steelingots chargeable to central exciseand had availed Cenvat credit ofvarious inputs, capital goods andinput services. The appellants hadalso availed credit of the servicetax paid on GTA service used inthe transportation of inputs to the

RECENT JUDICIALPRONOUNCEMENTSIN INDIRECT TAXESCA. N.R. Badrinath, Grad C.W.A., F.C.A.,CA. Madhur Harlalka, B. Com., F.C.A.

factory. The appellantsubsequently cleared the inputs assuch and reversed the credit ofexcise duty. The departmentcontended that the credit of theservice tax paid on GTA serviceshould also be reversed and theAssistant Commissionerconfirmed the demand of servicetax credit along with interest andpenalty. However, it was held thatunder Rule 3 of Cenvat CreditRules, 2004, at the time ofremoval of any inputs, as such, anamount equal to the credit ofexcise duties availed in respect ofsuch inputs has to be paid. Thereis no mention that the credit ofservice tax in respect of servicesavailed in bringing the inputs tothe factory also has to be paid.Hence the impugned order was setaside relying on the decision of theTribunal in the case of Chitrakoot& Power Ltd v CCE, Chennai.[AR Castings (P) Ltd vCommissioner of Central Exciseand Service Tax, Chandigarh.2010 (19) STR 384 (Tri-Delhi)]

The appellants were engaged inthe manufacture of sponge ironand other iron and steel productschargeable to central excise andhad availed Cenvat credit onvarious inputs, capital goods andinput services in terms of CenvatCredit Rules, 2004. Thedepartment issued show cause

notice for the recovery of servicetax credit availed on MarineInland Transit Insurance service inconnection with the procurementof plant and machinery. However,it was held that inwardtransportation of input or capitalgoods is covered by the definitionof input services and hence theinsurance during the inwardtransport of capital goods wouldbe eligible for credit. TheRevenue’s plea that the powerplant has not been used formanufacture of dutiable goods,but has been used to generateelectricity which is not excisabledoes not hold good. Accordingly,the appellants were allowed thecredit of service tax paid onMarine Inland Transit Insurance.[Monnet Ispat & Energy Limitedv Commissioner of CentralExcise, Raipur. 2010 (19) STR 417(Tri-Delhi)]

The appellants were engaged inthe manufacture of electronic andelectrical goods such as colourtelevision sets, computermonitors, air conditioners, etc.chargeable to central excise andalso were providing taxableservices such as repair andmaintenance, installation andcommissioning, consultingengineers etc. The appellants wereavailing the Cenvat credit ofcentral excise and service tax paidunder Cenvat Credit Rules, 2004.The appellants had availed creditin respect of the service tax onGTA service availed in outwardtransportation of the finishedgoods from the factory gate to thecustomer’s premises of fromfactory to depots and from thereto customer’s premises. The

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department was of the view thatGTA service availed fortransportation of goods fromfactory gate to customer’spremises is not covered underinput service and accordinglyissued show cause notice.However, it was held that when afinished product is taxed, credit ofduty paid on all input goods,capital goods and input serviceshas to be allowed. The assessablevalue of goods under section 4 ofthe Excise Act is not confined tomanufacturing cost but alsoincludes marketing, selling,advertisement etc. which havecontributed to the value of thegoods. All expenses includingtransport expenses up to thecustomer’s premises areincludible in the assessable valuefor charging duty. The input creditcannot be confined only to theservices used in completion ofmanufacturing process. Hence theimpugned order was set aside andthe matter was remanded to theCommissioner for adjudication.[LG Electronics (India) PrivateLimited v Commissioner ofCentral Excise, Noida. 2010 (19)STR 340 (Tri-Delhi)]

The appellants had taken credit ofduty paid on capital goods whichwas not backed by any dutypaying documents or receipt ofcapital goods. On pointing out theirregularity, the appellant reversedsuch credit except to the extentwhich was utilized for thepayment of education cess. TheCommissioner concluded that theappellants had taken such creditby misstatement with intent toevade payment of duty andimposed equal amount of penalty.The appellant challenged that the

penalty provisions shall be appliedto cases where an assessee hadtaken irregular credit bysuppression of facts, fraud etc.However, it was held that theimpugned order does not give anyreliable finding that the assesseehad taken the irregular credit withan intention to evade payment ofduty. Hence penalty imposedunder section 11AC of the CentralExcise Act, 1944is notsustainable. As regards thepayment of interest, in the MarutiUdyog Limited., case, it was heldthat in a case where the assesseehad taken modvat credit but hadnot utilised the same, the assesseewas not liable to pay interest.Accordingly, the impugned orderwas vacated and the appeal wasallowed. [Bill Forge PrivateLimited v Commissioner ofCentral Excise, Bangalore. 2010(256) ELT 587 (Tri-Bangalore)]

Stay/ Dispensation of Pre-Deposit

The appellants are engaged inpromotion of sales of computersand peripherals of M/s. IBM, USAand also engaged in provision ofcall centre services. The appellantshad disclosed the receipts fromexport of services in their ST-3returns. The Commissionerdecided that the impugned activitydid not constitute export ofservices and issued show causenotice demanding the service taxalong with interest. However, itwas held that the benefit of theimpugned services rendered hasaccrued in USA. In terms ofCircular No. 111/05/2009-STdated 24/02/2009, the impugnedservices were exported.Accordingly, the appellants werenot liable to pay service tax andinterest thereon and penalty.

Hence the pre-deposit was waivedand the recovery of dues adjudgedwas stayed. [IBM India (P)Limited v CCE, Bangalore. 2010(19) STR 520 (Tri-Bangalore)]

Demand

The assessee had carried outtesting activities at Mettur Dam totheir Marikal unit. The departmentdemanded service tax on suchtesting activity based on the factthat mettur dam unit is a separatelegal entity from the Karikal unitof the assessee as laid down by theTribunal in Government CeramicService Centre, Cannanore vCollector of Central Excise,Cochin [1983 (13) ELT 115(CEGAT)]. However, it was heldthat in the context of service taxliability, the different units of acorporate entity will not makethem separate legal entities for thepurpose of leviability of servicetax and when one renders serviceto oneself service tax is notleviable. The above decision hasbeen followed in Indian OilCorporation Limited vCommissioner of Central Excise,Patna [2007 (8) STR 527 (Tri-Kolkata)]. Hence the impugnedorder was set aside. [ChemplastSanmar Limited v Commissionerof Central Excise, Salem. 2010(19) STR 424 (Tri-Chennai)]

The issue in the present case wasthe entitlement of benefits ofcomposition scheme. The assesseewas engaged in the execution ofon going works contract and hadavailed the benefit of CBECCircular No. 98/1/200/-ST. Thepetitioner was denied the benefitsunder the composition scheme inrelation to the on going workscontract in respect of which thepetitioner had paid service tax.

11 October2010

The petitioner contended that theimpugned circular is irrational,discriminatory, ultra vires theFinance Act, 1994 andinconsistent with the objects ofRule 3 of the 2007 Rules.However, it was clarified that aservice provider who paid servicetax prior to 1/6/2007 for thetaxable services such as erection,commission or installing services,commercial or industrialconstruction services, as the casemay be, is not entitled to avail thecomposition scheme under the2007 Rules and the impugnedcircular is wholly in conformitywith the provisions of Rule 3 ofthe 2007 Rules. The nature ofworks executed by the petitionerfall within the services classifiedas works contract does not entitlethem to the benefits ofcomposition scheme. Theentitlement to such scheme arisesonly after exercise of option as perrules and such option cannot beexercised after the payment ofservice tax on works contract.[Nagarjuna ConstructionCompany Limited v Governmentof India. 2010 (19) STR 321 (AP)]

The appellants were engaged infabrication of structures at site fortheir various clients and had alsoexecuted work order forfabrication of structure/ pipes/equipments and erection offabricated structures, piping andequipments. The appellants hadnot registered themselves forrendering erection,commissioning services but wereregistered for maintenance andrepair services. The departmentissued show cause noticeproposing levy of service tax onthe services rendered by the

appellants. However, it was heldthat the activity undertaken by theappellants amounted tomanufacture under section 2(f) ofCentral Excise Act based on thedecision of the Larger Bench inthe case of Mahindra & MahindraLimited 2005 (190) ELT 301 (Tri-LB). Hence the appellants are notliable to pay any service tax on theactivities undertaken by them.Accordingly, the impugned orderwas set aside and the appeal wasallowed. [Neo StructoConstruction Limited vCommissioner of Central Exciseand Customs, Surat-I. 2010 (19)STR 361 (Tri-Ahmedabad)]

The assessee firm was engaged inexport of various goods oncommission basis. The assesseecontended that the servicesprovided by him were coveredunder the category of exportservice and therefore he was notliable to pay service tax. Thedepartment contended that theassessee has received commissionin Indian currency and thereforethe exemption in terms of Rule 3of Export Services Rules, 2005 isnot available. However, it washeld that arrangements were madebetween the buyer and sellers topay the commission in Indiancurrency directly to the assesseeto minimize the cost relating to thetransfer charges by foreign bankssince the amount of commissionwas very small. The amount wasreceived in relation to the exportof goods and the arrangement wasonly to make the transactionscommercially viable. Hence theappeal filed by the department wasset aside. [Commissioner ofCentral Excise, Rajkot v ShelpanExports. 2010 (19) STR 337 (Tri-Ahmedabad)]

The appellants had entered into acontract for the purpose ofrendering services of loading,standardisation, unloading,stacking etc. On scrutiny of thedocuments, the departmentnoticed that the appellants hadalso supplied labourers in additionto the provision of the saidservices. The revenue was of theview that services rendered by theappellants would fall undermanpower recruitment and supplyagency and accordingly issuedshow cause notice. However, itwas held that on the basis of thecase papers, the contract whichhas been given to the appellantsis for execution of work ofloading, unloading, bagging,stacking etc. and the supply oflabourers has not been mentionedin the contract and the invoices.Hence the impugned order was setaside and the appeal was allowed.[Divya Enterprises vCommissioner of Central Excise,Mangalore. 2010 (19) STR 370(Tri-Bangalore)]

Refund/ Refund Claim

The petitioner is in the businessof running retail stores by takingshops/ premises on rent or onlicense. The petitioner isaggrieved by the provisions ofsection 66(105)(zzzz) as amendedby the Finance Act, 2010 wherebythe renting of immovable propertyis brought within the ambit ofservice tax. The petitionercontended that the renting ofimmovable property would notconstitute any value addition andthe provisions of the said sectionas amended are inconsistent withthe service tax provisions of theFinance Act, 1994 based on thedecision of the Delhi High Court

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October2010

in the case of Home SolutionRetail India Limited v Union ofIndia and others 2009 (14) STR433 (Delhi).However, since theapplicability of the said section asamended retrospectively was notdecided, the respondents weredirected not to initiate anycoercive steps for the recovery ofthe service tax on renting ofimmovable property by thepetitioners for the earlier periods.However, the petitioners wererequired to pay service tax on suchrenting in the subsequent periods.[Trent Limited v Union of India.2010 (19) STR 336 (AP)]

CENTRAL EXCISE

Valuation

The revenue filed these appealsagainst the impugned order of theCommissioner (Appeals) whereinthe cost of packing was excludedfrom the assessable value of thefinal product based on the decisionof the Supreme Court in the caseof Union of India v Bombay TyreInternational Limited 1983 (14)ELT 1896 (SC). The departmentcontended that packing is essentialfor marketing of the goods andtherefore the value of the same isto be included in the assessablevalue of the goods. However, itwas held that the goods are clearedat factory gate without packingwhich is only provided by therespondents at the request of thebuyers for safe transportation ofthe goods. Hence the value of thepacking materials does not formpart of the assessable value and theappeals filed by the revenue weredismissed. [Commissioner ofCentral Excise, Kolkata-IV vLagan Jute Machinery CompanyLimited. 2010 (256) ELT 284 (Tri-Kolkata)]

The assessee was engaged in themanufacture of coated fabrics.The price declared by the assesseein the price list was approved bythe Revenue. Later the assesseerevised the price to exclude thepost manufacturing expenses suchas cost of packing the fabrics inhessian cloth which, was rejectedby the Adjudicating Authority.However, it was held that thefabric manufactured by theassessee was sold to thewholesalers at the factory gateonly in polythene bags. Thefurther packing of the fabric inhessian cloth was not in the courseof normal delivery to thecustomers and was, therefore notrequired to make the productmarketable. The additionalpacking was done for the purposeof convenience of the up-countrycustomers in the transportation ofthe goods manufactured by theassessee. Hence the cost ofsecondary packing in hessiancloth cannot be included in thevalue of the goods. Accordinglythe appeal was allowed leavingthe parties to bear their own costs.[National Leather ClothManufacturing Co Limited vUnion of India. 2010 (256) ELT321 (SC)]

Manufacture The assessee was carrying on the

business of producing and sellingtarpaulin made-ups. The assesseewas of the contention that theprocess of mere cutting, stitchingdoes not amount to manufacture.However, the department issuedshow cause notice as to why theprocess does not amount tomanufacture and demanded theduty. However, it was held that the

process of cutting, stitching oftarpaulin does not change thebasic characteristic of the rawmaterial and end product. Theprocess does not bring intoexistence a new and distinctproduct with total transformationin the original commodity. Theoriginal material used i.e.tarpaulin is still called tarpaulinmade-ups even after undergoingthe said process. Hence, it cannotbe said that the process is amanufacturing process.Accordingly, there can be no levyof central excise duty.[Commissioner of Central Excise,Chennai-II v TarpaulinInternational. 2010 (256) ELT481(SC)]

CUSTOMS

Export duty

The issue in the present case waswhether export duty is applicableon the SEZ supplies made by DTAunits. By virtue of Finance Act,2008, 20% ad valorem duty wasimposed on all iron and steelitems. The notifications issuedunder section 25 of the CustomsAct, 1962 enabled the levy ofcustoms duty on transactionstreated as exports. TheDevelopment Commissionerswere made aware that export dutyhad been levied on export of steelproducts and therefore they wereto allow supply of steel productsto SEZs on submission of a bondand bank guarantee. Thepetitioners contended that theimpugned action has the effect oflevying customs duty on goodswhich are not physically movedout of India. However, it was heldthat Rule 23 of the SEZ Rules,2006 indicates that supplies from

13 October2010

the DTA to a SEZ would beeligible for export benefits. Rule27 permits a unit to import orprocure from the DTA all types ofgoods without payment of duty orafter availing export entitlements.Hence duty drawback and otherexport benefits would be availableto either the SEZ unit or DTAsupplier at their option. It is thusclear from the statement of objectsto the SEZ Act that the intentionof the Legislature was to makeavailable goods and services to theSEZ unit free of taxes and duties.Hence the instructions issued bythe respondents under theimpugned notifications are whollyillegal and cannot be sustained andall the proceedings initiated in thisregard are liable to be quashed.[Shyamaraju & Co (India)Private Limited v Union of India.2010 (256) ELT 193 (Kar)]

VALUE ADDED TAX The petitioners were engaged in

undertaking turnkey projects andother works contract for thirdparties and were assessed to taxunder the Karnataka Value AddedTax Act, 2003 (‘KVAT Act’) andoffered the turnover of iron andsteel for tax at the rate of 4%. Therevenue contended that workscontract of civil works is a distinctentry in the 6th schedule andtherefore, tax is attracted on thesaid turnover at the rate of 12.5%.However, it was held that aregistered dealer shall be liable totax on the taxable turnoverrelating to transfer of property ingoods involved in the executionof works contract specified in the6th schedule of the Act at the ratesspecified therein. Such levy issubject to the provisions of

sections 14 and 15 of the CentralSales Tax Act relating to declaredgoods. In respect of the declaredgoods involved in the executionof works contract, the rate of taxshall be 4% inspite of the fact thatthe tax rate applicable is 12.5% inrespect of composite workscontract involving transfer ofproperty in goods. Thus as regardsiron and steel products, used in theexecution of works contracts, levyof tax shall be at 4% on the valuethereof. Section 4(1)(c) of the Actread with 6th schedule to the Actdoes not enable the respondents tolevy tax at the rate of 12.5% inrespect of declared goods used inthe execution of works contract.Consequently, proceedingsinitiated in respect of thepetitioners to levy the tax werequashed. [NagarjunaConstruction Company Limited,Bangalore v State of Karnatakaand Others. 2010 (69) Kar.L.J.97(HC)]

The issue in the present caserelated to the exemption availablefor penultimate sale under theCentral Sales Tax Act, 1956. Theassessee was requested to buildbus bodies by the exporter inaccordance with the specificationsprovided by the foreign buyer. Theassessee claimed exemption onsale of bus bodies as penultimatesales in the course of exportwhich, was rejected on the groundthat the ‘bus bodies’ and ‘buses’are two different commodities andthe bus bodies as such were notexported. However, it was heldthat if it is clear that the local saleor purchase between the parties isinextricably linked with the exportof the goods, then a claim under

Section 5(3) for exemption fromState sales tax is justified, in whichcase, the same goods theory hasno application. The bus bodiesconstructed and manufactured bythe assessee could not be of anyuse in the local market and in thePurchase Order placed on theassessee by the exporter, it isspecifically indicated that the busbodies have to be manufactured inaccordance with the specificationsprovided by the foreign buyer,failure to do so, the export orderwould have been cancelled.Therefore, the assessee wasentitled to claim exemption underSection 5(3) of the CST Act. [Stateof Karnataka v Azad CoachBuilders Private Limited. 2010-TIOL-70-SC-CST-CB]

The issue for discussion in thepresent case was whether softwareamounts to goods and if so, whenit is supplied to a customerpursuant to the End User LicenceAgreement, the transaction isliable to be treated as sale orservice. The petitioner is a societyregistered under the SocietiesRegistration Act with itsheadquarters at Mumbai, prayingto declare section 65(105)(zzzze)of Chapter V of Finance Act, 1994(as amended by Finance No.2 Actof 2009) to be null and void. Thesaid section was amended to bringinformation technology softwareunder the meaning of taxableservice. The petitioner contendedthat whenever software is sold,they are treated as goodsregardless of the nature oftransaction and in such event thegoods are liable to sales tax. Therespondents argued that theoriginal manufacturer, whocreates the software, only licenses

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October2010

the software for the private use ofthe end user and at no stage theend user becomes absolute ownerof the software. The end usercannot tamper, modify, improveor rectify errors in the software.Hence it is clear that the softwareis not sold, but only licensed forthe limited use. Hence, the writpetitions holding that the softwareis goods were dismissed andwhether the transaction wouldamount to sale or service woulddepend upon the individualtransaction and for that reason, theamended provision cannot be heldto be unconstitutional so long asthe Parliament has the legislativecompetency to enact law inrespect of tax on services.[Infotech Software DealersAssociation v Union of India.2010-TIOL-620-HC-MAD-ST]

The issue in the present case waswhether freight and insurancecharges are includible in turnoverand taxable turnover for TNGST/CST. The appellant is a dealerregistered under the provisions ofthe Tamil Nadu General Sales TaxAct, 1959 as well as the CentralSales Tax Act, 1956 andmanufactures electric meters andsupplies it to the ElectricityBoards. The Revenue passedorders holding that such freightand insurance charges were liableto be taxed and the same are to beincluded in the turnover. Theappellants contended that sincethe contract separates the ex-factory price and the insuranceand freight charges, and, underRule 6(c) of the Tamil NaduGeneral Sales Tax Rules, thefreight when specified by the

dealer separately, withoutincluding the same in the price, thefreight charged could not havebeen treated as part of the saleprice and subjected to tax.However, it was held that amountof freight and insurance chargesincurred by the dealer forms partof the sale price. As per the clausecontained in the contract, thetransfer of title to the goods wasto take place only on delivery ofgoods at the customer’s place andthat the customer’s obligation topay would arise only after thedelivery had been so affected.Hence it was held that the freightand insurance charges were to beincluded in the turnover andtaxable turnover and the appealswere dismissed. [India MetersLimited v State of Tamil Nadu.2010-TIOL-69-SC-CT]

Adv

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Please contact:

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42nd Regional Conferenceof SIRC of ICAI at Kochi

Jnanamarga New Challenges, New Frontiers

on November 27 and 28, 2010(Saturday and Sunday)

Organized by SIRC of ICAI

Hosted by Ernakulam Branch

Venue: Jawharlal Nehru International Stadium,Kaloor, Kochi

★★★★★ Address by Eminent Personalities

★★★★★ Discussion on important current topicsconcerning the profession

★★★★★ Enjoy great fellowship & hospitality

For further details, please referSIRC Newsletter, Sept. & Oct. 2010

12 Hrs

CPE

15 October2010

Taxability of Renting of ImmovableProperty is one among the variousactivities on which service tax is leviedand being objected and contested in thecourt of law and still to attain finality.Meanwhile in this article the paperswriters have made an attempt to bringout the aspects of taxability of rentingof immovable property and certainissues which are generally prevailingin the industry on this taxability.1. Which is the service covered

under the provisions of Sec65(105)(zzzz)?Ans. Any service provided to anyperson by any other person, byrenting of immovable property orany other service in relation to suchrenting for use in the course of or,for furtherance of, business orcommerce. (after the retrospectiveamendment vide Finance Act,2010)

2. From when this category wasbrought to tax net?Ans. This service was initiallybrought to tax net w.e.f. from01-06-2007.

3. What are the inclusions andexclusions in the definition ofrenting of immovable property?Ans. Includes – Renting, letting,leasing, licensing or other similararrangements and also includespermitting the use of space in animmovable property irrespective ofthe transfer of possession or controlof the immovable property.Excludes –

a. Renting of immovable property

RENTING OF IMMOVABLEPROPERTY SERVICE – FAQ’sCA. Rajesh Kumar T R, B Com, LL B, FCA, DISACA. Chandra Shekar B D, B Com, LL B, FCA, DISA

BY a religious body or TO areligious body or,

b. renting of immovable propertyTO an educational body impartingskill or knowledge or lesson onany subject or field other than acommercial training or coachingcentre.

4. What is immovable property asper Finance Act, 1994?Ans. Immovable propertydefinition is merely inclusivedefinition and it Includes –

• Building and part of building andthe land appurtenant thereto

• Land incidental to the use of suchbuildings or part of a building

• Common or shared areas andfacilities relating thereto and

• In case of building located in acomplex or an industrial estate, allcommon areas and facilitiesrelating thereto, within suchcomplex or estate

• Vacant land, given on lease orlicense for construction of buildingor temporary structure at a laterstage to be used for furtherance ofbusiness or commerce.Excludes

• Vacant land soley used foragriculture, aquaculture, farming,forestry, animal husbandry,mining purposes

• Vacant land• Land used for education, sports,

circus, entertainment and parkingpurposes and

• Building solely used for residentialpurposes and buildings used for

purpose of accommodation,including hotels, hostels, boardinghouses, holiday accommodation,tents, camping facilities.

5. What are the major amendmentswith regard to this service?Ans.

a. Amendment to definition wef 16-05-2008 – Explanation wasinserted ‘allowing or permittingthe use of space in an immovableproperty, irrespective of thetransfer of possession or controlof the said immovable property isrenting of immovable property.

b. Retrospective amendment in thedefinition w.e.f. 01.06.2007 madevide Finance Act, 2010 – Thedefinition of taxable service wasamended to include specificallyrenting along with service inrelation to renting. Whereas earlierit was only covering services inrelation to renting. The Hon’bleHigh Court of Delhi in the case ofHome Solutions Retail I Pvt Ltdhad held the coverage is only withregard to services in relation torenting and not renting perse.

c. Amendment w.e.f. 01.07.2010 –The definition of immovableproperty was expanded to include“Vacant land, given on lease orlicense for construction of buildingor temporary structure at a laterstage to be used for furtherance ofbusiness or commerce.”

6. Land mark judgements?Ans.

a. Home Solutions Retail I Pvt Ltd& Others 2009 (14) STR 433(Delhi High Court) – Held rentingper se is not taxable only servicesin relation to renting is taxable.

b. Home Solutions Retail I Pvt. Ltd., -Stay was granted for theamendment made in the FinanceAct, 2010.

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October2010

c. Trent Ltd Vs Union of India(Andhrapradesh High Court)–Stay partly granted forretrospective collection of tax. Butdid not stay the current collectionsafter enactment.

d. Maharastra Chambers of HousingIndustry V/s Union of India(Mumbai High Court) – StayGranted.

7. Whether landlord has to pay theservice tax with effect from 01-06-2007?As per the retrospectiveamendment, the landlords have todischarge the service tax liability.The service tax is to be eithercollected from the tenants or borneby the landlord itself. But thelandlords can take a contentioneven today based on the followinggrounds:

a. Renting per se does not involveany service

b. Considering List II of the SeventhSchedule of Article 246 of theConstitution of India, renting is astate subject and not a centralsubject.If the landlord wants to take aconservative view then it issuggested in the opinion of thepaper writers that the service taxis paid under protest. By this thelandlord can avoid paying penaltyat a later date.

8. Is interest and penalty leviable?Ans. As discussed above landlordhas to discharge the taxes else heshall be liable to interest andpenalty according to Finance Act,1994, subject to litigation.

9. Can landlord claim the servicetax from tenants?Ans. As service tax on renting isan indirect tax, the same can becollected from the tenant. But itdepends on the terms of contract,

in few cases it is inclusive of taxesand in few cases it is exclusive oftaxes.

10. In case of common facilities andamenities are provided totenants like electricity, watercharges, etc?Ans. There could be two types ofarrangement-

a. Single agreement – In case of asingle composite contract for bothrenting and amenities then asservice has to be classified as perthe classification rules under thehead which defines the characterof service.

b. Separate agreement – In casethere are separate agreements forboth renting as well as amenitiesthen renting falls under the serviceof renting of immovable propertyservice and the amenities fallunder the services management,maintenance and repair service.Here again the terms of theagreements would guide theclassification.

11. Can we take credit on inputservice/inputs in relation toconstruction of building foroutput service in relation torenting of immovable propertyservice?

Ans. As per the Board CircularNo. 98/08-ST dated 04-01-2008as per immovable property isneither goods nor service,therefore tax paid on inputs/inputservices used in relation toconstruction of immovableproperty is not eligible forCENVAT Credit.

However the paper writers are ofthe view that as far as input servicesare concerned, the said services areused in relation to setting up ofpremises of service provider andthe credit on the same should be

eligible. As regards to the inputs,the said inputs are used forconstruction of building which isin turn used for providing taxableservices as per the statute.Therefore even the credit on theinputs should also be available.

12. Whether immovable propertyletout is partly for residentialpurpose and business purposes?Ans. Service tax need not becharged for the portion used forresidential portion. If there is acomposite contract as per theexplanation, it would deemed tobe used for business purposes.

13. Whether the Use of immovableproperty is allowed for placingvending/dispensing machines inmalls and other commercialpremises and erection ofcommunication towers onbuilding?Ans. This type of activities werespecifically brought under tax netw.e.f. 16.05.2008 as definitionwas amended to include providingof any space/part of building evenwithout giving control orpossession of entire immovableproperty. But the condition is thatit has to be used for commercialor business purpose to call it ataxable service. Hence the sameis taxable under the head ‘rentingof immovable property service.’

14. Whether Ownership ofproperty is necessary?Ans. As per the definition theperson need not be the owner ofthe property.

15. Mr X & Mr Y are co-owners ofproperty. Each of them gettinga rent of Rs 6 lakhs each peryear. Are X & Y liable under theprovision of service tax?Ans. If the co-ownership isrecognized and also the terms of

17 October2010

lease/rent also recognizes such factand there is a clear distinction andindependence between X and Y areco-owners, in the view of paperswriters both are eligible for claimingthe benefit of Small service providerexemption u/n 6/2005-ST and neednot pay service tax.

16. With a small variation to theprevious query. Mr X hasanother property and getting arent of Rs 5 lakhs?Ans. In this scenario, Mr X hasto collect service tax to his portionof his property ie. He has to collectservice tax on Rs 11 lakhs. But Yis still exempt from service tax ifhe avails small service providerexemption.

17. If there is some other service,such as air-conditioning service

provided along with the rentingof immovable property?Ans. As the scope of definitionspecifically covers any otherservices in relation to such renting,the same would get coveredwithin the scope of taxable serviceunder this category of service.However in view of paper writers,if the terms of agreement are forrenting movable propertyseparately independent ofimmovable property, the movableproperty would be liable for salestax and considered as tax on saleof goods and cannot be broughtunder service tax net.

18. Whether renting of suchimmovable property by itselfconstitutes a service and,thereby, a taxable service?

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

The Committee for Members in Industry of the Institute conducted campus interviews at Hotel Bangalore Internationalfrom 15th to 17th, September 2010. 17 Companies participated in the placement programme at Bangalore Centre.

The organizations participating were as under –

Public Sector Companies IT/ ITES Companies Other Companies

•BEL • Infosys Technologies • Bosch

Banking Sector • Wipro Ltd • Britannia

• Syndicate Bank • IBM India Pvt Ltd • Axis Consulting

CA Firms • WIPRO • Titan Industries

• S.R Baliboi & Associates • Accenture • JSW Steel

• PWC • Capgemini • Narayana Hrudayalaya

• Deloitte

Highlights:

1. 230 candidates attended the Campus Interviews and received 109 offers. 104 offers were accepted by the candidates.

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

3. The highest pay package offered was Rs 10.8 lacs by Britannia Industries Ltd and average pay package offered was Rs5.5 lacs.

4. CA Subodh Kumar Agarwal, Chairman CMII of ICAI honored the occasion on 17th Sep 2010 and interacted with theexecutives of the companies & the candidates.

OBITUARY

CA. C. NANDAKUMARM. No. 022129

passed away on 31.08.2010

May his soul rest in peace

Ans. This is the issue which is stillto be finally decided by Hon’bleSupreme Court as well as DelhiHigh Court in the case of HomeRetail Solutions I Pvt. Ltd., case.

18


October2010

Workshop on Direct Tax CodeMonday, 18th October 2010 to Friday, 22nd October 2010

between 4.00 PM and 8.00 PM, Venue : Branch PremisesDate / Day Topic Sections Speaker

1. Charge & Scope of Income Tax 2-3 CA. H Padamchand Khincha2. Residence in India 43. Income Deemed to accrue in India/to be received 5-61. Computation of Total Income 12 CA. S Ramasubramanian2. Classification of sources of income 133. Computation from Ordinary Source 14

and Special Source 151. Salary 20-23 CA. Vishnumurthy S2. Tax Incentives 68-793. Exemption 101. House Property 24-29 CA. Narendra J Jain2. Clubbing 8-93. Dividend Income 74. Tax Incentives 80-86

Income from Business 30-45 Mr. H Naginchand KhinchaCapital Gains 46-55 CA. K K Chythanya1. Income from residuary Sources 56-59 CA. D Devaraj2. Aggregation of Income 60-67Computation of Total Income 90-103 Dr. Suresh Nof Non-Profit Organization1. Minimum Alternate Tax 102-103 CA. Vishnumoorthi H2. Dividend Distribution Tax 108-1103. Wealth Tax 112-1141. General Anti-Avoidance Regulations 115-125 CA. M Vishweshwar Mudigonda2. Authority on Advance Ruling & 256-267

Dispute Resolution Procedures

Workshop Co-ordinator: CA. K K ChythanyaDelegate Fee: Rs.1000/- Restricted to 200 participants

18.10.10

Monday

19.10.10

Tuesday

20.10.10Wednesday

21.10.10Thursday

22.10.10

Friday

20 Hrs

CPE

Mode of payment: Cash / Cheque in favor of “Bangalore Branch of SIRC of ICAI” payable at BangaloreFor further details please contact: Mrs. Roopashree, Tel: 080-30563511/512/513, Email: [email protected]

Topic: STPI – Beyond March 31, 2011 ...Date: October 30, 2010, Saturday

Time : 09.30 am to 01.30. pm, Venue : Branch PremisesDuration Topic Speakers09.30 am Basic Concepts covering Income-tax Act / CA Shashishekhar Chaugule

Direct Tax Code, Foreign Trade Policy and related regulations CA Sudhakar G10.30 am Industry perspective CA Umesh NV11.45 am Structuring options from a tax and regulatory perspective CA Sanath Ramakrishna12.45 pm Open House [Q&A] Session

Delegate Fee: Rs.250/- Restricted to 200 participants

4 Hrs

CPE

19 October2010

20


October2010

Blore Br Oct 10 Newsletter - bangaloreicai.org · Date/Day Topic /Speaker Venue/Time CPE Credit ......

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Transcript of Blore Br Oct 10 Newsletter - bangaloreicai.org · Date/Day Topic /Speaker Venue/Time CPE Credit ......