Extension Of Due Date For Filing ROI From 31.07.2012 To 31.08.2012

F.No.225/163/2012/ITA.I1
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, the 31st July 2012.

Order under Section 119 of the Income Tax Act. 1961

On consideration of the reports of disturbance of general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and HUF has been made mandatory, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the ‘due date’ of filing of returns of income for the Assessment Year 2012-13 to 31st August 2012 in respect of assessees who are liable to file such returns by 31st July 2012 as per provisions of section 139 of Income Tax Act, 1961.

(Ajay Goyal)
Director (ITA.II)

Copy to:-
1. PSto F.M./ OSDto FM/ PS to MOS(R)/ OSDto MOS(R).
2. PS to Secretary (Revenue).
3. Chairman (DT), All Members, Central Board of Direct Taxes.
4. All CCITs(CCA)
5. All Joint Secretaries / Directors / Deputy Secretaries / Under Secretaries of
Central Board of Direct Taxes.
6. DIT(Systems), New Delhi, for appropriate publicity by putting it on
departmental website.
7. The C& AGof India (30 copies).
8. The IS & Legal Advisor, Min. of Law & Justice, New Delhi.
9. The DG,NADT,Nagpur.
10. The Institute of Chartered Accountants of India, IP Estate, New Delhi-
110003.
11. All Chambers of Commerce
12. CIT(OSD),Official Spokesperson of CBDT.
13. All Cs.lT,CBDT ~\-i\~,\n..
(Ajay Goyal)
Director (ITA.II)

SEZ Exemption from Service Tax only if consumed in SEZ

Notification No. 4/2004-ST being a conditional exemption notification issued under Section 93 of the Finance Act, 1994, cannot be interpreted on the basis of the provisions of SEZ Act, 2005 or the Rules made thereunder and the conditions specified therein have to be fully satisfied for availing the benefit under the said notification. Further, as observed earlier, the notification came into force much before the Special Economics Zone Act or the Rules made there under came into force. If the intention of the legislature was to align the exemption with section 26 of the SEZ Act or Rule 31 of the SEZ Rules, then notification No. 4/2004-ST would have been amended to reflect the same. No such amendment has been carried out in the said notification. In these circumstances, we are of the view that if the services are not consumed within the Special Economic zone, then the benefit of notification No. 4/2004-ST will not be available.

CESTAT, MUMBAI BENCH

DHL Lemuir Logistics (P.) Ltd.

v.

Commissioner of Central Excise, Mumbai

ORDER NO. S/644/2012/CSTAB/C-I

APPLICATION NO. ST/S/52 of 2012

APPEAL NO. ST/11 of 2012

MAY 16, 2012

ORDER

P. R. Chandrasekharan, Technical Member – This appeal and stay application are directed against order-in-original No. 56/BR-56/ST/Th-I/2011 dated 30/09/2011 passed by the Commissioner of Central Excise, Thane-I. The stay application is being taken up for consideration.

2. The appellant, M/s. DHL Lemuir Logistics Pvt. Ltd., Chennai, is engaged in rendering of services of Custom House Agent, Clearing and Forwarding Agent, Storage and Warehousing, Business Auxillary Service, Transport of goods by road and Business Support Service, etc. During the course of audit of the records of the company from 06/08/2007 to 08/08/2007 it was noticed that the assessee was availing wrongly exemption of service tax under Notification No. 4/2004-ST dated 31/03/2004 for the CHA services rendered outside the unit situated at Special Economic Zone, Chennai. It is further noticed that the assessee had made late payment of service tax for the month of October & November 2006 and January & March 2007 but did not pay the interest thereon. It was further found that the assessee has been rendering CHA service Air and Sea freight Agency service (business auxillary service) pertaining to the import of cargo to M/s. Nokia India Pvt Ltd., a unit situated at in the Special Economic Zone in Sriperumpudur, Chennai and the assessee had not paid service tax on the above charges claiming the benefit under Notification No. 4/2004-ST dated 31/03/2004. It was further noticed that the assessee had rendered such services during the period from 01/12/2005 to 31/07/2007 for a consideration of Rs. 17.43 crores approximately and the service tax payable on the same works out to Rs. 2,07,42,984/-. Accordingly, a show-cause notice dated 23/04/2008 was issued to the assessee demanding service tax of Rs. 2,07,44,984/- ad Rs. 2,56,896/- in respect of the services rendered to the airlines for which they received a consideration along with interest thereon at appropriate rates. The notice also proposed penalties under Section 76 & 78 of the Finance Act, 1994. The case was adjudicated and the above demands were confirmed along with interest thereon. A penalty was also imposed on the assessee for an equivalent amount under Section 78 of the Finance Act for suppression and wilfull mis-statements of facts with an intent to evade tax apart from penalty under Section 76 for non-payment of service tax. Hence, the appellant is before us.

3. Sri. Harsh Shah, Senior Manager of the appellant firm submits that during the impugned period, the services provided to a SEZ developer or to a unit in the SEZ by any service provider was exempt under Notification No. 4/2004-ST dated 31/03/2004 and, therefore, they are eligible for the said exemption. He further referred to Section 26 of the Special Economic Zone Act, 2005 and rule 31 of the SEZ Ruled, 2006, wherein it is stated that every developer and the entrepreneur shall be entitled to exemption from service tax under Chapter V of the Finance Act, 1994 on taxable services provided to a developer or a unit to carry on the authorized operations in a Special Economic Zone. Accordingly, he argued that Notification No. 4/2004-ST has to be read along with Section 26 of the SEZ Act, 2005 and the rules made thereunder and therefore, the appellant is rightly entitled for the service tax exemption. He also relied on the judgments of the Tribunal in the case of Norasia Container Lines v. CCE [2012] 21 taxmann.com 370 (New Delhi – CESTAT) and Maersk India Ltd. v. CST [2012] 21 taxmann.com 279 (Chennai – CESTAT) and the judgement of the High Court of Delhi in the case of CIT v. Jindal Stainless Ltd., [2011] 337 ITR 495/[2012] 20 taxmann.com 531. In the light of these submissions, it is contended that the appellant is not liable to pay any service tax and the demand of service tax is not sustainable in law. Consequently the penal provisions also do not apply. Accordingly he prays for complete waiver of pre-deposit of the dues adjudged.

4. The Ld, AR appearing for the revenue on the other hand submits that exemption under Notification no. 4/2004-ST is a conditional exemption and is available only in respect of the services provided by a service provider for consumption of services within such Special Economic Zone. In the instant case the services of CHA, C&F agent, Business auxillary services, etc. have not been consumed within the Special Economic Zone and, therefore, the benefit of the said exemption will not apply. The Ld. AR also relies on the judgement of the Tribunal in the case of Sobha Developers Ltd. v. CCE [2011] 33 STT 13/13 taxmann.com 84 (Bang. – CESTAT) (Mag.) wherein while deciding the eligibility of cenvat credit under the CENVAT Credit Rules, it was held that the provisions of SEZ Act has no relevance. On the same analogy in the instant case also the appellant will not be eligible for the benefit under Notification No. 4/2004-ST and prayus for putting the appellant to terms.

5. We have carefully considered the rival submissions.

5.1 Notification No. 4/2004-ST, effective from 31-3-2004, issued under section 93 of the Finance Act, 1994, exempts taxable services provided to developer of a Special Economic Zone or a unit in the Special Economic Zone by any service provider for consumption of service within such Special Economic Zone. The argument of the appellant that the notification has to b e read along with Special Economic Zone Act, 2005 and the Special Economic Zones Rules, 2006 is devoid of merits for the reason that the latter enactments came much later, more than one year after the issue of notification No. 4/2004-ST dated 31/03/2004.

5.2 Any exemption notification has to be interpreted based on the language used therein. The Supreme Court in the case of Hemraj Gordhandas v. H.H. Dave, Asst. Collector of Central Excise & Customs [1978 (2) ELT J 350 (SC)] = (2002-TIOL-351-SC-CX) laid down the principle as follows:-

“It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority”.

The principle relating to interpretation of notification was again considered and enunciated by the hon’ble apex Court in the case of Mangalore Chemicals & Fertilizers Ltd., v. Dy. Commissioner of Commercial Taxes [1991] (55) ELT 437 (SC) wherein the apex Court held as follows:-

“It appears to us the true rule of construction of a provision as to exemption is the one sated by this Court in Union of India v. Wood Papers Ltd., (1991 JT (1) 151 at 155)”…..Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction…”

Again in the case of Bombay Chemical (P.) Ltd. v. Collector of Central Excise [1995] (77) ELT 3 (SC), the hon’ble apex Court inter-alia held as follows:

“One of settled principled of construction of an exemption notification is that it should be construed strictly, but once a goods is found to satisfy the test by which it falls in the exemption notification then it cannot be excluded from it by construing such notification narrowly”.

In the Sarabhai M. Chemicals v. CCE 2005 (179) ELT 3 (SC) a three judge bench of the hon’ble apex Court held as follows:-

“It is well settled that an exemption notification has to be strictly interpreted. The conditions for taking the benefit of the exemption have to be strictly interpreted.”

The same was re-iterated by the hon’ble apex Court in the case of Gujarat State Fertilizers CO. v. Collector of Central Excise 1997 (91) ELT 3 wherein it was held that-

“an exemption notification has to be interpreted by taking into consideration , the language of the notification which has to be given its due effect. Supposed object and purpose of the exemption has to be culled out from the said language.”

5.3 If one applies the ratio of these judgments to the facts of the present case, then the exemption is available only in respect of services provided for consumption within the Special Economic Zone. In other words, the exemption will not be available if the services are consumed elsewhere than in the Special Economic Zone.

5.4 The canon of interpretation ” Expressio unius est exclusio alterius” applies in this case. This canon implies that “the express mention of one thing excludes all others”. The explicit mention in the notification is “services provided for consumption within such Special Economic Zone”. This means services consumed outside such zone will not be entitled for the benefit of exemption.

5.5 Reliance placed by the appellant in the Norasia Container Liners case, Maersk India Ltd. case or Jindal Stainless Ltd, Case does not help when one applies the principles of statutory interpretation laid down by the hon’ble apex court. The law laid down by the hon’ble apex court is binding on all. Further, this Tribunal in the case of Shobha Developers Ltd., in a similar situation held that the provisions of Special Economic Zone Act, 2005 or the Rules made thereunder cannot be said to have any application while considering the eligibility to Cenvat Credit under the Cenvat Credit Rules, 2004.

5.6 The hon’ble High Court of Gujarat in the case of Essar Steel Ltd. v. Union of India 2008 (232) ELT 617 considered a question as to whether export duty under the Customs Act could be levied on supplies made from the DTA to a unit in the SEZ, taking into account the provisions of Section 2 (m) (ii) of the Special Economic Zone Act, 2005, read with section 51 ibid which defines the words export, import and domestic tariff area. The hon’ble High Court held that the provisions of Special Economic Zone Act, 2005 cannot be automatically be extended to other Acts such as Customs Act and prima facie in the absence of specific provision under Special economic Zone Act to levy Customs duty, no liability to pay Customs duty on goods supplies from DTA to Special Economic Zone would rise. The said decision of the hon’ble Gujarat High Court was upheld by the hon’ble apex Court reported in 2010 (255) ELT A115.

5.7 Applying the ratio of these judgments to the facts of the present case, it can be inferred that notification No. 4/2004-ST being a conditional exemption notification issued under Section 93 of the Finance Act, 1994, cannot be interpreted on the basis of the provisions of SEZ Act, 2005 or the Rules made thereunder and the conditions specified therein have to be fully satisfied for availing the benefit under the said notification.

5.8 Further, as observed earlier, the notification came into force much before the Special Economics Zone Act or the Rules made there under came into force. If the intention of the legislature was to align the exemption with section 26 of the SEZ Act or Rule 31 of the SEZ Rules, then notification No. 4/2004-ST would have been amended to reflect the same. No such amendment has been carried out in the said notification. In these circumstances, we are of the view that if the services are not consumed within the Special Economic zone, then the benefit of notification No. 4/2004-ST will not be available.

5.9 The appellant has not pleaded any financial hardship in their stay application. The hon’ble High Court of Andhra Pradesh in SQL Star International Ltd. v. Commissioner of Customs 2012 (276) ELT 465 (A.P.) held that stay cannot be granted merely on prima facie case being shown. Balance of convenience and prejudice to interest of public revenue needs to be taken into consideration while granting stay. In the instant case not only that the appellant has not made out a prima facie case but also the balance of convenience and interest of revenue demand that the appellant be put to terms.

6. In the light of the foregoing, we are of the view that the appellant has not made out any case for full waiver of the pre-deposit of dues adjudged. Accordingly, we direct the appellant to make a pre-deposit of Rs. 1.00 Crore within a period of eight weeks and report compliance on 20.8.2012. Subject to such compliance, pre-deposit of balance of dues adjudged shall stand waived and recovery thereof stayed during the pendency of the appeal.

No Disallowance on Non Deduction of TDS on Reimbursement for Expenses

Mitra Logistic Pvt. Ltd.  V. ITO  -  There is no dispute about the fundamental posit ion that as long as the payments are for reimbursements, and not expenditure, the tax deduct ion obligations do not come into play and accordingly, disallowance u/s. 40(a)(i ) cannot be made either. In support of thisproposition, our attention is invited to a coordinate bench decision in the case of Satyendra Jhunjhunwalla –vs. – ITO (ITA No. 1988/Kol. /2009; order dated 11.11.2011). He, however, fairly submits that as this aspect of the matter, i.e. payment being in the nature of reimbursement , has not been examined by the authorities below, the matter can be restored to the file of the Assessing Officer for fresh adjudication in the light of the above principle. 

INCOME TAX APPELLATE TRIBUNAL, KOLKATA

I .T.A. No. : 1216 & 1217/ Kol . / 2011

Assessment years : 2006-07 & 2008-09

Mitra Logistic Pvt. Ltd.  V. ITO  

&

I .T.A. No.: 1387 & 1388/ Kol . / 2011

Assessment years: 2006-07 & 2008-09

ITO v. Mitra Logistic Pvt. Ltd.

Date of pronouncing the order: June 19, 2012

O R D E R

Per Pramod Kumar:
1. These two sets of cross appeals are directed against separate but material by identical orders dated 10th August , 2011 passed by the CIT(Appeals) in the matter of assessments u/s. 143(3) of the Income Tax Act, 1961 for the assessment years 2006-07 and 2008-09. As these appeals were heard together and these appeals involve some common issues, all the four appeals are being disposed of by this consolidated order.
2. We will first take up the appeals for A.Y. 2006-07.
3. In appeal fi led by the Revenue (i.e. 1387/Kol. /2011), grievance raised is as follows:-
“On the facts and in the circumstances of the case, the ld. CIT(A)-VI II erred in law in deciding the appeal in favour of the assessee by deleting the addition u/s. 40(a)(ia) relating to transportation charges of Rs.86,04,049/ – where tax was not deducted at the time of payments/ credit”.
4. Learned representatives fairly agree that as the assessee had filed all the relevant Form 15J with the Department on 05.06.2008, and also before the CIT(A) during the appellate proceedings, the case of the assessee is squarely covered in his favour, by decisions of the coordinate benches in the cases of, among other, Capital Transport Corporation of India –vs. – ITO (ITA No. 1753/Kol. /2009). We see no reasons to take any other view of the matter than the view so taken by the coordinate bench, and hold that, in view of the fact that the assessee has duly filed all the relevant 15J declarations, the CIT(A) was justified in deleting impugned disallowance of Rs.86,04,049/ – u/s. 40(a) (ia) r.w.s. 194C.
5. The appeal of the Revenue is thus dismissed.
6. In the appeal fi led by the assessee (ITA No. 1216/Kol. /2011) for AY 2006-07, grievances raised are as follows : -
(1) For that in the facts and circumstances of the case the assessment order passed was in violation of principles of natural justice hence is bad in law and be quashed. (2) For that in the facts and circumstances of the case the learned Assessing Officer and learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.14,55,480/ – being reimbursement security expense u/s. 40(a)(ia) . The said amount being a reimbursement the disallowance was not cal led for. Thus the disallowance be reversed. (3) For that in the facts and circumstances of the case the learned Assessing Officer and learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.52,032/ – being reimbursement service charges u/s. 40(a)(ia). The said amount being a reimbursement the disallowance was not cal led for. Thus the disallowance be reversed. (4) For that in the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.50,000/ – being accounting charges u/s.40(a) (ia). The disallowance was unjustified and be reversed.
(5) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal .
7. As regards the above grievances, learned counsel for the assessee submits that there is no dispute about the fundamental position that as long as the payments are for reimbursements, and not expenditure, the tax deduct ion obligations do not come into play and accordingly, disallowance u/s. 40(a) (i ) cannot be made either. In support of this proposition, our attention is invited to a coordinate bench decision in the case of Satyendra Jhunjhunwalla –vs. – ITO (ITA No. 1988/Kol. /2009; order dated 11.11.2011). He, however, fairly submits that as this aspect of the matter, i.e. payment being in the nature of reimbursement , has not been examined by the authorities below, the matter can be restored to the file of the Assessing Officer for fresh adjudication in the light of the above principle.
8. Learned Departmental Representative does not oppose the prayer of the assessee, but relies upon the orders of the authorities below nevertheless.
9. In view of the above discussions, we are of the considered view that the matter is to be restored to the file of the Assessing Officer for verification as to whether the payments are in the nature of reimbursements or not, and with a direct ion that if the payments are indeed in the nature of reimbursements, the disallowance u/s. 40(a) (i), to that extent, will stand deleted. We order so.
10. The appeal of the assessee is thus allowed for statistical purposes in the terms indicated above.
11. To sum up, so far as A.Y. 2006-07 is concerned, while appeal of the AssessingOfficer is dismissed, the appeal of the assessee is partly allowed in the terms indicated above.
12. We now take up the cross appeals for the AY 2008-09.
13. Grievance raised in appeal fi led by the revenue (i.e. 1388/Kol. /2011) is as follows: -
“On the facts and in the circumstances of the case, the ld.  CIT(A)-VI II erred in law in deciding the appeal in favour of the assessee by deleting the addition u/s. 40(a)(ia) relating to transportation charges of Rs.96,01,585/ – where tax was not deducted at the time of payments/ credit”.
14. Learned representatives fairly agree that as the assessee had filed all the relevant Form 15J with the Department on 05.06.2008, and also before the CIT(A) during the appellate proceedings, the case of the assessee is squarely covered in his favour, by decisions of the coordinate benches in the cases of, among other, Capital Transport Corporation of India –vs. – ITO (ITA No. 1753/Kol. /2009). We see no reasons to take any other view of the matter than the view so taken by the coordinate bench, and hold that, in view of the fact that the assessee has duly filed all the relevant 15J declarations, the CIT(A) was justified in deleting impugned disallowance of Rs.96,01,585/ – u/s. 40(a) (ia) r.w.s. 194C.
15. The appeal of the Revenue is thus dismissed.
16. In the appeal filed by the assessee for AY 2008-09, grievances raised are as follows : -
(1) For that in the facts and circumstances of the case the assessment order passed was in violation of principles of natural justice hence is bad in law and be quashed.
(2) For that in the facts and circumstances of the case the learned Assessing Officer and learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.4,51,110/ – being reimbursement staff travelling charges u/s. 40(a)(ia). The said amount being a reimbursement the disallowance was not called for. Thus the disallowance be reversed.
(3) For that in the facts and circumstances of the case the learned Assessing Officer and learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.10,32,427/ – being reimbursement security charges u/s. 40(a)(ia). The said amount being a reimbursement the disallowance was not cal led for. Thus the disallowance be reversed.
(4) For that in the facts and circumstances of the case the learned Assessing Officer and learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.42,000/ – being reimbursement service charges u/s. 40(a)(ia). The said amount being a reimbursement the disallowance was not called for. Thus the disallowance be reversed.
(5) For that in the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in disallowing Rs.50,000/ – being accounting charges u/s.40(a) (ia). The disallowance was unjustified and be reversed.
 (6) The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal .
17. As regards the above grievances, learned counsel for the assessee submits that there is no dispute about the fundamental posit ion that as long as the payments are for reimbursements, and not expenditure, the tax deduct ion obligations do not come into play and accordingly, disallowance u/s. 40(a) (i ) cannot be made either. In support of this proposition, our attention is invited to a coordinate bench decision in the case of Satyendra Jhunjhunwalla –vs. – ITO (ITA No. 1988/Kol. /2009; order dated 11.11.2011). He, however, fairly submits that as this aspect of the matter, i.e. payment being in the nature of reimbursement , has not been examined by the authorities below, the matter can be restored to the file of the Assessing Officer for fresh adjudication in the light of the above principle.
18. Learned Departmental Representative does not oppose the prayer of the assessee, but relies upon the orders of the authorities below nevertheless.
19. In view of the above discussions, we are of the considered view that the matter is to be restored to the file of the Assessing Officer for verification as to whether the payments are in the nature of reimbursements or not, and with a direct ion that if the payments are indeed in the nature of reimbursements, the disallowance u/s. 40(a) (i), to that extent, will stand deleted. We order so.
20. The appeal of the assessee is thus allowed for statistical purposes in the terms indicated above.
21. To sum up while both the appeals filed by the Assessing Officer are dismissed, both the appeals filed by the assessee are allowed for statistical purposes in the terms indicated above.
22. The order is pronounced in the open court immediately upon conclusion of hearing today on 19th day of June, 2012.

Book Profit 115JB Interest Capitalized

The Assessing Officer is not competent to make addition to the book profit for amount of interest, as the net profit had already been computed as per provisions of the Companies Act. The said amount does not fall under section 115JB(2) and Explanation 1 thereunder. Therefore, the appeal of the revenue on the said issue was liable to be dismissed.

Section 115JB was amended by Finance [No.2] Act, 2009 by insertion of clause (i) with retrospective effect from 1-4-2001 to specifically include any amount, set aside as provision for diminution in the value of asset. Prior to this amendment, the issue relating to the provision for bad and doubtful debt was covered in favour of the assessee. Having regard to the above factual and legal matrix of the case, there was no infirmity in the findings of the Commissioner (Appeals). Hence, the order of the Commissioner (Appeals) on the said issue deserved to be upheld.
IN THE ITAT CHANDIGARH BENCH ‘A’
JCIT(OSD), 
v.
Shreyans Industries Ltd.
IT Appeal No. 1185 (Chd.) of 2011
[Assessment year 2008-09]
May 4, 2012
ORDER
Mehar Singh, Accountant Member – The present appeal filed by the Revenue is directed against the order dated 16.09.2011 passed by the ld. CIT(A) u/s 250 of the Income-tax Act, 1961 (in short ‘the Act’).
2. In this appeal, the Revenue has raised the following Grounds of Appeal:
“1.  That the Ld. CIT(A) has erred in law in deleting the addition of Rs. 34,05,937/- made by the AO in the book profit u/s 115JB as the claim of interest capitalized in earlier years written off during the current year and added back to the book profit for computation of tax under MAT in order to prevent double deduction.
 2.  That the Ld. CIT (A) has erred in law in deleting the addition of Rs.2,1 1,33,8897- made in the book profit u/s 1 15JB by the A.O. as the creation of provision for employee benefits amounting to Rs.2,11,33,889/- has resulted in increasing the value of current liabilities equivalent to the diminution of the value of current assets with reference to retrospective amendment made by Finance Act 2009 applicable w.e.f. 1.4.2001 according to which the amount of provision for diminution in the value of assets is to be added back to the book profits of the company.
 3.  The order of the Ld. CIT(A) be set aside and that of A.O. be restored.
 4.  That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off.”
3. In Ground No.1, the revenue challenged the deletion of addition of Rs. 34,05,937/- made by the AO in the book profit u/s 115JB as the claim of interest capitalized in earlier years written off during the current year and added back to the book profit for computation of tax under MAT in order to prevent double deduction.
4. We have heard the rival submissions and carefully perused the relevant available records. The AO disallowed the claim of interest amounting to Rs. 34,05,937/- in the calculation of book profit u/s 115JB. While making this disallowance, AO observed that the said amount has been described as “interest capitalized”, in earlier years written off during the current year and the assessee, on being confronted, agreed to the disallowance on the ground that the said amount had been claimed on year to year basis and had been debited to the books of account in compliance to the accounting standard. The AO further proceeded to disallow this amount u/s 115JB on the ground that it would prevent double deduction. The AO has not elaborated the basis of such observations on the basis of which disallowance was made.
5. Before the CIT(A), it was contended by the company that it had already claimed the interest amount on year to year basis for the purpose of income tax, no benefit was required to be claimed in this year. Consequently, the company itself, in the course of assessment proceedings, asked the AO to disallow the said amount while computing income of the appellate company. The AO, in doing so also, added same amount to the book profits for the computation of tax u/s 115JB of the Act. Ld. ‘AR’ contended that Section 115JB(2) is a code in itself. The said Section requires that the company shall, for the purpose of Section, prepare its profit and loss account for the relevant year, in accordance with the provisions of Part II and III Schedule VI to the Companies Act. The assessee, has also referred to the Explanation to the abovesaid Section. The assessee further placed reliance on the decision of the Hon’ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273/122 Taxman 562 (SC). The assessee, further submitted before the CIT(A) that, on the basis of various decisions of the Hon’ble High Courts and Tribunals, that the AO is not competent to take different figure from the net profit, as shown in the Profit & Loss Account, for the purpose ofcomputing book profit, except to the extent permitted under Explanation 1 to Section 115JB(2) of the Act. Ld. CIT(A), on consideration of the submissions and the case-laws, deleted the impugned additions.
6. Having regard to the legal and factual position of the case, the AO is not competent to make an addition to the book profits for an amount of Rs.34,05,937/- as the net profit had already been computed as per provisions of the Companies Act. The said amount does not fall u/s 115JB and Explanation (i) thereunder. The findings of the CIT(A) are recorded in para 4, which are in consonance with legal and factual position of the issue in question. The same are reproduced hereunder :
“4. I have considered the basis of disallowance made by the AO and the arguments of the AR on the issue. It is clear that the annual accounts comprising ofbalance sheet and profit and loss account have been prepared in accordance with the provisions of schedule-VI of the Companies Act 1956 and such accounts have been adopted by the company in its annual general meeting. It is also fact that the interest expenditure of Rs. 34,06,000/- does not fall under any of the specific items given in clause (a) to (i) of explanation (1) to section 115JB of the Act., which can be added back to the book profits for the purposes of taxation. As such the disallowance made by the AO is deleted.”
7. In view of the above discussions, ground of appeal raised by the revenue is dismissed.
8. In Ground No.2, revenue contended that CIT(A) erred in law in deleting the addition of Rs. 2,1 1,33,8897- made in the book profit u/s 115JB by the A.O. as the creation of provision for employee benefits amounting to Rs. 2,11,33,889/- has resulted in increasing the value of current liabilities equivalent to the diminution of the value of current assets with reference to retrospective amendment made by Finance Act 2009 applicable w.e.f. 1.4.2001 according to which the amount of provision for diminution in the value of assets is to be added back to the book profits of the company.
9. The brief facts of the case are that the assessee company has debited a sum of Rs.2,11,33,889/- to its Profit & Loss Account on account of provision for gratuity, made on actuarial basis and the same was done in the year under consideration on account of adoption of revised Accounting Standard- 15. The said amount was purely reflected in the Profit & Loss Account and proper disclosure had been made in the Schedule-18 to the balance sheet. The said amount was duly added back to the total income in the computation of income under the normal of the Act, being covered u/s 43B of the Act. However, AO, while framing the assessment, held that the impugned amount provided as provision of gratuity in accordance with accounting Standard-15, should also be added back while computing book profit, u/s 115JB of the Act and for this purpose, the AO concluded that creating a provision for gratuity, results in diminution of value of an asset and he placed reliance on the decision of the Delhi High Court in the case of CITv ILPEA Paramount (P) Ltd. [2010] 192 Taxman 65.
10. Having regard to the provisions of Section 115JB(2) and Explanation thereunder, including the decision of the Hon’ble Supreme Court in the case ofBharat Earth Movers v. CIT [2000] 245 ITR 428/112 Taxman 61 (SC) and CIT v Insilco Ltd. [2010] 320 ITR 322/[2009] 179 Taxman 55 (Delhi) and decision of the jurisdictional High Court in the case of CIT v National Hydroelectric Power Corporation Ltd. [2011] 201 Taxman 67 (Punj. & Har.) (Mag.)/12 taxmann.com 406 (Punj. & Har.). The CIT(A) deleted the impugned addition.
11. Ld. CIT(A) also considered other decisions in the matter, which are enlisted in para 5.4 of his order.
12. Section 115JB of the Act was amended by Finance Act (2009) by insertion of clause (1) w.e.f. 1.4.2001 to specifically include any amount, set aside as provision for diminution in the value of any asset. Prior to this amendment, the issue relating to the provision for bad and doubtful debt, was covered in favour of the assessee, by the decision in the case of CIT v. HCL Comnet Systems & Services Ltd.[2008] 305 ITR 409/174 Taxman 118 (SC). It was submitted before the CIT(A) that if the view taken by the AO taken as correct, then it would make the exclusion given in clause (c) of the said Explanation redundant and that cannot be the intention of the legislature. Findings of the CIT(A) are contained in para 6 of the order passed by him, which are reproduced hereunder :
“6. I have considered basis of disallowance made by the AO and the arguments of the AR on the issue. The AO has based his disallowance on the ground that creation of the impugned provision has led to the decrease in the value of assets of the company, though no specific diminution has been pointed out and neither it is possible to point out as there has not been any specific dilution in the value of a particular asset. The assessee had to increase the current liability because of the creation of this provision as there was no amount in the general/revenue reserves as on the required date and therefore same can not be held to be fault on the part of the assessee as the provision had to be created because of adoption of accounting standard 15 meant increase in the liability of the assessee company. However, important thing to appreciate here is that the provision created is on account of ascertained liability and the same should logically be excluded out of the calculation of book profits Clause (c) of Explanation (1) of Section 115JB. If the argument of the AO is accepted then every creation of provision will lead to dilution/reduction in the value of assets as a general class and therefore would not be deductible from book profit. This would mean that the deduction available for ascertained liabilities as per clause (c) would have no meaning. The judgement quoted by the AO is in fact in favour of the appellant as the Hon’ble Court has clearly held that the provision for gratuity being ascertainable liability on actuarial valuation is deductible while computing book profits and the provision for doubtful debts result in the diminution of value of debtors and the same was liable to be added back. Therefore, I do not see any logic in AO’s view on this issue. The addition made is therefore deleted.”
13. Having regard to the above factual and legal matrix of the case, as also case laws relied upon by the assessee, we do not find any infirmity in the findings of the CIT(A), hence, the same are upheld and this ground of appeal is dismissed.
14. Ground Nos. 3 and 4 are general in nature, hence, need no separate adjudication. Accordingly, these grounds of appeal are dismissed.
15. In the result, appeal of the revenue is dismissed.

CEP Guidelines updated ICAI

To meet the requirement of professional skills in the current changing dynamic economic scenario, Cost Accountants in practice and service (members of ICAI) should equip themselves with the new skills and concepts to meet the challenges and render yeomen’s services to trade, commerce and industry. Therefore, the existing scheme for mandatory training to the members in practice and service under Continuing Education Programme (CEP) has been revised. The basic features of the revised scheme are:



For Members in Practice

(i) The member should undergo minimum mandatory training of 10 hours per year w.e.f. 2009-10.(1st April to 31st March every year)

(ii) The certificate of attendance for training will have to be enclosed with the application for renewal of Certificate of Practice.



For Members in Service

(iii) The member should undergo minimum mandatory training of 6 hours per year w.e.f. 2011-12.

(1st April to 31st March every year)

(iv) The certificate of attendance for training will have to be enclosed with the application for renewal of membership.



The attendance of members in National Cost Convention, Regional Cost Convention, Seminars/Workshops conducted by the Institute/Regional Councils/Chapters (both paid/unpaid programme) will be reckoned against the requirement of mandatory training period under this scheme.



The requirement specified above will not apply to a member who has attained the age of 65 years.



The basis of computation of programme credit hours will be as follows:-

Hours of Training Programme attended by the members

Programme Credit (Hours)

Less than 1 hour

Nil

I hour and more and upto 2 hours

1

More than 2 hours and upto 4 hours in a single day

2

Beyond 4 hours in a single day

4

Programmes for more than 1 day and upto 2 days

6

Programme spanning beyond 2 days

10



For this purpose, the participation of members in the following programmes/courses/ publications shall also be recognized:



1. Courses of the Universities recognised by the UGC/ AICTE approved Institutions

• The members who have successfully completed any post graduate course related to commerce, economics and taxation of the UGC recognized University/ AICTE approved Institution will be awarded CEP credit of 5 hrs. for each semester based on submission of the pass certificate.



2. Service as a Speaker or Discussion Leader

• Service as a lecturer or teacher in a program or seminar offered by business, professional associations and college or university professional education centres may be counted for continuing education credit as follows:

(1) Continuing education hours equal to twice the number of hours of presentation will be granted the first time the program is offered.

(2) Credit will not be granted for subsequent offerings unless significant additional preparation is necessary. For such repeat offerings credit will be granted only for the actual hours of presentation and only once each year.

The CEP credit will be given to the member only after getting the authenticated proof in this regard.



3. Service as a college faculty of approved Universities/Faculty of AICTE approved Institution/ ICAI Faculty

College courses or ICAI Course earn 3 CEP credits for each paper taught in a semester or stage.



4. Technical Materials Submitted for Publication

Technical articles, monographs, or books published are eligible for continuing education credit subject to they are in an International Standard Serial Number (ISSN)/ International Standard Book Number (ISBN) Published articles containing technical accounting and financial management material can earn a maximum of six hours each. Books and monographs can earn a maximum of 20 hours each only for the first time of publication. Subsequent publication of the same title will not be given CEP Hrs. unless there is a vast change in the new publication. The Institute will assign specific CEP hrs. on receipt of a copy of the publication.



5. a) The members who are holding General manager or equivalent and above position working in an organization with turnover of Rs.500 crores and also investment of more than Rs.100 crores in fixed assets will be exempt from CEP requirement.

b) The training imparted by the organizations to their employees in their in-house training Institute, having turnover of Rs.100 crores or above per annum, are to be considered for calculation of CEP hours subject to :

i) The training programme should be on the subject relating to costing/accounts/finance/taxation/project finance/treasury management.

ii) The organization shall submit their calendar of programmes to the Institute.

iii) The organization shall submit list of Institute members with their name & membership number, details of programme attended & duration to the Institute after programme is completed.

iv) Certificate of attendance of the programme shall be given to their employee with his membership number.

c) The organization having turnover of Rs.100 crores or above, which nominates their employees for outside training programme from reputed Institutions on the subject mentioned Sl. No. 5(b)(i) shall also be considered for CEP hours provided they produce the certificate in this regard. Reputed Institutes include IIM, IIT, National Productivity Council/State Productivity Councils and others as may be approved by the Council and against reciprocal arrangement with sister professional Institute i.e. ICSI



6. Articles Published in Management Accountant

A member whose article is published in ‘Management Accountant’ only will be eligible for CEP hours as follows:

(a) Two hrs. for up-to 2 pages

(b) Four hrs. for 3-5 pages

(c) Six hrs. for above 5 pages



7. Members staying abroad can meet the CEP requirements by adopting any one or more of the following modus operandi:

(a) Attend CEP programmes organized by the CEP Department of the Institute, Regional Councils and Chapters – (visit www.icwai.org)

(b) Attend CEP Programmes organized only by IFAC/CAPA/ SAFA Member Bodies abroad. For this members has to submit the following :

(i) Self certification letter by the members regarding the programme attended by them for approval of CEP Hrs.

(ii) Membership number and name as per Institute’s records.

(c) Members staying abroad can meet the CEP requirements by attending the programmes organized by the Overseas centres of the Institute in addition to the programmes organized by the Institute and its Regions and Chapters.



8. The Council approved the following guidelines :

(a) The members who reside outside India for a part of the year may be exempted from credit hours requirement for the same year on submission of valid documents in support of the same.

(b) The members who are victimized by polio or accident or physically handicapped may be exempted from fulfilling the requirement of CEP hours on submission of valid documents in support of the same.

However, no such exemption/relaxation as mentioned in clauses (a) & (c) above would be given to a member who obtains membership of ICAI in accordance with the MOU entered into between IMA & ICAI.



9. A member who obtains membership in accordance with the MOU entered into between IMA,USA & The Institute of Cost Accountants of India (ICAI), should obtain minimum mandatory training of 30 hours per year as per the guidelines of IMA,USA.



10. A member who obtains membership in accordance with the MOU entered into between IMA, USA & The Institute of Cost Accountants of India (ICAI) and is over 55 years of age and retired from the profession is exempt from the CEP requirements.



11. A member who obtains membership in accordance with the MOU entered into between IPA, Australia & The Institute of Cost Accountants of India (ICAI) and is over 60 years of age and retired from the profession is exempt from the CEP requirements.



12. Attendance of the Members in the Meetings/Seminars/Workshops by SAFA/CAPA/IFAC or any other bodies where ICAI is a member will be reckoned against the requirement of mandatory training period under this scheme.



13. Guidelines for attending international seminars by the President, Vice President and Council Members

i) Four CEP Hours for attending one full day Programme/ Seminar/Workshop/Event

ii) Six CEP hours for 2 days Programme/Seminars/Workshops/Event

iii) Ten CEP hours for three days Programme/Seminar/ Workshop/Event



14. Guidelines for Chairing Programme/ Seminar/ Workshop/ Event by the President, Vice President and CCMs chairman and members of the Regional Council

i) One CEP Hours for up to 2 hrs. Programme/ Seminar/ Workshop/ Event

ii) Two CEP Hrs for more than 2 hrs. – up to 4 hrs. Programme/ Seminar/Workshop/Event

iii) Four CEP Hours for more than four hrs. Programme/ Seminar/ Workshop/ Event



15. The Members attending the webnair /seminars/workshops/traning programmes get two CEP hrs. for every three hrs. webnair/ seminars/workshops/training programmes organised by the Institute, provided they have to attend the webnair/seminar/workshop/training programme for full three hrs(Details to be announced soon).



16. The programmes organized by the CMA support Centres being established by the Institute at different locations are eligible to CEP hrs. as per the norms of the CEP guidelines.



17. The members attending the approved CMA study circles programmes being formed at different locations are eligible to the CEP hours as per the norms of the CEP Guidelines.



18. Members answering five questions successfully out of ten questions of each of the articles published in the Management Accountant on monthly basis will get one CEP Hour for every article(Details to be announced soon).

FCNR (B) Interest Rate on Deposits

DBOD.Dir.BC. 30/13.03.00/2012-13

July 18, 2012

All Scheduled Commercial Banks
(Excluding RRBs)

Dear Sir/Madam,

Interest Rates on Deposits held in FCNR (B) Accounts

Please refer to paragraph 4 of the directives enclosed to our circular DBOD.Dir.BC.49/13.03.00/2000-2001 dated November 4, 2000 and mail box clarification dated May 13, 2005 in terms of which it was clarified that in the case of FCNR(B) deposits of staff members, existing or retired, interest rate including any additional interest paid to them by virtue of their being staff members, should not exceed the ceiling stipulated by RBI from time to time.

2. On a review, it has now been decided that banks should not allow the benefit of additional interest rate on any type of deposits of non-residents. Accordingly, the discretion given to banks to allow the benefit of additional interest rate of one per cent per annum as available to bank’s own staff on deposits under FCNR(B) accounts stands withdrawn.

3. All other instructions in this regard, as amended from time to time, will remain unchanged.

Yours faithfully

(Sudha Damodar)
Chief General Manager

Gold & Silver Rates as on 31st March,2012

Gold Rates (Standard 24 carats) (per 10 gms) as on March 31, 2012 - Rs. 28,040

Silver Rates (9,960 touch) (per 1 kg) as on March 31, 2012 - Rs. 56,290

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Application Form for Settlement Commission

Here is the Form No, 34B for the Application to Settlement Commission for any Case on Income Tax & Wealth Tax
 Link

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Settlement Commission Income Tax & Wealth Tax About

1.1	Income-tax Settlement Commission / Wealth-tax Settlement Commission was set up under section 245B of Income-tax Act 1961/Section 22B of Wealth-tax Act, 1957, respectively, w.e.f. 1.4.1976 with its headquarters at New Delhi. It is a quasi judicial body. It has been set up as a result of recommendations made by Direct Taxes Enquiry Committee (Popularly known as Wanchoo Committee). The objective of setting up this Commission is to provide a body comprising of persons of integrity and outstanding ability, having special knowledge of and experience in, problems relating to direct taxes and business accounts, for settling across the board, tax liabilities in complicated cases with doubtful benefit to revenue avoiding endless and prolonged litigation and consequential strain on investigational resources of Income-tax Department.
1.2	Originally the Commission consisted of a Chairman and two other Members. However, w.e.f. 10.9.1986 it consists of a Chairman and as many Vice-Chairmen and Members as the Central Government thinks fit. The change has been made to augment strength of the Commission to facilitate quicker disposal of cases and to liquidate arrears of pending cases. The jurisdiction, powers and authority of the Commission are exercised by its Benches which will ordinarily be presided over by the Chairman or one of the Vice-Chairmen. The Bench for which the Chairman is the presiding officer is the Principal Bench and the other Benches are known as the Additional Benches.
1.3	Four Benches of the Commission are functioning. The Delhi Bench is known as the Principal Bench. The other Benches are functioning at Mumbai, Calcutta and Chennai and these are known as the Additional Benches.
1.4	If Members of a Bench (including its presiding officer) differ in opinion on any point, the point is decided according to opinion of majority. But if the Members are equally divided, they state the point or points on which they differ, and make reference to the Chairman who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Settlement Commission and such point or points shall be decided according to opinion of Majority of the Members of the Settlement Commission who have heard the case, including those who first heard it DO SHARE

Countdown To Final / CPT May,2012 Result

Dear Student
We have uploaded the Countdown to the left of this page for the upcoming Result by ICAI of Final and CPT(June) May,2012.

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IPCC May,2012 Result Commenting

Dear Students / Friends
Many of us wanted to know when the Result of IPCC May,2012 is going to come as maximum people has an assumption that it must be coming by the 1 - 2 weeks after the Result of Final ( 18th July,12 ).
I Invite you to Comment and share your opinion on when the Result of IPCC May,12 Must be Coming ...

We Will Summarized the your Views.

BEST OF LUCK
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Penalty for Late / Incorrect Filing of TDS / TCS

Penalty for Late Filing & incorrect information in TDS/TCS Statement w.e.f. 1st July, 2012:

A fee of Rs 200 per day will be levied for late furnishing of TDS statement from the due date of furnishing of TDS statement to the date of furnishing of TDS statement, not exceeding the total amount of tax deductible during the period for which the TDS statement is delayed. Besides, a penalty ranging from Rs.10,000 to Rs.1,00,000 shall also be levied for not furnishing TDS statement within the prescribed time.

Also, a penalty ranging from Rs.10,000 to Rs.1,00,000 shall be levied for furnishing incorrect information in the TDS statement. However, no penalty shall be levied if the deductor proves that there was a reasonable cause for the failure.

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Time table Nov,12 IPCC

Following Is the Time table for IPCE Nov,12

Group 1 :
02/11/2012 - Accounting
04/11/2012 - CL, BL, ethics & Communication
06/11/2012 - Costing / FM
08/11/2012 - Taxation

Group 2 :
10/11/2012 - Advance Accounting
15/11/2012 - Audit & assurance
17/11/2012 - IT / SM

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