TAX UPDATES JULY 2011 CA. Chythanya K.K., B.com, FCA, LL.B., Advocate
VAT, CST, ENTRY TAX, PROFESSIONAL TAX PARTS DIGESTED: a) 16 KCTJ – Part 4 b) 41 VST – Part 5 c) 42 VST – Part 1 to 3 Reference / Description [2011] 42 VST 330 (Mad) HC : V. Win Garments v. Addl. Deputy Commercial Tax Officer - In the instant case the Madras High Court has held that to claim the exemption from sales tax in respect of sales effected outside India it was not mandatory to produce the agreement between the foreign buyer and the Indian seller. The Court opined that the claim of exemption could be considered on basis of Form H and other documents such as bill of lading furnished by dealer. The aforesaid judgement was based on the premise that all that was required on the part of the dealer was to prove the factum of the transaction and once the same is done with sufficient and satisfactory documents, the value thereof would be exempt and there was no rule/ requirement to insist upon the agreement with the foreign buyer.The above decision brings a much soughtafter relief as it may be impractical to furnish the purchase orders placed by the importers on the exporters. The assessee being a penultimate seller to the exporter, would not have the purchase orders with him. [2011] 42 VST 335 (Karn) HC: Kennametal India Ltd. v. Addl. CCT (Appeals) - In the instant case the High Court of Karnataka has held that
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transport of special commodities (namely iron and steel) without the requisite Form VAT 505 and VAT 515 was in contravention of Section 53(2) of the KVAT Act and therefore liable to penalty. It was the contention of the dealer that the goods carried were goods rejected by the buyer being returned. However the said transaction was not substantiated by means of any correspondence or documents (the documents submitted did not specifically prove that the vehicle was carrying rejected goods because the invoices were also raised on the appellant as consignor with the other party being named as the consignee). The invoices and the records indicated sale of goods. It was held that invoice or excise gate pass alone carried was not sufficient and that the levy of penalty was justified.The aforesaid decision is a pointer for understanding the importance of carrying necessary documents during the transit of goods. Non-carriage of necessary documents could result in unnecessary levy of penalty which is avoidable otherwise.
INCOME TAX PARTS DIGESTED: a) 334 ITR – Part 5 b) 335 ITR – Part 1 to 3 c) 199 Taxman – Part 4 to 7 d) 200 Taxman – Part 2 e) 10 ITR (Trib) – Part 1 to 4 f) 130 ITD – Part 5 to 9 g) 131 ITD – Part 1 to 3 h) 138 TTJ – Part 6 i) 139 TTJ – Part 1 j) 60 TCA – Part 1 k) 5 International Taxation-Part 1
Reference / Description [2011] 335 ITR 132 (Delhi) HC : CIT v. Jaypee DSC Ventures Ltd. - In the instant case the Delhi High Court has held that the interest earned on fixed deposits placed with the bank as performance guarantee; a condition for being awarded contract work, was not assessable as income from other sources. It was observed that the bank guarantee was furnished as a condition precedent to entering into the contract and was to be kept alive to fulfil the obligations. It was not the case where the assessee had made the deposit of surplus money lying idle with it in order to earn interest. The said interest was earned from the fixed deposit which was a prerequisite to securing a contract to earn income and therefore the same could not be assessed as income from other sources.The aforesaid decision has brought out the fine principle that the taxability of interest under the head ‘income from other sources’ will be only by exception and not by rule. It is only when the interest income is not found taxable under the preceding heads, the same could be brought to tax under the residuary head. Ironically, this is the decision rendered by the Courts off late in the matter of taxability of interest. The Department seems to treat interest as income from other sources in every case without exception which practice is not envisaged in the Act. [2011] 335 ITR (St.) 1 (SC) : CIT v. UWE Jarosch - In the instant case the supreme court dismissed the Department’s special leave petition against the judgment dated June 16,