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Bangalore Branch of SIRC of the Institute of Chartered Accountants of India


March 2012

March 2012


Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

CALENDAR OF EVENTS - March & April 2012 Date/Day 07.03.12 Wednesday 07.03.12 Wednesday 08th, 09th, 12th & 13th March 2012 14.03.12 Wednesday 17.03.12 Saturday

18.03.12 Sunday 19.03.12 Monday & 20.03.12 Tuesday 20.03.12 Tuesday 21.03.12 Wednesday 24.03.12 Saturday 27.03.12 Tuesday 28.03.12 Wednesday 04.04.12 Wednesday 11.04.12 Wednesday

Topic /Speaker CPE Teleconference on “Bank Branch Audit” CA. C.V. Sajan Usage of MCA’s Statutory Report in XBRL ( Format) using Tally ERP 9 Mr. Vijaya Sarathy D. Workshop on Communication Skills Delegate Fee: Rs.1,200/Refer Page No:18 Ethical Problems & Case Studies (Impact Seminar - No Fee) CA. Ramachandran M. Analysis of Union Budget-2012 (Open to General Public) Moderators: CA. T. V. Mohandas Pai CA. H. Padamchand Khincha Delegate Fee: Nil Refer Page No: 17 Golden Jubilee Valedictory - Family Gettogether & Variety Entertainments Workshop on Revised Schedule VI under Companies Act including its XBRL integration Delegate Fee: Rs. 500/Refer Page No:17 CPE Teleconference on “A clause by clause Analysis on Finance Bill 2012” CA.Dr. Girish Ahuja Taxability on Import of services” CA. G. Praveen Kumar Clause by Clause Discussion on Finance Bill 2012 Delegate Fee: Rs. 900/Refer Page No: 16

Venue/Time Branch Premises 11.00am to 01.00pm Branch Premises 06.00pm to 08.00pm Branch Premises 05.00pm to 08.00pm

CPE Credit

2 hrs 2 hrs 12 hrs

Branch Premises 3 hrs 05.30pm to 08.30pm Jnana Jyothi Convention Centre, Central College 4 hrs Campus, Bangalore -1 04.00pm to 08.00pm Kassia Bhavan, West of Chord Road, Vijayanagar, Bangalore, 4:00pm to 8:00pm Branch Premises 04.00pm to 08.15pm 8 hrs on both days Branch Premises 02.30pm to 04.30pm

Branch Premises 06.00pm to 08.00pm J N Tata Auditorium, Bangalore 09.30am to 05.00pm Seminar on “Bank Branch Audit” NIMHANS Convention Delegate Fee: Rs. 1500/Refer Page No: 16 Hall, Bangalore (Venue is subject to change) 08.45am to 05.30pm XBRL - MCA Taxonomy ReportingBranch Premises Challenges Faced (Impact Seminar - No Fee) 05.30pm to 08.30pm CA. S. Hariharan Service Tax - Recent Budget Amendments - Finance Act 2012 Branch Premises CA. Sai Prasad 06.00pm to 08.00pm Budget changes in respect of International Taxation Branch Premises (Impact Seminar - No Fee) 05.30pm to 08.30pm CA. D. S. Vivek

2 hrs 2 hrs 6 hrs 6 hrs 3 hrs 2 hrs 3 hrs

Note : High Tea at 5.30 pm for programmes at 6.00 pm at Branch Premises. Advertisement Tariff for the Branch Newsletter Colour full page Outside back ` 30,000/Inside back ` 24,000/-

Inside Black & White Full page ` 15,000/Half page ` 8,000/Quarter page ` 4,000/Advt. material should reach us before 22nd of previous month.

Editor : CA. Nithin Mahadevappa Sub Editors : CA. Ravindranath. S.N CA. Prasad. S.R CA. Shivakumar. H

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


March 2012

TAX UPDATES JANUARY 2012 CA. Chythanya K.K., B.Com, FCA, LL.B., Advocate

VAT, CST, ENTRY TAX, PROFESSIONAL TAX PARTS DIGESTED: a) 47 VST – Part 1 to 4 b) 12 GSTR – Part 2 & 5 c) 16 KCTJ – Part 10 Reference / Description [2012] 47 VST 126 (All. – HC): India Exports v. State of U.P. and others In the instant case the Allahabad High Court held that the fiction that the SEZ is deemed to be outside the customs territory of India is limited and cannot be invoked for the purpose of determining import/export. Therefore, sales made from unit in SEZ to unit in Domestic Tariff Area cannot be treated as import and hence liable to be taxed under CST Act, 1956. [2012] 47 VST 343 (Delhi – HC): Giesccke & Debrient I.P. Ltd. - In the instant case the Canara Bank placed an order for import of bank note processing machine to the dealer. The dealer imported the same from Germany under a bill of entry which described the dealer as the importer and Z as the cargo agent. The question that arose before the Delhi High Court was whether the above transaction was sale in the course of import under Section 5(2) of the CST Act, 1956.The Delhi High Court held that although the dealer had entered into an earlier contract with Canara Bank, for the purpose of the contract the dealer was not the agent of the supplier in Germany. The obligation to comply with the purchase order was that of the dealer alone. They were two independent transactions. Back to back contract by themselves

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do not prove that the first part of Section 5(2) of the CST Act, 1956 is attracted and applicable.The Court further held that the import may have been made with the intention to supply the imported goods to the Canara Bank, but that by itself was not sufficient to satisfy the requirement of Section 5(2) of the CST Act, 1956 and there was no legal or contractual obligation to sell the equipment only to Canara Bank. The imported goods could have been diverted to another third person, without violation of the contract between the dealer and the Canara Bank. Therefore, the Court held that the above transaction was not a sale in the course of import. 2011-12 (16) KCTJ 298 (Kar. – HC): Pfizer Ltd. v. State of Karnataka - In the instant case, the Petitioner had made an application during the pendency of the matter before the authority praying for return of defective Forms – F for curing defects. However, the authority rejected the application and passed the orders. The Karnataka High Court held that the petitioner was right in making an application before the authority for return of defective forms for curing defects.

INCOME TAX PARTS DIGESTED: a) 340 ITR – Part 1 to 3 b) 204 Taxman – Part 1 to 4 c) 13 ITR (Trib) – Part 1 to 5 d) 134 ITD – Part 1 to 4 e) 143 TTJ – Part 3 & 5 f) 37 CAPJ – Part 1 to 3 g) 43-B BCAJ – Part 4 h) 6 International Taxation – Part 1

Reference / Description [2012] 340 ITR 246 (AAR): Foster Pty Ltd., In re - While dealing with an application is maintainable, the Authority for Advance Ruling observed that if the question before it was directly and substantially in issue before the Assessing Officer and now before the Appellate authority and what the payee was seeking from the Authority was also a ruling on the question whether the amount received by it from the payer was taxable in India, the application is not maintainable.In the instant case, the payer had suffered addition under section 40a(i) and thus had challenged the same in appeal. Rejecting the application of the recipient, the honourable authority held that the issue involved is the same and hence the application is not maintainable. [2012] 340 ITR 253 (Patna – HC): R.A. Himmatsingka and Co. v. CIT and others - In the instant case the Patna High Court held that the revision order passed under Section 263 of the IT Act by the Commissioner on the basis that the order dropping penalty proceedings was erroneous and prejudicial to the revenue, was valid. [2012] 340 ITR 272 (AAR): Ardex Investments Mauritius Ltd., In re In the instant case the applicant, a Company incorporated in Mauritius, which held equity shares constituting 50 per cent of the equity share capital of A, an Indian Company, proposed to sell its entire shareholding in A to another non-resident A group Company and sought an advance ruling on the question whether the capital gains on the proposed sale of shares would be chargeable to income-in India in the hands of the applicant.The Authority observed that the first shares in the Indian Company

Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

were purchased almost 10 years before the application and the shareholding was steadily increased. The formation of this subsidiary in Mauritius may have been with a view to take advantage of the IndoMauritius DTAA, but that by itself could not be viewed as objectionable treaty-shopping.In view of the above observation the Authority ruled that this was not a case of gift or transfer without consideration of shares but a sale at market rate, therefore, the capital gains on the proposed sale of shares by the applicant to the German Company was not chargeable to tax on capital in India in view of Article 13(4) of IndoMauritius DTAA.The aforesaid decision is in line with the decision of the honourable Supreme Court in the case of Vodafone 341 ITR 1. [2012] 204 Taxman 166 (AAR) - 16 207 (AAR): Perfetti Van Melle Holding B.V., In re - In the instant case the Applicant is a Company based in Netherlands and is in business of manufacture and sale of sugar confectionary and gum. It had entered into a service agreement with its group Company ‘Perfetti India’ to provide specified services requiring use of proprietary knowledge and processes belonging to Perfetti Group on continuous basis. All such services were required in connection with trademarks, technology and know-how license agreement (TTLA) through which consideration in form of royalty was flowing. Applicant sought advance ruling on taxability of payments made by Perfetti India under agreement in its hands in India. The Authority for Advance Ruling observed that the agreement clearly brought out the intention of parties to assist Perfetti India by applying experience of its sister concerns and group Companies

and since services were not being carried out independently by applicant but were only to enable Perfetti India to be able to carry out its day-to-day tasks better, it can be said that Perfetti India will get equipped with knowledge or expertise and would be able to apply it in future independent of applicant. Further it also observed that the services under service agreement, when read with TTLA, fall within purview of Article 12(a) of the DTAA as such services were ancillary and subsidiary to application or enjoyment of right, property or information for which a payment described in paragraph 4 of Article 12(a) of the DTAA was received. In view of the above, the Authority ruled that for a service to fall under ‘rendering of any technical or consultancy services’ mere development and transfer of a technical plan or technical design should be sufficient compliance and therefore the services giving knowledge and experience of confectionary industry to Perfetti India were technical in nature and accordingly taxable in India.In the aforesaid decision, the honourable authority refused to apply the principles emerging from the Memorandum of understanding annexed to Indo US DTA by bringing out the distinction between MOU and a protocol. [2012] 204 Taxman 192 (Delhi – HC) - 16 371 (Delhi HC): DIT v. Ericsson A.B. - In the instant case the Delhi High Court in the context of Section 9 of the IT Act held that Instruction No. 1829 dated 21.09.1989 although stands withdrawn by virtue of Circular No. 7/2009 dated 22.10.2009, such withdrawal can have no retrospective effect and the principle laid down in Instruction No. 1829 must continue to govern the assessment for the relevant assessment year i.e. 1997-1998.

[2012] 204 Taxman 192 (Delhi – HC) - 16 371 (Delhi HC): DIT v. Ericsson A.B. - In the instant case the Delhi High Court held that when the Assessee supplies the software which is incorporated on a CD, it has supplied tangible property and the payment made for acquiring such property cannot be regarded as a payment by way of royalty.Further it held that in order to qualify as royalty payment, within the meaning of Section 9(1)(vi) and particularly clause (v) of Explanation-II thereto, it is necessary to establish that there is transfer of all or any rights (including the granting of any license) in respect of copyright of a literary, artistic or scientific work and Section 2(o) of the Copyright Act makes it clear that a computer programme is to be regarded as a ‘literary work’. Thus, in order to treat the consideration paid as royalty, it is to be established that by making such payment, it obtains all or any of the copyright rights of such literary work. The High Court also held that the distinction has to be made between the acquisition of a ‘copy right’ and a ‘copyrighted article’The aforesaid decision is in sharp contrast to the decision of Karnataka High Court in the case of Samsung Electronics and an unreported case of Synopsis. [2012] 204 Taxman 227 (Del. – HC) - 17 76 (Del. - HC): CIT v. C.R. Dass - In the instant case the Assessee was director of a Company and was holding less than 10 per cent shares in that Company at relevant time. In 16.03.1998, he leased out his premises to the said Company at certain monthly rent. As per lease agreement, Company also paid security deposit of Rs. 75 lakhs to Assessee by way of allotment of further shares of that value which


March 2012

increased shareholding of Assessee in company to 44.57 per cent. Assessing Officer treated aforesaid interest-free security deposit as deemed dividend under Section 2(22)(e) of the IT Act in the hands of the Assessee.The Delhi High Court held that when the transaction of lease was entered into between the Assessee and the Company, the shareholding of the Assessee in the Company was much less than 10 percent and the amount of security deposit cannot be treated as deemed income under Section 2(22)(e) of the IT Act. [2012] 204 Taxman 267 (Ker. – HC) - 16 398 (Ker. - HC): CIT v. Abad Fisheries - In the instant case the Kerala High Court held that no reassessment is permissible under Section 147 of the IT Act when the time provided for regular assessment under Section 143(3) after issuing notice under Section 143(2) of the IT Act has not expired. [2012] 204 Taxman 311 (Kar. – HC) - 17 115 (Kar. – HC): CIT v. Infosys Technologies Ltd. - In the instant case, the Karnataka High Court reversed the order of the Tribunal dated 11.11.2005 where the Tribunal relying upon its earlier decision in Wipro Ltd. v. ITO [2005] 95 ITD 9 (Bang.) had concluded that the payment made (payments akin to payments made for railway timetable which gives information about train schedules or to obtain a book) by the respondentassessee to M/s. Gartner, a non-resident Company would not amount to royalty and held that the same amounts to royalty. The aforesaid decision which calls payment for standard information as royalty requires review for the reason that such payment does not fit into any of the clauses in Explanation 2 to section 9 (1) (vi) and the relevant article of the DTAA.

March 2012


[2012] 204 Taxman 321 (Kar. – HC) - 17 100 (Kar. – HC): CIT v. Tata Elxsi Ltd. - In the instant case the Karnataka High Court in respect of computing deduction under Section 10A of the IT Act held that if export turnover in numerator is to be arrived at after excluding certain expenses, said expenses should also be excluded in computing export turnover as a component of total turnover in denominator. [2012] 204 Taxman 340 (P&H – HC) - 17 99 (P&H – HC): Sood Bhandari & Co. v. CBDT - In the instant case the Punjab and Haryana High Court dealing in respect of Section 40(b) of the IT Act held that if there is no quantification of salary, remuneration or rate of interest on capital contribution of partners in the agreement and is left to discretion of partners at the end of the financial year, the same cannot be allowed as deduction in view of Circular No. 739 dated 25.03.1996 issued by CBDT. The Court further held that the aforesaid Circular is clarificatory in nature and cannot be said to be beyond powers of CBDT conferred on it under Section 119 of the IT Act. [2012] 204 Taxman 356 (Kar. – HC) - 16 397 (Kar. – HC): CIT v. Smt. N. Sannamma - In the instant case Assessee had not filed regular return and made a declaration under VDIS and the same was rejected. Thereafter Assessing Officer issued notice under Section 148. Pursuant to the said notice, Assessee filed return of income and assessment was completed. Assessing Officer levied interest under Section 234A from due date of fling return under Section 139(1). On appeal, Tribunal held that interest can be levied only from date of filing return pursuant to notice issued under Section 148 and not as

per Section 139. The Karnataka High Court held that a return of income filed in response to a notice issued under Section 148 is a return of income filed under Section 139(1) under which assessee ought to have filed return of income within time stipulated, therefore, Assessee would be deemed to have defaulted in filing of return of income within time prescribed and, consequently, interest under Section 234A would be leviable from due date of filing of return under Section 139(1) and not from date of filing of return in pursuance of notice under Section 148. [2012] 204 Taxman 408 (SC) - 17 202 (SC): Vodafone International Holdings B.V. v. UOI - In the instant case the Supreme Court held that transfer of a share in a foreign company which has an Indian Company as its subsidiary does not amount to transfer of any capital asset situated in India within the meaning of 4th limb of Section 9(1)(i) of the IT Act. The Court also held as follows: a. Legal fiction in Section 9(1)(i) does not mean that if a foreign company has a subsidiary in India, shares of foreign company are deemed to be situated in India. b. Section 9 covers only income arising from a transfer of a capital asset situated in India and it does not purport to cover income arising from indirect transfer of capital asset in India. c. Source in relation to an income is construed to be where transaction of sale takes place and not where item of value, which was subject of transaction, was acquired or derived from. d. Transfer of foreign holding company’s share off-shore, cannot result in an extinguishment of holding company’s right of control of Indian company nor can it be stated that same constitutes extinguishment and transfer of an asset/management

Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

and control of property situated in India. e. Section 9(1)(i) is not a ‘look through’ provision merely because word ‘through’ is there in said Section. [2012] 204 Taxman 109 (Kar. - HC) (Mag.) - 17 143 (Kar. - HC): CIT v. Apcus Technology Ltd. - In the instant case the Karnataka High Court held that Assessee who has availed tax benefit of 5 years prior to coming into force of amended provision of Section 10B, with effect from 01.04.1999, is entitled to benefit of tax exemption for 10 years if exemption is sought for unexpired period of 10 consecutive assessment years. [2012] 204 Taxman 109 (All. - HC) (Mag.) - 17 127 (All. HC): Nirmal Kumar Seth v. CIT - In the instant case Assessee purchased a plot in financial year 1982-83 initially by making a payment of Rs. 3,000/only and remaining payments were made in instalments. During relevant assessment year, Assessee sold said plot. Though Assessee claimed capital loss on sale of plot, Assessing Officer levied short-term capital gain. Tribunal finding that period of holding plot was more than 3 years, held that long term capital gain would apply to Assessee’s case as per payment chart.The Allahabad High Court held that it was apparent from record that actual amount was paid by Assessee form time to time after date of issuance of allotment letter, which had to be considered for purpose of indexation with reference to date of payments. Therefore, the Court held that the Tribunal rightly directed to compute long term capital gains as per payment schedule. [2012] 13 ITR (Trib.) 340 (Delhi): DCIT v. Cosmo Films Ltd. - In the instant case assessee made additions to the assets during the second half of the financial year 2002-2003 relevant to the assessment year 2003-2004 and

since the additional depreciation was claimed only on 50 per cent on all the additions made after September 30, 2002 on account of the second proviso to Section 32(1)(ii), the Assessee claimed the balance 50 per cent in the assessment year 2004-2005 under Section 32(1)(iia), i.e., depreciation equal to 15 per cent. of the actual cost of new plant and machinery.The Delhi Tribunal held that Section 32(1)(iia) is a one-time benefit to encourage the industrialisation and the provisions related to it have to be constructed reasonably, liberally and purposive to make the provision meaningful while granting the additional allowance. This restriction is only on the basis of period of use. There is no restriction that the balance of the one-time incentive in the form of additional sum of depreciation shall not be available in the subsequent year. In Section 32(1)(iia), the expression used is ‘shall to be allowed’. Thus, the Assessee earns the benefit as soon as he purchases the new plant and machinery in full but it is restricted to 50 per cent. in that particular year on account of period of usages. Such restrictions cannot divest the statutory right. Law does not prohibit the balance 50 per cent. being allowed in the succeeding year. [2012] 13 ITR (Trib.) 422 (Mum.): Dresser-Rand India P. Ltd. v. Addl. CIT - In the instant case the Mumbai Tribunal dealing in respect international transactions held that when evaluating arm’s length price of a service, whether the Assessee benefited from the service or not; and whether the associated enterprise gave the same services to the Assessee in the preceding years without any consideration or not was wholly irrelevant. [2012] 134 ITD (BN-XIV) (Jaipur Trib) - 17 37 (Jaipur

– Trib.): Madan Singh Kangarot v. ITO - In the instant case the Jaipur Tribunal held that where Assessing Officer has not issued notice under Section 143(2) within time available, he cannot issue notice under Section 142(1)(ii) and (iii) after time limit of issuance of notice under Section 143(2) has expired. [2012] 143 TTJ (Jd) 331: ACIT v. Minpro Industries - In the instant case Assessee deducted tax at source only from the agency charges paid to C&F agent and not from the other payments which were reimbursement of actual expenditure incurred by the C&F agent on its behalf.The Jodhpur Tribunal held that reimbursement of payment towards sea freight transport, CCI charges, steamer freight charges and REPO container charges made by the Assessee to the C&F agents who have already made the payment on behalf of the Assessee is covered by the provisions of Section 172 and not by Section 194C or Section 195, and the agent having already deducted TDS from the transportation charges and shipping bill before making these payments to the principal which have been reimbursed by the Assessee, Assessee was not liable to deduct tax at source from such payments and consequently, same could not be disallowed by invoking the provisions of Section 40(a)(ia). [2012] 37 CAPJ 36 (Bom. – HC): CIT v. Manjula J. Shah - In the instant case the Bombay High Court held that while computing the capital gains arising on transfer of a capital asset acquired by the Assessee under a gift the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the Assessee became the owner of the asset.


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RECENT JUDICIAL PRONOUNCEMENTS IN INDIRECT TAXES CA. N.R. Badrinath, Grad C.W.A., F.C.A. CA. Madhur Harlalka, B. Com., F.C.A KVAT: 1. Sale of goods from duty free shops located at Airports: The issue before the Hon’ble Supreme Court was whether VAT is leviable on sale of goods from duty free shops located at airports. The Hon’ble Supreme Court held that the imported goods will be stored at bonded warehouses before selling the same from duty free shops located at airports. The goods are sold from duty free shops before crossing the customs frontiers of India. Article 286 of the Constitution of India read with Section 5 of the Central Sales Act, 1956 prohibits any state to impose tax on sale or purchase of goods which are said to have taken place in the course of the import or export. Hence, the goods remain outside India till they cross the customs frontiers of India. The transaction might take place within India before crossing Custom frontier but technically looking at the provisions of Section 2(11) of the Customs Act, 1962, the said transaction would be said to have taken place outside India. It is further held that sale not taking effect by transfer of documents of title to the goods is absolutely irrelevant as it is one of the methods whereby delivery of the goods is effected. The sales would not be taxable simply

March 2012


because the sales had not been effected by transfer of documents of title to the goods and the sales were effected by giving physical possession of the goods to the customers. [M/s. Hotel Ashoka Vs ACCT, Bangalore, 2012-TIOL08-SC-VAT] Service Tax: 2. Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 are Constitutionally valid: Hon’ble Allahabad High Court held the Parliament is empowered to make laws with respect to aspects or cause that occur, arise or exist or may be expected to do so within territory of India, and also with respect to extra-territorial aspect or cause that have an impact on or nexus with India. Section 66A of Finance Act, 1994 only creates legal fiction to deem import of services so that the provisions of Chapter-V thereof can be applied. Section 66A of the Finance Act, 1994 is not a charging section itself for import of services and charging section remains Section 66 of the Finance Act, 1994. The provision of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 are not unconstitutional either on ground lack of legislative competence or extra territorial operations of laws.

[M/s. Glyph International Limited Vs. UOI, 2012(25)S.T.R. (All.)] 3. Creation of deeming fiction of Services through explanations to Commercial or Industrial Construction Service or Construction of Complex or Preferential Location are constitutionally valid: The issue before the Hon’ble High Court is constitutional validity of the explanations relating to deeming fictions of construction of a new building or complex, which is intended for sale wholly or partly before, during or after construction and whether it shall be deemed to be service provided by the builder to the buyer under Commercial or Industrial Construction Service or Construction of Complex Service (clause zzg and zzzh of Sub-section (105) Section 65) except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorized by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force and also whether Preferential Location means any location having extra advantage which attracts extra payment over and above the basic sale price. It was challenged that taxability arising on deeming fiction is on the land or buildings which falls under legislative power of States under Entry 49 of List II to the seventh schedule of the Constitution of India. In this regard, it is held that the charge of service tax under Section 66 of the Finance Act is on rendering of a taxable service

Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

as defined in clause (105) of Section 65 of Finance Act, 1994 and the service tax is levied on providing of services described in sub-clauses (zzq), (zzzh) and (zzzzu) of Sub-Section (105) of Section 65 of the Finance Act, 1994. The service tax is not directly imposed on land and buildings but on services rendered in relation to activities, which occurs on land or buildings. The fact that the service is rendered in the context of construction of building or complex and service tax is not on land which is within the meaning of Entry 49 of List II. The legislature has expanded the notion of taxable service by incorporating clause (zzq) and clause (zzzh) rendered by a builder to the buyer in the course of an intended sale whether before, during or after construction. Levy of service tax on preferential location only intends to obviate a leakage of revenue and plugs a loophole which would have otherwise resulted. The fact that the service is rendered in the context of a location, does not make it service tax on land within the meaning of Entry 49 of List II. [Maharashtra Chamber Of Housing Industry Vs. UOI, 2012TIOL-78-HC-Mum-ST] 4. Transfer of technical knowhow is not Consulting Engineer services: The issue before the Tribunal is whether the transfer of technical knowhow and royalty for a lump sum consideration is chargeable to service tax under the category “Consulting Engineers Services”. The Tribunal held that consideration received as lump sum for technical knowhow and

royalty was not for any advice, consultancy and technical assistance in any engineering discipline but was for transfer of technical knowhow. [CST, Delhi Vs. Suzuki Motor Corporation, 2012 (25) S.T.R. 266 (Tri.–Del.)] 5. Appeal against CESTAT decision of service taxability lies with the Supreme Court and not High Courts: The decision of CESTAT on issues related to taxability of services in question relating to “rate of tax” falls squarely within the exceptions carved out in Section 35G of the Central Excise Act, 1944 and read with Section 83 of Finance Act, 1994. Hence, appeal lies with the Supreme Court and not with High Courts. The Hon’ble Karnataka High Court has relied on its own decision of Mangalore Refineries and Petro Chemicals Limited (2011 (270) S.T.R. 49 (Kar)) in ruling the same. [CST, Bangalore Vs. M/s. Aquamall Water Solutions Limited, 2012 (25) S.T.R. 233 (Kar)] 6. Ready mix concrete (RMC) is sale of goods and doesn’t involve any service: The issue before the Tribunal is whether the supply of ready mix concrete is a sale or providing taxable services under the category works contract service. It is held that the supply of RMC is a sales contract instead of a service contract. The Finance Act 1994 not being law relating to commodity taxation but services are declared to be taxable under this law. [M/s GMK Concrete Mixing Private Ltd Vs. CST, Delhi 2012-TIOL-137CESTAT-DEL]

7. Short term courses are not taxable under the category “Management Consultancy Services”: Organising short term courses on subject relating to Forestry, Water Resources Management and Environment etc for the officers in India Forest Service and other organizations for improving their skills and knowledge level of the persons, who attend courses does not involve an activity of rendering advise, directly or indirectly, in connection with management of any organization. It is just imparting training on certain areas to the officers in certain organizations and therefore does not amount to rendering Management Consultancy services either directly or indirectly to that organization. [Indian Institute of Forest Management Vs. CST, Bhopal, 2012 (25) S.T.R. (Tri.-Del.)] Central Excise: 8. Short realization of money due to subsequent price reduction: The issue before the Tribunal was whether excess excise duty paid due to reduction in price subsequent to clearance of goods is liable for deduction under Central Excise. It is held excise duty is payable with reference to transaction value under Section 4 of Central Excise Act, 1944. The duty element is to be determined on the basis of time of removal of the goods, which is issuance of invoices. There is no provision under the Act for reduction in the duty liability in case of reduction in price subsequent to clearance


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of goods. [M/s. Ece Industries Limited Vs CCE, Rohtak, 2012TIOL-217-CESTAT-DEL] 9. Refund of duty paid on goods which were not dispatched: Appellants raised the invoices and paid the duty for the goods which were intended to be cleared for transfer to another unit. Subsequently such goods are not transferred and therefore, the invoices were cancelled and the refund was claimed. However, the refund claimed was disallowed for want of original invoices and certificate from the Range Superintendent that credit of duty paid on such invoice is not claimed by other unit. It is held, denying the refund on the ground that appellants failed to produce the original invoice which is misplaced and which can be misused by unscrupulous person is not valid. Hence refund allowable. [Ms. Hindustan Coco Cola Beverages Pvt. Ltd. V CCE, Pune-III, 2012 (25) S.T.R. 299 (Tri – Mumbai)] CENVAT CREDIT: 10. CENVAT Credit on input services used for provision of service to SEZs: In the present case, the issue before the Tribunal is whether construction services provided to SEZ developers and units located in SEZ is ‘export of services’ or ‘exempted services’ for claiming CENVAT credit on input services under the CENVAT Credit Rules, 2004. The Tribunal held that services provided to SEZ developers / units in SEZ don’t mean that SEZ Act, 2005 would be applicable and Finance Act, 1994 & Central Excise Act, 1944 would not be applicable. Rule 6

March 2012


of CENVAT Credit Rules, 2004 and Export of Services Rules, 2005 did not provide for any exemption to services provided to SEZ developers / units located in SEZ’s and therefore a restriction on availment of CENVAT credit. In the absence of such provisions under CENVAT Credit Rules, 2004 which are nothing to do with and not in conflict with SEZ Act, 2005 the Tribunal held that the restriction under Rule 6(1) of the CENVAT Credit Rules, 2004 applies only in case of services, which are unconditionally exempted from service tax. The Notification No. 04/2004-ST read with Section 25 of SEZ Act, 2005 is a conditional exemption and therefore, the restriction under Rule 6 of CENVAT Credit Rules, 2004 would not apply to services provided to SEZ developer and units located therein. The Tribunal has relied upon the decision of Supreme Court in Bajaj Tempo Ltd Vs. CCE., Pune and Sterlite Industries (I) Limited for the same. [Sobha Developer Ltd., Vs. CCE, LTU Bangalore, 2012 (25) S.T.R. 136 (Tri.–Bang)] 11. CENVAT Credit on outdoor catering Services: Service tax paid on outdoor catering services to the extent of the expenses recovered from employees would not be eligible to CENVAT credit. The tribunal has relied on the decision of GTC industries Limited 2008 (12) STR 468 (Tri-LB) for the same. [CCE, Pune I v Bosch Chassis Systems India Ltd. 2012 (25) S.T.R. 175 (Tri.–Mumbai)] 12. Input Services need not be provided within the Factory: On

reading of the definition of input service as a whole, it is clear that not only the services which are used directly or indirectly in or in relation to manufacture of final products but it also includes other services which have direct nexus or which are integrally connected with the business of manufacturing the final product. Therefore, input services need not be used within the same factory and therefore denial of CENVAT credit on the ground that services were not received in factory premises is not sustainable. The Tribunal relied upon Ultratratech Cement Limited for the same. (2011 (21) S.T.R. 297) [M/s. Maharashtra Seamless Limited Vs. CCE, Raigad (2012 (276) E.L.T 209 (Tri.-Mumbai)] 13. Goods used in testing are inputs under the CENVAT Credit Rules: Testing of machinery is inextricably connected with the manufacturing process and until it was carried out manufacturing process was incomplete and machines were not fit for sale and hence not marketable. In view of that, goods used for testing machines were inputs used in relation to manufacture of final products under the CENVAT Credit Rules, 2004. Physical presence in final products is not a prerequisite to claim credit and they may very well be indirectly related to manufacture and still necessary for completion of manufacture of final products, which is complete only when product is rendered marketable. Therefore, excise duty paid on such inputs used for testing is eligible as CENVAT credit. [M/s. Felx

Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

Engineering Limited Vs. CCE, U.P., 2012 (276) E.L.T 153 (S.C)]



Customs: 14. Royalty and License fee which are not related to imported goods are not includable: In the present case issue before the Tribunal was whether royalty and license fee under License and Technical Assistance agreement with the foreign collaborator is includable in the assessable value of imported goods for payment of import duty. Royalties and license fees related to the imported goods, which the buyer is required to pay directly or indirectly as a condition of sale of such imported goods is includable for valuation of imported goods under Rule 10(1)(c) of the Customs Valuation (Determination of Value of the Imported Goods) Rules, 2007. However, in the present case, the payments of royalty or license fee, are neither related to the imported goods nor a condition of sale of imported goods and therefore the same are not required to be included in assessable value of imported goods for payment of import duty. [CC (Import), Mumbai Vs. M/s. Bridgestone India Private Limited, 2012-TIOL-166-CESTAT-Mum]


March 2012


SITUATION REQUIRED FCA having 30 years standing in profession with exposure to audit of PSU / Branches of Nationalised Banks and private sector entities, and also having varied exposure to Direct and Indirect Taxes, is interested in joining CA Firm at Bangalore or manage branch at Bangalore. Please respond to:


Bangalore, a medium sized fast growing firm,needs: CA, experienced CA Inter / Finalists, 1-4 years B.Com staff experienced in at least two-three areas: 01. Outsourcing of -Company Accounts & MIS Taxation, Payroll & related labour laws Compliances as domain expertise. 02. Transfer Pricing, International Taxation, Expatriate Taxation – domain expertise 03. Auditing- Internal ,Statutory, Income Tax, HR, Service Tax, VAT audit 04. Corporate secretarial /all statutory compliances 05. SEZ /Service Tax/ STPI - domain expertise Candidate must have long term commitment/ hardworking, disciplined and vision to add value in all services to clients. Visit website for details of current requirement with us and with clients. We need CA(Inter) / experienced articles urgently. E-Mail : Add : M K TYAGI & CO, Chartered Accountants 50, Renaissance Landmark, (Near Bun world) 10 main, 17th cross, Malleshwaram Bangalore -560003, Phone:23310661/ 23344636 Web :

March 2012



Chartered Accountants



Bangalore Branch of SIRC of the Institute of Chartered Accountants of India


Payment of Excise Duty for February 2012 Payment of Service Tax for February 2012 by Corporates


7 March 2012

e-Payment of Excise duty for February 2012 e-Payment of Service Tax for for February 2012 Deposit of TDS/TCS Collected During February 2012

10th March 2012

Monthly Returns for Production and Removal of Goods and CENVAT Credit for February 2012 Monthly Return of excisable Goods Manufactured & Receipt of Inputs & Capital Goods by Units in EOU,STP,HTP for February 2012 Monthly Returns of Information relating to Principal Inputs for February 2012 by Manufacturer of Specified Goods who Paid Duty of Rs.1 Crore or More During Financial Year 2010-11 By PLA/ CENVAT/Both

15th March 2012

Due Date for Third Installment (In the Case of Non Corporate Assesses) or Fourth Installment (In the Case of Corporate Assessee) for Payment of Advance Income Tax for Financial year 2011-12 Payment of EPF Contribution for February 2012 Return of Employees Qualifying to EPF During February 2012


21 March 2012

Monthly Return and Payment of CST and VAT Collected During February 2012 Deposit of ESI Contributions and Collections for February 2012


25 March 2012

Consolidated Statements of Dues and Remittances Under EPF and EDLI for February 2012 Monthly Returns of employees Joined the Organisation during February 2012 Monthly Return Return of Employees left the Organisation During February 2012


31 March 2012

Payment/e-Payment of Excise Duty for Mar 2012 Payment/e-Payment of excise duty for Quarter ending 31st March 2012 by SSIs/Registered Dealers. Payment/e-Payment of Service Tax for March 2012 by Corporates Payment/e-Payment of Service Tax for the Quarter Ending 31st March 2012 by Non Corporates Last Date for Revision of Income tax Return for the Financial year 2010-11

EMPANELMENT OF FACILITATORS FOR The Course on GMCS (General Management & Communication Skills) & IPCC (Integrated Professional Competency Course) Orientation Programme The Bangalore Branch is empanelling facilitators for the GMCS and IPCC courses at the Bangalore Branch. Some of the topics are, • Communication Skills & Process • Inter-personal Skills • Team working and Team-building • Business Presentation Skills • Negotiation Skills • Goal Setting • Creativity & Neuro Linguistic Programming • Time Management • Group Discussion Techniques • Meeting Skills • Preparation of CV • Office Etiquette • Stress Management • Dressing & Grooming • Leadership • And other Soft Skills, People Skills & Management Skills Honorarium as per rules will be paid. If you are interested in handling sessions, please email your details with your choice of topics to or under subject “GMCS & IPCC facilitators”.


March 2012

ADORA COATINGS ONE STOP SHOP FOR ALL PAINTING NEEDS Be it your home or work place, your taste is a reflection of your personality. Every room is a living space that helps you express your personality. At Adora, our goal is to simply share with you our gift for finding and presenting the most admired colors and textures Adora Coatings is a company having a group of professionals, providing solutions to the construction industry. We market world-class high quality Designer paints, Texture Coatings and plain finishes. At Adora Coatings we provide turnkey solutions and consultancy for Residential Apartment, Commercial Complex, Educational Institutions, Auditorium and Industries. Our enthusiastic team for application makes your colorful dreams come true.


Ashutosh Mehraa

Mobile : 98800 33353

Mobile : 98800 44000


A4, GN Homes, 151/10, Rustomji Layout, Whitefield Main Road, Bangalore - 560 066 Telefax : 080 - 4150 6295 Advt.

E-mail : | Website :

March 2012


Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

RANK HOLDERS FOR NOV 2011 EXAM PCC NOV 2011 EXAM Sl.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Reg.No CRO0208404 SRO0238400 SRO0250200 SRO0193347 SRO0225749 SRO0193614 SRO0238512 SRO0247819 SRO0232867 SRO0240107 ERO0140656 SRO0249907 ERO0138739 SRO0246280 SRO0242964 SRO0214074 SRO0210917

Roll.No 402470 402993 402983 402317 402855 402785 402846 402402 402367 402892 402329 402335 402852 402343 402802 402804 402411


Marks Obtained 395 377 373 372 368 355 350 344 339 339 338 338 338 337 334 334 333

Rank 1 10 14 15 17 28 33 39 44 44 45 45 45 46 49 49 50

542 521

18 38

IPCC NOV 2011 EXAM 1 2

SRO0339270 SRO0315655

208825 208862




Delegate fee


24th March 2012 Bank Branch Saturday Audit 09:30am to 05:30pm

Rs.250/- CA.R.Sathyanarayana Murthi CA. S. Ananda Krishna

25th March 2012 ‘How to overcome Sunday the failures in 05:00pm to CA Examinations’ 08:00pm


‘How to succeed in CA Examinations’

OBITUARY We deeply regret to inform the sad demise of senior member of our profession CA. S. Amarlal on 10.01.2012.

CA.Madhukar N. Hiregange Vice Chairman, Board of Studies Rank Holders of the previous examinations

Venue: Branch Premises, ‘ICAI BHAWAN’, #16/O, Millers Tank Bed Area,Vasanthnagar,Bangalore-560052 For registration please contact: Ms. Rajalakshmi, Tel:080-30563509,

May his soul rest in peace.


March 2012

Seminar on “Bank

Branch Audit”


On 27 March 2012 between 08.45am & 05.30pm

6 hrs


at NIMHANS Convention Centre, Hosur Road, Bangalore (Venue is subject to change) Timings



08.45am to 09.15am


09.15am to 10.00am


10.00am to 10.15am

Tea Break

10.15am to 11.45am

Practical issues in audit of advances

CA. P. R. Suresh, Bangalore

11.45am to 01.15pm

Planning for Branch Audit and Audit Documentation

CA. M. N. Venkatesan, Chennai

01.15pm to 02.00pm

Lunch Break

02.00pm to 04.00pm

Bank Branch Audit – IT Perspective

04.00pm to 04.15pm

Tea Break

04.15pm to 05.00pm

RBI- Recent circulars

05.00pm to 05.30pm

Panel Discussion - CA. P. R. Suresh, Bangalore, CA. R Vittal Raj, Chennai CA. P. Manohar Gupta, Bangalore, CA. S. Ananda Krishna, Bangalore

CA. R. Vittal Raj, Chennai CA. P. Manohar Gupta, Bangalore

Delegate Fees: Rs.1500/- for Members, Rs.2000/- for Non-members Cheque / Cash in favour of “Bangalore Branch of SIRC of ICAI” For further details please contact: Ms.Geetanjali D., Tel: 080-30563500 / 3513, Email:

Clause by Clause Discussion on Finance Bill 2012 Saturday, 24th March 2012 at J N Tata Auditorium, National Science Symposium Complex, Bangalore between 09.30am & 05.00pm Time


Resource Persons

09.30am to 10.00am


10.00am to 01.00pm

Discussion on Indirect Taxes

CA.K.S.Ravishankar CA.V.Raghuraman CA. Badrinath

02.00pm to 05.00pm

Discussion on Direct Taxes

CA.S.Ramasubramanian CA.H.Padamchand Khincha CA.K.K.Chythanya

Delegate Fees: Rs.900/- for Members Cheque / Cash in favour of “Bangalore Branch of SIRC of ICAI” For further details please contact: Ms.Geetanjali D., Tel: 080-30563500 / 3513, Email:

March 2012


6 hrs


Bangalore Branch of SIRC of the Institute of Chartered Accountants of India

Analysis of Union Budget – 2012 On Saturday, 17th March 2012

4 hrs


between 04.00pm & 08.00pm at Jnana Jyothi Convention Centre, Central College Campus, Bangalore A special programme on Analysis of Union Budget – 2012 is being organized by Bangalore Branch of Southern India Regional Council of The Institute of Chartered Accountants of India (ICAI), on 17th March 2012 at Jnana Jyothi Convention Centre, Central College Campus, Bangalore between 04.00pm & 08.00pm, enabling the delegates to acquire a comprehensive knowledge about the Union Budget. The distinguished Moderators CA. T. V. Mohandas Pai, Chairman, Manipal Global Education Services and renowned CA.H.Padamchand Khincha, an expert in Direct Taxes, along with the panelists will be focusing the salient features of Union Budget - 2012. Eminent resource persons from various industries will be on the panel, and will technically analyse & present their views on the Budget 2012. Entry fee : Nil

Fellowship & High Tea : 4.00 pm onwards

This programme is open for members & general public also. You are invited to participate in the programme & make it a remarkable event.

Workshop on Revised Schedule VI under Companies Act including its XBRL Integration Speakers : CA. N. Nityananda – Co-ordinator of the Workshop

8 hrs


CA. P. Manohar Gupta CA. K. Gururaj Acharya CA. P. M. Rashmi CA. B. N. Ganesh Kumar Schedule VI containing the format & disclosure requirement for companies in India has undergone a sea change. Professionals both in practice and in industry will have to unlearn the old format & its contents and learn the new avatar of Schedule VI in depth. XBRL filing posed several challenges last year and should be much more challenging under the revised schedule VI. To evaluate these new waves in the corporate law practice, this workshop is designed. Dates: 19th Monday & 20th Tuesday, March 2012 Timings: 04.00pm to 08.15pm on both days with 15 minutes tea break. Delegate Fee: Rs.500/DD/Pay order/Cheque should be drawn in favour of “Bangalore Branch of SIRC of ICAI” payable at Bangalore. (Please mention your name, membership number and contact details at the back of the cheque/demand draft). For further details please contact: Ms. Geethanjali D, Tel: 080-30563500 / 3513, Email:


March 2012

Workshop on Communication Skills Get Over Your FEAR of Public Speaking

12 hrs CPE

This is a unique workshop on public speaking being organised by the Bangalore Brach. In this workshop the participants get to learn the skills required to be an effective public speaker and overcome the fear of facing the audience. What participants would achieve at the end of the course?  Introduce yourself effectively.  Write and Deliver speeches effectively.  Be effective in expressions and gestures.  Be effective in voice modulation. Unique features:  Learning by practice, i.e. by speaking in front of audience.  Mentors guide participants to prepare speeches.  Experienced speakers will demonstrate and provide educational speeches on the projects designed to improve the communication skills and help the speakers to prepare and deliver their speeches in an effective way.

Venue: Branch Premises Fees: Rs. 1,200/- for members

Duration: 12 hours - 4 sessions of 3 hours each per day between 05.00pm & 08.00pm Programme Structure: Day & Date Thursday, 08.03.12

Friday, 09.03.12 Monday, 12.03.12 Tuesday, 13.03.12

Topic  Why effective communication?  Organize your talk.  Overcome Nervousness and getting ready for it.  Plan to prepare your talk.  How to make an impromptu speech.  Evaluation/Playback Round.  Use your body and voice effectively.  How to make an effective PPT.

Restricted to 30 participants on First Come First Serve basis. For further details please contact: Ms.Geethanjali, Tel: 080-30563500 / 3513, Email:,

Coaching Classes: IPCC / PCC & FINAL for November 2012 and CPT for December 2012 Examinations

Admissions open for Subjectwise Coaching In pursuance of our objective to provide fruitful and quality teaching to our students, we are pleased to inform you that CPT/ IPCC/ PCC and FINAL coaching classes will be commencing at the Bangalore Branch of SIRC of ICAI from 01st June 2012 onwards. The classes will be concluded by 30th September 2012. Salient features: • Experienced, Expert and Dedicated faculty members • Methodology – Conceptual teaching • Affordable Coaching Fee • The journey of CA with Bangalore Branch is that of progress with innumerable activities of knowledge supported and guided by our senior renowned faculty members – resource persons • During the course, amazing, inspiring and motivational sessions and Orientation classes will be conducted • Concessional fee for deserving students. Hence be proud to be part of the Branch by enrolling as a student to become a proud member of this glorious profession. Fees Timings CPT Rs.4500/05.30pm to 07.30pm (Monday to Friday) 03.00pm to 07.30pm (Saturday) 07.30am to 12Noon (Sunday) IPCC / PCC / FINAL Rs.10000/- for Both Groups 06.30am to 09.30am (Monday to Saturday) Rs.8000/- for Single Group 06.00pm to 09.00pm (Monday to Saturday) Rs.2000/- for Single Subject 07.30am to 05.30pm (Sunday) Faculty Members: CA. Hariharan K, Chennai, Dr. V. Rajesh Kumar, Bangalore, CA. Sampath Kumar, Bangalore, CA. Shanthi Ganapathi, Chennai, CA.Vijay Raja, Bangalore, CA. Naveen Khariwal G, Bangalore, CA. Shivanand Nayak P, Bangalore, CA. Narendra Jain, Bangalore, CA. Vikas Oswal, Bangalore, CA. Jatin Christopher, Bangalore, CA. Malay Kumar Panda, Bangalore, Mr. J Sundaresan, Bangalore, Mrs. Malathy Sunderrajan, CA. Shruthi B N, CA. B N Ganesh Kumar, Prof. Venkateshwara Kiran I. Bangalore, CA. Lohit Jagdish, CA. Sudheendra H, CA. Jaikumar Nair, Bangalore, Mr. S Gopichandra, Bangalore, Mr. Ajay Kumar Menon, Bangalore, Mr. S V Madhavan, Bangalore, Mrs. Anita Mehtha, Bangalore and so many other renowned resource persons. Registration Fees: DD should be drawn in favour of “Bangalore Branch of SIRC of ICAI” payable at Bangalore. For further details please contact: Tel: 080-30563500 / 511 / 512 / 513 Email: / Appeal to members: Members are requested to show their patronage by informing and encouraging their students to join the coaching classes of Bangalore Branch.

March 2012


Bangalore Branch of SIRC of the Institute of Chartered Accountants of India


March 2012

March 2012


Newsletter for the Month of March 2012  

Newsletter for the Month of March 2012