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By Vijay Kumar

Income Tax

Relief for Sheraton International; ITAT holds Revenue cannot split integrated business agreement and subject technical service part to tax in India as such income is business profits, not taxable as per Indo-US Treaty. In a highly interesting decision which cannot be read without multiple pauses even by an extraordinarily patient legal practioner, the Delhi Bench of ITAT has held in the case of US-based M/s Sheraton International Inc that since the assessee had an integrated business arrangement with the ITC Hotels in India, Income Tax authorities cannot split it and levy tax on technical service part of the agreement either under the DTAT or the Income Tax Act as such services are only ancillary and auxiliary in nature to the main objects of marketing and sales promotion of the hotel business to mutual benefits. Such an income is neither royalty nor fee for included services but pure business income, not taxable in India as per the provisions of DTAT, it further noted.

Central Excise

Interest on differential duty paid on price escalation - West Zonal Bench looks the other way!

A Single member Bench of the CESTAT, Mumbai had in 2006-TIOL-885-CESTAT-MUM held that interest is not payable on such differential duty paid. Interestingly in that case, the party was not represented. The same Single Member Bench in 2007-TIOL-655-CESTAT-MUM, relied on its own judgement and confirmed the view. Now another Single Member bench in Ahmedabad has taken a different view. In this case also, the appellant was not present at the time of hearing. And so perhaps, the decision of the Mumbai Bench could not be brought to the notice of this Bench. Incidentally in the Anil Hitkari case - 2005-TIOL-476-CESTAT-MUM, the Tribunal had held that in such cases even duty is not payable, let alone interest!

Cenvat Credit on surrendering registration certificate - Primary responsibility is on assessee to reverse the same under rule 9(2) and having failed to do so, Revenue can recover the same u/s 11A : Tribunal. HOW

far can one try his luck and disown his liability? This case aptly illustrates it.

Customs

Customs wants to retain trousers of the accused - Magistrate orders release - Revenue approaches High Court - stuck with costs of Rs 5000: Delhi High Court. RUSHING

to the High Court on flimsy grounds has become a hobby with Revenue, for there is absolutely no punishment for silly appeals. Of late the Delhi High Court has been perhaps doing its bit to dissuade Revenue from clogging the courts - by dismissing Revenue appeals with costs. But what is after all Rs. 5,000/- for the mighty Revenue/ Here is yet another case where Revenue has been asked to pay Rs. 5,000/-. And the Revenue petition was because it did not want to return the trousers of the accused!

See our columns tomorrow for the judgments