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By Vijay Kumar

Income Tax

Indo-Canadian DTAA is based on UN Model - Profits not only attributable to PE but also arising out of sales in other contracting State are taxable in India : Tribunal

TAXING income of a non-resident company is always a tricky business. In this case, the issue largely revolves around the attribution of profits between the Head Office (HO) and the Permanent Establishment (PE) in India. Although the assessee opted for assessment under the provisions of Indo-Canadian DTAT but it also expressed its desire to be assessed under the Income Tax Act if the benefits are denied under the first option. Revenue stoutly resisted such switchover from DTAT to Income Tax Act as the tax rate was lower on fee for technical services but the Tribunal allowed it. However, the assessee was not allowed deduction of expenses as per the Act.

Central Excise

Parts cleared separately and stand alone compressor cleared separately - parts cannot be classified as compressor - but for valuation, the cost of parts may be includible - matter remanded - Supreme Court

The Commissioner is confused, whether it is a classification or valuation issue. As far as classification is concerned, the Supreme Court agreed with the Tribunal that parts cannot be classified with the compressor, but what the Commissioner wanted was more duty. He could collect it through valuation.

Commissioners should realise that the profound orders passed by them are subject to scrutiny by the highest Court of the land and when the Apex Court comments that the Commissioner is confused between classification and valuation, it is a bad reflection of the working of the Department.

The other day a retired judge of a High Court told me that the least he expected the Commissioners to do was to read the orders 'put up' by their Superintendents.

Customs:

Rebook Shoes - import of parts of shoes by two importers to finally manufacture shoes - two imports was only a fictitious arrangement to deceive the government - not eligible for exemption to parts - matter remanded for re-quantification - Supreme Court

We have heard of clubbing of clearances of SSI units, but have you heard of clubbing of imports? Well, here is one such case!

The question of law that arises for determination in these civil appeals is: Whether shoe uppers, outer soles, insoles and sock liners imported by M/s. Phoenix Industries Ltd. (PIND) in the same container could be clubbed so that it could be considered as import of the shoe itself in semi knocked down (SKD) condition? Whether the importer was guilty of mis-declaration when the importer declared SKD goods as components?

See our columns Tomorrow for the judgments