TIOL-DDT 1027 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1027</font><br>
07.01.2009<br>
Wednesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fringe Benefit Tax – Pre-paid Electronic Meal Card – CBDT Prescribes Conditions</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 115 WB (2) (B) of the Income Tax Act, certain food supplied by the employer to the employee would not be considered as fringe benefit provided to the employee.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Sub clause (iii) is inserted into this sub-rule with effect from 1.4.2009, which reads as,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“any expenditure on or payment through non-transferable pre-paid electronic meal card usable only at eating joints or outlets and which fulfils such other <strong>conditions </strong> as may be <strong>prescribed. </strong>”</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board has <em>prescribed </em> the <em>conditions </em> by inserting Rule 40E in the Income Tax Rules.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) The card shall be granted by the employer to its employees under a scheme framed by the employer specifying the circumstances under which the meal card can be used by the employee.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The card shall be issued by the issuing bank.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) An employee shall not be issued more than one card.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) The card shall bear the name of the employer along with the name, photograph and signature of the employee to whom the card is issued.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) The card shall be used only by the employee to whom the card is issued.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) The card shall be used by the employee only for the purpose of purchasing ready to eat food or non-alcoholic beverage from a member establishment.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) The aggregate amount of ready to eat food or non-alcoholic beverage purchased during a day by an employee shall not exceed one hundred rupees.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) The details of each transaction of purchases made by the employee against the card shall be maintained by the employer and the member establishment in such manner and for such period as is required under the Act for any other similar transaction.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2009/it09not001.htm" target="_blank">CBDT Notification No. 1/2009, Dated: January 5, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax - Conditions for approval to a Scientific Research Association – CBDT
amends rules</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 5D of the Income Tax Rules, the following are the conditions:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) The sole object of the applicant scientific research association shall be to undertake scientific research.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The applicant scientific research association shall carry on the scientific research activity by itself.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) The scientific research association seeking approval under clause (<em>ii</em>) of sub-section (1) of section 35 shall maintain books of account and get such books audited by an accountant as defined in the <em>Explanation </em> to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) The scientific research association shall maintain a separate statement of donations received and amount applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board has added another sub rule 4A , which stipulates</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scientific research association shall, by the due date of furnishing the return of income under sub-section (1) of section 139, furnish a statement to the Commissioner of Income-tax or Director of Income-tax containing-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) a detailed note on the research work undertaken by it during the previous year;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) a summary of research articles published in national or international journals during the year;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) any patent or other similar rights applied for or registered during the year;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme;</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similar amendments are made for <strong>Conditions subject to which approval is to be granted to a University, College or other Institution under clause (ii) and clause (iii) of sub-section (1) of section 35 </strong>by adding Rule 5E (4A).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2009/it09not002.htm" target="_blank">CBDT Notification No. 2/2009, Dated: January 5, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax – Exemption - National Housing Bank (Tax Saving) Term Deposit Scheme, 2008 notified under Section 80C</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has specified the National Housing Bank (Tax Saving) Term Deposit Scheme, 2008 for exemption under Section 80C (2)(xv) 0f the Income Tax Act. As is well known, payments or deposits made for the schemes mentioned under Section 80C (2) are deducted from the total income.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2009/it09not003.htm" target="_blank">CBDT Notification No. 3/2009, Dated: January 5, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Correlation
of inputs with the export product under DFIA Scheme - DGFT Clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Circular No. 46/2007-Customs, Dated : December 20, 2007, the CBEC clarified as,</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">I am directed to invite your attention to the provisions of paragraph 4.55.3 of the Handbook of Procedures, Vol.I 2004-09 and condition (i) of notification No.40/2006- Cus dated 1.5.2006 regarding correlation of technical characteristics, quality and specification of the inputs with the export product under the DFIA Scheme. In this connection, representations have been received from trade stating that the importers are facing difficulties in regard to clearance of material under DFIA Scheme because of insistence by the Customs to establish correlation between the imported goods and the exported product in all cases of imports under the said scheme.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that except for the items specified in paragraph 4.55.3 of the Handbook of Procedures, Vol.I 2004-09, in all other cases a correlation between the inputs under import with those used in the exported product <strong>is not required </strong> to be established and that clearance under DFIA scheme may be allowed if other conditions of the scheme and Customs notification referred to above are fulfilled.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally, importers face difficulties with Customs on the ground that there is no corresponding Customs provision for the tall promises made in the Foreign Trade Policy. But in a reverse scenario, it seems now the difficulty is that there is no corresponding DGFT Circular for the Customs Circular No. 46/2007.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So now the DGFT clarifies,</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">DFIA is issued strictly as per SION. There are 22 sensitive items (inputs) listed in paragraph 4.55.3 of HBP v.1, for which an exporter need to specify the technical specification, quality, characteristics etc. to establish nexus with the product exported. For other inputs, such details are not required unless otherwise specifically mentioned in the SION . In this regard, Customs Circular no. 46/07 dated 20.12.07 has been issued.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is therefore clarified that except for the items(inputs) specified in paragraph 4.55.3 of HBP v.1, such correlation is not required to be established in other cases unless the SION prescribes for the same.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir050.htm" target="_blank">DGFT Policy Circular No. 50 (RE-08)/2004-2009 Dated: January 6, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI must maintain its independence – Don't be an instrument of the Government – Supreme Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In March 2007, the Supreme Court had directed the CBI to conduct investigations into the assets of Mulayam Singh Yadav and submit its report to the Central Government. The CBI pleaded that it was an Independent Agency and so would submit the report to the Court and not the Government.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the CBI says it wants to submit its report to the Central Government.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And what is the great change in the last one year? No marks for correct guessing – you know Mr. Yadav now supports the government and support doesn't come cheap.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court told the CBI yesterday, “You had earlier said that you are an independent body, not under anyone's control, you are not bound to submit reports to any government,”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“We don't want the CBI to be an instrument of the Central government. The CBI must maintain its independence in all its actions.” the Supreme Court observed.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">– Friday's cases</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Clearances to Kandla SEZ under exemption – though the status of KFTZ was changed into KSEZ by Ministry of Commerce and Industries , the provisions of Central Excise remained the same – Notfn. 12/2001-CE(N.T) is clarificatory in nature – No cause for payment of 8% amount under rule 57AD of CER , 1944 - CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> facts are that the respondent is engaged in the manufacture and sale of goods to their customers located in <em>Kandla Special Economic Zone </em>without payment of Excise duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to 01.10.2000, respondent's customers were <em>located in the same area, </em> but covered under <em>Kandla Free Trade Zone </em>and when the respondent was availing the benefit of notification no. 126/94-CE dated 2.9.1994.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Valuation - Waste Filter Cake (WFC) supplied free of cost for recovery of Calcium Petroleum Sulphonate which is returned on payment of duty – No question of including the value of WFC as same is non-excisable – Tribunal holds so and rejects Revenue appeal.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Excise authorities after some ‘investigation' came to know that the respondent was <strong>not including the cost of Waste Filter Cake </strong> while paying duty on Calcium Petroleum Sulphonate . A demand notice for the extended period followed and the Adjudicating authority was not impressed by the arguments of the respondent so much so that he confirmed the differential duty demand and imposed penalty.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income arising from allowing 'right to use' to Indian software buyers is actually sale of copyrighted article which does not involve transfer of copyright and such receipt is not royalty</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> is
treated as royalty by the Revenue is actually reckoned as a plain sale of
copyrighted article by the assessee. Thus there is nothing new about this
dispute as decided by the Special Bench of the Tribunal in the Motorola case.
However, there is an element of novelty in the approach of the CIT(A) but
the same has been rejected by the Tribunal, relying on the decision of the
Special Bench which is binding on it</font>.</p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tomorrow is a holiday.</strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Friday for the judgements</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Friday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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