TIOL-DDT 1071 · 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 1071</font><br>
16.03.2009<br>
Monday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Investment of Provident Fund – Government opens up</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Rule 67(1) of the Income Tax Act, all moneys contributed to a provident fund may be deposited in a Post Office Savings Bank Account in India or in a current account or a Savings Bank Account with any scheduled bank; and to the extent such moneys as are not so deposited (investible moneys) shall be invested in the manner specified in sub-rule (2).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sub rule (2) hitherto prescribed investments in</font></p>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">in Central Government securities as defined in section 2 of the Public Debt Act, 1944 (18 of 1944); and/or units of such Mutual Funds which have been set up as dedicated funds for investment in Government securities and which are regulated by the Securities and Exchange Board of India; </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Twenty-five per cent </font></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>a</em>) in Government securities as defined in section 2 of the Public Debt Act, 1944 (18 of 1944), created and issued by any State Government, and/or units of such mutual funds which have been set up as dedicated funds for investment in Government securities and which are regulated by the Securities and Exchange Board of India; and/or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>b</em>) in any other negotiable securities the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government or any State Government except those covered under (<em>iii</em>)(<em>a</em>) below; </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fifteen per cent </font></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>a</em>) in bonds/securities, of a public financial institution or of a public sector company or of a public sector bank, which have an investment grade rating from at least two credit rating agencies; and/or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>b</em>) Term Deposit Receipts (TDR) up to three years issued by public sector banks; and/or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>c</em>) in Collateral Borrowing and Lending Obligation (CBLO) issued by Clearing Corporation of India Limited and approved by the Reserve Bank of India; </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thirty per cent </font></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">to be invested in any of the above three categories, as decided by their Trustees </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thirty per cent </font></p></td>
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<p align="center"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now this is amended to</strong></font></p>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>i</em>) </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) in Government securities; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Other securities, as defined in section 2(h) of the Securities Contract (Regulation) Act, 1956, the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government or any State Government, except those covered under (ii) (a) below; and/or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) units of mutual funds set up as dedicated funds for investment in Government securities and regulated by the Securities and Exchange Board of India </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fifty five per cent</font></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>ii</em>) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Debt securities with maturity of not less than three years tenure issued by Bodies Corporate, including banks and public financial institutions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Term Deposit Receipts of not less than one year duration issued by scheduled commercial banks fulfilling all the following criteria: </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) it has made profit continuously for immediately preceding three years; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) it is maintaining a minimum Capital to Risk Weighted assets Ratio of 9 per cent; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) it is having net non-performing assets of not more than 2 per cent. of the net advances; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) it is having a minimum net worth of not less than rupees 200 crores ; and/or </font></p>
</blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Rupee Bonds having an outstanding maturity of at least three years issued by institutions of the international Bank for Reconstruction and Development, International Finance Corporation and the Asian Development Bank. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Forty per cent </font></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>iii</em>) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Money market instruments including units of money market mutual funds </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Five per cent </font></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em>iv</em>) </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Shares of companies on which derivatives are available in Bombay Stock Exchange or National Stock Exchange or equity linked schemes of mutual funds regulated by the Securities and Exchange Board of India </font></p></td>
<td valign="top"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fifteen per cent </font></p></td>
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<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/it09not024.htm" target="_blank">CBDT Notification No. 24/2009, Dated: March 12, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tariff Value of Brass Scrap and Poppy Seeds Reduced</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has increased the Tariff Value of Brass Scrap from 2643 US Dollars to 2658 and decreased the Tariff Value of Poppy Seeds from 4192 Dollars to 3894 Dollars. There is no change in the Tariff Values of other items.</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=24&filename=notification/custom/2009/cnt09_025.htm" target="_blank">Notification NO. 25/2009 -CUSTOMS(NT), Dated: March 13, 2009 </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Pan Masala Packing Machine Rules – Abatement - Pre and post audit</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In terms of Rule 10 of the Pan Masala Packing Machine Rules, 2008, the abatement of duty is to be given, in case the factory did not produce notified goods during any continuous period of 15 days or more. The JDC/JAC has to pass an abatement order in the case.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has received representations from the field formations regarding whether these abatement orders need to be subjected to pre and post audit in the same manner as the refund/rebate orders.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that as the abatement order is in the nature of refund, they are <strong>required to be subjected to the same administrative procedure of pre and post audit </strong> as laid down by the Board from time-to-time regarding refund.</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=31&filename=notification/excise/2009/exciseletter.htm" target="_blank">CBEC Letter F. No.267 /16/2009- CX -8 Dated: March 12, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT - Deduction under section 10B – EOUs - Approval by Development Commissioner will do – CBDT Clarifies</strong></font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> Section 10B of the Income Tax Act provides for exemption of income in case of hundred percent export oriented undertakings subject to prescribed conditions.</font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"> Explanation 2 (iv) below to the section defines a “hundred percent export oriented undertaking” as an undertaking so approved by the Board appointed in this behalf by the Central Government under section 14 of the Industries Development and Regulation Act, 1951.</font></li>
</ul>
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<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">Subsequent to the delegation of this power by the Ministry of Commerce and Industries to the Development Commissioners, such approvals to 100% EOUs are now being granted by the Development Commissioners, which are later ratified by the Board of Approvals.</font></li>
</ul>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">The matter regarding validity of approvals given by Development Commissioners has been examined in the Board.</font></li>
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<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">It has been decided that an approval granted by the Development Commissioner in the case of an export oriented unit set up in an Export Processing Zone will be considered valid, once such an approval is ratified by the Board of Approval for EOU scheme.</font></li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2009/instruct0902.htm" target="_blank">CBDT Instruction No. 2/2009: Dated: March 09, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Light at the End of the Tunnel switched off</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Due to recent budget cuts and the cost of electricity, gas and oil, as well as current market conditions and the continued decline of the world-wide economy, the Light at the End of the Tunnel has been switched off.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inconvenience regretted.</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">–Tomorrow's cases</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Order-in-revision cannot go beyond the original show cause notice – Tribunal restores original order, in appeal by assessee - CESTAT<br>
</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>COMMISSIONER</strong> has acted as adjudicating authority and not as a Revision authority as he has issued an order-in-original and not order-in-revision and the whole tenor of the order is determining of the issue afresh rather than revising the order.</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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Excess tax paid by employer on behalf of non-resident employee - refund - Revenue treats same as 'perquisite' taxable u/s 17(2)(iv) - Such refund should have gone to employer who paid the tax and cannot be taxed even in hands of employee as same is exempt u/s 10( 5B ): ITAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WRONGS</strong>, mistakes and errors are well known history-twisters as they change the course of history by their presence. In the taxation world, their presence is widely seen as more imposing and majestic, and that is how we come across some of the most litigated tales of demand, penalty, interest and also refund. The instant case is a tale of Income Tax refund which did not go to the 'person' who had paid that tax but to someone in whose name the tax was paid. And, thus begins the tale of litigation and hassles. Although the person who received the refund did remit the same to the one who had paid the tax on his behalf, but for Revenue it made no sense and it decided to tax the same in the hand of non-resident receiver as 'perquisite', taxable u/s 17(2)(iv). However, the Tribunal has held that the excess tax paid by the employer on behalf of the non-resident employee is to be refunded to the employer and cannot taxed in the hands of the employee as 'perquisite'. Even if it is held that excess amount also had the same character as amount "due" and "payable", even then it is exempt u/s 10(5B) and cannot be charged in the hands of the assessee, it added.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Re-import of goods exported availing Notification 94/96- Cus whether to be held as goods having suffered CVD under s. 3 of Customs Tariff Act and therefore leviable to SAD under s. 3A thereof – Matter goes to larger bench – CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IRONICALLY</strong>, while the larger issue of whether to regard the duty payable on re-imported goods as CVD and further leviability of SAD thereon is referred to a Larger Bench for resolution, the Tribunal went ahead and remanded the matter of leviability of interest on SAD and delayed payment of duty to the Appellate Commissioner. It will be interesting to see if the Appellate Commissioner can decide this issue when the larger issue of CVD and SAD itself has been referred to the Larger Bench.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
<p align="justify"><font color="#FF6600" 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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