TIOL-DDT 1084 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1084</font><br> 02.04.2009<br> Thursday</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Guidelines for import of Precious Metal by the Nominated agencies – DGFT clarification</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present, the following agencies/entities are entitled for direct import of precious metal</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I. Designated Banks notified by RBI; <br> <br> II . Agencies/entities notified by Department of Commerce;</font></p> <div align="justify"> <blockquote><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) MMTC Limited;</font></blockquote> </div> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) State Trading Corporation (STC);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) The Projects & Equipment Corporation of India Limited;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Handicraft and Handloom Export Corporation (HHEC);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) EOU and SEZ Gems & Jewellery Units for their own consumption;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) STCL Limited;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) MSTC Limited;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) Diamond India Limited (DIL);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Gems & Jewellery Export Promotion Council (G&JEPC);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(j) Premier Trading Houses; &</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(k) Star Trading Houses (only for Gems & Jewellery Sector).</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Guidelines for monitoring the import of precious metal and its distribution and/or own use</strong></font></p> <div align="justify"> <blockquote><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) All these Nominated agencies shall be required to maintain records of imports of precious metal (both quantity and value) and its distribution for the purpose of exports of value added product as well as for the purpose of domestic consumption.</font></blockquote> </div> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Periodic filing of returns on monthly basis to the Gems & Jewellery EPC Registered Office at Mumbai. G&J EPC, in turn, shall compile the figures and forward it to DGFT (Hdqrs.) by 15th of the subsequent month;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) At least 10% of the imports of each entity shall be supplied to the exporters;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Performance to be reviewed on annual basis.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clearance of import consignment shall be allowed by the Customs Authority as per the Procedure laid down by them for the Nominated Agencies by way of Customs Notification and/or Circular issued by them from time to time. WILL THEY?</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=46&filename=notification/dgft/2008/dgft08cir077.htm" target="_blank">DGFT POLICY CIRCULAR NO. 77 (RE-2008)/2004-2009, Dated: March 31, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Issues referred to Special Bench of ITAT</font></strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Whether or not, it can be said that Airfreight Ltd. was the agent of the assessee so that it can be held that the assessee had a PE in India?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Whether the CIT(A) was justified in holding that the notional interest of Rs.23,10,000 /-calculated at the rate of 15% on interest free deposit of Rs.1,54,00,000/- placed with the assessee by the Citibank N.A. be taken into account in determining annual value under section 23(1)(b), more so when the deposit of Rs.1,54,00,000 /- was invested in income earning assets, which income was separately assessed?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Whether can it be said that where a forward contract is entered into by the assessee to sell the foreign currency at an agreed price at a future date falling beyond the last date of the accounting period, the loss is incurred to the assessee on account of evaluation of the contract on the last date of the accounting period i.e. before the date of maturity of the forward contract?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Whether an order u/s 195 r.w.s. 201 of the Income tax Act, 1961 is barred by limitation within 4 years from the end of the relevant financial year in the absence of any express provision in the Act?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Whether the entire amount received on sale of DEPB entitlements represents profit chargeable under section 28(iiid) of the Income Tax Act or the profit referred to therein requires any artificial cost to be interpolated?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Whether the lessor is entitled to depreciation on assets leased by it in the event of the transaction being held as a financial lease.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. “Whether, assessee is entitled for deduction u/s 80P (2)(a)(i) on the interest received u/s 244A of the Act on the refund of tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Whether the services rendered by the assessee through their satellites for telecommunication or broadcasting, amount to ‘secret processes' or only ‘process'?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Whether the term ‘secret' appearing in the phrase ‘secret' formula or process' in Explanation 2 to section 9(1)(vi) and in the relevant the Treaties, will qualify the word ‘process' also? If so, whether the services rendered through secret process only will be covered within the meaning of royalty?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Whether the payment received by the assessees from their customers on account of use their satellites for telecommunication and broadcasting amounts to ‘royalty' and if so, whether the same is liable to tax under section 9 (1)(vi) of the Income Tax Act, 1961 read with relevant provisions of DTAA?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Whether in view of the provision of Section 80IA (9) r.w.s 80IB (13), the deduction of income under Chapter VI-A can be allowed on entire profit and gains of an undertaking or an enterprise of an assessee or it is to be allowed on such profit and gains as reduced by deduction claimed and allowed u/s 80IB/80IA?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Whether the receipt of Rs.2.85 Crores by the assessee from DCM for the termination of the agreement to build on the land belonging to DCM along with right to sell such portions of the super built area in the construction falling to the share of the assessee is a revenue receipt or a capital receipts? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. Whether the surplus arising on revaluation of the land, held by the assessee as stock-in-trade and brought into the common stock of the partnership firm M/s DLF Commercial Developers, and by credit, at an agreed value, to the assessee's capital account amounted to a transfer of the asset to the partnership firm and can be assessed as the business profits of the assessee?”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. Whether the assesses, who are in the business of blending & processing of tea and export thereof can be said to be “Manufacturer/Producer” of the tea for the purpose of Section 10A/10B of the I.T.Act , 1961?”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. Whether the loss incurred on account of hedging by way of future and options are speculative in nature and cannot be regarded as business loss.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. Whether the CIT was correct in invoking the provisions of section 263 of the Act in withdrawing the claim of deduction of gratuity provision of Rs.7,85,600 /-, actually paid to an approved gratuity fund and allowed by the A.O. in the original order of assessment as against incremental actuarial liability.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. Whether the Assessee is entitled to claim deduction of Rs.7,85,600 /- being the provision for gratuity in terms of Section 36(1)(v) of the Act, actually paid to an approved gratuity fund.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18. Whether the amount collected from the borrowers to meet the interest tax liability could be taxed as interest under the Interest Tax Act, 1974?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. Whether the entire amount of the time-share membership fee receivable by the assessee upfront at the time of enrolment of a member is the income chargeable to tax in the initial year when there is a contractual obligation fastened to the receipt to provide the services in future over the term of the contract?”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20. Whether the duty drawback receipts will qualify for deduction u/s 80IA for the assessment year 1997-98?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21. Whether the period of limitation for completion of the block assessment as per sec. 158BE read with Explanation 2 is to be reckoned from the end of the month in which ‘last Panchanama on the conclusion of search is drawn on the assessee' or ‘last Panchnama of the last authorization even when it is not last Panchanama drawn on the assessee and one or more valid panchanamas are drawn on the assessee thereafter in execution of any former authorization.</font></p> </blockquote> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">If an amendment is fairly capable of either interpretation, it ought to be construed as prospective only – AAR</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today we bring you an important Advance ruling pertaining to Rural Electrification Corporation Ltd where the IT Authorities had denied deduction on account of provision for bad and doubtful debts.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <strong>Breaking News</strong>.</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">–Monday's cases</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font><font color="#663399">Central Excise</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Revenue succeeds in classifying 'Chilli Vinegar' under heading 2203.00 of CETA , 1985, before Tribunal, <em>well almost</em></font></strong></font></p> <p align="justify"><br> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS </strong> is a Revenue appeal and the <strong><em>facts are not that chilly</em></strong>, except of course it concerns <strong><em>one green chilli </em></strong>finding its way, rather purposefully, into a bottle of vinegar. The respondents in these appeals are engaged in the manufacture of food items such as Soups, Noodles, and Spices etc. during the material period. During the period from April, 1996 to February 1997, they paid duty at the rate of 8% on their product ‘Chilli Vinegar' classified under heading 20.01 of the Schedule to the Central Excise Tariff Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Speculative loss – Section 73 - no difference between losses suffered in course of trading by delivery and losses in terms of book value: Bombay High Court</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LOSS</strong> or profit on account of valuation of closing stock has to be treated as speculative loss and allowable as revenue loss or revenue receipt as the nature of these profits are similar to the nature of business in trading of shares: As long as the assessee is carrying on business of trading by way of purchase and sale of shares even if in respect of any financial year, there are no transaction and yet the company has stock in trade of shares, the book value will have to be considered for the purpose of considering the profit and loss in case of speculative business.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Service Tax</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Tour operator – charges for hotel rooms not to be included; payment received in advance for services not taxable at that time – no tax – matter remanded: CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant is rendering services as Tour Operator in the following manner. The foreign tourists contact their local travels agents who contact Indian travel agent (the present appellant) and as per the requirements of the foreign tourists, accommodation in hotels and train tickets, air tickets were arranged by the appellant. While booking accommodation, the appellant issued instruction to issue bill for room rent alone to the appellant who will settle them. The guests pay for other expenses like food and beverages directly to the hotel. The hotel sent bill for room rent and the appellant paid the bills excluding the commission allowed to him.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow is a holiday</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Monday for the judgements</font></strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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> </body> </html>