TIOL-DDT 1087 · 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 1087</font><br> 09.04.2009<br> Thursday</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Limited Liability Partnership – Govt Notifies Rules</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has notified the Limited Liability Partnership Rules, 2009 effective from 01 04 2009. Highlights:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A person shall not be capable of being appointed as a designated partner of a limited liability partnership, if he</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) has at any time within the preceding five years been adjudged insolvent; or</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) suspends, or has at any time within the preceding five years suspended payment to his creditors and has not at any time within the preceding five years made, a composition with them; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) has been convicted by a Court for any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months; or</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) has been convicted by a Court for an offence involving section 30 of the Act.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every limited liability partnership shall keep books of accounts which are sufficient to show and explain the limited liability partnership's transactions and are such as to-</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) disclose with reasonable accuracy, at any time, the financial position of the limited liability partnership at that time; and</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) enable the designated partners to ensure that any Statement of Account and Solvency prepared under this rule complies with the requirements of the Act.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The books of account shall contain—</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) particulars of all sums of money received and expended by the limited liability partnership and the matters in respect of which the receipt and expenditure takes place;</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) a record of the assets and liabilities of the limited liability partnership;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) statements of cost of goods purchased, inventories, work-in-progress, finished goods and cost of goods sold; and</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) any other particulars which the partners may decide.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/llp_rules.pdf" target="_blank">NOTIFICATION NO. GSR 229(E), Dated: April 1, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RAW Sexual Harassment- Nisha Bhatia wins in CIC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nisha Bhatia, a director in the country's top Intelligence Agency – RAW had complained of sexual harassment against her boss Sunil Uke , a customs officer on deputation to RAW. She had asked the RAW to supply her information on the report submitted by the Enquiry Committee. The Raw pleaded exemption. Sunil is back with Customs as Commissioner.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the CIC dismissed her present appeal, the CIC held that it will be open to appellant Ms. Nisha Priya Bhatia to move a fresh application before the CPIO RAW seeking information on the matters which she has now sought at the level of the second appeal.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The determined Ms. Bhatia has a long way to go.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://cic.gov.in/" target="_blank">Appeal No.CIC/WB/A/2009/00010 dated 6.1.2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">RTGS Transactions</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The volume of RTGS transactions is increasing rapidly. RTGS settled 1.94 million transactions in the month of March 2009 as against 0.72 million transactions in March 2008. Customer transactions settling in RTGS presently constitute 89 percent of total RTGS transactions and are growing. At a recent meeting with major banks, RBI reviewed the entire gamut of RTGS customer transactions with a view to making them more user friendly.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has advised that</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) A bank customer receiving RTGS credit shall be provided with the name of the remitter in his account statements/pass book.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) A bank customer sending a RTGS remittance shall be provided with the name of the beneficiary in his account statements/pass book.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The banks are free to provide any additional information as they deem necessary/useful.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is RTGS? </strong> “RTGS” stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a “real time” and on “gross” basis. This is the fastest possible money transfer system through the banking channel. Settlement in “real time” means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. “Gross settlement” means the transaction is settled on one to one basis without bunching with any other transaction. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rtgs_transaction.htm" target="_blank">RBI/2008/09/426 DPSS (CO) RTGS No. 1776 / 04.04.002 / 2008 – 2009 Dated April 8, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Income Tax – Transfer Pricing – High Court stays ITAT Full Bench Decision</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The questions before the Special Bench were:-</font></p> <blockquote> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Whether it is a legal requirement under the provisions contained in Chapter X of the Income tax Act, 1961 that the Assessing officer should prima facie demonstrate that there is tax avoidance before invoking the relevant provisions?</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Whether it is a legal requirement under the provisions contained in Chapter X of the Income tax Act, 1961 that the Assessing officer should prima facie demonstrate that any one or more of the circumstances set out in clauses (a), (b), (c) and/or (d) of sub-section (3) of Section 92C of the said Act are satisfied in the case of any assessee, before his case is referred to the Transfer Pricing Officer under sub-section (1) of Section 92CA for computation of the arm's length price?</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Whether the Assessing officer is required to record his opinion/reason before seeking the previous approval of the Commissioner u/s 92CA( 1) of the Income-tax Act, 1961.</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Whether before making a reference to the Transfer Pricing Officer u/s 92CA(1) read with Section 92C(3) of the Income-tax Act, 1961, is it is a condition precedent that the Assessing officer shall provide to the assessee an opportunity of being heard?</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Is the approval granted by the Commissioner under section 92CA( 1) justiciable ? If so, can it be called in question in appeal on the ground that it was accorded without due diligence or proper application of mind?</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">6. What is the legal effect of Instruction No.3 of 2003 dated 20th May, 2003 issued by the Central Board of Direct Taxes on Transfer Pricing matters?</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">7. What is the role of the Assessing officer after receipt by him of the order passed by the Transfer Pricing Officer u/s 92CA(3) of the Income-tax Act, 1961?”</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court of Karnataka has stayed the ITAT Special Bench order.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8866" target="_blank">Breaking News</a></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 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 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></strong></font></strong></font></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="#FF6600">Gold plating on Imitation jewellery does not amount to manufacture: Tribunal</font></strong></font></p> <p align="justify"><strong><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> respondent is doing job work of gold plating on the imitation jewellery supplied by the manufacturers of the jewellery. For the said purpose, they were receiving jewellery items of mild steel, copper and brass. For jewellery items in brass they were directly doing gold or dye gold plating and then lacquering as per customers' requirements. For jewellery items in mild steel and copper, they were first doing copper and/or nickel plating and then gold or dye gold plating and then lacquering as per customers requirements. Copper and nickel plating was got done from outside. For the purpose of doing gold plating they were purchasing gold from open market and the gold was cut into strips and connected to D.C power supply of electroplating bath. Several chemicals/additives were added in bath tub and the plating was carried out by reverse current method.</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">Reimbursement of expenses to non-resident parent company - Since no element of either profit or income is embedded in such expenses, assessee not liable to TDS; Provisions of Sec 40 cannot be invoked where income is computed u/s 42, a code by itself: ITAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REIMBURSEMENT</strong> of expenses is a constant bone of contention for income tax purposes. And if it involves a non-resident, it is bound to be a long-drawn battle. However, in the latest decision the Chennai Bench of the ITAT has once again reiterated the settled judicial view that if there is no element of profit or income in the reimbursed sums, no TDS liability u/s 195 arises for the assessee. What further goes in favour of the assessee in the instant case is the well-established special status of Sec 42 which was incorporated in the I-T Act to allow special deductions to companies engaged in prospecting mineral oil. This Section is so special that an assessee which is a part of the Production Sharing Contract (PSC ), can claim deduction for both revenue as well as capital expenditures.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Refund claims made beyond sixty days period under Notification No 32/2005 CE are not to be treated as hit by time bar – claims filed within the time limit under Section 11B are valid – CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IMAGINE </strong> rejection of refund claim to an NGO working for <em>welfare </em> of the Tsunami affected areas on the ground of unjust enrichment and crediting it to the consumer <em>welfare </em> fund. Well, that is how the bureaucracy of a <em>welfare </em> state works and one has to live with it. Notification No 32/2005 CE provides exemption from central excise duty for steel and cement used for construction of houses by NGOs etc in Tsunami affected areas. But this exemption operates through refund route. The organizations should file refund claims on quarterly basis within sixty days after each quarter and then again submit a completion certificate from the District Collector and consumption certificate issued by a Chartered Engineer which is to be counter-signed by the concerned District Collector, finally, produce the evidence of duty payment to the satisfaction of the jurisdictional excise officer. And the maximum refund for each house is subject to a ceiling of Rs 9,000/- (may be equal to the amount charged by a Chartered Engineer for the certificate). The claims filed by the appellant agencies in the case we are reporting today were rejected on various grounds like claims filed after the expiry of six month period, burden of not passing on the duty not produced, proof of duty payment not produced etc. Wherever the claims were allowed by some magnanimous officers, the revenue was in appeal before the CESTAT.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Tomorrow is a holiday</font></strong></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>