TIOL-DDT 1144 · 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 1144</font><br> 01.07.2009<br> Wednesday</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">New TDS Regime – CBDT gives up – postpones indefinitely</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CBDT had come up with an ambitious, complex and impossible TDS regime which was to be effective from 1st April 2009. Like putting the cart before the horse, the law was put in place without the machinery. On 11th May, 2009, they announced that the new regime will come into force from 1st July instead of 1st April. Now today is 1st July and nothing has happened in the last couple of months to improve the situation. Yesterday they realised that it cannot be implemented from today. With the complicated and impossible procedure, TDS collections must have also come down.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Better sense prevailed at the last moment and the Board announced that the scheme is kept in abeyance <strong>for the time being</strong>. The next date will be notified by the Board soon.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For details of the Scheme, please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9074" target="_blank">DDT 1117 - 25.05.2009</a></strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Also see</strong></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=bnews_detail.php3&newsid=9006">New TDS Regime - A grand fiasco for CBDT; Is outgoing FM 'aware' of policy change, richly contributing to 'Tax Misery Index'</a></strong></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=bnews_detail.php3&newsid=9026">New TDS Regime - A tale of goof-ups; TPL, TRU need to develop grip over taxpayers' pulse for improved compliance</a></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and</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=bnews_detail.php3&newsid=9090">New TDS Regime: TPL bulldozes its way; CBDT looks helpless! Will veteran FM intervene before mess hurts exchequer?</a></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/cbdt_press_release.pdf" target="_blank">CBDT Press Release dated 30th June 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Deduction under section 80IB (10) in respect of undertakings developing building and housing projects – CBDT Clarifies</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under sub-section (10) of section 80- IB an undertaking developing and building housing projects is allowed a deduction of 100% of its profits derived from such projects if it commenced the project on or after 1.10.1998 and completes the construction within four years from the financial year in which the housing project is approved by the local authority.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now there is a doubt whether the deduction u/s 80- IB (10) would be available on a year to year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project u/s 80- IB (10).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT clarifies:-</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) In case it is late, found that the condition of completing the project within the specified time limit of 4 years as stated in section 80- IB (10) has not been satisfied, the deduction granted to the assessee in the earlier years should be withdrawn.</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=67&filename=notification/cbdt/2009/instruct0904.htm" target="_blank">CBDT Instruction NO. 4/2009, Dated: June 30, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Service Tax – Construction of Dam, Roads and tunnel as part of a Power Project – No Tax – Commissioner</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many of the assessees and consultants feel that the Departmental orders are always against the assessees and Tribunal is the first stage where an assessee can hope to get some justice.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is an order passed by a Commissioner dropping a whopping demand of about Rs. 25 Crores, both on merits and limitation.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner observed,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“I find that the impugned notice alleges construction of hydro-electric power project - and states that the civil work undertaken is nothing but integral part of construction of Power Project (a commercial complex). Though it has been admitted that civil work involves construction of dam, tunnels and roads, a view has been adopted to call it not a construction of common dam, tunnels or roads (in the impugned notice). That means the impugned notice attempts to make a distinction between construction of ordinary/common dam, tunnels and roads which is excluded from purview of Service Tax and construction of dam, tunnels & roads as an integral part of hydroelectric power project. Does the statute permit so? I find that the statute does not provide any explanation to the words dam, tunnels and roads for its exclusion from the service in question. This can only mean that construction of dam, tunnels and roads is excluded, irrespective of any condition like integral part of hydroelectric power project. Moreover, it is a common fact that dams are mostly used for generating hydroelectric power. It cannot be a condition that if dams are used for generating power, it is included in the purview of Service Tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The impugned notice also admits that as per the agreement the said assessee have only undertaken the civil work of the power project. They have categorically stated that they did not do any work in respect electrical and mechanical work of the project. This shows that they have not constructed the entire project on turnkey basis. I am, therefore, of considered opinion that civil work undertaken by the said assessee includes construction of dam, tunnels and roads. There is no scope of segregating the agreement for considering any part of work as taxable service. The entire work is excluded from the purview of taxable service, "Construction of Commercial or Industrial Complex". So I find that the demand of Service Tax amounting to Rs.24 ,19,15,624 /- is not sustainable.</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=331&filename=notification/servicetax/2011/commr09_04.htm" target="_blank">Order No. 04/2009-10 dated June 16, 2009 of the Commissioner of Service Tax, Kolkata</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">TIOL Budget Run Up</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are much obliged to all the eminent contributors who have made our Budget Run-Up a great Success. Due the large number of contributions received, we have not been able to carry all the articles. Though we are continuing the run-up till the Budget, it is well known that by this time the Budget is almost finalised. Netizens who have sent in their suggestions (which we were not able to carry) need not be disappointed – all the possible suggestions have been sent to the <strong><em>concerned </em></strong> officers and may as well be positively considered.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now please get ready to rush your comments/analyses/remarks on the Budget immediately after it is presented.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Khushi </font></strong><font color="#006600"><strong> ka din hai; aaj pahli tarikh hai</strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This 1st July is special for all Central Government employees as all of them get the first increment after the implementation of the Pay Commission Report. The Government's salary bill for July will show a huge hike compared to other months. Today will perhaps see the maximum attendance in the government offices, as normally government employees will not miss their increment day – if they do, their increment gets postponed. </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">–Thursday'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">No penalty can be imposed under section 11AC of Central Excise Act, 1944 in respect of non-payment of amount due under Rule 6(3)(b) of CENVAT Credit Rules, 2004: CESTAT </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RULE 12</strong> of the CENVAT Credit Rules provide that where the CENVAT credit has been taken or utilized wrongly or erroneously refunded the provisions of the Section 11A or 11AB shall apply <em>mutatis mutandis </em> for such recovery. Neither Explanation-II to Rule 6(3) refers to Rule 13 for imposition of penalty if the manufacturer does not pay the amount due under this sub-rule nor Rule 13 provides for penalty in this regard.</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">Transfer Pricing - determination of arm's length price - TPO can invoke proviso to Rule 10B (4) for using prior years' data provided such data influences determination of transfer price - otherwise, it is mandatory for TPO not to ignore data relating to pertinent financial year in which transactions with associated enterprise take place: ITAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> each passing month, the tally of TP cases has been getting taller, and greater clarity in the Transfer Pricing Regulations being achieved in India. It has now become important for the Revenue to deal with TP cases with greater accountability towards judicial decisions. Since TP -related disputes involve in-depth and critical analysis of high volume of data for determining Arm's Length Price for transactions with associated enterprises, the TP laws do prescribe certain guidelines for relying on them. In this case the Revenue had ignored the data of current year provided by the assessee and relied more on previous two years data without giving justification, the assessee was aggrieved and the Tribunal has held that the Rule 10B (4) is quite clear and specifies that the data to be used in analyzing the comparability of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">ROM is permissible even while the matter is pending with the Third Member – Tribunal has to frame points for determination and each point has to be answered. It is the cardinal duty of Court or Tribunal to do complete justice: Bombay HC </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN </strong>application for rectification would be maintainable even when a reference is made to a Member. Apart from the language of the provisions it would be a more constructive and purposeful method of answering the issue. Holding otherwise, and accepting the stand of the revenue would be to delay the proceedings and may also again lead to other points being referred once again. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While hearing and deciding an appeal the Tribunal is bound to frame points for determination which are relevant for deciding the issue in controversy in the appeal. Once the points for determination are fixed the members are bound to answer the points so framed. It is only on the points on which there is difference of opinion, then only is there a need to refer to a third member those points for determination. It is in that context while disposing of appeals the tribunal is bound to fix points for determination and answer the said points.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Tomorrow for the judgements</font></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> </body> </html>