TIOL-DDT 1148 · 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> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">TIOL-DDT 1148</font><br> 07.07.2009<br> Tuesday</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Budget with TIOL</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAN</strong> you believe it, we carried twenty stories yesterday? – All incisive analyses on the Budget. Our contributors included, apart from the in-house experts, some of the top names in the country. And today and in the next few days, we will cover every taxing aspect of the Budget.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As every proposal is being minutely dissected by experienced experts in the field, DDT has not much to say, for a few days.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Allotment of Document Identification Number</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What I liked best in the Budget is the proposed new Section 282B of the Income Tax Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Section reads as,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Every income-tax authority shall allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued by him to any other income-tax authority or assessee or any other person and such number shall be quoted thereon.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Where the notice, order, letter or any correspondence, issued by any income-tax authority, does not bear a Document Identification Number referred to in sub-section (1), such notice, order, letter or any correspondence shall be treated as invalid and shall be deemed never to have been issued.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Every document, letter or any correspondence, received by an income-tax authority or on behalf of such authority, shall be accepted only after allotting and quoting of a<font color="#FF6600"> computer generated Document Identification Number</font>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Where the document, letter or any correspondence received by any income-tax authority or on behalf of such authority does not bear the Document Identification Number referred to in subsection (3), such document, letter or any correspondence shall be treated as invalid and shall be deemed never to have been received.”</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is all about accountability of documents. Now every letter from the Income Tax Department will bear a computer generated identification number – so the existence of the letter cannot be denied or wished away and it should be easy to track it. Similarly the receipt of a letter by the Income Tax Officers will also be allotted a computer generated Document Identification Number.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The entire office administration will automatically improve if you have control over the inward and outward correspondence. And the government seems to be serious – that's why they have inserted these provisions in the Act – instead of issuing circulars which are anyway going to be flouted with impunity.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But why is it that no such provision is introduced in the Customs or Central Excise Acts?</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Summons by e-mail – IT adapts to IT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Department seems to be ready to adapt to Information Technology. Section 282 of the Income Tax is proposed to be replaced with a new Section which can enable the CBDT to make Rules for sending a notice or summon or requisition or order or any other communication under the Act, by email.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe ITAT and CESTAT should also follow suit and allow adjournment and miscellaneous petitions to be filed by email. Notices of hearing can also be sent by email and SMS. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the next step would be I can argue my case before the ITAT or CESTAT by video conference.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether the fee I collect for the e-hearing will attract Service Tax under the new heading zzzzm - of providing consultancy or assistance in any branch of law, is a question for another day's discussion.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Service Tax on Lawyers</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When asked why Service Tax was not imposed on lawyers, Chidambaram asked, “which lawyer provides service?” But his successor Pranab Babu holds PC in high esteem but disagrees with him and has gone ahead and introduced a tax on the Legal Fraternity without naming either <em>Lawyer </em> or <em>Advocate</em>. Many of my friends in the Service Tax Department called me up to warn me that now I am under their control. Taxing a lawyer is not all that easy. We will bring you today a few articles on this tax on lawyers, including one from the topmost lawyer in the indirect taxes field.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">But Pranaba babu could have easily</font></strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Increased the Income Tax Exemption limit to Rs. 3 Lakhs.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Abolished Wealth Tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Increased the SSI exemption limit to Rs 5 Crores.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Allowed savings up to Rs 3 Lakhs, including loans on House Building Loans.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Abolished Education Cess.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Abolished Wealth Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Done away with Compulsory Audit of professional with gross income of over Rs. 10 Lakhs.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Increased the Central Excise SSI Limit to Rs. 3 Cores.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Increased the Cash transaction limit from Rs. 20,000/- to Rs. 50,000/- </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But he chose to ignore all of the above issues. The Stock Exchange greeted him with a steep fall of 900 points.</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">–Wednesday'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 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></strong></font></strong></font></strong></font></strong></font><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">Applicant, a country liquor manufacturer, enters into selling agency agreement with a HUF allowing them to use their brand name ‘Pahili Dhar' – whether Service Tax payable under ‘Intellectual Property Services' – complete waiver of pre-deposit - CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicant is manufacturer of sugar and molasses. The applicant is also manufacturing country liquor under their brand name “<em>Pahili Dhar</em>” which is approved by the State Excise authority. The applicant had entered into <strong><em>selling agency agreement </em></strong> with M/s <em>Talreja Trade </em> (HUF) with intention to obtain higher returns on their investments in their country liquor plant by increasing the sale of country liquor of their brand “<em>Pahili Dhar</em>”.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The contention of the Revenue is that the applicants have <em>allowed M/s Talreja Trade (HUF) to use their brand name </em> “<em>Pahili Dhar</em>” in selling the products and hence they are liable to pay Service Tax under the category “<em>Intellectual Property Services</em>”.</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">Long-term capital gains - assessee buys agri land in 1975 - sells it in 2006 - land notified as capital assets in 1994 - for calculating fair market value date is embedded in law as 1.4.1981; Govt notification does not change date of FMV but only character of land as capital asset: ITAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAPITAL</strong> gains from sale of property are a common form of gains for most taxpayers. But it is also a 'capital' for potential dispute with the Revenue. In this case a dispute cropped up over the date from which fair market value (FMV) is to be calculated for determining the long-term capital gains (LTCG). The assessee had bought a piece of marshy land in 1975 for Rs 9000/-. This land was sold in 2006 for more than Rs 11 Crore. Since the land was notified as capital asset by a notification of the Central Govt in 1994, the assessee took the stand that the FMV should be taken from 1994 when the agricultural land was converted into capital asset but the AO was for 1.4.1981.</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>