TIOL-DDT 1170 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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><strong><font color="#660099" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1170 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>06.08.2009 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Norms
for building infrastructure in non - processing area of SEZ</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EMPOWERED</strong> Group of Ministers in its meeting dated 24th October, 2008 had approved development guidelines to be followed in respect of operations in the non - processing area of the SEZs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the decision, the Board of Approval while approving infrastructure within each category in the non - processing area of the SEZ will approve individual items on a case by case basis, depending upon the area of the SEZ, distribution of the area between processing and non - processing area, available FAR, projecte d employee population, location of SEZ and other relevant factors. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The items approved in each category will be subject to the notification dated 27.10.2006 on authorised operations in the SEZ. However, approval for each category as a whole will be subject to the overall ceiling as indicated by DDA. The overall ceiling in each category will be revised upwards in proportion with the available FAR and area. However, the actual setting up of facilities will be circumscribed by the local town planning norms. As an internal safeguard, construction could be allowed in a phased manner, wherever possible, linked with actual level of activities generated in the processing area. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Developer is to get the Master plan approved from the local bodies for the indicative social structure before commencing construction. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/sez09ins030.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Commerce Instruction No. 30 Dated – Nil August, 2009 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Has
Budget been enacted? Nobody knows! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Strange
are the ways of the Government! The Budget actually known as <strong>THE
FINANCE (No. 2) BILL, 2009</strong> was hurriedly passed by both houses of
Parliament as it was necessary that the Finance Bill became Act by the 31st
of July 2009. The Bill becomes the Act on the President giving her assent
to the Bill. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now has the President given her assent? Nobody knows! Neither Rashtrapati Bhavan nor Law Ministry has given out any information as to whether the Finance Bill is enacted or not. The Finance Ministry seems to be equally ignorant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are getting frantic calls and e-mails about the enactment and we are equally helpless. Has the President signed it or are they going to make her sign retrospectively? If she has signed it, what prevents them from making it public? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is something wrong somewhere?</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Excise Duty on Coconut Oil – Kerala Merchants want Minister to interfere </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Kerala Oil Merchants submitted a representation to Union Minister of State for Home Affairs Mullappally Ramachandran to take steps to abolish the excise duty on coconut oil which is sought to be imposed innocuously by Circular No. 890/10/2009-CX, Dated : June 3, 2009. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Please see: Coconut Oil dutiable? – Depends on where it is used – in your food or head? CBEC's Section 37 B Order. in</font></strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9124" target="_blank">DDT 1125</a></strong> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Power Packed Seminar – Galaxy of Stars descending in Hyderabad </font></strong></p>
<p align="justify"><font color="#660099" 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 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 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></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></strong></font></strong></font></strong></font></strong></font></strong></font></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 size="2" face="Verdana, Arial, Helvetica, sans-serif">Our Seminar in Hyderabad unfolds tomorrow. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Chief Mr. V. Sridhar and CBDT Member Mr. SS Khan are our honoured guests. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Gautam Bhattacharya, Joint Secretary, TRU and Mr. Sengupta, Former CCIT will be present throughout to clarify doubts on the Indirect and Direct taxes fields. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Leading Tax consultants and experts from all over the Country will be attending the Seminar. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On Saturday, we have a Seminar at Vizag which will be addressed by Mr. Bhattacharya and Mr. Sengupta and several tax experts. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#660099" 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 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 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><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/tiol_123.jpg" alt="Legal Corner Icon" width="240" height="160" hspace="5" border="0" align="center"></b></strong></strong></strong></strong></strong></strong></strong></font></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></strong></font></strong></font></strong></font></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></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Picture shows Mr. Sridhar addressing our Seminar last year. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">India's Budget 2009 – Viewed from US </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">New Transfer Pricing Rules, Speedy Tax Dispute Resolution Welcome Change But Companies May Need To Revisit Current Agreements: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India's proposed Safe Harbour rules for transfer pricing could allow income tax authorities to accept the price set by the tax payer, significantly easing transfer pricing hassles for U.S. business but companies may need to review existing agreements, according to Nair & Co., a leading global integrated solutions provider. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the new measure proposed in India's 2009 budget, the Central Board of Direct Taxes (CBDT) is being empowered to formulate rules that define the circumstances under which the income tax authorities can accept the transfer price declared by the tax payer. The transfer pricing changes incorporated in the budget propose that the 5% range benefit would be available only if the arm's length price falls within +/-5% range of the transfer price. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This would also mean a review of the benchmarking analysis report to ensure that the arm's length price falls within +/-5% to avoid adjustments by the revenue. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Alternative Dispute Resolution Mechanism (ADRM) </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a related proposal for setting up of the Alternative Dispute Resolution Mechanism (ADRM), the government delivered on hopes that it would use a strong re-election mandate to push through pro-market reforms. The ADRM, aimed at encouraging foreign investments, will ensure fast track resolution of transfer pricing disputes between the tax authorities and foreign companies. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prolonged litigation over transfer pricing issues is a pain for foreign companies. The new rules could usher in a certain organization and predictability on transfer pricing assessment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is very important for a foreign subsidiary to be remunerated by other group companies on an arm's length basis. There is high level of regulatory focus in this area and companies need to be cautious in dealing with transfer pricing issues. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fringe Benefit Tax </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India's 2009 budget also proposes scrapping of the Fringe Benefit Tax (FBT), which could reduce administrative costs and tax burdens for companies but also means that some U.S. firms may need to revisit their subsidiary contracts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With the abolition of FBT, employees themselves will have to pay taxes on Employee Stock Options Plans (ESOPs) or stock options exercised and other fringe benefits, which include entertainment, gifts etc., instead of the employers paying fringe benefit tax on these benefits. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Companies could be required to amend the Cost Plus Intercompany Agreements of the subsidiaries and may also need to consider amendment of the Stock Option Plan. Companies must also revisit the salary structure of the employees. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export Profits </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a major boost for the Information Technology and Business Process Outsourcing industry (IT-BPO), India extended to 2010-2011 the tax holiday on export profits for entities eligible under section 10A and Section10B. </font></p>
<p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">Jurispruden</font><font color="#FF6633" size="3">tiol</font><font color="#006600" size="2"> – Friday's
cases</font></strong></font></strong></font></p>
<p align="justify"><font color="#660099" 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 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 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></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font>Service Tax </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Xerox machine Maintenance is an Input service but Photography Services, Air Travel Agent & Tourist Taxi Services are not Input Services – Unconventional trade practices cannot bolster Cenvat credit claim - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Minuscule amounts of Cenvat credits adding up to Rs.22,078/- were taken on the following services - Xerox machine repairs and maintenance, Air Travel Agents, Tourist taxi & Photography. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue was of the view that there was no connection of these services with the manufacturing activities and hence denied the credit and imposed a penalty of Rs.5000/-. The lower appellate authority confirmed this. </font></p>
<p align="justify"><strong><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Amortisation of licence fee expenditure on software over a period of 3 years – Where revenue expenditure results in continuing benefit to assessee's business over a period of time, allowing expenditure in year in which it is incurred will distort profits of that year - amortization of expenses permissible under concept of 'matching principle' – No reason to interfere with CIT order: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 'matching principle' allowing amortization of expenses, in a situation where the Act is silent in this regard, is a 'judge-made' law. Its application has to be restricted to cases where a revenue expenditure results in a continuing benefit to the business of the assessee over a number of years, and allowing the entire expenditure in the year in which it is incurred is likely to distort the profit of that particular year. In our opinion this principle cannot be applied by the AO in each and every case where the benefit of a particular expenditure spills over to subsequent years. It should be applied with great caution. </font></p>
<p><strong><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Re-labelling of boxes of Vitrified and Glazed tiles with higher MRP consequent to import – Differential CVD duty demand – CESTAT orders pre-deposit of Rs.50 lakhs </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT has in the case of <em>Media Industries Ltd.</em> <strong><em>- (</em></strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2006/2006-TIOL-2007-CESTAT-DEL.htm" target="_blank">2006-TIOL-2007-CESTAT-DEL</a></em></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>)</em></strong> held that subsequent change in MRP amounts to mis-declaration at the time of import and differential duty confirmed on the said basis is liable to be upheld along with confiscation of the goods and imposition of penalty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the appellant had imported Vitrified Tiles and Glazed Tiles during the period March 2001 to April, 2004 and cleared the same under Bills of Entry on payment of duty and on the MRP values declared on “per square meter” basis. After clearance of the goods on payment of duty as assessed, the appellant re-labelled the boxes with equivalent MRP printed thereon, but on “per box” basis . </font></p>
<p align="justify"><strong><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p>
<p align="justify"><font color="#FF6666" 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>