TIOL-DDT 1177 · 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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#660099" size="3">TIOL-DDT 1177</font> <br> 18.08.2009 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs Commissioner charged with false TA Claim! </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAN</strong> you believe that a Senior officer of the rank of Commissioner of Customs and Central Excise will cheat the government by submitting false TA Claims? In this sordid story, that was what exactly alleged. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This <strong>V </strong>ictimised <strong>O </strong>fficer – let's call him <strong>VO </strong>was cleared for promotion as Chief Commissioner in 2007 but between the providential cup and the lip, somebody slipped in. Somebody was determined that he should not get that promotion. So they found some loopholes in his Transfer TA Claims of 2004 and 2005. The amounts involved were Rs. 4700 in connection with a foreign trip and Rs. 38,425 in connection with his transfer. He received an advance of TA of Rs. 38,425 on 14.11.2005 and because he could not transfer his household goods, he returned the money to the government on 14.12.2005 – so for a full month he had illegal possession of the princely amount of Rs. 38,425. He was charged with misusing his official position and showing undue favour to himself. The basis of the charge sheet was a pseudonymous complaint received in the Department on 7.7.2005 alleging irregularities on the part of our <strong>VO</strong>. The Charge Memo was issued on 10.5.2007 – two years after the pseudonymous complaint. The DPC for promotion as Chief Commissioner was held on 21.3.2007. <strong>VO </strong> was considered and found fit for promotion. The ACC also approved this promotion. As on that date, there was nothing against <strong>VO </strong> as no charge memo was issued by that time. In normal course, such promotion should have been given effect to. However, after serving the charge memo on 10.5.2007, the result of the DPC was placed in Deemed Seal Cover. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VO </strong> without replying to the Charge Memo approached the Central Administrative Tribunal (CAT). The CAT allowed the Application and set aside the memo of charges dated 10.5.2007. The Tribunal, while allowing the OA, also directed the petitioners to open the sealed cover and give effect thereto. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But somebody who had initiated this campaign would not lie low. The Government filed a writ petition before the High Court. By order dated 31.7.2008 this writ petition was dismissed as withdrawn with liberty to the petitioners to file a review application. The Tribunal dismissed the review application. The Revenue was determined that <strong>VO </strong> should not get his promotion and they again took the matter to the High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court gave its verdict last month and observed, “For two years the respondent is struggling to get his promotion. The promotion, otherwise rightly earned by him, is denied to him by issuing charge sheet at this stage trying to somehow implicate the respondent with alleged irregularities which do not even constitute “misconduct”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court further observed, “action against the respondent was initiated on the basis of a pseudonymous complaint; the alleged allegations, when seen in the backdrop of the record and explanation, do not constitute misconduct.; on the basis of such pseudonymous complaint, charge sheet came to be issued only in May 2007, that too when the respondent had already been cleared for promotion as Chief Commissioner of Central Excise by the DPC , which was even approved by the ACC. These factors, taken independently, might not have been serious. However, cumulative effect of all these aspects gives an indication that the issuance of charge sheet upon the respondent at this juncture was not a <em>bona fide </em> move on the part of the petitioners.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court's order came on 10 th July, 2009 – it is more than a month now and there is no news of <strong>VO </strong> being promoted as Chief Commissioner. Maybe the Government is planning to go in appeal to the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the problem with dwarfs occupying high positions. Based on a pseudonymous complaint and that too on a stupid TA Claim of about Rs. 43,000, somebody can be denied a promotion to the high rank of Chief Commissioner! Obviously somebody in the top echelons of the bureaucratic hierarchy is responsible for this anarchy. The High Court has said that the charge sheet was not a <em>bona fide </em> move. Shouldn't this high functionary who took the decision to charge sheet <strong>VO </strong> be punished? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you can do this to a Chief Commissioner, we shudder to imagine what they can do to a minor minion. Our <strong>VO </strong> must have ruffled some feathers somewhere and he is paying the price now. Our <strong>V </strong>ictimised <strong>O </strong>fficer – <strong>VO </strong> will ultimately get his promotion and may even join the Board, but imagine his humiliation and trauma, especially when he sees many of his juniors as Chief Commissioners. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One lesson that emerges is, all officers should realise, however haughty and powerful they are – there is still somebody higher who can really mess up their career. They should keep this in mind when they try to screw their subordinates. Do unto others as what you would have them do unto you. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Everything seems to be fair in love, war, promotions and postings. Brother will kill brother. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We hope the Government would open that deemed (damned) sealed cover and promote our <strong>VO </strong> without wasting further time and taxpayers' money to fight out this ridiculous legal battle in the Apex Court. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is Income? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Act does not define <em>income </em>; Central Excise Act has no conclusive definition of <em>manufacture </em> or <em>goods </em>; The Act for Service Tax does not say what ‘service' is. This is the Great Indian Law rope trick. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The new proposed Direct Taxes Code defines<font color="#FF0000"> income</font> as: [Section 284 is for definitions.] </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">128. <strong>“<font color="#FF0000">income</font>” </strong>includes,- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) gross salary referred to in section 21; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) gross rent referred to in section 25; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) the amount of any accrual or receipt from the businesses referred to in column (2) of Table-1 in sub-section (2) of section 30; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) gross earnings from the business referred to in section 31; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) full value of the consideration received or accruing as a result of the transfer of any investment asset referred to in section 48; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) gross residuary income referred to in section 56; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) voluntary contributions received by any person other than an individual or a Hindu undivided family; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) any sum deducted at source on payment received, in accordance with the provisions of Chapter XI; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) income of the nature referred to in column (3) of Table in Rule 3 of the First Schedule; </font></p> </blockquote> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Some interesting Definitions in the Direct Taxes Code </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. “<strong><font color="#FF0000">agreement</font></strong>” includes any arrangement or understanding or action in concert, whether or not such arrangement, understanding or action, is- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) in writing; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) formal; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) intended to be enforceable by legal proceedings; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23. “<strong><font color="#660099">assessee</font></strong>” means every person - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) who is required to file a return of his tax base; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) who files a return of his tax base, regardless of the fact that he is otherwise not required to do so; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) who is required to furnish any information or document under this Code; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) in respect of whom any proceeding under this Code has been initiated; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) by whom any tax, or any other sum of money, is payable under this Code; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) to whom any amount of refund is payable under this Code; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) who is deemed to be an assessee under any provision of this Code;or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) who is an assessee in default; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24. “<strong><font color="#FF0000">assessee in default</font></strong>” means,- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) an assessee who has failed to fulfill his obligation under this Code and has consequently failed to make payment of any amount due from him to the Central Government; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) an assessee who is deemed to be assessee in default under any provision of this Code; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">40. “<strong><font color="#660099">business</font></strong>” includes - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) any trade, commerce or manufacture; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) any adventure, or concern of that nature; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) any profession; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) any vocation; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">52. “<strong><font color="#FF0000">child</font></strong>” in relation to an individual, includes a step-child and an adopted child of that individual; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">63. “<font color="#FF0000"><strong>computer software</strong></font>” means- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) any computer programme recorded on any disc, tape, perforated media or other information storage device; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) any customized electronic data or any product or service of similar nature, as may be notified by the Board; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">102. “<font color="#FF0000"><strong>family</strong></font>” in relation to an individual, means- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the spouse and children of the individual; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the parents, brothers or sisters of the individual, if mainly dependant on the individual; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">126. <strong>“<font color="#FF0000">however</font>” </strong> shall mean an alternative intention, or a contrast, with the previous section, sub-section, clause, sub-clause, item or phrase, as the case may be, and a modification of it under such circumstances as specified therein </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">141. “<strong><font color="#FF0000">India</font></strong>” means- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the territory of India as referred to in article 1 of the Constitution; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) the air space above its territory and territorial waters; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) the seabed and the subsoil underlying the territorial waters; </font></p> </blockquote> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font></p> <p><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="#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></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>Central Excise</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Valuation of body fabricating and mounting on chassis supplied free of cost by chassis manufacturers using materials procured from vendors identified by chassis manufacturers under Rule 10A and not under Rule 6/11 of Valuation Rules – Duty demand with interest confirmed – Penalty set aside as issue involves interpretation of law – CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants are engaged in fabricating and mounting bodies of buses and trucks on the chassis manufactured and supplied free of cost by M/s Eicher Motors Ltd and M/s Tata Motors Ltd. This body building activity was carried out by the appellants on the automobile chassis supplied to them using raw materials procured from vendors identified by the said manufacturers of automobile chassis. </font></p> <p align="justify"><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DTAA – Expatriate Salary – UK Firm's employees working in Delhi Branch – fully deductible business expenditure - ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per A.O. these employees continue to draw their salary from the overseas office from which they are being seconded. It is the claim of the assessee that as these expatriate employees are working wholly and exclusively for the branch office, their expenses have been claimed as fully deductible business expenditure in computing taxable income on A T K (UK) from its Indian operations. By the impugned order CIT( A) deleted the disallowance of expenses by observing that since the Indian branch is said to be a PE of a non resident's company as per Article 5 of DTA , for the purpose of computing business profits of the assessee under Article 7, the expenses attributable to such PE are required to be allowed. No infirmity in this order. </font></p> <p align="justify"><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Input Service - Mobile phones procured by the company and supplied to functionaries/employees and mobile phone bills were paid by the company under presumption that the same are to be used in connection with business of the company - As this presumption is in favour of assessee, the rebuttal has to come from Revenue – Credit allowed – CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Irregular availment of CENVAT credit by way of fraud, collusion, suppression/misstatement of facts or contravention of rules with intention to evade payment of duty attracts a penalty under the said provisions - In the present case, none of these ingredients was alleged in any of the show-cause notices and none was found by any of the lower authorities. Therefore, the penalty imposed on the assessee cannot be sustained and the same is set aside. </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>