TIOL-DDT 1207 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1207 </font><br>
01.10.2009 <br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Don't look a Gift Horse in mouth - Generosity to be taxed from today </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF </strong>you get a gift in kind (movable or immovable property) worth more than Rs. 50,000, from today, it is taxable as <em>income from other sources </em>under clause (vii) of sub-section 2 of section 56 of the Income Tax Act.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To remind the prospective gift takers about their liability, the CBDT has issued a Press Release highlighting the provisions of law effective from today. Any such person who receives a gift of any such property on or after 1st October 2009 must pay the income tax due on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11 and subsequent years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“property” means— </em></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>i<em>) immovable property being land or building or both; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>ii)<em> shares and securities; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>iii)<em> jewellery ; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>iv)<em> archaeological collections; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>v)<em> drawings; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>vi)<em> paintings; </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>vii)<em> sculptures; or </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(</em>viii)<em> any work of art; </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So maybe that gift horse is not property after all. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There will be no tax on the following gifts </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. from any relative; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. on the occasion of the marriage of the individual; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. under a will or by way of inheritance; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. <strong><font color="#FF6633">in contemplation of death</font> </strong> of the payer or donor, as the case may be; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e. from any local authority as defined in the Explanation to clause (20) of section 10; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f. from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">g. from any trust or institution registered under section 12AA . </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier cash gifts exceeding Rs. 25,000 were subject to tax with effect from 1st April 2004. Later the Act was amended with effect from 1st April 2006 to tax all cash gifts having aggregate value exceeding Rs. 50,000. Cash gifts also enjoy exemptions as is available for gifts-in-kind. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gift in <em>contemplation of death </em> – What if the donor doesn't die? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Somebody is in the death bed and wants to make a gift. For that good act, God is pleased with him and allows him a little more stay on Earth. He doesn't die. What happens to the gift and the tax on it? When should one <strong><em><font color="#FF6600">contemplate</font> </em></strong> death? How many days/years before the happening? Since early childhood, we all know that one day we will have to die and so can't we <em>contemplate </em> from that early childhood? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gift
before taking up sanyas - Is renouncing world contemplation of death? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Somebody is fed up with this world, but he is not contemplating death. Instead he wants to take sanyas . But before that he wants to gift his property to his friends. Should the friends pay tax? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not a hypothetical issue. One such case reached the ITAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One Miss Preeti Jaswantlal Shah is claimed to have renounced the world and became a ' Sadhvi ' under Swetambar Jain Sect on 26.1.1991. Before that on 14.1.1991 she issued the declaration that she has decided to renounce the world and become a sadhvi . This act presupposes that she shall not have any worldly attachments. She was a partner in several firms. Before becoming a Sadhvi , she divided her property between her brothers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And tax was demanded. The Appellate Commissioner held that when one enters into a religious sect, such action is tantamount to civil death and this declaration can only be taken as a declaration made <strong><font color="#FF6633">in contemplation of death</font></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On appeal in the ITAT, the Member (J) agreed with the appellate commissioner, but Member(A) held that the donor must be ill and expect to die shortly of the illness. One also has to proceed on the basis that planning to take up sanyas is to be treated as an illness, and perhaps terminal illness. That is too farfetched a proposition to meet judicial approval; 'gifts in contemplation of death' implies reference to natural death alone. There is nothing to suggest it also takes care of gifts in contemplation of a civil death. And the President as third Member agreed with this view. <em><font size="1"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2006/2006-TIOL-35-ITAT-MUM.htm">2006-TIOL-35-ITAT-MUM</a>)</strong></font></em> </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Definition of gift <em>made in contemplation </em> of death </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly it is the Indian Succession Act which defines this term. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 191 stipulates:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">191. Property transferable by gift made in contemplation of death.- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) A man may dispose, by gift made in contemplation of death, of any moveable property which he could dispose of by will. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) A gift is said to be made in contemplation of death where a man, who is ill and expects to die shortly of his illness, delivers, to another the possession of any moveable property to keep as a gift in case the donor shall die of that illness. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Such a gift may be resumed by the giver; and shall not take effect if he recovers from the illness during which it was made; nor if he survives the person to whom it was made. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Can a donor who made a gift in contemplation of death, get back the gift if he does not die </strong>?. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Legal Terms for The Genealogist </em>, this example is given. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Ferdinand Bullard took to his sick bed with pneumonia as diagnosed by his doctor. He was sure that he was going to die and told his good buddy Hershel that he could have his shot gun. Hershel took the gun home with him. Ferdy miraculously survived and wanted his gun back. Hershel said, "Go fly a kite." Ferdy went to see his lawyer instead and got his gun back. Since he had not died, the gift was revoked.</em></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<strong>Import of Rough Marble Blocks/Slab - DGFT Guidelines</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representations have been received from trade and industry, who have been granted licences for import of rough marble blocks/slabs for the year 2008-09 and for the first three months of the year 2009-10 requesting for release of the balance quota of 75% for the year 2009-10. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been decided to grant another 25% of the quota to the erstwhile licencees under the earlier Circulars. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, all licence holders of rough marble blocks/slabs issued to them under the provisions of Policy Circular No.12 (RE-08)/2004-2009, may apply to <strong><font color="#FF6633">concerned</font> </strong> RA of DGFT for enhancing the quantity in their licence by upto another 25% of the quantity granted to them in the year 2008-09. The import of enhanced quantity shall be subject to all the conditions applicable on import of rough marble blocks/slabs indicated in relevant Circulars. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly the Schedule-I (Imports) to the ITC (HS) Classifications of Export and Import Items, has been amended to include the latest circular. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2009/dgft09cir008.htm" target="_blank">DGFT Policy Circular No. 8/2009-2014 Dated: September 29, 2009</a> and</strong> </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2009/dgft09not012.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 12 / 2009-2014 Dated: September 29, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tomorrow is Gandhiji's birth anniversary - Swarajya at work </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Gandhiji said, “Good government is no substitute for self-government”. Unfortunately we have neither good government nor self government. Who decides who the government is? At least as of now it is that lady with the Gandhi name. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Look at a classic example. A month ago, a Chief Minister who was never accused of integrity or efficiency died in a tragic air crash and it is found that he is immensely popular for the doles he threw at people. Anyway they have to find a new Chief Minister. True to the Indian Succession tradition, the people want his son to be the CM, not the least because the son is another epitome of virtue. But who are the people to decide such silly issues? They planted a CM whose cabinet has passed a resolution that they want the SON to be the CM. The legislature party is not allowed to meet, even to pass a condolence resolution, afraid that they may act <strong><font color="#FF6633">democratically</font> </strong> and dare to elect a leader. Even the convention of going through the process of electing a leader of the majority party is given a goby, because they are afraid of democracy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bapu,
forgive us! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>"Generations to come will scarce believe that such a one as this ever in flesh and blood walked upon this earth" </strong></font></p>
<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"> – Monday's cases</font></strong></font></strong></font></p>
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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Clandestine removal – pre-deposit ordered by Commissioner(A) not paid, hence appeal rejected - CESTAT asks appellant to make deposit and furnish bank guarantee and remands matter to adjudicating authority for <em>de novo </em>decision. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Modification application was filed against the said Order but the same was rejected by the Commissioner of Central Excise (Appeals) and the appellants were again directed to deposit 50% of the duty demanded and penalty imposed within ten days of receipt of the order. Finding that the order was not complied, the Commissioner of Central Excise (Appeals) dismissed the Appeals. </font></p>
<p align="justify"><font color="#663399" 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>Property sold to IOCL for Rs. 99 Lakhs – Registration value Rs. 3.92 Crores – AO passes order before getting Valuation Officer's Report - right of an assessee conferred under Section 50C of the Act is a valuable statutory right: Alternative remedy cannot be a bar for writ where fundamental right is breached or there is violation of statutory provisions. – High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The right of an assessee conferred under Section 50C of the Act is a valuable statutory right available to protect his interest against any arbitrariness which may creep in while fixing the value of the capital gain and that is the safeguard given to the assessee. The petitioner must be given an opportunity to take advantage of the valuation report that may be filed by the statutory authority and therefore, the contention of the counsel for the respondent that the appellate remedy is available cannot be countenanced. Alternative remedy cannot be a bar for exercise of extraordinary jurisdiction under Article 226 of the Constitution of India in cases where fundamental right is breached or there is violation of the statutory provisions. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CESTAT </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Letter by Superintendent conveying order passed by the Commissioner – Appeal lies before Tribunal and not Commissioner (Appeals) – CESTAT. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THESE </strong>appeals are filed by the appellant against the orders of the Commissioner (Appeals) who held that an appeal against the order of the Commissioner is not maintainable before him. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The law does not countenance a situation where the person is rendered remediless </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow is a holiday to celebrate the Birthday of the father of the Nation. Perhaps the best celebration should have been to work an extra hour in his honour. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow
is a Holiday.</font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See
our columns on Monday for the judgements </font></strong></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>
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