TIOL-DDT 1266 · 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="#663399">TIOL-DDT 1266 </font><br> 29.12.2009 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Improving Quality of Assessments - CBDT's New Year Resolution </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBDT has devised a scheme for improving quality of assessments to be implemented from calendar year 2010 onwards. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) At the beginning of each calendar year i.e. in the month of January, the Range Head in consultation with the <strong><font color="#FF6633">concerned</font> </strong> Assessing Officer would identify at least 5 pending time-barring assessment cases in respect of each Assessing Officer of his Range for monitoring. These should normally include cases taken up for scrutiny with the permission of CCIT. The selection should be done jointly by the Range Head and the <strong><font color="#FF6633">concerned</font> </strong> Assessing Officer. Cases of PSUs and loss-making concerns should normally not be identified for this purpose. This exercise should also include those Ranges which are held as additional charge by a Range Head in January. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The Range Head would issue directions u/s 144A in the identified cases for the guidance of the Assessing Officer regarding the course of investigation to enable him to complete these assessments in a proper manner. This should be done at the earliest available opportunity so as to allow the Assessing Officer to have sufficient time to complete the assessment proceedings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) On completion of the assessment the Assessing Officer shall send a copy of the assessment order to the Range Head and the CIT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) In the event of a Range Head holding more than one Range the <strong><font color="#FF6633">concerned</font> </strong> CCIT may appropriately relax the requirement for issue of directions under section144A in respect of the cases of the Range(s) held as additional charge. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) A quality assessment would be one in which issues arising for consideration are clearly identified, investigation of basic facts in respect of these issues is carried out, adequate opportunity to rebut adverse evidence is given to the assessee, the rival evidence are suitably analysed and evaluated in the light of correct interpretation of law, and these efforts result in substantial addition to the returned Income. The benchmark for the quantum of addition to the returned income, which may qualify for being a quality assessment, may be decided by the <strong><font color="#FF6633">concerned</font> </strong> CCIT depending upon the potential of the given Range/Charge. Normally, this should not be less than Rs.5 lakh excluding additions on account of recurring issues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) As regards the remaining scrutiny assessments, it is expected that 30% of assessments completed by the Range Head, 20% of the remaining scrutiny assessments completed by DC/ACIT and 10% by ITOs will result in quality assessments. These benchmarks can be reviewed once the scheme has been in operation for some time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) The parameters for determining whether an assessment is a quality assessment should be decided by the <strong><font color="#FF6633">concerned</font> </strong> Chief Commissioner in the light of the above and should be widely circulated at the beginning of the calendar year i.e. in the month of January of every year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) At the end of the financial year, the data regarding assessments completed by Assessing Officers of the CCIT Region shall be got evaluated by the <strong><font color="#FF6633">concerned</font> </strong> CCIT in the month of next April according to the parameters decided earlier. The overall results will be tabulated and circulated in the CCIT (CCA) Region for information. Separate performance ranking should be done for Range Heads in respect of cases completed by them u/s 143(3) out of the cases selected under Instruction 4 of 2007 dated 16.5.2007, and those monitored by them under this instruction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ix) CCsIT may also devise methods for commending good performance of Assessing Officers in the area of quality assessments and reflecting the same in the annual appraisals. Important cases involving large successful additions may be reported to the Board in monthly D.O. letters. These can also be sent to DTI (RSP&PR) for inclusion in the Annual Report of good assessment cases. </font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2009/instruct0906.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Instruction No. 6/2009, Dated: December 18, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TDS - lower deduction or non-deduction certificate – CBDT Instructions </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> had earlier instructed that certificates for lower deduction or nil deduction of TDS u/s 197 are not to be issued indiscriminately and for issue of each certificate, approval of the JCI/Addl. CIT concerned need to be taken by the Assessing Officer (AO). It was also instructed that power of issue of certificates under Section 197 would ordinarily be exercised by the officers manning TDS Administration. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been brought to the notice of Board that the AOs are issuing certificates for lower or non-deduction of tax at source under Section 197 indiscriminately, in contravention of relevant Income Tax Rules and Instructions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now CBDT directs that in addition to the earlier instructions, prior administrative approval of the Commissioner of Income Tax (TDS) shall be taken (where the cumulative amount of tax foregone by non-deduction/lesser rate of deduction of tax arising out of certificate under Sec. 197 during a financial year for a particular assessee exceeds Rs. 50 lakh in Delhi, Mumbai, chennai, Kolkata, Bangalore, Hyderabad, Ahmedabad and Pune Stations and Rs. 10 lakh for other stations. Once the CIT (TDS) gives administrative approval of the above, a copy of it has to be endorsed invariably to the jurisdictional CIT also. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2009/instruct0907.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Instruction No. 7/2009, Dated: December 23, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TDS on Commission received by travel agents from airlines - CBDT clarifies </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBDT has communicated two High Court judgements to the field formations. The High Court decisions held that commissions and supplementary commissions received by the travel agents from Airlines are liable to tax deduction at source under Section 194H and in case of default the mandatory interest under Section 201(1A) is leviable. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2009/letter_275.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT F. No. 275/70/2009-IT(B) Dated: December 22, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export Duty on Iron Ore - Steel Lobby vs Ore Lobby; Steel wins: </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Notifications were issued on 24th December and as DDT would appear only after four days, we carried a story on the issue on 25th December in our Breaking News - <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10141">Export Duty on Iron Ore levied </a>. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To recap the issue briefly:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_129.htm" target="_blank">Notification No. 129/2008-Customs, dated the 7th December, 2008</a></strong></em>, iron ore fines falling under Heading No. 11 of the Second Schedule to the Customs Tariff Act, were exempted from the whole of Customs Duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By <em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_079.htm" target="_blank"><strong>Notification No. 79/2008-Customs, dated the 13th June, 2008</strong></a></em>, a 5% effective duty was fixed on iron ores and concentrates, all sorts (except iron ore fines), falling under Heading No. 11 of the Second Schedule to the Customs Tariff Act, 1975. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is done Now: </strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_129.htm" target="_blank"><strong>Notification No. 129/2008-Customs, dated the 7th December, 2008</strong></a></em>, is rescinded - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_145.htm" target="_blank">NOTIFICATION NO. 145/2009-CUSTOMS Dated: December 24, 2009</a> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. A 5% effective rate (instead of nil) is prescribed for iron ore fines falling under Heading No. 11 of the Second Schedule to the Customs Tariff Act -<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_146.htm" target="_blank"> <strong>NOTIFICATION NO. 146/2009-CUSTOMS Dated: December 24, 2009</strong></a><strong> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_079.htm" target="_blank">Notification No. 79/2008-Customs, dated the 13th June, 2008</a></strong></em>, is amended to make the effective rate 10% (instead of 5%) for iron ores and concentrates, all sorts (except iron ore fines) - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_147.htm" target="_blank">NOTIFICATION NO. 147/2009-CUSTOMS Dated: December 24, 2009 </a></strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In effect the effective rate of duty on iron ore fines is 5% (instead of nil) and on iron ores and concentrates, is 10% (instead of 5%). </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Na Nar na nari? Narayan Dutt Tiwari? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING</strong> the emergency (1975- 77), there used to be a poem doing the rounds: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Na nar na Nari; Indira ke Pujari; Sanjay ka Sawari; Narayan Dutt Tiwari </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Narayan Dutt Tiwari is one of the few surviving freedom fighters who had gone to jail during the freedom struggle. In Post Independent India, Tiwari held many important positions like Chief Minister of UP thrice and Chief Minister of Uttarakhand. He is perhaps the only Indian who had been the Chief Minister of two states. He was a strong contender for the post of Prime Minister in 1991 and could have changed the history of India, but for the small detail that he was defeated in the elections by a small margin of 800 votes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He was also Finance Minister of India. A Revenue Official recalls that he was fairly honest but he had some weak spots related to species of the opposite sex less than half his age. Apparently a quarter of a century has made no difference and the former Finance Minister, who by now had become the Governor of Andhra Pradesh, had to quit his job and leave Hyderabad for the cool climate of the Doon Valley on charges of being caught on tape in not too respectable postures for a 85 year old governor. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is absolutely no doubt about Nar or Nari, but Tiwari has lots to explain. </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"> – Wednesday's cases</font></strong></font></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"><font color="#663399">Service Tax </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Works Contract or Construction - Activities which are concerned with welfare of citizens of this country has been excluded from liability of service tax - CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee had executed Projects relating to construction of reservoirs, canals, distributory system to feed various ayacut, land etc. for Government of Andhra Pradesh. The Revenue proceeded against the appellant on the ground that such an activity would fall under the category of works contract and liable for service tax as “turnkey projects including engineering, procurement and construction or commissioning (EPC) projects” under ‘Works Contract Services' which was introduced from 01.06.2007. </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>Assessee markets cinematographic films on DVD for non-resident - makes royalty payment but deducts no tax at source- AO invokes rigours of Sec 40(a) - although royalty has been paid but it falls outside definition of royalty given in I-T Act - no TDS: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> the Indian economy opening up to the global economy in a big way, a large number of business entities nowadays undertake cross-border transactions, and send payments by wire transfer for either the goods or the services. Among all the payments remitted to non-residents, royalty has its own pride of place. Royalty has been defined in Section 9(1)(vi) of the I-T Act. If royalty payment is made without TDS, such a payment is disallowed under Section 40(a). But here is a case where the assessee-company declares in its return that royalty payment has been made but the same does not fit into the definition of royalty given in the I-T Act. Since it falls outside the definition given in Explanation 2 to Sec 9(1)(vi), no disallowance can be made in respect of such payment. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>‘Reverse Osmosis Membrane Filtration System' squarely falls within meaning of ‘plant' used in definition of ‘Water Supply Project' – Importer eligible for benefit of exemption notification 14/2004-Cus – Revenue appeal rejected by CESTAT. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2004/ctariff04_014.htm">Notification 14/2004-Cus dated 8.1.2004 </a></em></strong> exempts Water Supply Projects, falling under heading 9801 of the First Schedule to the Customs Tariff Act, 1975, from whole of the duty of customs leviable thereon under the said First Schedule, and from whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act. The explanation to the notification effective 9 th January, 2004 reads - <em>Water Supply Project includes a plant for desalination, demineralization or purification of water or for carrying out any similar process or processes intended to make the water fit for agricultural or industrial use.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue in its appeal before CESTAT seeks to challenge the order of the Commissioner(Appeals) allowing the benefit of this notification to the imports made by the respondent. </font></p> <p align="justify"><strong><font color="#663399" 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>