TIOL-DDT 1269 · 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 1269 </font><br>
01.01.2010 <br>
Friday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Happy New Year </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> friend who sent in his greetings advised me to ‘party hard tonight'. Maybe late night editors have no business to party, hard or soft, when they have a column to deliver, whether the year is old or new. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway, today many of the Netizens may hardly get time to read <strong><font color="#FF6633">DDT</font> </strong> or other features, due to the hard partying last night or the heavy greeting sessions today. So we will try to keep <strong><font color="#FF6633">DDT</font> </strong> as light as possible, so that you can just take a peep and continue with your New Year! </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Uncle Sam will see your Gonads </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WANT</strong> to fly to the US of A? The Transportation Security Administration - TSA will see you nude. After a Nigerian, Farouk Abdulmutallab almost blew up a plane to Detroit on Christmas Day, security has been tightened and now all passengers will have to stand before a machine that can see through their clothes and officers will study the body of the passengers minutely, especially the gonads, because that's where people would like to hide bombs and that's where Security is least likely to check. At least our latest Nigerian bomber had it sewn right in his underwear. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TSA is beginning to deploy scanners that can see you naked without removing your clothes. At the last count, the agency said 40 scanners were in use at 19 airports, with 150 more on the way. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But it is not total invasion of privacy – private parts rather. Nobody who sees your naked body will see your face. That's how the TSA system works: The naked image shows up in a separate room without facial detail. The officer who sees you in the flesh never sees you on the monitor. The officer who sees you on the monitor never sees you in the flesh. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But as the Indian Supreme Court pointed out in a case we reported yesterday, <strong><font color="#663399">the rights of the passenger will have to yield to public interest</font>. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But then can Security Agencies really prevent the terrorists? Look at this case of the missed bomb on Christmas Day in the Detroit plane. It was God and not the Security Agencies that prevented the bomb from going off. Farouk's father had informed the US Embassy in Nigeria about his son's doubtful activities – still he managed to get into a plane bound for Detroit and with enough bombs attached to his crotch. Had the US embassy in Nigeria shared this information, he could have never got into that plane!. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any lessons for India – Mr Chidambaram and Mr. Shashi Tharoor? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What happened to India-ASEAN Free Trade Agreement? </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> FTA was to take effect from today, but there is absolutely no news from CBEC or the Commerce Department. Has the CBEC issued any notifications? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Malaysian Ministry of International Trade and Industry, yesterday announced that it will implement the FTA from today. The Ministry said, “<em>For ASEAN and India, the FTA would open the market of 1.7 billion population. In this regard, the Malaysian business community is encouraged to seize each benefit and facility provided, including the abolition and reduction of tariffs on goods, the opening of market for services and the relaxation of investment conditions as well as measures for the implementation of trade and economic collaborations. </em>” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems Malaysia is the only country which has got the agreement ratified so far. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even in respect of Malaysia, there seems to be no notification from CBEC. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Establishment of Branch Office (BO)/Liaison Office (LO) in India by Foreign Entities - Eligibility Criteria and Procedural Guidelines – RBI </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> application from a foreign entity to establish Branch / Liaison Office in India is considered on the basis of two criteria viz: basic and additional: </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Basic criteria</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>++ <font color="#FF6633">Reserve Bank Route </font>- </strong> Principal business of the foreign entity falls under sectors where 100 per cent foreign direct investment (FDI) is permissible under the automatic route.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>++ <font color="#FF6633">Government Route</font> - </strong> Principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category are considered by the Reserve Bank, in consultation with the Government of India, Ministry of Finance. </font></p>
</blockquote>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Additional criteria </strong></font></p>
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<p><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Track Record </strong>
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</p>
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<ul>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ For Branch Office - a profit making track record during the immediately preceding five financial years in the home country. </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ For Liaison Office - a profit making track record during the immediately preceding three financial years in the home country. </font></p>
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</ul>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Net Worth</font> </strong> [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name].
</font>
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<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ For Branch Office - not less than USD 100,000 or its equivalent. </font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ For Liaison Office - not less than USD 50,000 or its equivalent. </font></p>
</blockquote>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Permitted activities: </font></strong>Permitted activities for a Branch / Liaison Office in India would be as under:</font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Branch Office </strong></font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Export/import of goods.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Rendering professional or consultancy services.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Carrying out research work, in which the parent company is engaged.
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</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Representing the parent company in India and acting as buying/ selling agent in India.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Rendering services in Information Technology and development of software in India.
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</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Rendering technical support to the products supplied by parent/group companies.
</font>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Foreign airline/shipping company. </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally, the Branch Office should be engaged in the activity in which the parent company is engaged. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Liaison Office </strong></font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Representing the parent company / group companies in India.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Promoting export / import from / to India.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Promoting technical/ financial collaborations between parent / group companies and companies in India.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Acting as a communication channel between the parent company and Indian companies. </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has also announced Delegation of Powers for this. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2009/rbi09cir023.htm" target="_blank">Circular No. 23</a> </strong> <strong>and</strong> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2009/rbi09cir024.htm" target="_blank">24/RBI., Dated: December 30, 2009</a> </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>
<p><font color="#663399" 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">Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether CENVAT credit can be denied on short receipt of inputs – there is no hard and fast rule - prescribes various factors to be considered for allowing / disallowing the credit in each case – CESTAT LB </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> scheme of allowing credit on the inputs was introduced in the year 1986 and even after nearly 24 years, there is no uniform view on the important issue of whether the assessee has to restrict the credit to the actual receipt of the inputs into the factory or full credit can be availed. Raising audit objections and demanding credit on short receipt of the inputs is a routine matter with the department. In many cases, there will be difference of weight between the quantity mentioned in the invoices and the actual quantity received in the factory because of various reasons like the weighing on different weigh bridges, transit / evaporation / handling losses. The demands are routinely confirmed, leaving the matter to the CESTAT. </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>Settlement Commission cannot remand – After Commission passes an order no power vests in assessing authority or any other authority to issue notice for period and income covered under settlement: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> passing of the order by the Settlement Commission, no power vests in the assessing authority or any other authority to issue impugned notice in respect of the period and income covered under the order of the Settlement Commission. In case of fraud or misrepresentation of facts, remedy is to approach the Settlement Commission. The Settlement Commission, by para 7 of its order, has not and could not have empowered the income tax authorities to frame another assessment order, while settling the undisclosed income of the petitioner for the period covered by its order, in respect of investment in bonds etc. </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>smuggling of Gold – Opening seals for publicity before media and resealing causes no prejudice to accused - Conviction upheld: Delhi High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> drawing up of panchnama dated 10.10.1991 which was the display of the case property through the T.V. Media to the public at large was not a necessary fact which had to be put up before the sanctioning authority. It did not in any manner relate to the gist of the offence for which the petitioner was being charged; the gist of the offence being the recovery of 360 gold biscuits from the car of the petitioner; its subsequent recovery and seizure as described and detailed in the panchnama dated 9.10.1991 was what was relevant and was duly put up before the sanctioning authority. The sanction suffers from no infirmity. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more<strong> DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend. </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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