TIOL-DDT 1302 · 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" size="3">TIOL-DDT 1302</font> <br> 18.02.2010<br> Thursday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Today is 150th anniversary of India's First Budget </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One hundred and fifty years ago, on February 18, the first Budget speech was made in the Indian Legislative Council. It was made in Calcutta by James Wilson, the first to be Finance Member in the Viceroy's Council, in effect India's first Finance Minister. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Budget speech did not exactly win him many friends – at least not from Madras. He is said to have introduced the modern concept of Income Tax in India. The businessmen were upset by the proposal, so were the princely and zamindari orders. But the loudest explosion came from the Governor of Madras, Sir Charles Trevelyan. He minuted, in effect, “Madras will not pay income tax.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On this occasion, he objected to taxation because Madras, the senior settlement, had not been consulted by upstart Calcutta. He also wondered why the South, which had played little part in the Revolt of 1857, should be burdened with a tax that was described as being necessary to restore the economy of a country that had been damaged by what was to all intents and purposes a war. But not our war, Trevelyan seemed to be saying. Most tellingly of all, he emphasized that fundamental principle, ‘No taxation without (political) representation'. To all intents and purposes, he was encouraging Indian nationalism - in public! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As Assistant Secretary to the Treasury he was placed in charge of the administration of Government relief to the victims of the Irish Famine in the 1840s. In the middle of that crisis Trevelyan published his views on the matter. He saw the Famine as a <em>"mechanism for reducing surplus population"</em>. He described the famine as "The judgement of God sent the calamity to teach the Irish a lesson, that calamity must not be too much mitigated. …The real evil with which we have to contend is not the physical evil of the Famine, but the moral evil of the selfish, perverse and turbulent character of the people" While these views appeared to be mitigated in another letter dated 29 April 1846 when Trevelyan wrote: "Our measures must proceed with as little disturbance as possible of the ordinary course of private trade, which must ever be the chief resource for the subsistence of the people, but, the people must not, under any circumstances , be allowed to starve.", starve they did, with as little disturbance as possible to private trade. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The ICS - Also about 150 years </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Sir Charles Edward Trevelyan, 1st Baronet,</font></strong> KCB (2 April 1807 – 19 June 1886) was a British civil servant and Governor of Madras. Trevelyan was Governor of Madras from 1859 to 1860, and Indian Finance Minister from 1862 to 1865. He was also a civil service reformer and is widely regarded as the founder of the modern British civil service. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Advance Ruling – applicant was employed abroad and was in India for 123 days in year - He is NRI and his income abroad cannot be taxed in India - AAR </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An interesting question before the AAR was <strong><font color="#FF6633">“Am I non-resident in India in previous year 2008-09?” </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question was recast as <font color="#663399"><strong>Whether the income earned by the applicant by way of salary from his employment in USA in the previous year 2008-09 (assessment year 2009-10) is liable to be taxed under section 5(1)(c) or any other provision of the Income-tax Act, 1961 on the basis that the applicant's status was that of a ‘resident' during that year? </strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Authority for Advance Rulings held that: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For an individual who has left India for employment outside India, he should be treated as resident of India only if he was in India during the relevant period/year for 182 days or more. In other words, if an individual has spent less than 182 days in India during a previous year and was outside India for the purposes of employment, then regardless of his being in India for 365 days or more during 4 preceding previous years, he cannot be treated as a resident of India. It necessarily follows that the applicant was a ‘non-resident' during the relevant period. Consequently his income that accrued outside India in USA by reason of his employment there cannot form part of the total income taxable in India. The Department in its comments dated 28.1.10 has also clarified that the applicant may be treated as NRI as he remained in India for 123 days during the financial year 2008-09. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this latest AAR judgement today. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=mbuzz/mbuzz1319.htm" target="_blank">Breaking News</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"> – Friday's cases</font></strong></font></strong></font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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 </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit - Procedural lapse should not result in denial of admissible credit - Revenue Appeal summarily dismissed : High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The invoices could have been endorsed by the Daman Office of the same appellant in the name of their Mumbai Office. This is rectifiable defect and can be rectified at any point of time. There being no dispute otherwise about the entitlement of the Modvat Credit, such procedural lapse should not result in denial of benefits to them otherwise admissible credit. It could not give raise to any substantial question of law and, hence, the Appeal is summarily dismissed. </font></p> <p align="justify"><strong><font color="#663399" 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">Profits and gains of foreign companies engaged in business of civil construction - section 44BBB mandates that income of assessee is to be computed at 10%. : ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When section 44BBB mandates that income of the assessee is to be computed at 10% of the receipts and the assessee does not claim a lower profit than that to be assessed under sub-section (2) of section 44BBB and the Assessing Officer cannot proceed to determine the income of the assessee under section 28 to 44A ignoring such provisions which are specifically overridden in the opening sentence of section 44BBB of the Act on the pretext of consistency. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reduction in penalty - tribunal not required to give reasons: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is well accepted that the reasons are reflecting the decision making process. Reasons introduce clarity in an order. There is no provision in the Rules or even administrative instruction which require the Tribunal to record reasons while imposing the penalty or for modification thereof. In the facts of the present case also, the Tribunal established under the Act is having such discretion and therefore while sustaining the order in toto , as regards the penalty on the individuals, who are the officers of the company, is modified considering the fact that they are salaried employees of the firm and still considering about the role played and their involvement substantial penalty has been imposed to the tune of Rs. 20 lakhs on each individual. It cannot be said that the order is not justified merely because it has modified the penalty on individual from Rs. 2 crores to Rs. 20 lakhs . The mitigating circumstances or a word about this aspect reflected in the order of the Tribunal could be considered as desirable. </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>