TIOL-DDT 1376 · 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 1376 </font><br>
09.06.2010<br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Armed Forces Exemption - Bullet Proof Jackets </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has exempted Ballistic grade aramid yarn used in the manufacture of Ballistic grade aramid fabric required for the manufacture of bullet proof jackets and Ballistic grade aramid fabric used for the manufacture of bullet proof jackets, for supply to the armed forces of the Union under the Ministry of Defence or the Police Forces of the States or the Union-territories, from Excise Duty. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A similar exemption is given for Customs Duty also </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/etariff10_27.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 27/2010 - CX., Dated: June 4, 2010 </strong></font></a></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_066.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 66/2010- Cus .,Dated: June 4, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">What is Work? Refer? Income Tax Act </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> explanation to Section 194C of the Income Tax states, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) "work" shall include </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) advertising; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) broadcasting and telecasting including production of programmes , for such broadcasting or telecasting; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) carriage of goods or passengers by any mode of transport other than by railways; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) catering; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 194C, TDS has to be deducted on any sum paid to a contractor for carrying out any<strong><em> <font color="#FF6633">work</font></em></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And so work had to be defined. The new look 194C came into existence from 1.10.2009, vide Finance Act, 2009 (No.2) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT has a clarification for this. </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is on-going litigation as to whether TDS is deductible under section 194C on outsourcing contracts and whether outsourcing constitutes work or not. To bring clarity on this issue, it is provided that "work" shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for <strong>sale</strong>. This will however not apply to a contract which does not entail manufacture or supply of an article or thing (e.g. a construction contract). Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer is also included, within the definition of 'work'. It is further provided that in such a case TDS shall be deducted on the invoice value excluding the value of material purchased from such customer if such value is mentioned separately in the invoice. Where the material component has not been separately mentioned in the invoice, TDS shall be deducted on the whole of the invoice value. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This amendment has been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to assessment year 2010-2011 and subsequent assessment years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But
why this clarification now? The CBDT has last week issued a circular explaining
the substance of the provisions of the Finance Act , 2009. The Finance Act
2010 is also in place - maybe the explanatory notes to that will come in
2011. The abovementioned clarification is from the Circular. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2010/it10cir05.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 5/2010, Dated: June 3, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">We Simply cannot proceed with business as usual - if our planet is to be preserved for future generations - WTO Chief </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WTO</strong> Director General Pascal Lamy says, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As we slowly emerge from one of the deepest economic crises, it is evident that we simply cannot proceed with business as usual. If our planet is to be preserved for future generations, we must protect our resources, our planet's biodiversity and our environment at large. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Trade opening improves the allocation of resources at the international level, including of natural resources. International trade can help countries with scarce water resources actually save their water by purchasing water-intensive agricultural products from abroad, for example. Trade also generates economic growth which can create demand for higher environmental standards, and the financial capacity to respond to this demand. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Nevertheless, it is doubtless true that such growth could lead to a greater use of energy and to higher levels of CO2 emissions. This said, about 90% of trade is moved by ship a mode which leaves a smaller CO2 footprint than any other form of transportation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There is also the fact that more open trade can facilitate improved production methods and can make environmentally friendly products and technologies more accessible to more consumers at lower costs. This will surely be needed to reduce the use of energy and pollution. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Protecting the environment also means protecting our oceans. Over fishing depletes fish stocks in our oceans and threatens many species with extinction. Many environmentalists directly link certain types of government subsidies to over fishing. Reducing fisheries subsidies could significantly reduce over fishing and foster species preservation, which is why WTO Members are presently negotiating stronger international disciplines in this field. A deal in the WTO would mean richer oceans for future generations and would constitute a triple-win for trade, environment and development. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Global problems require global solutions, for which sound global environmental governance is key. </font></p>
</blockquote>
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<p align="center"><font size="2"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif">Will GST come? </font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXCEPT</strong> for a few jokers, everybody knew that GST by 1.4.2010, is a big joke. Now will the joke continue on 1.4.2011 also? The States are yet to reach a consensus on several issues. The threshold limit is a big irritant. Purchase tax is anot</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">her area where there is going to be disagreement. And when are they going to put the infrastructure in place? What will poor Nilekani do with the bright bureaucrats and aimless politicians? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Australia, GST is ten years old and just yesterday an economic expert called it a three card trick. Mr. Greg Smith, another expert who was called a genius by a former Prime Minister, says, </font></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"the simplest solution would be to lift the GST and get rid of the dud cash grabs that appear designed for little else but to keep tax professionals in a job. Politicians invariably try to fit square pegs into round holes when they decide on change. They seem to think that if they announce something it can be done" </font></em></p>
</blockquote>
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<p align="center"><font size="2"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif">Vodafone gets reprieve in High Court </font></strong></font></p>
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<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>VODAFONE'S</strong> writ petition against the Income Tax Department's mega million demand is posted for hearing on July 8. It seems Vodafone was asked to file a revised comprehensive writ petition and the Income Tax Department has been asked to prove its claim for jurisdiction. </font></p>
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<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"></font></strong></font><strong><font color="#006600"> – Thursday's cases</font></strong></strong></font></p>
<p><font size="2"><strong><font color="#663399" 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></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is duty of department to verify exemption sought by appellant as mentioned in ER-1 returns to extent why exemption has been claimed and whether credit has been reversed or not Department having failed in its duty, extended period not invokable: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was well within the knowledge of the department that the goods have been cleared as exempted goods, the said fact has been confirmed by the Superintendent of Central Excise in his report to invoke extended period. Department was having the knowledge as it is clear that the respondent is clearing their goods as an exempted goods shown in the ER-1 returns, which were being filed periodically by the respondent.</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">Sec 271(1)(c) - Penalty cannot be imposed merely on allegation that trade liabilities shown in books ceased to exist as notices sent to creditors at wrong addresses were not responded: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> question before the Tribunal is whether penalty u/s 271(1)(C) is leviable on mere allegation that the trade liabilities shown in the books ceases to exist, ignoring that the notices issued to the creditors were wrongly addressed because of which no body appeared before the AO. And the Tribunal's answer is NO. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Merely because appellant is registered with PF department as Security provider does not imply that they were 'Security Agency Service' providers and leviable to Service Tax Demand cannot be justified: CESTAT</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WHEN</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the service tax is being demanded is on security agency service, it is the responsibility of the department to show that the appellant did render this service. When the invoice does not show details; some of the receivers could have been contacted and details obtained as to the nature of service received by them. No investigation whatsoever has been conducted in this case. </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 commen</font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">ts 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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