TIOL-DDT 1377 · 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 1377</font><br>
10.06.2010<br>
Thursday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FM's day Out with his Taxmen - All Praise for the CBDT but wants them to collect a little more than targeted 4.3 Lakh Crores</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> FM is always at his sartorial best, but while addressing the Chief Commissioners and DGs of Income Tax, yesterday, he was at his oratorical best.</font></p>
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<td><div align="justify"><font size="1"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Pranab Babu addressing the CCs and DGs of Income Tax – CBDT Chairman Moorthy and Revenue Secretary Mitra keenly listen. </font></strong></font></div></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TREMENDOUS growth in Tax Collections:</strong> He was happy with the growth rate of 24 per cent in tax collections in the last five years. This tremendous growth has been made possible not only due to rationalisation of tax structure and improvement in tax administration leading to better tax compliance, but also persistent and unrelenting efforts of employees of the Income Tax department.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Simple Tax Laws: </strong>To improve compliance further, tax laws need to be simple, stable and robust; tax rates should remain moderate; and multiplicity of tax exemptions and deductions should be gradually phased out in order to widen and deepen the tax base. Tax administration needs to be further toned up by appropriate use of technology on the one hand, and improving professional competence and responsiveness of the employees on the other. [<font color="#FF6633"><strong>Who should do this? Apparently the Minister himself</strong></font>.] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New Direct Taxes Code - Legislation for the 21st Century </strong>. - Its draft is under revision, taking into consideration the areas of concern expressed by various stakeholders, and the discussion paper will be shortly in the public domain before introduction in Parliament in the forthcoming monsoon session. It will indeed be legislation for the 21st century, which will witness the emergence of an economically strong and vibrant India. The transition from existing law to DTC would require completion of delegated legislation in a time bound manner. CBDT should ensure smooth transition by planning the activities schedule well in advance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Get our Due Taxes:</strong> The GDP is poised to grow at 8.5 percent during 2010-11. Sectors of the economy performing well should be monitored for tax compliance and we should get our due taxes. The department should also make attempts to widen and deepen the tax-base further. It should improve utilization of information relating to high value transactions available through Annual Information Returns (AIR), Central Information Branches (CIB) and other sources. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Satisfied workforce:</strong> I am happy to announce that Advanced Mid-Career Training Programme (AMCTP) for IRS officers would be started during the current year. A satisfied work force is the backbone and strength of an organization. We have modified the transfer policy for the Indian Revenue Service (IRS) officers to improve satisfaction levels and minimise unwarranted service litigation with our own employees. The Standing Committee on Finance, in its report for 2009-10, has expressed concern about shortages of manpower in the Department. This needs to be addressed urgently, especially in the face of the exponentially increasing workload, and the challenges of maximising revenue generation along with efficient taxpayer service. I am told that cadre restructuring of CBDT is pending for quite some time, which has adversely affected the implementation of core areas of work in the Income Tax department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rising Litigation:</strong> The rising litigation with the taxpayers and the quantum of revenue locked in appeals is a matter of serious concern. The strengthening of Settlement Commission, setting up Dispute Resolution Panel ( DRP ) may address the litigation issues with the taxpayers to some extent. I am told that under mutual agreement procedure (MAP) negotiations under Indo-USA DTAA a tax demand of Rs.800 crore in 48 cases has been confirmed. This is a good development and tax-payers should be encouraged to invoke MAP, which has emerged as a preferred alternate dispute resolution mechanism. In spite of these efforts, we need to develop more strategies to reduce the litigation with the taxpayers. I would like CBDT to come out with a comprehensive proposal to address the issue of unwanted litigation with taxpayers and also <font color="#FF6633"><strong>to realise locked up revenue in appeals. [Mr. FM, in most of the litigation, there is no revenue for the government – it is only revenue for the consultants]</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Welfare Fund:</strong> The Fund has a corpus of Rs . 100 crore kept in interest-bearing deposit. The interest earned annually on this deposit, and other annual accruals to the Fund, will be available for welfare activities of employees of the Income Tax department. I am sure that CBDT will come out with innovative welfare measures, which will further motivate employees of the Department to excel in their area of work. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Yet another conference is over – the FM has delivered an inspirational lecture patting the CBDT [most probably the speech is prepared by CBDT ]. And everybody is back to business; the poor FM is made to believe that there is lot of money locked up in litigation – there is only litigation; no money! </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Renting - AP High Court stays retrospective amendment</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TRENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Ltd and Future Value Retail Ltd have challenged before the AP High Court, the service tax with retrospective effect on renting of immovable property, brought in by the Finance Act, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The prayer in the Writ petition reads as,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To issue a Writ order or direction one more particularly in the nature of Writ of Mandamus </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) Declare the impugned provisions, viz. section 65( 90a ) read with Section 65(105 )(zzzz) of the Finance Act, 1994 as amended by the Finance Act, 2008 and Finance Act 2010 as null and void and ultra vires the Constitution of India and/ or section 66 of the Finance Act and /or be strike down the said provisions as illegal, arbitrary and violative of Articles 14, 246 and 265 of the constitution of India; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Issue a Writ order or direction in the nature of Certiorari or any other Writ, order or direction of like nature, setting aside Section 75(5 )(h) and Section 76 of the Finance Act 2010; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Declare the <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_024.htm" target="_blank">Notification no. 24/2007 dt. 22nd May 2007</a> and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/sercir98.htm" target="_blank">Circular No. 98/1/2008-ST dt. 4-1-2008</a></strong></em> as revived by Finance Act 2010 issued by the Respondent No.1 as illegal, null and void and ultra vires the provisions of the Finance Act 1994 as amended by the Finance Act 2007 and Finance Act 2008 and Finance Act 2010 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) Issue a Writ of Mandamus or a Writ in the nature of Writ of Mandamus or any other appropriate Writ order or direction restraining the respondents by their servants agents and subordinates from directly or indirectly giving effect to or acting upon the impugned Notifications or impugned circulars or collecting any taxes on the basis of Section 65(90a) 65(105)(zzzz) read with Section 66 as amended by Finance Act 2010 and provided retrospective operation on and from 1-6-2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e) Issue a Writ of Mandamus or a Writ in the nature of Writ of Mandamus or any other appropriate Writ order or direction restraining the respondents by their servants agents and subordinates from directly or indirectly giving effect to or acting upon the Section 65(90a) 65(105)(zzzz) read with Section 66 as amended by Finance Act 1994 as amended by Finance Act 2007 and Finance Act 2008 and Finance Act 2010 as stated hereinabove; </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner also filed an injunction petition seeking </font></p>
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<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">to restrain the respondents their servants, officers and agents from in any manner whatsoever giving effect to directly or indirectly or acting upon Notification 24/2007 dt. 22nd May 2007 and Circular No. 98/1/2008-SAT dt. 4-1-2008 as revived by Finance Act 2010 or levying or collecting any taxes on the basis that Section 65( 90a ), Section 65(105)(zzzz) read with section 66 Finance Act, 1994 and recovering any service tax on renting of immovable property from the petitioner pending disposal of the above Writ petition. </font></strong></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And it appears that the High Court has granted the interim injunction. <strong>DDT</strong> spoke to Mr. Niranjan, the Advocate appearing for the petitioner and he confirmed that the High Court has granted the interim injunction. We will bring you the order as soon as it is made available – maybe tomorrow.</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><font 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"><strong><font color="#663399">Central Excise</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Compounded levy scheme in respect of Aluminium Circles and utensils - Rule 96ZB of CER , 1944 - whether mere presence of two more cold-rolling machines enough to saddle central excise duty liability by assuming production on their account or is installation of machines essential - Difference of opinion: Matter referred to President: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant was engaged in the manufacture of aluminium circles and utensils during the material period, during which period a compounded levy scheme was in vogue. In terms of rule 96ZB of the CER, 1944 read with the <em>notification 33/1997-CE dated 30.05.1997</em>, in respect of a cold rolling machine installed for manufacturing Aluminium Circles the rate of duty was Rs.7500 /- per month per machine. </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"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sec 80IB - Central Excise refund and interest subsidy are not eligible for deduction as they were not provided by Govts for acquisition of capital assets prior to commencement of production: ITAT </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee -firm is engaged in the business of manufacture and sale of aluminium alloy and zinc alloy ingots. It claims deduction u/s 80IB . During the Course of assessment proceedings, the A.O. treated the refund of Excise Duty and Interest Subsidy, as income not eligible for deduction under section 80IB of the Act. The findings of the A.O. were upheld by the Ld. CIT (A). Both held that these receipts are not derived from industrial undertaking. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Incorporation of additional grounds in appeal memo challenging taxability of appellant's activity – appellant accepted and paid tax liability and contested only penal liability before adjudicating authority - since no such issue taken before lower authority, it is to be considered as an afterthought - Application rejected: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PURSUANT</strong> to a case booked by the Revenue, the appellant voluntarily paid service tax with interest. However, the show-cause notice and adjudication proceedings at the hands of the Commissioner of Central Excise, Customs and Service Tax, Aurangabad led to the appellant being saddled with penalties under sections 77 and 78 of the Finance Act, 1994. </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>
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