TIOL-DDT 1381 · 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 1381 </font><br>
16.06.2010 <br>
Wednesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap and Poppy Seeds Decreased </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GOVERNMENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> has decreased the Tariff Value of Brass Scrap from US Dollars 3895 to 3619 per MT and that of Poppy Seeds from 3228 to 2741 dollars. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 47/2010-CUSTOMS (N.T.) Dated: June 15, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Chief Commissioners Conference - No Charge-sheet just before retirement - FM</font></strong></p>
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<td bgcolor="white"><div align="justify"><strong><font color="#FF0000" size="1" face="Verdana, Arial, Helvetica, sans-serif">FM lighting the lamp to inaugurate the CC's conference. In the limelight are CBEC Chairman, V. Sridhar and MOS Palanimanickam. In the background is a Customs officer on protocol duty! </font></strong></div></td>
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<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> the FM wanted a zero tolerance of corruption, he was against charge sheeting <em><font color="#FF6633"><strong>“our own officers”</strong></font></em> on the last day of service, after they have put in more than 30 years of <font color="#FF6633"><em><strong>service</strong></em></font> to the government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He told the senior officers, “Tax evaders, as well as smugglers, are getting increasingly more sophisticated using modern technology... you must also develop an effective intelligence system to not only check the evasion of taxes but also punish the wrong-doers” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Does the CBEC have a PR system? </font></strong>Such an important event like the FM addressing the senior most officers of the Department and there was not even a PIB handout! The CBEC website was perhaps not aware of this meet or they just blocked out the news. The DG, Systems must have been in the meeting and his staff did not consider this event to be NEWS. They gave a flash - <font color="#FF6633"><strong>ACES website attracts more than ten crore hits</strong></font> - why so many hits? You just can't upload a return until you visit the site at least ten times. Filing them manually with an envelope containing a few thousand rupee notes was certainly a better proposition for most of the assessees. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Zero tolerance of Corruption?</font></strong> It is surprising that they still talk of corruption and its zero tolerance! How are you going to stop corruption when Adjudicating Authorities have power to demand Crores of Rupees as duty/tax and impose Crores as penalty and when higher appellate authorities routinely ask for 25 to 50 per cent pre-deposit? It is a harsh reality of the Department that the honest officers are more harsh in demanding duty and imposing penalties. The assessee would prefer a corrupt officer who, for a small consideration would give them a favourable order, so that they need not make pre-deposit of huge amounts of money, to an honest officer, who to prove his honesty, will never give an order in favour of the assessee. When will they learn to treat the assessee as a partner and not as an adversary? If they are serious about zero tolerance of corruption, let them amend the laws to stipulate that no pre-deposit is required up to the stage of the Tribunal – the whole system will be cleaned and Mr. FM, you will not really lose any money! Your transfer system is such a massive commercial activity that a Commissioner's post in some of the formations carry a rate of Rs Fifty Lakhs to One Crore! And if somebody has bought his posting for fifty Lakhs, he will make at least a few Crores in that post, mocking at your zero tolerance! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Discussion Paper on DTC - CBDT seeks comments </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has released the Revised Discussion Paper on the DIRECT TAXES CODE and has asked for response which may be sent to <a href="mailto:directtaxescode-rev@nic.in"><strong>directtaxescode-rev@nic.in</strong> </a>by 30th June, 2010 . The major changes are:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MAT:</strong> The DTC has proposed a Minimum Alternate Tax (MAT) on companies calculated with reference to the "value of gross assets". The economic rationale for the assets tax is that investors can expect ex-ante to earn a specified average rate of return on their assets, hence it provides an incentive for efficiency. However, considering the practical difficulties and unintended consequences, particularly in the case of loss making companies and companies which have a long gestation period (infrastructure companies), it is proposed to compute MAT with reference to book profit. Issues like MAT Credit will be addressed later by making appropriate changes in the proposed scheme. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXEMPT EXEMPT TAX (EET) <em>VIS-À-VIS</em> EXEMPT EXEMPT EXEMPT (EEE):</strong> it is proposed to provide the EEE method of taxation for Government Provident Fund (GPF), Public Provident Fund (PPF) and Recognised Provident Funds (RPFs) and the pension scheme administered by Pension Fund Regulatory and Development Authority. Approved pure life insurance products and annuity schemes will also be subject to EEE method of tax treatment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TAXATION OF INCOME FROM EMPLOYMENT – RETIREMENT BENEFITS AND PERQUISITES:</strong> The method of valuation of perquisites will be appropriately provided in the rules. It is proposed that perquisites in relation to medical facilities/reimbursement provided by an employer to its employees shall be valued as per the existing law with appropriate enhancement of monetary limits. It is clarified that the DTC does not propose to compute perquisite value of rent free accommodation based on market value. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TAXATION OF INCOME FROM HOUSE PROPERTY </font></strong></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) In case of let out house property, gross rent will be the amount of rent received or receivable for the financial year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Gross rent will not be computed at a presumptive rate of six per cent of the rateable value or cost of construction/acquisition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) In case of house property which is not let out, the gross rent will be nil. As the gross rent will be taken as nil, no deduction for taxes or interest etc., will be allowed. However, in case of any one house property, which has not been let out, an individual or HUF will be eligible for deduction on account of interest on capital borrowed for acquisition or construction of such house property (subject to a ceiling of Rs. 1.5 lakh) from the gross total income. The overall limit of deduction for savings will be calibrated accordingly. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TAXATION OF CAPITAL GAINS: Income under the head “Capital Gains? </strong>will be considered as income from ordinary sources in case of all taxpayers including non-residents. It will be taxed at the rate applicable to that taxpayer . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECURITIES TRANSACTION TAX:</strong> The Securities Transaction Tax (STT) is a tax on specified transactions and not on income. Accordingly, STT is proposed to be calibrated based on the revised taxation regime for capital gains and flow of funds to the capital market. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TAXATION OF NON-PROFIT ORGANISATIONS:</strong> NPOs already registered under the Income-tax Act, 1961 and holding valid registration on the date on which DTC comes into effect, would not be required to apply for fresh registration under the DTC. However, they would be required to provide additional information to facilitate the administration of the new provisions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SPECIAL ECONOMIC ZONES – TAXATION OF EXISTING UNITS:</strong> Profit linked deductions are distortionary in nature as they create an incentive to inflate profit as well as to transfer profits from a taxable entity to a non-taxable one. As a policy, it has, therefore, been decided not to extend the scope or the period of profit linked deductions. However, specific provisions for protecting such deduction for the unexpired period have been provided in the DTC in the case of SEZ developers. A similar provision to protect profit linked deductions of units already operating in SEZs for the unexpired period will also be incorporated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONCEPT OF RESIDENCE IN THE CASE OF A COMPANY INCORPORATED OUTSIDE INDIA:</strong> It is proposed that a company incorporated outside India will be treated as resident in India if its “place of effective management? is situated in India. As an anti-avoidance measure, in line with internationally accepted practices, it is also proposed to introduce Controlled Foreign Corporation provisions so as to provide that passive income earned by a foreign company which is controlled directly or indirectly by a resident in India, and where such income is not distributed to shareholders resulting in deferral of taxes, shall be deemed to have been distributed. Consequently, it would be taxable in India in the hands of resident shareholders as dividend received from the foreign company. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) VIS-À-VIS DOMESTIC LAW:</strong> it is proposed to provide that between the domestic law and relevant DTAA, the one which is more beneficial to the taxpayer shall apply. However, DTAA will not have preferential status over the domestic law in the following circumstances:- when the General Anti Avoidance Rule is invoked, or when Controlled Foreign Corporation provisions are invoked or when Branch Profits Tax is levied. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WEALTH TAX:</strong> Wealth tax is an anti- abuse measure in the integrated tax system. It ensures reporting of significant assets held by a tax payer. It is proposed that Wealth Tax will be levied broadly on the same lines as provided in the Wealth Tax Act, 1957. Accordingly, specified “unproductive assets” will be subject to the wealth tax. However, it will be payable by all taxpayers except non-profit organizations. The threshold limit and rate of tax will be suitably calibrated in the context of overall tax rates. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GENERAL ANTI-AVOIDANCE RULE:</strong> The proposed GAAR provisions do not envisage that every arrangement for tax mitigation would be liable to be classified as an impermissible avoidance arrangement. It is only in a case where the arrangement, besides obtaining a tax benefit for the assessee, is also covered by one of the four conditions i.e. it is not at arm's length or it represents misuse or abuse of the provisions of the Code or it lacks commercial substance or it is entered or carried on in a manner not normally employed for bona-fide business purposes , the GAAR provisions would come into effect. </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"> – Thursday'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">Customs </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal rejected by CESTAT as not maintainable but Jt. Secretary, GOI holding that application is beyond jurisdiction – application filed belatedly for restoration of appeal – delay explained satisfactorily – ROA application allowed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 129A(a) of the Customs Act, 1962, the appeal is maintainable before this Tribunal. The appellant has explained the reasons for causing the delay in filing for application in the restoration of appeal and the same are satisfactory. Hence, both miscellaneous application for condoning the delay and the application for restoration of appeal are allowed. The registry is directed to restore the appeal at its original number.” </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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sec 80IA - Deduction to be computed on profits from eligible business and not on basis of sum invested in plant and machinery like telephone exchanges </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 80IA has over the years become one of the most disputed sections like Sec 80HHC of the I-T Act. The issue in the present dispute is - Whether deduction is to be computed on the profits of the eligible business and not on the basis of the amount invested in plant & machinery in the form of telephone exchanges. Whether in view of the fact that after 1995 MTNL has underwent tremendous changes, the AO was not justified in restricting the deduction u/s 80IA alleging that the assessee has simply modified its earlier set-up and also generating income from old set-up. </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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