TIOL-DDT 1425 · 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 1425 </font><br>
17.08.2010 <br>
Tuesday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax on commercial training and coaching - clarification whether ‘donation' is ‘consideration' </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has received a representation seeking clarification whether donations and grants-in-aid received from different sources by a charitable foundation imparting free livelihood training to the poor and marginalized youth, will be treated as ‘consideration' received for such training and subjected to service tax under ‘commercial training or coaching service'.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has examined the issue and clarifies:-</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The important point here is regarding the presence or absence of a link between ‘consideration' and taxable service. It is a settled legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to service tax. Donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered Foundation. Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest. In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2010/sercir127.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 127/9/2010 - ST, Dated: August 16, 2010</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Issue
of Certificate of lower deduction or non-deduction of tax at sources (TDS/TCS) – CBDT
Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has come to notice of the Board that TDS/TCS certificate u/s. 197/206C(9) are normally being issued at present, manually rather than through the TDS module of TDS application. To maintain centralized data of issue of such certificates and facilitate better processing of the TDS / TCS returns filed by the deductors and in continuation to the previous instructions, Board directs that henceforth the certificates u/s. 197/206C(9) shall be generated and issued by the AO mandatorily through ITD system only. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2010/instruct1006.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Instruction No. 6/2010, Dated : August 9, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ Instructions - Two Contradictory Circulars – which is Correct? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> concerned Netizen has brought to our notice a major goof up by the Commerce Department. Now there are two Instructions numbered 11, one dated 12 th August 2009 and another dated 27 th May, 2009. The Instruction dated 12 th August available in the SEZ website is in supersession of the Instruction dated 27 th May, 2009. Now it seems the SEZ officers are refusing to accept the second instruction, claiming it to be a fraud. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is the difference between the two instructions? </font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
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<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl. No. </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nature of Difference </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instruction 11, dated 27 May 2009 </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instruction 11, dated 12 August 2009 </font></strong></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment in exiting Instruction </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is in supersession of Instruction No 8 issued vide Department's (Department of Commerce) O.M No F1/6/2006-SEZ dated 12 October 2007 </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is in suppression of OM of even number dated 27th May 2009 and Instruction No 8 issued vide department's (Department of Commerce) O.M No. F1/6/2006-SEZ dated 12 October 2007 </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Depreciation calculation of used capital goods </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While computing the value of the used/second hand capital goods sought to be transferred into the Zone from DTA, including from an EOU,EHTP/STP/BTP unit, within the Zone or from any other Zone, <strong>the depreciation rates stipulated as per the provision of Income Tax Act and Rules</strong> made there under will be adopted for arriving at depreciated value of such second hand capital goods intended to be moved into Zone </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While computing the value of the used/second hand capital goods sought to be transferred into the Zone from DTA, including from an EOU,EHTP/STP/BTP unit, within the Zone or from any other Zone, <strong>the depreciation rates stipulated as per Rule 49(1)(C) of the SEZ Rules, 2006</strong> will be adopted for arriving at depreciated value of such second hand capital goods intended to be moved into Zone </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value limit for transfer of used capital goods from DTA to SEZ </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sum total of S.No 5 & 6 of the annexure 1 shall not exceed 20% of the sum total of <strong>S.Nos 3 & 4</strong> of the same annexure at any given point of time. However, the units can shift used/second hand capital goods valuing more than 20% in which case they will not be entitled to benefits under Income Tax Act </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sum total of S.No 5 & 6 of the annexure 2 shall not exceed 20% of the sum total of <strong>S.No 3 ,4, 5 & 6</strong> of the same annexure. However, the units can shift used/second hand capital goods valuing more than 20% in which case they will not be entitled to benefits under Income Tax Act, 1961. </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4 </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Role of Approval Committee or Development Commissioner while granting any approval for setting up of unit </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Keeping in view the provisions that exist in Section 10AA of the Income Tax Act, 1961 to deal with tax related issues in case of previously used Capital Goods, in terms of the provisions of sub-section (8) of Section 15 of the Special Economic Zones Act, 2005, <strong>it is hereby prescribed that while granting any approval for setting up new units in any SEZ, the <br>
Approval Committee or the Development Commissioner, as the case may be, shall ensure that procurement of second hand capital goods shall be allowed only in terms of the provisions of sub-section (4) of Section 10AA read with Explanation 1 & 2 to sub-section (3)of Section 80 IA of the Income Tax Act ,1961. For this purpose, it has been decided to <br>
prescribe the following procedure for the guidance of the units in the SEZs:- </strong></font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Keeping in view the provisions that exist in Section 10AA of the Income-tax Act, 1961 to deal with tax related issues in case of previously used Capital Goods, it should be ensured that by the unit that the sum total of S.No. 5 &6 of the enclosed annexure shall not exceed 20% of the sum total of S.No. 3, 4,5 &6 of the annexure. However, the units can shift used/second capital goods valuing more than 20% in which case they will not be entitled to benefits under the Income-tax Act, 1961. For the purpose of shifting used/second capital goods, it has been decided to prescribe the following procedure for the guidance of the units in the SEZs </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annexure to the Instruction </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 3 -<strong> Value</strong> of the installed Capital Goods (Imported) (New & used/ Second hand) </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 3 - <strong>Original Cost</strong> of the installed Capital Goods (Imported) (New & used/ Second hand) </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annexure to the Instruction </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 4 - <strong>Value</strong> of the installed Capital Goods (Procured from DTA) - (New) </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 4 - <strong>Original Cost</strong> of the installed Capital Goods (Procured from DTA) – (New) </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annexure to the Instruction </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 5 - <strong>Value</strong> of the installed Capital goods - (Procured from DTA) - (used / second hand) </font></p></td>
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 5 -<strong> Depreciated value</strong> of the installed Capital goods <strong>on the date of installation in the SEZ</strong> - (Procured from DTA) - (used / second hand) </font></p></td>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8 </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Web site </font></p></td>
<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.eouindia.gov.in/"><strong>http://www.eouindia.gov.in/ </strong></a></font></p></td>
<td><p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.sezindia.nic.in/">http://www.sezindia.nic.in </a></font></strong></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Commerce Ministry clarify? </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"> – Wednesday'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">CENVAT Credit – exempted and dutiable goods – Once Credit is reversed, it is deemed that Credit is not taken – Revenue Appeal Dismissed – High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TRIBUNAL</strong> has considered all the relevant material on record and has afforded reasonable opportunity and by placing reliance on the notification and also the judgment of the Apex Court in the case of <em>Chandrapur Magnet Wires Pvt. Ltd., Vs. CCE, Nagpur </em><strong>(<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-41-SC-CX.htm" target="_blank">2002-TIOL-41-SC-CX</a></font></strong>) and applying the ratio of the said case to the facts in hand, has reversed the order passed by the assessing authority and held that assessee is not liable to pay 8% of the price of the exempted goods and consequently, allowed the appeal. </font></p>
<p><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 194C - Individual exporter utilises manufacturing facilities of a company for meeting exports deadline and reimburses costs - TDS provisions are applicable to such cases only from 1.6.2007: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXPORT</strong> is a time-sensitive business. Export orders are normally executed against a fixed delivery schedules. In case an exporter misses the scheduled periods, there are heavy penalties incorporated in the agreements. In some cases even the orders are cancelled irrespective of the facts that the consignments have landed in the country of importer but could not be delivered for either because of delayed customs clearance or delayed shipment etc. In the instant case, the individual exporter has a tight deadline and she knows that unless part of production is done elsewhere she cannot meet the demand. So, she gets into a kind of oral contract with a company for utilising the manufacturing facilities against reimbursement of salaries of its employees and other costs. </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Conversion of free shipping bills into drawback shipping bills - Section 149 of Customs Act, 1962 clearly permits amendment of shipping bill – Commissioner directed to amend the Shipping Bill - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SINCE</strong> Board's circular also does not clearly provide that Commissioner cannot allow amendment under Section 149 of Customs Act, 1962, Commissioner could have considered the request under this section. </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day </font></p>
<p><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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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