TIOL-DDT 1435 · 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 1435 </font><br> 31.08.2010 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DTC Bill introduced - No Excitement - Effective only from 2012 </strong></font></p> <p align="center"><img src="http://www.taxindiaonline.com/RC2/image/stories/pranab_1435.jpg" alt="Legal Corner Icon" width="390" height="325" hspace="5" border="0" align="center"></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was a historic moment in Parliament. Amidst disturbances in the Lok Sabha, the Finance Minister Pranab Da intervened and said, “ Today we have spent enough time on non-issues. Limited time is now left, and it is three o'clock. There are certain other issues. Please transact some business because the House has been extended to transact certain essential Government Business. My respectful submission to all the Members would be that let the normal business be carried on” ... and the Speaker said , “Shri Pranab Mukherjee to introduce the Bill”. The FM said, “ Sir, I beg to move for leave to introduce a Bill to consolidate and amend the law relating to direct taxes.” The leave was granted and the FM said , “Sir, I introduce the Bill” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So finally the Bill is before the Lok Sabha – now they can take all the time they want, for the Bill is to come into force only from 1 st April 2012, maybe along with GST!- maybe to provide enough time for the tax analysts of the country to dissect every comma in the Code! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">We will lose 50 Thousand Crores – RS:</font></strong> Revenue Secretary Sunil Mitra said that because of the new DTC, he would lose Rs. 53,172 Crores (very accurate figures – thank god, his officers didn't give figures to the last paisa.) in 2012-13. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">No more Gender Discrimination – women to be axed on par with men</font></strong>: The special Income Tax exemption enjoyed by women will now be a thing of the past – they will have to pay taxes as the men do. This hardly makes any difference to the women or their men, but will be good copy for women movement, magazines and for women's organisations to shout hoarse. TV channels can have a few discussions and finally the FM may concede the status quo . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Wealth Tax to Stay and with reduced limits</font></strong>: The previous DTC had proposed an exemption from wealth tax up to a net wealth of Rs. 50 Crores and with a tax of 0.25 percent on the wealth above Rs. 50 Crores. These limits are drastically reduced. Now the exemption limit is Rs. 1 Crore and the tax above that is 1 percent. How much money is the government going to earn by this small tax? Why can't they just do away with this nuisance tax? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">No appeal by or against PSU to Tribunal – No need of COS</font></strong>: At present a PSU or the Department (against PSU) can appeal to the Tribunal only after getting clearance from the Committee of Secretaries. This will no more be necessary as under the new DTC, PSU or the Department cannot appeal to Tribunal. The appeal lies to the Dispute Resolution Panel. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Only High Court CJ to be President of ITAT</font></strong>: The DTC stipulates that the President of the ITAT should be a sitting or former Chief Justice of a High Court. Currently the post of ITAT President is vacant – government should consider following this policy even before the Code is enacted. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Why DTC? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>STATEMENT OF OBJECTS AND REASONS: </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income-tax Act, 1961, has been subjected to numerous amendments since its passage fifty years ago. It has been considerably revised, not less than thirty-four times, by amendment Acts besides the amendments carried out through the annual Finance Acts. These amendments were necessitated by policy changes due to the changing economic environment, increasing sophistication of commerce, increase in international transactions as a result of globalisation, development of information technology, attempts to minimise tax avoidance and in order to clarify the statute in relation to judicial decisions. As a result of all these amendments, the basic structure of the Income-tax Act has been over burdened and its language has become complex. Tax administrators, accountants and tax payers have raised concerns about the complex structure of the Income-tax Act. In particular, the numerous amendments have rendered the Act difficult to decipher by the average tax payer. The Wealth-tax Act, 1957 has also witnessed amendments. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government, therefore, decided to revise, consolidate and <strong>simplify the language</strong> and structure of the direct tax laws. A draft Direct Taxes Code along with a Discussion Paper was released in August, 2009 for public comments. It proposed to replace the Income-tax Act, 1961 and the Wealth-tax Act, 1957 by a single Act, namely the Direct Taxes Code. Public and stakeholder feedback on the proposals outlined in these documents was analysed and suggestions for amendments received from members of the public, business associations and other bodies were taken into account. Thereafter, a Revised Discussion Paper addressing the major issues was released in June, 2010. The present Bill is the outcome of this process. </font></p> <p align="center"><font color="#006600"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Simple Language – Have a Look </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME of the definitions in the code:</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>16.</strong> (1) The income of the husband and wife, governed by the<em> communiao dos bens</em>, from ordinary sources under each head of income (other than the head “Income from employment”) and from special sources shall be apportioned equally between the spouses. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) In this section, <em>communiao dos bens</em> refers to the system of community of property under the Portuguese Civil Code of 1860 as in force in the State of Goa and in the Union territories of Dadra and Nagar Haveli and Daman and Diu. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“higher education” means any course of study pursued after passing the senior secondary examination, or its equivalent, conducted by any board, or univer- sity, recognised by the Central or State Government or any authority authorised by the Government so to do; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) “general public” means the body of people at large sufficiently defined by some common quality of public or impersonal nature; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ arm's length price” means a price which is applied, or proposed to be applied, in a transaction between persons, enterprises or undertakings, other than associated enterprises, in uncontrolled, unrelated or independent conditions; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(131) “India” means-</font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the territory of India as referred to in Article 1 of the Constitution; </font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclu- sive Economic Zone and Other Maritime Zones Act, 1976; </font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) the sea-bed and the subsoil underlying the territorial waters; and </font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) the air space above its territory and territorial waters;</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exchange Rates for September Notified </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods for September 2010. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_077.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 77/2010-Cus.,(N.T.), Dated: August 27, 2010 </font></strong></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Spandex yarn – No Anti dumping Duty – CBEC Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> had received references seeking a clarification as to whether Anti Dumping Duty under the <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_015.htm" target="_blank">Notification No.15/2007-Customs dated 20.02.2007</a></em></strong> is applicable to Spandex Yarn (Elastomeric yarn). Although the description ‘elastomeric yarn' is not specified in the above said notification, doubts have been expressed since the Tariff Item 5402 44 00 is mentioned therein. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board examined the issue and observes that though Tariff Item 5402 44 00 is mentioned in the notification, there is no ambiguity / confusion in the description of the goods in the notification which clearly mentions “Fully Drawn or Fully Printed Yarn or Spin Drawn Yarn or Flat Yarn of Polyester”. Thus, it is clear that only specified yarns of polyester are covered by the anti dumping levy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, Board clarifies that Spandex Yarn (Elastomeric Yarn) is not covered within the scope of the <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_015.htm" target="_blank">Notification No.15 / 2007-Customs dated 20.02.2007</a></strong></em>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_030.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 30/2010-Cus., Dated: August 30, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Goods for Common Wealth Games – CBEC Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> clarifies:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suppliers / contractors / vendors or sub vendors of OC, CWG, the Prasar Bharti or of the broadcasting right holders will also be eligible for benefit of the <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_013.htm" target="_blank">Notification No. 13/2010-Customs dated 19.02.2010</a></strong></em>, as amended by <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_084.htm" target="_blank">Notification No.84/2010-Customs dated 27.08.2010</a></strong></em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of imports by supplier / contractors / vendors or sub vendors of the OC, CWG, Prasar Bharti or of the broadcasting right holders, as the case may be, the OC, CWG or Prasar Bharti will furnish an undertaking in term of <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_013.htm" target="_blank"><em><strong>Notification No.13/2010-Customs dated 19.02.2010</strong></em></a> as amended by Notification No.84/2010-Customs dated 27.08.2010. This undertaking ensures adherence to the conditions of the said Notification and in the event of failure to do so, OC, CWG or Prasar Bharti, as the case may be, will pay the duty on the imported goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_084.htm" target="_blank"><strong><em>Notification No.84/2010-Customs dated 27.08.2010</em></strong></a> has also expanded the list of specified goods allowed duty free imports against Sl.Nos.1 and 2 of <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_013.htm" target="_blank">Notification No.13/2010-Customs dated 19.02.2010</a></strong></em>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_031.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 31/2010-Cus., Dated: August 30, 2010 </font></strong></a></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">Departmental appeal to Tribunal - Review by Committee of Chief Commissioners - Tribunal has power to condone delay in filing appeal – CESTAT LB </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Tribunal has ample power to condone the delay in filing the appeal including the one filed under section 35 E (4) of the said Act. The period which can be condoned in relation to filing of the appeal under section 35 E (4) of the said Act would include the period availed by the review committee in terms of section 35 E (1) or 35 E (2) of the said Act. </font></p> <p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Depreciation u/s 32 - Routers and switches are 'computers', entitled to 60% depreciation rate: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE I-T Act does not contain any definition of 'computer'. In this background, the onus lies on the courts to lend it a concrete definition. In this case the issue is</strong> - Whether routers and switches can be classified as computers, entitled to depreciation at 60% or to be classified as general plant and machine entitled to depreciation only at 25%. And the verdict has gone against the Revenue. </font></p> <p><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">Construction of Driveway in Petrol Pump – The value of construction of road is to be included in value of service only when there is no segregation between construction of commercial complex and construction of the road - If contract recognizes two activities as separate activities, even though construction of road is in connection with the commercial complex, benefit has to be allowed. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents filed an application for refund for service tax paid before the JAC on the grounds that they had paid it wrongly for the construction of road which is excluded from the category of "Commercial and Industrial Construction" as defined under clause (25b) of the Section 65 of the Finance Act, 1994. The Assistant Commissioner adjudicated the said show cause notice and rejected the claim for refund. The Commissioner (Appeals) however, allowed the refund of Service Tax by relying on the Board's Circular No.B1/6/2005-TRU dated 27.07.2005. </font></p> <p align="left"><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"><strong> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p> </body> </html>