TIOL-DDT 1618 · 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 1618</font><br>
30.05.2011<br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Bonus Benefit to Silk Carpets</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended Public Notice No:2(RE2010)/2009-14 dated 23rd August 2010.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Public Notice No:2 dated 23rd August 2010 had added table 7 in the Product Category under the Focus Product Scheme for granting bonus benefit to certain sectors for export made with effect from 1.4.2010. Sr no 156 of this table stipulated bonus benefit to silk carpets exported under ITC HS codes 57023920, 57024920,57025032, 57029920 and 57050011. In pursuance of the intention of the Government to grant bonus benefit to silk carpets, ITC HS code 57019090 having drawback code 570102 is deemed to have been added to this list for grant of bonus benefits for exports made with effect from 1.4.2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Bonus benefit under Focus Product Scheme available to silk carpets would also include such silk carpets exported under ITC HS code 57019090 with drawback code 570102 duly endorsed on the respective shipping bills. This will be with effect from 1.4.2010. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn050.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 50/(RE-2010)/ 2009-14, Dated: May 27, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">MCA – Payment
of Fees in Electronic Mode - Modification </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MCA</strong> has allowed challan mode for payment for amount less than Rs. 50,000 with effect from 29.05.2011, in the following cases: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Payment to 'Investor Education and Protection Fund' through 'Pay Misc. Fee' functionality </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Any payment made by user having category as 'Official Liquidator (OL) office </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Any payment made by user having category as 'MCA employee' </font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/circular_electronic_mode.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. NO. HQ/9/2002-computerization, Dated: May 27, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">LLP of CAs Not to be treated as Body Corporate</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNDER</strong> section 226(3)(a) of the Companies Act, 1956 a body corporate is disqualified from appointment as auditor by a company. Since LLP is a body corporate as per section 3(1) of the Limited Liability Partnership Act, 2008, LLP among Chartered Accountants will not be qualified for appointment as auditor under section 226(3)( a ) of the Companies Act, 1956. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Institute of Chartered Accountants of India has represented against this and now MCA - Ministry of Corporate Affairs has clarified that Limited Liability Partnership of chartered accountants will not be treated as body corporate for the limited purpose of section 226(3)(a) of the Companies Act, 1956. Notification has been sent for publication in the Gazette of India and will be hopefully published soon. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/body_corporate30a.htm"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MOC CIRCULAR NO. 30A/2011 [NO. 02/02/2011-CL.V]; Dated : May 26, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Transparency in Survey operations - CBDT Directions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> bringing transparency in survey operations and obviate the possibility of any grievance to the taxpayers, the Income Tax Department has devised an innovative procedure: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Survey teams visiting taxpayer's premises under the provisions of section 133A of the Income tax Act will, before the commencement of survey proceedings, provide to the taxpayer the names, designations & contact numbers of their Chief Commissioner, Commissioner & Additional/ Joint Commissioner of Income Tax. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Inform the taxpayer that in case of any grievance or otherwise, he is free to contact Chief Commissioner/ Commissioner/ Addl Commissioner/ Joint Commissioner of Income Tax. </font></p>
</blockquote>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Survey parties will invariably carry in their survey kit names, designations & contact numbers of their CCIT / CIT / Addl / JCIT on which, as a proof of implementation of the above directions, signature of the taxpayer surveyed would be obtained. This would be submitted back to the CIT, to be preserved as permanent record. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We do hope these directions are followed and in case, usually the PAs are very strict in ensuring that nobody talks to their officers. Maybe they have directions to do so! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cbdt%20instruction.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From the
desk of Chairman, CBDT; S.N. 49/May 27,2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">US Audit finds fault with IRS for lapses on Energy Tax Credit </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> US Treasury Inspector General for Tax Administration (TIGTA) has lambasted the US IRS for its failure to monitor Energy Credits. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The American Recovery and Reinvestment Act of 2009 (Recovery Act) modified the law related to energy credits to encourage the purchase of energy efficient property and renewable sources of energy for use in a home. The Internal Revenue Service (IRS) cannot verify whether individuals claiming Residential Energy Credits are entitled at the time their tax returns are processed. Inadequate verification increases the risk that taxpayers will be allowed to receive erroneous Residential Energy Credits. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More than 6.8 million individuals claimed more than $5.8 billion in Residential Energy Credits on Tax Year 2009 tax returns processed through December 31, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Audit found that: The IRS cannot verify whether individuals claiming Residential Energy Credits are entitled to them at the time their tax returns are processed. The IRS does not require individuals to provide any third-party documentation supporting the purchase of qualifying home improvement products and/or costs associated with making energy efficiency improvements and whether these qualified purchases and/or improvements were made to their principal residence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a sample of 150 tax returns, TIGTA was unable to confirm home ownership for 45 (30 percent) of the taxpayers. Home ownership is required to claim Residential Energy Credits. The Audit also found 362 ineligible individuals who were allowed to erroneously claim $404,578. These individuals were either in prison or individuals under the age needed to enter into a contract to purchase a residence. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Non filing of appeal by revenue is not bar for serutiny in another case: CESTAT LB </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Larger Bench of the CESTAT passed a landmark decision, in which it made some sacrosanct statements.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">NON FILING OF APPEAL BY REVENUE IS NOT A BAR FOR SCRUTINY IN ANOTHER CASE:</font></strong> Merely because in some cases revenue has not preferred appeal, that does not operate as a bar for the revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher Court when divergent views are expressed by the Tribunals or the High Courts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">POLICY OF REFUND OF INPUT CREDIT IS REGULATED BY STATUTORY PROVISIONS:</font></strong> A distinction between provisions of statute which are of substantive character and are built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can be reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">COURTS HAVE TO DECIDE WHAT THE LAW IS BUT NOT WHAT IT SHOULD BE:</font></strong> The court cannot rewrite the legislation for the reason that it had no power to legislate. The court cannot add words to a statute or read words into it which are not there. The court cannot, on an assumption that there is a defect or an omission in the words used by the legislature, correct or make up assumed deficiency, when the words are clear and unambiguous. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, the Certified copy of the order states that the order has been signed by Justice R M S Khandeparkar, Mr. M Veeraiyan and Mr. D N Panda. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The last page of the order says, it has been signed by Justice R M S Khandeparkar, Dr. C. Satapathy and Mr. D N Panda. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was Mr. Veeraiyan a Member of the Larger Bench? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you this case tomorrow. </font></p>
<p align="center"><strong><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"> – Tuesday's cases</font></strong></font></strong></font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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"><font color="#663399"><strong>Central Excise</strong></font></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Refund of unutilized credit is only permissible in case of export of goods and for no other reason whatsoever - equity, justice and good conscience are guiding factors for Civil Courts, no fiscal Courts are governed by these concepts: CESTAT LB </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONSIDERATIONS</strong> of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity. It has also been said that if taxing provision is "so wanting in clarity that no meaning is reasonably clear, the court will be unable to regard it as of any effect. It has also been held that in interpreting taxing statute, equitable considerations are entirely out of place nor can taxing statutes be interpreted on any presumptions or assumptions. </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">Whether, even without doubting payment of guarantee fee to third parties within a reasonable range, AO can make disallowance u/s 40A(2) on ground that third parties are shareholders in assessee-company and they could have provided services free of cost: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Tribunal is - Whether, even without doubting the payment of guarantee fee to third parties within a reasonable range, AO can make disallowance u/s 40A(2) on the ground that the third parties are shareholders in the assessee-company and they would have provided such services free of cost. And the verdict goes against the Revenue. </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">Job of cutting and transportation of sugar cane by arranging for tools and labourers - No case made out against demand of Service Tax under head ‘Manpower Supply' – Pre-deposit ordered: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant-trust undertook the job of cutting and transportation of sugar cane grown by members and non-members of the factory for the sugar seasons 2005-06 to 2009-10. The full responsibility of cutting and transportation of the cane upto the factory gate was on the trust. The equipments, tools and labourers required for the job were to be arranged by the trust with the help of the factory. The trust was liable to follow the instructions of the factory in regard to the harvesting and transportation of the sugar cane. No evidence whatsoever, has been adduced by the assessee to show that their activity did not constitute ‘manpower supply' service. </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="left"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day.</font></p>
<div 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"><strong>vijaywrite@taxindiaonline.com </strong></a></font>
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