TIOL-DDT 1689 · 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 1689 </font><br>
</strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">09.09.2011 <br>
</font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Friday </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Direct Taxes Collections 1,54,360 Crores in five months </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> gross Direct Taxes collection for the first five months – April-August 2011 stood at 1,54,367 Crores up by 25.89 per cent, compared to last year's figures. Personal income tax is up by about 20 percent at Rs. 57,582 Crores. There was a decrease in securities transaction tax, which is less by about 10 percent at Rs. 2021 Crores compared to 2223 Crores for the same period last year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However net collections stood at Rs. 96,738 crores, down from Rs.100,113 crores in the same period last fiscal. This is because of the huge refunds. The income tax department was on a refund spree and gave Rs. 57,622 crores refunds this year as against Rs.22,505 crore last fiscal.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Air India is a Symbol of the State - Save it - CAG</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG's latest report is on India's ailing maharaja – Air India and as every one knows, the CAG has found out that the maharaja is on the deathbed. CAG says, “The Airline has a debt liability of Rs. 38,423 Crores as on 31 March 2010. Aircraft acquisition has contributed predominantly to it. Government must lay down a road map for liquidating the liability within a short span after making a realistic assessment of revenue generation capacity. Piecemeal infusion of small amounts is merely going to at best <strong>delay the certain closure of the Airline. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Other comments of the CAG: </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoCA and Government must recognise that AI is the National Carrier. In very many ways, it is a symbol of the State. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The airline is in a crisis situation. Salary payments and ATF obligations are becoming difficult. If the airline has to survive, the management and employees will have to set personal interests aside and undertake some harsh decisions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Market surveys of customer perception revealed that Air India was no longer a preferred brand, and that it was not adequately oriented towards customer satisfaction. Expenditure on publicity and sales promotion was negligible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit is constrained to comment on the speed at which the acquisition process proceeded. A programme, which was under consideration from 1996 and took eight years to progress upto the Government level for purchase of 28 aircrafts suddenly picked up speed. Between August 2004 and December 2005 the proposals were formulated by AIL, approved by its Board, examined and approved by MoCA, the Planning Commission, the Department of Expenditure, PIB, EGoM and also the CCEA. Government conveyed its approval on 30 December and the Contract was signed by AIL with Boeing on the same day. From receipt of the proposal by the government to the signing of contract with government approval, by AIL with Boeing took seven months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dedicated cargo freighter operations started in June 2007/ August – December 2008 by converting four passenger aircraft (two owned and two leased) into freighters at a cost of Rs.168.30 crore. This ended up incurring losses of Rs.270.62 crore and were suspended from September 2009. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cash profits and marginal net profits in 2004-05 and 2005-06 turned into substantial cash losses and net losses. The net worth of the entities, which was negative in 2004-05, was made positive in 2008-09 through a revaluation of fixed assets by Rs. 8,028 crore. Even such revaluation could not reverse the trend and it became hugely negative in 2009-10; </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Recommends: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All free travel by AI officers, on duty or leaves in business/ first class should be prohibited. All existing facilities offered in this regard should be withdrawn till AI's financial conditions improve dramatically. Given the life-threatening crisis that AI is currently facing, top and middle management in AI should set an example in this regard. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - Allowances of UPSC Members Exempted </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 10 of the Income Tax Act, which excludes certain incomes from total income, has 47 clauses. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clause 45 inserted by Finance Act 2011 with retrospective effect from 01.04.2008, reads as, </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ any allowance or perquisite, <strong>as may be notified by the Central Government</strong> in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission.” </font></em></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has notified the allowances eligible for the exemption. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exempted allowances for the serving Chairman and members of the UPSC are: </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The value of rent free official residence; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The value of conveyance facilities including transport allowance; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The sumptuary allowance; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The value of leave travel concession (for self and family) </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For retired Chairman and members: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A sum of maximum Rs. 14,000 per month for defraying the service of an orderly and for meeting expenses incurred towards secretarial assistance on contract basis; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The value of a residential telephone free of cost and the number of free calls to the extent of 1500 per month (over and above the number of free calls per month allowed by the telephone authorities). </font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2011/it11not049.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO. 49/2011 [F.NO. 149/113/2008-SO (TPL)]; Dated September 06, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Banks to send TDS Certificates to account holders </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AT</strong> a recent conference of Banking Ombudsman held in RBI, it was decided, among others, that:- </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Banks should issue tax deduction at source (TDS) certificates duly completed in all respects to the account holders and despatch it to their mailing address. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In case of ATM/Internet based banking transactions, in the event of any monetary dispute involving the customer and the bank, the onus should be on the bank to prove the customer's negligence or mistake. Customer must be compensated for the losses arising out of customers' non-authorised transactions. </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Banks must not recover pre-payment charges in floating rate loans.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Reserve Bank/IBA would examine the issues pertaining to monetary compensation for mental harassment suffered by bank customers.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ To create awareness about the Banking Ombudsman Scheme, the Banking Ombudsmen will annually share with local media, information regarding complaints received and resolved, including important cases and awards given. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inaugurating the conference, RBI Governor Subba Rao said that often, prevention was better than cure. In customer service area too, rendering good customer service was like ‘prevention' and was better than the ‘cure' which was the various grievances redressal mechanisms. He flagged various issues relating to banks' customer service for the consideration of the participants. He asked whether customer service was a criterion in evaluating the performance of a branch level official or did levying of penalty on a bank reflected in any manner on the staff which caused the levy of penalty; do all banks have customer grievances redressal officer and at what level; were the most important terms and conditions (MITC) explained to the bank customers before they signed the documents; and whether the deviation from most important terms and conditions of a banking product transparent. He urged bankers to identify ten action points to further improve their customer service. </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"> – Monday's cases</font></strong></font></strong></font></p>
<p><strong><font color="#663399" 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">Kerala Sales Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Margarine is edible oil - eligible for concessional tax of 4 percent: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NORMALLY </strong>anything, which is used for preparation of a food article, is edible because ultimately it is being consumed by human beings. Though one may not consume margarine directly or may not use for normal cooking, the fact is that margarine is used for preparing bakery items, which are consumed by human beings, and, therefore, margarine is also edible. Having around 80% fat, and being in the nature of oil, it should be considered as edible oil. Intention of the government was to give relief in tax to edible oils. </font></p>
<p align="justify"><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">Whether, when assessee deals in sale of imported timber, interest income earned from FDs with banks is to be treated as business income - NO, rules HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is engaged in the business timber import and sale. The assessee received a sum of Rs.7,92,451/- by way of interest on Fixed Deposits. The assessee also had interest income earned on the money lent to other parties. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Bench are - Whether, when the assessee deals in sale of imported timber, interest income earned from FDs is to be treated as business income and whether interest earned from the advances is to be assessed under the head "income from other sources" when the object of the business was not money lending. NO is the High Court's answer to both the questions. </font></p>
<p align="justify"><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">Anti Dumping Duty - Different Tariff Heading numbers mentioned in initial notification and final notification after sun set review - Latter one correct - No stay - DA should take a Customs Expert to avoid such faux pas: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> description of the product namely PVC Paste Resin has remained the same during the original anti-dumping investigation as well as during the Sunset Review. The fact that there was an error in indicating the correct classification in the final finding and the Customs Notification issued after the original anti-dumping investigation, howsoever inelegant that was, does not persuade to stay the operation of the present anti-dumping regime which specifies the product under consideration as well as the Customs classification correctly.</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is yet another case where an avoidable instance of mis-classification by the D.A. It is high time that the D.A. takes on board a trained Customs specialist so that such classification <em> faux pas do not recur</em>.</font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Scope of method of duty calculation provided under Notification no. 2/95-CE cannot be enhanced or varied by issuing a Circular without amending notification and such amendment came into force only on 01.03.2002 – Payment of 50% of aggregate of duties not warranted during period April 2000 to March 2001 – Appeal allowed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are a 100% EOU and they cleared goods to the Domestic Tariff Area (DTA) availing benefit of concessional rate of duty under notification 2/95-CE dated 04.1.1995. The appellants were issued a show-cause notice alleging short-payment of duty of Rs.98,380/- in respect of the clearances made to DTA during the period from April 2000 to March 2001. It was alleged in the show-cause notice that the appellants were liable to discharge duty liability @ 33.54 % of the assessable value whereas they have discharged duty liability @ 31.37% of the assessable value during the period April 2000 to February 2001 and similarly for the period March 2001 they have short paid duty to the extent of 1.99% (i.e. duty payable @ 31.43% minus duty actually paid @ 29.44%). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The original authority confirmed the demand and imposed a penalty of Rs.5000/-. The Commissioner (Appeals) upheld the order and hence the appellant is before the CESTAT.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend.</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>
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