TIOL-DDT 1737 · 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 1737</font><br> 22.11.2011<br> Tuesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - Transfer Pricing - Prescribing a Proforma for Obtaining Information - Suggestions Invited from Officers </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INFORMATION</strong> on tax matters is being sought by field officers of the Income Tax Department from countries/jurisdictions with which India has Double Taxation Avoidance Agreement (DTAA) or Tax Information Exchange Agreement (TIEA) under the relevant 'Exchange of Information' Article of DTAA/TIEA through the office of competent authority viz. the Joint Secretary in the Foreign Tax & Tax Division, CBDT; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present, the above information is being sought in a prescribed checklist/ proforma (Annexure-A). Further in the case of U.K, for obtaining banking information, a separate proforma has been prescribed by U.K tax authorities (Annexure-B).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Considering the developments at International Forums including the Model Proforma for the exchange of information being developed by the OECD, it is proposed to change the existing proforma. Further, it is proposed to have a separate proforma for obtaining any information relating to Transfer Pricing and prescription of a separate proforma for the same. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Foreign Tax & Tax Research Division has requested for views/comments on the following to the FT & TR Division by the 15th December, 2011: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ for developing separate proforma (T.P) for Transfer Pricing cases </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ for any improvement required to be made to the present Proforma prescribed for obtaining information from countries/jurisdictions with which India has DTAA/TIEA. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Any other suggestion relating to the above </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FT & TR Division wants that at present the request may be sent to FT&TR. Division by the <em><strong>concerned</strong></em> Commissioner of Income Tax/Director of Income Tax as per the following guidelines:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Request should be made in the checklist/proforma as per Annexure A and Annexure B. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Request for the exchange of information may be addressed by the concerned commissioner of Income Tax/Director Income to JS, (FT&TR-I), CBDT, New Delhi, for the North America including Caribbean Island, Europe and Japan and to JS(FT&TR-II), CBDT, New Delhi, for the rest of the world. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The request for exchange of information for the cases getting time barred on 31st December, 2011 should be received in the office of JS (FT&TR-I) or JS(FT&TR-II), as the case maybe, by <strong>15th December; 2011</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Separate requests should be made for different taxpayers even if the case pertains to same country or same foreign entity. Further, separate requests should be made for different countries even if the cases pertain to the same assessee. </font></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://taxindiainternational.com/circularDesc.php?qwer43fcxzt=MTYzNA==" target="_blank">CBDT FT&TR Division F. No. 504/31/2010-FTD-I, dated: 21 November 2011</a> (<a href="http://taxindiainternational.com/" target="_blank">visit taxindiainternational.com</a>) </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">'Set-off' of export receivables against import payables-Liberalization of Procedure </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS </strong>a measure of further liberalization, RBI has decided to delegate power to AD Category – I banks to deal with the cases of “set-off” of export receivables against import payables, subject to following terms and conditions: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The import is as per the Foreign Trade Policy in force. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Invoices/Bills of Lading/Airway Bills and Exchange Control copies of Bills of Entry for home consumption have been submitted by the importer to the Authorized Dealer bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Payment for the import is still outstanding in the books of the importer. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Both the transactions of sale and purchase may be reported separately in ‘R' Returns. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The relative GR forms will be released by the AD bank only after the entire export proceeds are adjusted / received. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The 'set-off' of export receivables against import payments should be in respect of the same overseas buyer and supplier and that consent for ”set-off” has been obtained from him. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The export / import transactions with ACU countries should be kept outside the arrangement. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ All the relevant documents are submitted to the concerned AD bank who should comply with all the regulatory requirements relating to the transactions. </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI A.P. (DIR Series) Circular No. 47 , dated: 17 November 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Human Capital - IRS </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> IRS's challenge of having the right people in the right place at the right time is made more difficult by many complex internal and external factors. The work performed by IRS employees continually requires greater expertise as tax laws become more complex, manual systems used to support tax administration become computer-based, and attempts by taxpayers and tax practitioners to evade compliance with the tax laws become more sophisticated. The IRS must also compete with other Federal, State, and local governmental agencies and the private sector for the same human resources, an effort that becomes more complicated as younger generations of employees move between jobs more frequently than employees in the past. Furthermore, budget constraints, legislative changes, and economic shifts can create unforeseen challenges for the IRS in addressing its long-term human capital issues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The IRS is improving in its human capital management practices and has developed a comprehensive agency-wide recruitment strategy. However, there is still much work left to be done. For example, the IRS, like other Government agencies, was struggling to accomplish the basic tasks in acquisition workforce planning, including identifying its acquisition workforce, determining the number of acquisition workforce personnel it needs to accomplish its mission, and determining the skills its employees have compared to the skills it requires. If the IRS does not take action to improve its acquisition workforce planning, it: (1) may not be able to easily determine whether its acquisition workforce has enough people with the right skills to perform acquisition duties, (2) may be understaffed to handle the anticipated acquisition workload, and (3) may not have all the prerequisite skills to oversee procurements. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The IRS also faces challenges to maintain the number of Revenue Officers needed, due to attrition and an increasing inventory. The IRS's Revenue Officer hiring initiative added 1,515 new Revenue Officers throughout the country between June 2009 and February 2010. The methodology to assign these new employees was effective in placing them in the Collection areas with the greatest need. However, even though 1,515 Revenue Officers were hired over a nine-month period, the net increase was only 580 Revenue Officers. The IRS has also projected that planned hiring for Fiscal Years 2011 and 2012 will barely cover attrition losses. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not about the Indian Revenue Service but about the Internal Revenue Service of USA – from a report by the Inspector General for Tax Administration. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Drug Smuggling into US - Novel Modus Operandi </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Drug gangs have hit upon yet a new idea to smuggle drug into the US. The smugglers bribe airport employees in other countries to keep a few kgs of cocaine in a checked in baggage of a passenger headed for US. The bags are marked and once they reach US, they are identified by again bribed airport staff, who will remove the drugs before the bags go for Customs examination. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But there can be a mistake and the contact in the US airport may not spot the baggage and an unsuspecting passenger may become a victim. It seems that two passengers even passed through Customs without getting the drug detected and they found drugs in their baggage after reaching home. But if an innocent passenger is caught, he will be detained, interrogated and may even spend time in jail. And there is simply nothing one can do about it! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Helicopter in a Container Seized by Dubai Customs </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Dubai Customs recently seized a helicopter in a container. It was a two-seater helicopter used mostly for entertainment and short distance flights. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Shampoo mistaken for Drugs - Victim awarded 100,000 Dollars</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NEIL</strong> Parry was arrested in June 2010 at the Darwin International Airport by Australian Customs and Border Protection Service agents who believed he was attempting to smuggle 3.5 pounds of liquid ecstasy inside Pantene Pro-V shampoo and conditioner bottles. He spent three days in jail and was engaged in a legal battle for 17 months. Now Australian Customs has admitted that they made a mistake, apologized to Parry and paid him 100,000 Dollars. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You know who got the money? Parry said most of it will go for the legal expenses incurred to prove his innocence! </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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 align="justify"><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">APVAT/Service Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">SIM cards, recharge coupon vouchers, mobile telephone rentals on post paid connections, value added services such as ring tones, music down loads, wall papers etc., and proceeds received on sharing of infrastructure – not taxable under VAT: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DECLARATION</strong> of the law by the Supreme Court, in <em><strong>Bharat Sanchar Nigam Ltd v. Union of India</strong></em> - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2006/2006-TIOL-15-SC-CT-LB.htm"><strong><font size="1">2006-TIOL-15-SC-CT-LB</font></strong></a>, notwithstanding, the High Court was to adjudicate on the jurisdiction of the revisional/appellate/assessing authorities to levy tax under Section 4(1) and (8) of the A.P. VAT Act, 2005 on SIM cards - pre-paid and post-paid; recharge coupons; value added services; telephone instruments, mobile handsets, modems and caller ID instruments; mobile telephone rentals; sharing of infrastructure; non-refundable deposits; refundable deposits etc. </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 gives revocable power of attorney, and provisions of Transfer of Property Act are not complied with, it can be said that no transfer has taken place - ruled in favour of assessee: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE </strong>Company engaged in the business of manufacturing of steel, sold out certain land to one builder, received certain amount on the date of singing of Agreement to sell, and the balance was to be received when the builder would be able to receive the money from its members. Assessee had given the possession and had also executed one revocable POA in favour of builder - however the POA was modified upon culmination of dispute - In view of these facts Assessee claimed to have earned gains in the year when the possession was given - It was the case of the AO that the gain was earned when the full and final payment was received by the assessee after the settlement of the dispute - CIT(A) partly affirmed the order of the AO in as much as he held that capital gain was rightly taxed in the year under consideration however the cost of improvement would be allowed to be reduced from the consideration. </font></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">In respect of waste and scrap generated during course of job work, liability to pay duty is on job worker as he is manufacturer - a trade notice which is contrary to statutory provision has no existence in law: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant sent out various types of cast articles for job work to various job workers for the purposes of machining/fettling, bending or carrying out any other operation necessary for the manufacture of final product. The finished goods were removed from the premises of the job workers and directly sent to the customers in terms of the permission granted to them under rule 4(6) of the CENVAT Credit Rules, 2004. The aforesaid permission was granted subject to undertaking given by the appellant that the waste and scrap if generated at the job workers end would either be brought back or removed on payment of Central Excise duty from the premises of the job workers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During the scrutiny of records of the appellant's factory, it was noticed that they had failed to pay excise duty on waste and scrap generated at the job worker's end. </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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>