TIOL-DDT 1913 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 1913 </font><br>
</strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">01.08.2012 <br>
Wednesday</font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax return - Due Date For Filing Extended to 31 August </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Board of Direct Taxes (CBDT), in exercise of powers conferred under section 119 of the Income Tax Act, 1961, has extended the ‘due date' of filing of returns of income for the Assessment Year 2012-13 to 31st August 2012. This has been done in respect of assesses who are liable to file such returns by 31st July 2012 as per provisions of section 139 of Income Tax Act, 1961. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This has been done on consideration of the reports of disturbance of <a></a>general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and HUF has been made mandatory. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Those who could not file the return until yesterday need not wait for the rush on the last day of August to file the return. Better, file early. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/returns_filling.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Order under Section 119 in F.No. 225/163/2012/ITA.I1, Dated: July 31, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Ruling By Authority for Advance Ruling - No Direct Appeal to Supreme Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHERE</strong> does an appeal lie to against an order passed by the Authority for Advance Rulings (AAR)? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the AAR is headed by a retired judge of the Supreme Court! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court had to decide this issue recently. In an order delivered on 30 July 2012, the Supreme Court observed, <em>"Under Article 226 of the Constitution, the High Court can issue writs of Certiorari and Prohibition to control the proceedings of not only a subordinate court but also of any person, body or authority having the duty to act judicially, such as a tribunal. Under Article 227 of the Constitution, the High Court has superintendence over all courts and tribunals throughout the territory in relation to which it exercises jurisdiction. Under Article 136 of the Constitution, this Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. Hence, we have to decide whether the Authority, if not a court, is a tribunal within the meaning of expression in Articles 136 and 227 of the Constitution and whether the Authority has a duty to act judicially and is amenable to writs of Certiorari and Prohibition under Article 226 of the Constitution"</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court answered the above doubt as, "<em>We have, therefore, no doubt in our mind that the Authority is a body exercising judicial power conferred on it by Chapter XIX-B of the Act <strong>and is a tribunal within the meaning of the expression in Articles 136 and 227 of the Constitution"</strong></em><strong>. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Basic Structure</strong>: The Supreme Court observed, "<em>In L. Chandra Kumar v. Union of India and Others <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-159-SC-CB.htm" target="_blank"><font size="1">(2002-TIOL-159-SC-CB)</font></a></strong>, a Constitution Bench of this Court has held that the power vested in the High Courts to exercise judicial superintendence over the decisions of all courts and tribunals within their respective jurisdictions is part of the basic structure of the Constitution. Therefore, to hold that an advance ruling of the authority should not be permitted to be challenged before the High Court under Articles 226 and/or 227 of the Constitution would be to negate a part of the basic structure of the Constitution. Nonetheless, we do understand the apprehension of the Authority that a writ petition may remain pending in the High Court for years, first before a learned Single Judge and thereafter in Letters Patent Appeal before the Division Bench and as a result the object of Chapter XIX-B of the Act which is to enable an applicant to get an advance ruling in respect of a transaction expeditiously would be defeated. We are, thus, of the opinion that when an advance ruling of the Authority is challenged before the High Court under Articles 226 and/or 227 of the Constitution, the same should be heard directly by a Division Bench of the High Court and decided as expeditiously as possible"</em> . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The court observed that it does not encourage an aggrieved party to appeal directly to this Court against the order of a Tribunal exercising judicial functions unless it appears to the Court that a question of principle of great importance arises. Unless, therefore, a Special Leave Petition raises substantial questions of general importance or a similar question is already pending before this Court for decision, this Court does not entertain a Special Leave Petition directly against an order of the tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In sum, the Supreme Court has held that the correct remedy against an order of a tribunal is to approach the High Court under Article 226 and or/227 and not approach the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court had also earlier in the case of <em>Foster's Australia Ltd </em>case <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2008/2008-TIOL-176-SC-IT.htm" target="_blank"><font size="1">(2008-TIOL-176-SC-IT) </font></a></strong>had permitted the petitioner to move the High Court instead of filing an SLP in the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, then what about orders passed by the CESTAT? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
bring you the Supreme Court judgement today. Please see <strong><a href="http://taxindiainternational.com/" target="_blank">www.taxindiainternational.com</a> by noon</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Direct Appeal to Supreme Court - Does<em> Chandra Kumar </em>make any difference? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN a landmark case,<em> L. Chandra Kumar v. Union of India</em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-159-SC-CB.htm" target="_blank"><font size="1">2002-TIOL-159-SC-CB</font></a></strong>, a Constitutional Bench of the Supreme Court held, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. We hold that all decisions of Tribunals whether created pursuant to Article 323A or Article 323 B of the Constitution, will be subject to the High Court's Writ jurisdiction under Article 226/ Article 227 of the Constitution, before a Division Bench of the High Court within whose territorial jurisdiction the particular Tribunal falls. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. We may add here that under the existing system, direct appeals have been provided from the decisions of all Tribunals to the Supreme Court under Article 136 of the Constitution. In view of our above-mentioned observations, this situation will also stand modified. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In the view that we have taken, <font color="#FF0000">no appeal from the decisions of a Tribunal will directly lie before the Supreme Court</font> under Article 136 of the Constitution; but instead, the aggrieved party will be entitled to move the High Court under Article 226/ 227 of the Constitution and from the decision of the Division Bench of the High Court, the aggrieved party could move this court under Article 136 of the Constitution. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court was very emphatic that no appeal shall lie to the Supreme Court from an order of a Tribunal. But the issue did not rest there. Several High Courts held that Chandra Kumar is not applicable to CESTAT and one High Court held that Chandra Kumar decision did not take away the statutory right of appeal provided for in the Central Excise Act. And even the Supreme Court continues to admit appeals directly from the orders of the Tribunal. Is it because the Central Excise Act provides for direct appeal to the Supreme Court in certain cases? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Samruddhi Industries</em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/hc/2009/2009-TIOL-600-HC-MUM-CX.htm" target="_blank"><font size="1">2009-TIOL-600-HC-MUM-CX</font></a></strong>, the Bombay High Court held that CESTAT was not constituted under Article 323B and so Chandra Kumar is not applicable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Delhi Gymkhana Club</em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-460-HC-DEL-ST.htm" target="_blank"><font size="1">2009-TIOL-460-HC-DEL-ST</font></a></strong>, the High Court held that appeal lies to Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Shalimar Rubber Industries</em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2003/2003-TIOL-222-HC-DEL-CX.htm" target="_blank"><font size="1">2003-TIOL-222-HC-DEL-CX</font></a></strong>, the High Court held that the ratio of Chandra Kumar is not to take away right of appeal provided under Section 35L and so the appeal had to be to the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Basic Doubt - Is CESTAT a Tribunal constituted under Article 323B?</strong> We need not have much discussion on this as the Supreme Court had in the Chandra Kumar case itself clarified this issue. In para 26 of the order, the Supreme Court observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"in<em> R.K.Jain V. Union of India</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-405-SC-CB.htm" target="_blank"><font size="1">(2002-TIOL-405-SC-CB)</font></a> </strong>…. A Division Bench of this Court consisting of three of us (Ahmedi, CJI, Punchhi and Ramaswamy, JJ) had occasion to deal with complaints concerning the functioning of the <strong>Customs, Excise and Gold (control) Appellate Tribunal, which was set up by exercising the power conferred by Article 323B".</strong> </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, it has been confirmed by the Supreme Court itself that CEGAT/CESTAT is set up by exercising the powers under Article 323B. In fact, in the <em>R.K.Jain</em> case, the Hon'ble Court had suggested that the possibility of an appeal from the Tribunal to the High Courts be pursued and one of the reasons for the <em>Chandra Kumar</em> judgment was that this suggestion of the Apex Court was not followed up. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, in spite of Section 35L, as per the Supreme Court judgement in Chandra Kumar , there should be no direct appeal from Tribunal to Supreme Court. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">What happened to National Tax Tribunal? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> National Tax Tribunal Act, which is gathering dust in some Ministry, should be recovered and put into effect, so that some confusion can be avoided. It is not easy for every assessee to go to the High Court, let alone the Supreme Court and then wait for years to get a decision. Since Central Excise, Customs and Service Tax are taxes to be levied uniformly all over the country and since, almost every decision of the Tribunal, has all India ramifications, it is better that there is only one Appellate Authority and let it be the Supreme Court, if we cannot bring in the National Tax Tribunal. But Delhi is too far for many. Maybe we should have an exclusive circuit bench of the Supreme Court for tax matters, which should travel to all State Capitals to hear appeals. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But this is all a dream. We will have to go through the maze of litigation from Inspector to Supreme Court and in the whole process, there is only one community of winners - the lawyers - on both sides! Perhaps the laws are made for the lawyers! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Values - Gold and Silver amended </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TARIFF </strong>Value of Gold is increased from 506 USD per 10 grams to 526 and Silver is increased from 866 USD per Kilogram to 898. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2012/cnt12_066.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No 66/2012-Cus.,(N.T.), Dated: July 31, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram back as Finance Minister</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> one and only PC is back in his favourite corner of the North Block. PC became the Finance Minister for the first time in 1996. From 1998 to 2004, he was in the opposition and in 2004 Manmohan Singh chose him as the Finance Minister. In 2008, he had to move to the other corner of the North Block as Home Minister. Now, he is back in the Finance Ministry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PC has a tough time ahead in the Finance Ministry, especially in the Revenue Department. Both the Boards have new heads and are not in the best of shape (Boards, not heads). The Negative List is playing havoc with Service Tax, Vodafone is pending, inflation and deficit are serious issues. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram knows his Law and knows the Ministry well - the babus cannot take him for a ride. The babudom is certainly unhappy about an astute Finance Minister - Indian bureaucracy is all about not allowing the politicians to function - but with PC, it may not be possible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Delhi babu seems to know everything. A very senior bureaucrat told me 15 days ago in Delhi that Chidambaram would be the new Finance Minister and Sushil Kumar Shinde would be the Home Minister before Parliament session starts. </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"> - Thursday'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">Central Excise</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Valuation - Goods manufactured with moulds supplied by purchaser and other goods procured from nominated suppliers - Not Job work - Rule 10A of Valuation Rules not applicable - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ACCORDING</strong> to the Job Worker definition, in terms of Rule 10 A, any person to enter within its ambit of the definition should satisfy three requirements viz. (i) he should manufacture or produce goods (ii) he should do it on behalf of a principal manufacturer and (iii) he should do it from any inputs or goods supplied by the principal manufacturer or by any other person authorized by him. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax</font></strong></p>
<p align="left"><font size="2"><strong><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif">Income
tax - </font></strong></font><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether
when assessee takes over running business of partnership firms, availing
benefits of Ss 80IB/80IC, such benefits available to undertakings can
also be availed by new owner for unexpired period - YES: ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Bench are
- Whether when assessee decides to allot sweat equity shares to its employees
free of cost, it is entitled to claim the fair market value of ESOP as
expenditure - Whether mere non-allotment of the shares pending completion
of certain formalities makes such expenditure contingent liability; Whether
when the assessee takes over running business of partnership firms, availing
benefits of Ss 80IB/80IC, such benefits available to the undertakings cannot
be availed by the amalgamating company for the unexpired period; Whether
the change in ownership of the undertaking would disentitle the successor
the benefit of deduction under Ss 80IB/ 80IC of the Act for the unexpired
period; Whether AMC charges received by the assessee which are directly
relatable to the business of manufacturing, commissioning and erection
of cooling system, is eligible for deduction u/s 80IB/80IC of the Act and
Whether deduction u/s 80IB/80IC of the Act is allowable on assembling the
bought out items in order to make available the whole unit in a running
condition at the site of the company/plant. Answers to these questions
partly go in favour of the assessee.</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">Conversion of Free Shipping Bills to DEPB Shipping Bills - Restrictions and conditions laid down in CBEC Circulars in context of conversion of free Shipping Bills to Shipping Bills under export promotion schemes have a proper rationale and same are intended to curb mis-utilisation of export benefits - Tribunal should not overlook such restrictions or nullify same - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RESTRICTIONS</strong> and conditions which have been laid down in the CBEC Circulars i.e., 4/2004 and 36/2010 in the context of conversion of free Shipping Bills to Shipping Bills under export promotion schemes have a proper rationale and the same are intended to curb mis- utilisation of export benefits and the Tribunal should not overlook such restrictions or nullify the same. When a well laid procedure is in place and all other claimants of DEPB benefit are following that procedure and are filing DEPB Shipping Bills, it does not stand to reason as to why the appellants want to circumvent that procedure and file a free Shipping Bill initially and ask for substitution later on without giving sufficient reason.</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><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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