TIOL-DDT 1924 · 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 1924</font><br>
21.08.2012<br>
Tuesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - No TDS on Compensation</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is a sad story.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A young child, named, Jyotsna Jethani, met with a horrifying accidental death in 1999, while getting out of the escalator maintained by Airport Authority of India (AAI) at Delhi Airport. A grief stricken mother and the grandfather filed a complaint with the National Consumer Disputes Redressal Commission, alleging deficiency in service on the part of the Airport Authority of India, which has resulted in chewing or crushing of their beloved child and hence claimed compensation for the irreparable loss. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was just another file with the AAI and they opposed the compensation tooth and nail. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commission in its order dated 5th August 2004, observed, <em>"The case also illustrates to what extent we have developed the tendency to deny the obvious, in litigation. Except admitting the trapping of young child in the escalator, the AAI has tried to dispute its liability and deficiency in service. We do not know when we would change our Jurisprudence which encourages such attitude of denials and protracts litigation and increases burden on adjudicating forums/courts"</em>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commission noted that fortunately the AAI has not disputed the death of the young child. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway, the Commission ordered payment of a compensation of 2,50,000 French Francs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The story did not end there. While giving the compensation, the Airports Authority deducted TDS of Income Tax. The unfortunate victims are again before the Commission with a plea that TDS is not deductible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The key issue before the Commission was, “Whether the T.D.S. is deductible on the compensation paid to the unfortunate parents, whose child dies in an escalator maintained by an Airport Authority”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commission by its order dated 14.08.2012, held, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First of all the respondent should not have deducted the T.D.S. An information to the Income Tax Authority would suffice. In the instant case, the compensation is by way of damages. The damages paid for the death of a person cannot be equated with income as such.</font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Commission directed the AAI to pay the TDS amount along with interest @9% p.a. to the Decree Holder, within a period of 30 days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AAI was however, directed to recover the same from the Income Tax Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But will the Income Tax Department give it back? That is another long litigation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=339&filename=notification/cbdt/other_cases/Geeta_Jethani_Consumer_Disputes.htm" target="_blank">Click Here</a></strong> for the NCDRC Order. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - Arm's Length Price - Five Percent Variation Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 90C of the Income Tax Act, </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Computation of arm's length price. </font></strong></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">92C. (1) The arm's length price in relation to an international transaction or <strong>specified domestic transaction</strong> shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe, namely :- </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(a) comparable uncontrolled price method; </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) resale price method; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) cost plus method;</font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) profit split method; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) transactional net margin method; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) such other method as may be prescribed by the Board. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm's length price, in the manner as may be prescribed:</em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices:</font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided further that if the variation between the arm's length price so determined and price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed <font color="#FF0000"><strong>such percentage of the latter, as may be notified by the Central Government in the Official Gazette in this behalf</strong></font>, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm's length price.</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The portion marked in red was substituted by the Finance Act 2011, for the words, <em>“five per cent of the latter”</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Government has notified the percentage as per the amended proviso. The Trade and Industry should be happy that confusion as to what percentage the Government is going to notify is ended and more so because the limit is retained at five percent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The notification stipulates that <em>where the variation between the arm's length price determined under section 92C and the price at which the international transaction has actually been undertaken does not exceed five per cent of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price for assessment year 2012-13. </em></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiainternational.com/circularDesc.php?qwer43fcxzt=MTc3Mw==">CBDT Notification No. 31/2012 [F.No. 500/185/2011-FTD I], Dated: August 17, 2012 </a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">One Percent CVD on Several Fertiliser Products</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE </strong>was confusion on the CVD rate applicable to import of several fertiliser items. The Column 5 pertaining to CVD in the Notification No. 12/2012 - Cus had a "-" (dash), which means the CVD had to paid as per the Central Excise Tariff with any exemption notifications. Now CE Duty payable is 6% as per Notification No. 2/2011-CE dated 1.3.2011. But fertilisers were charged to a CVD of 1% earlier. Surely the Government did not plan to charge 6% CVD on fertilisers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They have corrected the mistake now. Notification No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_012.htm" target="_blank">12/2012-Cus</a></strong> dated 17.03.2012 is amended, to stipulate a one percent CVD for the following items. </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
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<td valign="top"><p align="center"><font color="#993333"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl. No in the Table to the Notification </font></strong></font></p></td>
<td valign="top"><p align="center"><font color="#993333"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description</font></strong></font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">197</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Kyanite salts, in a form indicative of their use for manurial purpose </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">198</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Muriate of potash, for use as manure or for the production of complex fertilisers </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">199</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ammonium phosphate or ammonium nitro-phosphate, for use as manure or for the production of complex fertilisers </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">201</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Potassium Nitrate, in a form indicative of its use for manurial purpose </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">202</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I. The following Water Soluble Fertilizers included in Schedule 1, part A of the Fertilizers Control Order, namely:- </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Potassium nitrate (13:0:45) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Calcium nitrate </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Mono ammonium phosphate </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Mono potassium phosphate (0:52:34) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) 13:40:13 NPK fertilizers </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) 18:18:18 NPK fertilizers </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) 13:25:26 fertilizers </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) 20:20:20 NPK fertilizers </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) 6:12:36 NPK fertilizers </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(j) Potassium magnesium sulphate </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(k) 19:19:19 NPK fertilizers </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(l) NPK 12:30:15 </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(m) NPK 12:32:14 </font></p>
</blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">II. The following Liquid fertilizers included in schedule 1 part A of the Fertilizers Control Order, namely:- </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Super phosphoric acid ( 70% P2O5) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Ammonium poly-phosphate ( 10-34-0) (Liquid) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Zincated phosphate ( Suspension) </font></p>
</blockquote></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">203</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Urea </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">204</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Potassium sulphate, containing not more than 52% by weight of potassium oxide </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">205</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Diammonium phosphate, for use as manure or for the production of complex fertilisers </font></p></td>
</tr>
</table>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_046.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No.46 /2012-Cus.,Dated: August 17, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Officers Don't Obey Board's Transfer Orders </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has come to the notice of the CBDT's Placement Committee that some of the officers have not reported at their new place of posting as per Board's transfer orders. Board has asked all the Chief Commissioners to report about the disobedient officers of all grades from ACIT to CCIT by 22nd August 2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why is it that transferred officers don't join at their new places of posting? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They are either trying for a retention/change through their official/political connections or are busy signing files with backdates, which they had earlier reported as cleared.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/office_order_35015_2012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT F. No. 35015/31/2012-Ad.VI., Dated: August 17, 2012 </font></strong></a></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"> - Wednesday's cases</font></strong></font></strong></font></strong></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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">Customs</strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Project Imports - for classification under Heading 9801, bundle of items/goods must be complete so as to be considered to be "required for setting up of a power plant or for substantial expansion of an existing power plant": CESTAT. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</STRONG> expression "all goods" used in the two Chapter Notes of Chapter 98 is significant and so is the expression "all items" used in the text of Heading 9801 - The phrase "all items of machinery including... required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified... power project" means, that the whole lot of items required for the setting up of a power plant or for the substantial expansion of an existing power plant will constitute a bundle or cluster to be covered by Heading 9801 - The Chapter Notes appear to support this legal fiction embodied Heading 9801 - If some of the items/goods are removed from this bundle, the residue will not go to constitute a new power plant or an expanded power plant - It is imperative that, for classification under Heading 9801, the bundle of items/goods must be complete so as to be considered to be "required for the setting up of a power plant or for the substantial expansion of an existing power plant" </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 proceedings u/s 153A are initiated, AO is empowered to assess or reassess even 'total income' and no time-limit applies for sending notice u/s 148 - YES: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is an individual and was carrying on business under the name and style of M/s. A.K. Traders. On 13.12.05, there was a search of the assessee's residence and business premises u/s 132 of the Act. Pursuant to the search, the AO issued notices u/s 153A of the Act and called upon the assessee to file the returns of income for the six years as envisaged in the Section. After considering the explanation and details submitted by the assessee, the AO made several additions to the income returned in respect of the AYs under consideration. Before the Tribunal, the assessee in addition to challenging the addition made by the AO also questioned the validity of the additions made in the assessments framed u/s 153A of the Act. The Tribunal found itself in complete agreement with the submissions made on behalf of the assessee. </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">Rule 6 of CCR - Common inputs/input services used in manufacture of dutiable and exempted final products - Reversal of attributable credit - Commissioner rejecting application made in terms of s. 73 of the FA, 2010 and confirming demand of Rs.2.09 Crores along with penalty and interest - in case amount paid is found to be less than amount payable, CCE should call upon applicant to pay differential amount along with interest - Rejection of application is not sustainable: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> order rejecting the application under Section 73 of the Finance Act, 2010 is not sustainable, therefore, the impugned orders rejecting the application as well as demanding duty in view of the provisions of Rule 6(3)(b) of the Cenvat Credit Rules are set aside and the matter is remanded to the jurisdictional Commissioner of Central Excise for de novo adjudication after affording reasonable opportunity of hearing to the appellant. </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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day</font></p>
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