TIOL-DDT 1976 · 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 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><font color="#663399" size="3">TIOL-DDT 1976</font><br>
05.11.2012 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Notice Issued by ACIT after transfer of Jurisdiction Quashed - Cost imposed on Income Tax Department by HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE petitioner is the famous Fiat India Automobiles and the main respondents are the ACIT and CIT, Mumbai. The petitioner's assessments were transferred from the jurisdiction of an ACIT in Mumbai to a DCIT in Pune in 2011. After one year in March 2012, the ACIT Mumbai issued a notice to the petitioner proposing to reopen the assessment for the year 2005-06. Two days before the notice, the CIT, Mumbai, in a corrigendum temporarily cancelled the transfer of jurisdiction from Mumbai to Pune. And this corrigendum or a notice to issue a corrigendum was never served on the assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court was not impressed. It found the conduct of the CIT and ACIT as highly deplorable. The High Court observed, <strong>Instead of bringing to book the persons who circumvent the provisions of law, the ACIT­10(1) Mumbai has himself indulged in circumventing the provisions of law which is totally disgraceful. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court quashed and set aside the impugned notice dated 30.03.2012 issued by the ACIT­10(1) Mumbai based on the corrigendum order dated 27.03.2012 passed allegedly by the CIT­10 Mumbai at the behest of ACIT­10(1) Mumbai and in gross abuse of the process of law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court also allowed cost of Rs. 10,000 and made it clear that it would be open to the revenue to collect the costs of Rs.10,000/­ from the respondents - CIT and ACIT. And a copy of the order is to be sent to the CCIT and CBDT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tail spark:</strong> The High Court was informed that the CCIT­VI Mumbai agrees that the impugned actions of CIT­10 Mumbai and ACIT­10(1) Mumbai are patently unjustified and not as per law but has expressed his helplessness in the matter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fortunately, we still have Courts in this country, perhaps much to the dislike of Revenue officers who have only contempt for the Law and Courts and who would run the administration much better with retrospective secret corrigenda if only those irksome courts did not interfere.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2012/2012-TIOL-879-HC-MUM-IT.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Click Here</strong> <strong>for the High Court Order</strong></font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - E-filing Portal Shut Down </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> informs the esteemed taxpayers, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That looking to the overwhelming response from the taxpayers and growth of e-filing, a new e-filing project was conceptualized in order to take the e-services to the next generation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the new e-filing setup not only the ITR forms but also other income tax forms are proposed to be made available for electronic filing along with other web enabled services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In order to make the new portal live, the migration of data from the old set up to the new set up is in process. Due to this e-filing services to the taxpayers through the portal <a href="https://incometaxindiaefiling.gov.in"><strong>https://incometaxindiaefiling.gov.in</strong> </a>will not be available from 3rd November to 8th November, 2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The e-filing service will resume with various new additional services like multiple mode of e-filing of returns: help desk through call centre and e-mail support, provision of online forms, pre-filing of data in forms, and availability of offline e-forms. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Don't Revive Posts Vacant for more than Year - Fin Sec </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Finance Secretary has informed all the Secretaries that posts that have remained vacant for more than a year SHALL NOT be revived except under very rare and unavoidable circumstances and after seeking clearance of the Department of Expenditure. This is to be implemented with immediate effect. The officers in CBEC who have been waiting for long for their promotions may find that many of the posts would now get lapsed.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/Dept_07_2012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dept of Expenditure No. 7(1)E. Coord/2012, Dated: November 01, 2012</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Don't Deny Vigilance Clearance to suspected Officers due for Promotion - Suspend them</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOPT</strong> has issued instructions pertaining to vigilance clearance for promotion. Vigilance clearance for promotion may be denied only in the following three circumstances:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Government servants under suspension; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Government servants in respect of whom a charge sheet has been issued and the disciplinary proceedings are pending; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Government servants in respect of whom prosecution for a criminal charge is pending.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DOPT reiterates that vigilance clearance cannot be denied on the grounds of pending disciplinary/criminal/court case against a Government servant, if the three conditions mentioned above are not satisfied. The legally tenable and objective procedure in such cases would be to strengthen the administrative vigilance in each Department and to provide for processing the disciplinary cases in a time bound manner. If the charges against a Government servant are grave enough and whom Government does not wish to promote, it is open to the Government to suspend such an officer and expedite the disciplinary proceedings. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/Dopt_22034.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DOPT F.No.22034/4/2012 -Estt. (D) Dated; November 02 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Audited? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AT</strong> the request of the Comptroller and Auditor General of India (CAG), an international peer review team reviewed the performance audit function of SAI India. The objective of the peer review was to assess the extent to which the performance audit function of CAG adheres to applicable standards of professional practice; and to identify opportunities for improvement. The peer review team was led by the Australian National Audit Office and included representatives from the supreme audit institutions of Canada, Denmark, The Netherlands and the United States of America. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India has one of the largest public sectors in the world, within which there is a recognised need to strengthen performance, accountability for results and financial management systems. In this environment, the scale and complexity of the Supreme Audit Institution of India's (SAI India's) work are considerable. SAI India has around 43,500 staff, and its auditing covers multiple levels of government, all government sectors and many different types of organisations. There is also significant diversity in language, governance and development in the 28 states and 7 union territories subject to audit by SAI India. This environment highlights the importance of SAI India's role in terms of improving public sector performance and accountability, and necessarily affects the audit approach it adopts. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recommendations of the peer review : </font></strong></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. To strengthen quality management in the performance audit function, we recommend that SAI India review and update the Audit Quality Management Framework, and improve communication to its staff about the framework. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. To clarify and enhance performance audit direction and guidance, we recommend that SAI India review and update its Auditing Standards and Performance Auditing Guidelines, taking into account current performance audit practices, and relevant international standards and guidance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. To strengthen performance audit capability, we recommend that SAI India build on the current performance audit training program by further developing performance audit skills of relevant staff, including through on - the - job training. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. To improve performance audit design and the basis for forming audit conclusions, we recommend that SAI India refine its approach to developing achievable audit objectives, appropriate audit criteria, and the test programs necessary to satisfy the audit objectives. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. To assist in managing the actual and potential conflicts of interest of its staff and contractors, we recommend that SAI India introduce a formal independence policy, which would require staff and contractors involved in performance audits to declare actual and potential conflicts of interest at the planning stage, and subsequently if they arise. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. To inform audit conclusions and focus attention on performance audit recommendations aimed at improving administration and program performance, we recommend that SAI India: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. review its approach to obtaining responses to audit reports from audited entities; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. request that audited entities respond directly to each recommendation made in draft audit reports, and publish the responses received in final audit reports. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. To provide natural justice to third parties, and obtain and appropriately consider their perspectives when developing and finalising performance audit reports, we recommend that SAI India review its approach to consulting with third parties. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. To strengthen the evidence base supporting performance audit findings and conclusions, we recommend that SAI India reinforce validation techniques and documentation requirements for different types and sources of evidence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. To strengthen application of reporting standards across performance audit reports, we recommend that SAI India develop and implement a strategy to improve reporting capability and reinforce the requirements of its standards. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. To increase assurance on compliance with applicable standards of professional practice and identify opportunities for improvement, we recommend that SAI India introduce: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. an annual quality assurance program covering a sample of performance audits completed during the year; and </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. a process to identify and disseminate lessons learnt for performance audits. </font></p>
</blockquote>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India's CAG has agreed with all the recommendations. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Inspector caught red handed with a bribe of Rs. 300! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN </strong>it comes to a bribe, there are no heights and depths - an Income Tax Inspector was arrested in Pune by CBI accepting a bribe of Rs. 300 - yes three hundred rupees. This inspector gets a salary of more than Rs.30,000/- and he will suffer prosecution, jail, appeals, suspension, dismissal etc, for the rest of his life - all for three hundred rupees! </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"> – Tuesday'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">Service Tax</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Renting of immovable property - Three individuals are co-owners of building and have rented out premises to person who issues different cheques to all individuals - Prima facie, each applicant would get benefit of SSI exemption as they are provider of service on individual basis - strong case in favour - Pre-deposit waived and stay granted: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BENEFIT</strong> of SSI exemption Notification No 6/2005-ST dated 01.3.2005 as amended vide Notification No 8/2008-ST dated 01.3.2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. On perusal of the said notification, the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. Prima-facie, the appellants have made out a case for waiver of pre-deposit of amounts involved. Accordingly, the applications for waiver of pre-deposit of amounts are allowed and recoveries thereof stayed till disposal of appeals." </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 surcharge collected by landlord, along with municipal taxes, from tenants forms part of income from house property - YES: Calcutta HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE </strong>company was having 1/3rd ownership in a property situated at Kolkata, prior to the AY 1997-98, and remaining 2/3rd portion was being owned by M/s. Poddar Udyag Ltd. Subsequently under the scheme of arrangement sanctioned by the High Court, the assessee acquired 50 per cent ownership of the said building from the AY 1997-98 onwards. Since the land and building were standing in the name of the Poddar Udyag Ltd. all formalities relating to municipal assessment were made in the name of Poddar Udyag Ltd and this company used to collect rent from tenants. THE issues before the Bench are - Whether surcharge received by the landlord, along with municipal taxes from the tenants forms a part of income from 'house property' and Whether when the surcharge collected by the landlord is not used for his own purpose and the same is paid to the municipal authorities, the same can be deducted from the total income. And the verdict goes against 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">Benefit contained in Notification 22/2009-CE(NT) is to be allowed retrospectively - if credit of entire excise duty paid by an EOU is not allowed and same is restricted, it creates discrimination between units in DTA and those in EOU Zone: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONE </strong>is economic and the other is legal. First the economic reason CENVAT (value added tax) is an economic concept and the object is to minimize / eliminate the cascading effect of taxes. If this objection has to be realized, then full credit of the duties paid at the previous stage has to be allowed. Further, if credit of the entire excise duty paid by an EOU is not allowed and the same is restricted, it creates discrimination, between units in the DTA and units in the EOU Zone. That is to say, it will no longer be economically attractive to buy goods form the EOU because of lesser amount of credit that would be available. It also creates discrimination against the EOU <em>vis-à-vis</em> the imported goods. The CENVAT Credit scheme is not intended to create distortions in the market place and the law also should not be interpreted in such a way so as to create a distortion. It is an accepted legal principle that the law should be interpreted in a harmonious way so as to sub-serve the public policy. </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></p>
<p><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>
<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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