TIOL-DDT 2027 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 2027</font><br> 18.01.2013<br> Friday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Incentives on Export of Computer Software - CBDT Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has clarified several issues related to the incentives on profits from export of computer software: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <strong>WHETHER "ON-SITE" DEVELOPMENT OF COMPUTER SOFTWARE QUALIFIES AS AN EXPORT ACTIVITY FOR TAX BENEFITS UNDER SECTIONS 10A, 10AA AND 10B OF THE INCOME TAX ACT, 1961 </strong>; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT had long ago by Circular No. 694 dated 23.11.1994 clarified that a unit should not be denied tax-holiday under sections 10A or 10B on the ground that the computer software was prepared 'on-site' as long as it was a product of the unit, i.e.. it is produced by the unit. It is clarified that the software developed abroad at a client's place would be eligible for benefits under the respective provisions, because these would amount to 'deemed export' and tax benefits would not be denied merely on this ground. However, since the benefits under these provisions can be availed of only by the units or undertakings set up under specified schemes in India, it is necessary that there must exist a direct and intimate nexus or connection of development of software done abroad with the eligible units set up in India and such development of software should be pursuant to a contract between the client and the eligible unit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <strong>WHETHER RECEIPTS FROM DEPUTATION OF TECHNICAL MANPOWER FOR SUCH "ON-SITE" SOFTWARE DEVELOPMENT ABROAD AT THE CLIENTS PLACE ARE ELIGIBLE FOR DEDUCTION UNDER SECTIONS 10A, 10AA AND 10B. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that profits earned as a result of deployment of Technical Manpower at the client's place abroad specifically for software development work pursuant to a contract between the client and the eligible unit should not be denied benefits under sections 10A, 10AA and 10B provided such deputation of manpower is for the development of such software and all the prescribed conditions are fulfilled. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <strong>WHETHER IT IS NECESSARY TO HAVE SEPARATE MASTER SERVICE AGREEMENT (MSA) FOR EACH WORK CONTRACT AND TO WHAT EXTENT IT IS RELEVANT. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that the tax benefits under sections 10A, 10AA and 10B would not be denied merely on the ground that a separate and specific MSA does not exist for each Statement of Work (SOW). The SOW would normally prevail over the MSA in determining the eligibility for tax benefits unless the Assessing Officer is able to establish that there has been splitting up or reconstruction of an existing business or non-fulfilment of any other prescribed condition. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <strong>WHETHER RESEARCH AND DEVELOPMENT (R&D) ACTIVITIES PERTAINING TO SOFTWARE DEVELOPMENT WOULD BE COVERED UNDER THE DEFINITION OF "COMPUTER SOFTWARE" STIPULATED UNDER EXPLANATION 2 TO SECTIONS 10A AND 10B. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that the services 'Engineering and Design' do have the in built elements of Research and Development. However, for the sake of clarity, it is reiterated that any Research and Development activity embedded in the 'Engineering and Design', would also be covered under the said Notification for the purpose of Explanation 2 to the above provisions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.<strong> WHETHER TAX BENEFITS UNDER SECTIONS 10A, 10AA AND 10B WOULD CONTINUE TO REMAIN AVAILABLE IN CASE OF A SLUMP-SALE OF A UNIT/UNDERTAKING. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that on the sole ground of change in ownership of an undertaking, the claim of exemption cannot be denied to an otherwise eligible undertaking and the tax holiday can be availed of for the unexpired period at the rates as applicable for the remaining years, subject to fulfilment of prescribed conditions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. <strong>WHETHER IT IS NECESSARY TO MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR AN ASSESSEE IN RESPECT OF ITS ELIGIBLE UNITS CLAIMING TAX BENEFITS UNDER SECTIONS 10A AND 10B. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since there is no requirement in law to maintain separate books of account, the same cannot be insisted upon. However, since the deductions under these sections are available only to the eligible units, the Assessing Officer may call for such details or information pertaining to different units to verify the claim and quantum of exemption, if so required. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.<strong> WHETHER TAX BENEFITS UNDER SECTION 10AA CAN BE ENJOYED BY AN ELIGIBLE SEZ UNIT CONSEQUENT TO ITS TRANSFER TO ANOTHER SEZ. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tax holiday should not be denied merely on the ground of physical relocation of an eligible SEZ unit from one SEZ to another in accordance with Instruction No. 59 of Department of Commerce (F.No.C-4/2/2010-SEZIt) and if all the prescribed conditions are satisfied under the Income-tax Act, 1961. It is further clarified that the unit so relocated will be eligible to avail of the tax benefit for the unexpired period at the rates applicable to such years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. <strong>WHETHER NEW UNITS/UNDERTAKINGS SET UP IN THE SAME LOCATION WHERE THERE IS AN EXISTING ELIGIBLEUNIT/UNDERTAKING WOULD AMOUNT TO EXPANSION OF THE EXISTING UNIT/UNDERTAKING. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that setting up of such a fresh unit in itself would not make the unit ineligible for tax benefits, as long as the unit is set-up after obtaining necessary approvals from the competent authorities: It has not been formed by splitting or reconstruction of an existing business; and fulfils all other conditions prescribed in the relevant provisions of law. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2013/it13cir01.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 01/2013, Dated: January 17, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Centralised Processing of Statements of TDS Scheme, 2013</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has notified the <strong>Centralised Processing of Statements of Tax Deducted at Source Scheme, 2013.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board is to set up as many Centralised Processing Cells as it may deem necessary and specify their respective jurisdictions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A deductor shall furnish the correction statement of tax deducted at source in the form specified by the Director General - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) at the authorised agency through electronic mode; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) online through the portal. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No person shall be required to appear personally or through authorised representative before the authorities at the Cell in connection with any proceedings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope this centralised Cell would sort out many of the TDS credit problems. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2013/it13not003.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Notification No. 3/2013, Dated: January 15, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New Exchange Rates from Today</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods with effect from 18.01.2013. The last exchange rates notified were with effect from 04.01.2013 </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_005.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 05/2013-Cus.,(N.T.), Dated: January 17, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Values of Imported Edible Oils - to be defrosted </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Cabinet Committee on Economic Affairs has approved to defreeze the tariff values of Crude Palm Oil, RBD Palm Oil, Others - Palm Oil, Crude Palmolein, Others - Palmolein and Crude Soyabean Oil. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value is fixed under Section 14 (2) of the Customs Act, 1962, inter alia, on the above edible oils and notified on a fortnightly basis. Since 31.7.2006, tariff values of the above edible oils have remained unchanged, as a fiscal measure to contain inflation. The freeze has led to a significant variation between the notified tariff values and the computed landed prices based on international prices of the edible oils, adversely affecting the revenue collection and also the domestic refining industry. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hence, it is proposed to align the tariff values with international prices of the edible oils. <strong>The Government is also likely to enhance the import duty on edible oils</strong>, which in a very complicated procedure is expected to hike the price payable to farmers for Fresh Fruit Bunches of oil palm, which is linked to the landed price of Crude Palm Oil. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Arrears Recovery - CBEC's Draconian Circular Causing Ripples in Field </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC's</strong> New Year Bomb in Circular No. 967/2013-CX dated 01.01.2013 is exploding in the factories of Central Excise assessees right across the country. Though no Central Excise Officer can even be remotely accused of having collected a single rupee because of the Circular, the fact remains that the assessees are being threatened with letters, notices, attachments, personal requests and what have you! Every officer is extremely nice. The Superintendent says, he fully understands the woes of the assessees, but ‘what can I do, my Assistant Commissioner is mad at me'. The Assistant Commissioner is equally nice but says he is harassed by his Commissioner. The Commissioner is politeness personified, but he wants you to pay up, because his Chief Commissioner does not understand. The Chief Commissioner is equally nice, but what can he do when the Board is breathing down his neck? YOU HAVE TO PAY. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are told in Ludhiana Excise officials went to a knitting unit to attach their property to recover about Rs. 2 Crores. Tension prevailed with leaders of a political party joining in with heavy police deployment. When the situation threatened to turn out of control, the wise excise-men made a hasty retreat, but not without warning the assessees to pay up the arrears latest by 31 January. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do we need all this drama to collect taxes? Are we dealing with thugs and thieves?- even they are treated with more respect! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We understand that the Bombay High Court has yesterday granted interim stay against recovery pursuant to the controversial Circular No. 967/2013. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT Cartoon </strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2027.jpg" alt="" width="400" height="451" hspace="5" border="0" align="center"></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">Customs </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Spurious Drug - clear omission on part of importer has rendered goods liable to confiscation hence importer cannot escape penal consequences - Pre-deposit ordered of Rs.50,000/- towards penalty: CESTAT by Majority </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant imported a consignment of Prednisolone BP/USP/IP from China, declared to be manufactured by M/s. Tainjin Tianyao Pharmaceutical Co. Ltd., China. The goods were covered by invoice and packing list issued by M/s. Sinobright Development Ltd., Hongkong. The impugned goods arrived in India vide Air Way Bill and the bill of entry was filed by the CHA on behalf of the importer. The bills of entry were assessed as per the declaration given therein and the importer paid Customs duty of Rs.5,24,536/-. As per the import policy in force the importer was required to produce a “No Objection Certificate” from the Drug Controller General of India and, therefore, representative samples of the impugned goods were forwarded to the Assistant Drug Controller, Mumbai for obtaining NOC. After examination and comparing of the labels and the container, etc. it was declared that the subject drug was ‘spurious' and not manufactured by the original manufacturer. </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 reassessment can be initiated after four years merely on ground that one of Directors of assessee company filed complaint of siphoning of funds before CLB - YES: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether AO has the authority to reopen assessment after expiry of four years, on receipt of complaint of siphoning of funds, filed by one of the Directors of the assessee company; Whether the fact that such complaint has been filed before a statutory authority like Company Law Board can have any material relevance to ascertain its credibility; Whether when the complaint can constitute tangible material for reopening the assessments, it can equally constitute tangible material giving rise to the belief that the income had escaped assessment and Whether there is no duty of the assessee to disclose all relevant information at the time of original assessment, merely because the AO has not asked for it. 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">Classification - whether “Arjun-Ultra-1 CE” is a ‘Tractor' or ‘Front End shovel Loader' - Revenue demanding duty in respect of all clearances by classifying the same under C.H 8429 whereas assessee classifying under Ch. 87 and claiming exemption - Prima facie case for total waiver - Stay petition allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> applicants are engaged in the manufacture of Tractors and the dispute in the present proceedings is in respect of the model “Arjun-Ultra-1 CE”. The applicants were clearing this model by claiming the classification under Chapter Heading 87 of the Tariff as “Tractor” as the same was exempted from the payment of Central Excise duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue wants to classify the same under sub-heading 8429 5100 of the Tariff specifically as ‘Front End Shovel Loader' and accordingly charge the same to Central Excise duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The proceedings resulted in confirmation of the demand of Rs.17,26,89,200/- along with penalty and interest by the CCE, Nagpur.The appellant, therefore, in his “Arjun-Ultra-1” drove all the way to the CESTAT with a Stay application. </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"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>