TIOL-DDT 2044 · 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 2044 </font><br> 13.02.2013 <br> Wednesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Government Spends 15 Lakh Crores </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>expenditure of the Central Government is all set to touch the Himalayan figure of Rs. 15 Lakh Crores. The total expenditure of the Central Government as per the 2012 Budget was Rs. 14.97 Lakh Crores and this is sure to cross the 15 lakh Crore mark when the final figures arrive in a few weeks. Of the 15 Lakh Crores about 3 Lakh Crores go into consumption expenditure -wages and salaries and goods and services for current use. Debt service costs about 4.5 Lakh Crores. 50% gone and the Government does not really get all the 15L Crores it wants to spend - there is a deficit of over 5L Crores which they will bridge by borrowings and perhaps selling the family silver. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Out of the 15L Crores you want to spend, you are going to borrow 5L Crores. Maybe borrowing is not all that a bad idea if you are going to invest the borrowed money in capital assets like borrowing to buy a house makes good economic sense, but borrowing to gamble is disastrous. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, all these assumed figures are going to change as we approach the year-end. Expenditure will certainly shoot up beyond 15L Crores and the expected revenue of 9.3L Crores will remain an expectation - leaving a wider deficit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the only solution the Government seems to be having seems to be to hound the taxpayers into fiscal submission and probable extinction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can we expect anything better in the 2013 budget? </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Department's action excessive - Nokia - Not Connected </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/nokia.jpg" alt="" width="234" height="176" hspace="5" border="0" align="left"><strong>AILING</strong> Mobile phone giant Nokia reacted sharply to Indian Income Tax raids and investigation against them. They say, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF0000">The actions of the Income Tax authorities in Chennai are excessive, unacceptable and inconsistent with Indian standards of fair play and governance. </font></em></font></p> <p align="justify"><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Specifically, in tax investigations like this, local standards would prohibit government officials from entering the factory premises and Nokia IT systems without valid authorisation and questioning individual employees for intolerably long periods of time, even after they have fully cooperated with the authorities. </font></em></font></p> <p align="justify"><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We do not see any merit in any of the claims, and are ready to defend ourselves vigorously. </font></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the Income Tax department is armed with a demand of about Rs. 15,000 Crores on Nokia. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another major multinational under the Income Tax scanner is Shell India and everyone knows Vodafone. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see our CobWeb tomorrow </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Intelligence Agencies under Parliament Scrutiny? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>PIL is filed in the Supreme Court that <em>Intelligence Bureau (IB) , (RAW) , National Technical Research Organisation (NTRO)</em> etc. are snooping on the privacy of the citizens and were operating without any legislative mandate. The PIL also pleaded that the funding of these intelligence agencies was being done from the consolidated fund of India, and so their accounts should be brought under the scanner of the Comptroller and Auditor General (CAG) of India. The Supreme Court has issued notice to the Central Government and Intelligence Agencies. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Should Intelligence Agencies be under Legislative scrutiny</strong>? The most powerful Intelligence Agency in the World - CIA was created by the National Security Act in 1947. There is an Inspector General, appointed by the President and confirmed by the Senate, responsible for independent oversight of the CIA.The CIA Office of Inspector General (OIG) is an independent office that is headed by the Inspector General and promotes economy, efficiency, effectiveness and accountability in the management of CIA activities by performing independent audits, inspections, investigations and reviews of CIA programmes and operations. The OIG also seeks to detect and deter fraud, waste, abuse and mismanagement. The OIG advances the Agency's mission by providing findings and recommendations expeditiously to the Director, the Agency and the Congressional intelligence committees. If the CIA can be supervised and scrutinised, there is no reason why the Indian Intelligence agencies should not be under legislative sanction and Audit Scrutiny. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly the CIA website has a kid's page for children which has some interesting games, including one on decoding. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">What do they do with Secret Funds? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Revenue Department, especially Customs and DRI have a lot of money called secret fund - no scrutiny, no audit, no explanations. What is it spent on? Mostly for organising parties and dinners in offices, air tickets and such other expenditure which cannot be officially billed into the Government expenditure. The other day I overheard a senior officer discussing arrangements for the grand visit of a far more senior officer. They were discussing expenditure and this officer told his colleague - I have some money in the Secret Fund, which I can give you; the rest you manage from Preventive - No audit for both! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT exercises its powers under rule 41 and directs Commissioner to finalize assessment </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RULE</strong> 41 of the CESTAT(Procedure Rules), 1982 reads - <em><strong>Orders and directions in certain cases</strong></em>. - The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <em>Commissioner of Customs (I), Nhava Sheva</em> was not finalizing the provisional assessment for the period July, 2006 onwards on the ground that for the period up to June, 2006, the appeal filed in the year 2009 by the appellant was still pending final hearing before the CESTAT and the order that would be passed will have a bearing on the issue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Simply put, the Commissioner of Customs (I) was playing safe. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the applicant is before the CESTAT with a miscellaneous application and requests the Bench to exercise its powers under rule 41 of the CESTAT (Procedure), Rules, 1982. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The applicant submitted that the Bench direct the respondent Commissioner to pass an order either way, as per law, and they would take the legal remedy available. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT observed - </font></p> <blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"</font><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In these circumstances, by exercising our powers under Rule 41 of Customs, Excise & Service Tax Appellate Tribunal (Procedure) Rules, 1982, we direct the respondent to finalize the assessment provisionally assessed pending for the period July 2006 onwards as per law, without waiting for the decision of the appeal no. C/491/09."</font></em></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(See <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2013/2013-TIOL-278-CESTAT-MUM.htm" target="_blank">2013-TIOL-278-CESTAT-MUM</a></font>) </font></strong></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><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">Delay in de novo adjudication has been caused only on account of inaction on part of Revenue - adjudicating authority to dispose of matter of year 1989 within period of two months: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Customs authorities seem to be at leisure. They are not adjudicating a case of the year 1989 in remand proceedings ordered by the CESTAT. Vide an order dated 14.02.2012 the Bench had directed the department to adjudicate the matter within 90 days from the date of communication of the order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fearing for the worst, the Revenue filed a Miscellaneous application and had a conjured up a wonderful excuse for the job not done - that there is a mistake in the order dated 14.02.2012 passed by the Bench inasmuch as that the respondent's name is Commissioner of Customs (Adjudication), Mumbai, but the covering letter of the order, the respondent's name is shown as Commissioner of Customs (CSI Airport), Mumbai, and, therefore, this part of the order needs rectification. </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 computation of capital gains based on delayed rectification deed of property, resulting in lower consideration as compared to original deed, cannot be faulted with - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, an individual, had filed the return of income u/s 139(1) of the Act. During the A.Y. under consideration, the assessee had entered into an agreement to sell a land for consideration. Subsequently, when the land was physically measured the area was actually less than that mentioned in the original sale deed. Thus, the assessee entered into revisionary sale deed and accordingly the sale consideration was reduced. While computing income from sale of land the assessee took the revised sale consideration as base and computed capital gains. In the course of assessment the AO enquired about reduced sale consideration, and in the absence of any satisfying reply from the assessee the AO made additions u/s 50C of the Act equivalent to difference in value as per original sale deed and revisionary sale deed. The AO had also taken cognizance of valuation report whereby the valuation officer (DVO) had confirmed the area of land as 15311 sq. ft. However, the valuation of land by DVO was vague and hence not adopted by the AO. </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">Bagasse & Press mud arising during manufacture of sugar and molasses are waste and not final products - no need to pay any amount of 5%/10% in terms of Rule 6 of CCR, 2004 on ground that common Inputs/Input Services were used in manufacture: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is engaged in the activity of manufacture of sugar and molasses. Waste is obtained during the manufacture of sugar and is referred as Bagasse and press mud which is cleared from the factory without payment of any Central Excise duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The jurisdictional authorities are of the view that since the assessee has availed CENVAT credit in respect of common Inputs and Input service in the manufacture of final products which are cleared on payment of duty and in respect of the Bagasse/Press mud they are not maintaining separate account, therefore, they are liable to pay an amount of 5%/10% on the price of Bagasse/Press Mud as provided in Rule 6 of the CENVAT Credit Rules, 2004.</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><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> <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"> <strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font> </body> </html>