TIOL-DDT 2087 · 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 align="justify"><strong><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 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=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong>TIOL-DDT 2087 <br> </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>17.04.2013 <br> Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A Step Ahead - Income Tax Department, Gujarat </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH </STRONG>a background of footprints on sand, the inner pages sprinkled with quotes by <em>HenryWadsworth Longfellow,Michal J.Fox, Confucius, John W Gardner, Vince Lombardi, Pat Riley& Ted W Engstrom, </em> the Income Tax Department, Gujarat has released a book for departmental officers titled ‘ <strong><em>A Step Ahead </em></strong>'. The tagline is that the book is a compilation of contentious issues in Assessment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The genesis of this book (running into more than 500 pages) is an exercise carried out to compile best quality assessment orders passed in each Chief C.I.T region of <strong><em>Gujarat </em></strong> during the Financial Year 2011-12. It is mentioned that on analyzing these orders it emerged that majority of <strong><em>additions </em></strong> were relatable to issues pertaining to 19 topics. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And so, nineteen, truly incisive and analytical, essays have been authored by nineteen officers of the rank of CsIT& Addl. CsIT. / JCIT. Each officer was assigned a topic for in-depth analysis with the view to guide and help A.Os to understand the intricacies of various provisions of law. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The book begins with a disclaimer and which is a normal phenomenon. <em>But since it is meant for private circulation amongst the departmental officers, we wonder who the disclaimer targets. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The foreword says - ‘ It is a small step towards quenching the thirst for knowledge related to the taxation field; hope that this book will prove useful to officers and staff of the Income-tax Department not only in the State of Gujarat but also in other parts of this <strong><em>wonderful </em></strong> country.' </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is also mentioned in the foreword that if the response to this book is positive, we propose to take out a second compilation analyzing the various industries in the State of Gujarat soon. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notwithstanding the positive or negative response to the book, <strong>DDT </strong> feels that the Department should come out with the second compilation and allow such publications to also reach the hands of the taxpayers. After all, educating your taxmen and the taxpayer is the <em>sine qua non </em> of a transparent and non-adversarial tax administration. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 1<sup>st</sup> Edition, 2013 of the book has been issued by "The <strong><em>Cheif </em></strong> Commissioner of Income Tax, AayakarBhavan, Ahmedabad" <em>[ <font color="#FF0000">The printer's devil is at play!</font> ] </em></font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>DDT hopes that this small step would turn out to be a giant leap for the Department. </em></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The 19 Contentious Issues in Income Tax </strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><img src="http://www.taxindiaonline.com/RC2/image/stories/Contentious_19.jpg" alt="" width="533" height="617" hspace="5" border="0" align="middle"></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>While on Income Tax, here is something from the US of A. </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cribbing about Tax rates, you have got company </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the US of A, the deadline to file individual income-tax returns was on April 15. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here are some facts & figures and the public opinion - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ About 6 in 10 believe that the tax system is unfair i.e. the very rich don't pay their fair share. The richest 400 individual taxpayers, with an average income of more than USD 200 million, pay less than 20 percent of their income in taxes - far lower than mere millionaires, who pay about 25 percent of their income in taxes, and about the same as those earning a mere USD 200,000 to USD 500,000. And in 2009, 116 of the top 400 earners - almost a third - paid less than 15 percent of their income in taxes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Citizens for Tax Justice, an organization that advocates for a more progressive tax system, has estimated that, when federal, state and local taxes are taken into account, the top 1 percent paid only slightly more than 20 percent of all American taxes in 2010 - about the same as the share of income they took home, an outcome that is not progressive at all. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ The top rate in the United States, 39.6 percent, doesn't kick in until individual income reaches USD 400,000 (or USD 450,000 for a couple). Only three O.E.C.D countries - South Korea, Canada and Spain - have higher thresholds. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ General Electric has become the symbol for multinational corporations that have their headquarters in the United States but pay almost no taxes - its effective corporate-tax rate averaged less than 2 percent from 2002 to 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ For the rich, hiding such assets has become an elite sport. Many avail themselves of the Cayman Islands or other offshore tax shelters to avoid taxes. They don't have to report income until it is brought back ("repatriated") to the United States. So, too, capital gains have to be reported as income only when they are realized. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ And if the assets are passed on to one's children or grandchildren at death, no taxes are ever paid, in a peculiar loophole called the "step-up in cost basis at death." </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Our tax system relies heavily on voluntary compliance. But if citizens believe that the tax system is unfair, this voluntary compliance will not be forthcoming. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>What the man on the street wants </em></strong> - <em>"We could have a much simpler tax system without all the distortions - a society where those who clip coupons for a living pay the same taxes as someone with the same income who works in a factory; where someone who earns his income from saving companies pays the same tax as a doctor who makes the income by saving lives; where someone who earns his income from financial innovations pays the same taxes as a someone who does research to create real innovations that transform our economy and society. We could have a tax system that encourages good things like hard work and thrift and discourages bad things, like rent-seeking, gambling, financial speculation and pollution. Such a tax system could raise far more money than the current one - we wouldn't have to go through all the wrangling we've been going through with sequestration, fiscal cliffs and threats to end Medicare and Social Security." </em></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Order of Commissioner (Appeals) does not reflect any application of mind - matter remanded by High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> allegation against the petitioner is that he was involved in fraudulent exports of fabric and readymade garments of inferior quality by grossly inflating the value of the export goods so as to avail of duty drawback/DEPB benefits. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A penalty of Rs.15 lakhs was imposed on the petitioner under Section 114 of the Customs Act, 1962 by the adjudicating authority. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lower appellate authority called upon the petitioner to effect deposit of Rs.7.50 lakhs as pre-deposit for obtaining a Stay in the matter. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Although the petitioner had sought an adjournment, the Commissioner(A) while ordering pre-deposit cited the Board Circular of 30/03/1999 and mentioned that there would be no irregularity if the stay petition is disposed of without a personal hearing; that the grant of a personal hearing on a petition for stay would be more of an exception than the rule and that while there would be no irregularity if a stay petition is disposed of without a personal hearing, nonetheless a reasoned order should be passed in an objective manner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the purported reasoned order passed - </font></p> <blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"I find that the instance case is prima facie case made out in favor of the revenue. Therefore, considering the balance of convenience, I order for pre-deposit of a part of the penalty amount as under before proceeding to decide the case finally." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner is before the High Court against this order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was observed that the Circular dated 30/03/1999 was quashed by a Single Judge of the Madras High Court in ITC Limited and s ubsequently on 6 th April 2000, another circular was issued by the CBEC emphasizing that the Commissioner of Appeals while passing an interim order ought not to pass non-speaking orders so as to obviate an allegation or complaint of a lack of application of mind by the authorities or a bias towards the revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court then adverted to the apex Court decision in Union of India vs. Jesus Sales Corporation <strong><font size="1">( </font></strong><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2002/2002-TIOL-259-SC-CUS.htm"><strong><em>2002-TIOL-259-SC-CUS </em></strong></a><strong>)</strong></font><strong> </strong>and after considering its binding nature observed - </font></p> <blockquote> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"…The judgment of the Supreme Court in Jesus Sales Corporation (supra), while holding that an order on an application for waiver of pre-deposit would not be invalid merely on the ground that no personal hearing had been afforded, nonetheless, holds that it is incumbent upon a quasi-judicial authority which is vested with the discretion to grant a waiver of deposit to take an objective decision after considering all relevant facts and circumstances having a bearing on the issue of undue hardship. In the present case, the order of the Commissioner (Appeals) does not reflect any application of mind whatsoever to the twin requirements of whether a prima facie case had been made out by the appellant as well as on the issue of financial hardship. The consequence of non-compliance with an order of pre-deposit is serious. The appeal would be liable to be dismissed for failure of deposit. Hence, it is incumbent upon the authority which adjudicates upon an application for waiver of pre-deposit to objectively consider whether the grounds on which a waiver is sought constitute undue hardship to the assessee. The authority is entitled to impose conditions to secure the interests of the revenue." </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fine, the High Court allowed the petition by setting aside the order and remitted the proceedings back to the Commissioner(Appeals) for a fresh decision. </font></p> <p align="left"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc3OTk=" target="_blank"><font size="1">2013-TIOL-300-HC-MUM-CUS </font></a></font></strong></font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appellant is changing address for the third time and saying that they have not received the notice of hearing - they are misusing the opportunities of hearings and simply delaying the matter - Costs imposed. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide a Stay order dated 27/09/2012 the applicant's request for waiver of dues was dismissed for <strong>non-prosecution </strong> and the applicant was directed to deposit dues and report compliance on 14/11/2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 14/11/2012, when the matter was called for compliance, <strong>then alsonone appeared </strong> on behalf of the applicant and no request for adjournment was made and once again the appellant was directed to comply with the stay order and report compliance on 03/01/2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the case was called on 03/01/2013 again <strong>none appeared </strong> and the case was adjourned for hearing on 06/02/2013 and on 06/02/2013 the appellant sought adjournment and the stay application was listed for hearing on 13/03/2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On this date, the appellant appeared and submitted that they have filed a miscellaneous application for modification of the stay order on the ground that they had not received the notice for hearing and, hence, they could not be present on the dates of hearing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench could see through the ploy being adopted by the appellant and, therefore, observed - </font></p> <blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"3. It can be seen that the appellant has never been present whenever the case was listed for hearing on four occasions and now he submits that there is a change in address. This is the third time the appellant is changing his address. The appellant seems to be misusing the opportunities of hearings and simply delaying the matter. Accordingly, we impose a cost of Rs.5000/- on the appellant, which have to be paid to the account of the Commissioner of Central Excise, Kolhapur within fifteen days from today. On such payment of cost, the appellant's application for modification shall be considered. The Registry is directed to list the application for hearing on 26/04/2013." </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Surprisingly, the Board Circular <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular967.htm" target="_blank">967</a> </strong>is nowhere to be seen - catching <em>forty winks </em>!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT will keep you posted. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc4MDA=" target="_blank">2013-TIOL-617-CESTAT-MUM </a></font></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="4">tiol</font><font color="#006600"> - Thursday's cases</font></strong></strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VCD players cleared for free supply along with sale of CTVs - appellant's contention that MRP of VCD is to be taken as 'nil' is totally incorrect - issue of levy of duty u/s 3 of CEA, 1944 on clearance of goods manufactured by an assessee cannot be mixed with issue of valuation u/s 4 or 4A - matter remanded: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During the period from Feb.2003 to March, 2003 the appellant manufactured VCD players and also different models of colour T.V. sets. Both these items were chargeable to duty on the basis of the MRP declared on their packages in terms of s.4A of the CEA, 1944. As a promotional offer, the appellant during this period cleared combination packs of certain models of CTVs along with VCD players, the VCD being given free along with those models of CTVs. The duty was paid by the appellant on the value determined on the basis of MRP of the combo pack of the CTVs along with VCD players. </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 assessee is engaged in shipping business, receipts like recruitment fees and visa processing fees can also be treated as part of shipping income subject to tonnage tax - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong>, a company was engaged in the business of shipping operations and was approved u/s 115 VI(3) to pay Tonnage Tax in respect of its income from shipping business. It owns and operates ships comprising tankers, bulk carriers and offshore supply vessels. During assessment, AO noticed that there was an agency division operated by the assessee which was engaged in recruitment of personnel on foreign lines.The issues before the Bench are - Whether recruitment fees received can be treated as a part of the shipping income subject to Tonnage Tax as per Chapter XII-G - Whether there is any scope for addition of the same separately by treating such fees as income not incidental for computing shipping income under Tonnage Tax Scheme - Whether when an assessee receives miscellaneous income on account of VISA processing fees, charges for seaman book and had claimed adhoc expenses in respect thereof, the same can be allowed by the assessing authority. And the verdict partly goes in favour of the assessee. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Principles of unjust enrichment do not apply to fine and penalty but only duty - appeal allowed with consequential relief: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a case relating to imports under DEEC scheme, the appellant had made a pre-deposit of Rs. 7.5 lakhs in cash and Rs. 40 lakhs as bank guarantee, as a transferee of the DEEC licence. The said amount was appropriated by the department towards redemption fine and penalty. The said decision was appealed against before the CESTAT and the Tribunal set aside the said order and allowed the appeal. The department did not prefer any appeal against the order of the Tribunal which became final. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequently, the appellant became eligible for refund of Rs. 47.5 lakhs which was allowed by the adjudicating authority but credited to the Consumer Welfare Fund on the ground that the appellant allegedly did not fulfill the condition of unjust enrichment. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Thursday for the judgements </strong></font></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"><strong>Have a nice day. </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"></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>