TIOL-DDT 2321 · 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"><font 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 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><img width="115" height="125" border="0" align="right" src="image/ddt/10yearsDDT.jpg" alt="" /></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img width="175" hspace="5" height="120" border="0" align="right" src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" /></a></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font><font color="#663399" size="3">TIOL-DDT 2321 </font><font size="3"></font><font size="2"><br> </font></strong><font size="2"><strong>26.03.2014 <br> Wednesday </strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NDPS - Transhipment Vs Transport </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> is the difference between <em>Transhipment </em> and <em>Transport</em>? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under Section 23 of the NDPS Act, the following are offences: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Import into India;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Export out of India; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Transhipment; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">of any narcotic drug or psychotropic substance. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a particular case, the High Court set aside the conviction of the accused on the ground that there must be import of the contraband to attract punishment under this section but the prosecution could not prove that the Ganja was of foreign origin. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The State appealed to the Supreme Court and in the Supreme Court, the Counsel for the respondent accused argued that <em>Transhipment </em> under Section 23 must necessarily be understood in the context of the scheme of the Section and the preceding expressions of "import into India" and "export out of India" to mean only transhipment for the purpose of either import into India or export out of India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a Judgement delivered yesterday, the Supreme Court agreed and observed that the Parliament used the expression <em>transport </em> in the context of inter-state movement and in the context of importing to India and export out of India, Parliament employed the expression <em>transhipment </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court order was upheld - WORDS do play a major role in winning or losing cases. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this judgement today. Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20062" target="_blank">Breaking News</a></strong>. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Offices to be open during last three days of month - CBDT issues Section 119(1) Order </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INCOME</strong> Tax Offices throughout India shall remain open and the receipt­ counters shall also work during normal office hours on 29th, 30th and 31st of March, 2014. This direction is issued for administrative convenience by the Central Board of Direct Taxes in exercise of powers conferred under section 119 of the Income Tax Act, 1961. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants special arrangements to be made by way of opening additional receipt counters, wherever required on 29th, 30th and 31st of March 2014 to facilitate filing of return of income and other related work of tax payers. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/Order25_2014.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Order in F.No.225/138/2014/ITA.II, Dated: March 24, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Offices to function as usual on April 01, 2014 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ALL</strong> offices of the Reserve Bank of India situated in Mumbai and Navi Mumbai will remain open for public transactions on Tuesday, April 01, 2014. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_1887.htm"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Press Release 2013-2014/1887, Dated: March 25, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Rules - 'Training Institute' - Definition expanded </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CBDT has expanded the definition of '<em>Training Institute</em>' by amending clause (ii) of Rule 6AAH of the Income Tax Rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As of now "<em>Training institute </em>"means a training institute set up by the Central or State Government or a local authority or a training institute affiliated to National Council for Vocational Training or State Council for Vocational Training. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is changed to</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Training institute" means a training institute, -</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) set up by the Central Government or a State Government or a local authority; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) affiliated to the National Council for Vocational Training or a State Council for Vocational Training; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) affiliated to, or approved by, or empanelled by, the National Skill Development Agency; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) affiliated to, or approved by, or empanelled by, the Central Government and certified by the National Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Training; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) affiliated to, or approved by or empanelled by, the State Government and certified by the National Council for Vocational Training or a State Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Training or, as the case may be, the State Council for Vocational Training.'; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <em>"National Skill Development Agency" </em> is also defined as <em>the agency constituted by the Government of India vide Notification No.14/27/2012-EC, dated the 6th June, 2013'. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does this have something to do with Service Tax? </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2014/it14not016.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT NOTIFICATION No. 16/2014, Dated: March 20, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appeal dismissed for not filing legible copy of O-in-O restored after appellant rectifies defects but subject to paying cost of Rs.2000/- </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=19384"><strong>DDT 2260</strong> </a><strong>27.12.2013 </strong> while reporting this unique case <font size="1"><strong>[<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTEzMDM=">2013-TIOL-1919-CESTAT-MUM</a>] </strong></font>we had mentioned - </font></p> <p align="justify"> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>"AS </em></strong><em> per rule 11(1) of the CESTAT (Procedure) Rules, 1982, the Tribunal may, in its discretion, on sufficient cause being shown, accept a memorandum of appeal which is not accompanied by the documents referred to in rule 9 or is in any other way defective, and in such cases may require the appellant to file such documents or, as the case may be, make the necessary amendments within such time as it may allow. So also, in terms of sub-rule (2), the Tribunal may reject the memorandum of appeal referred to in sub-rule (1), if the documents referred to therein are not produced, or the amendments are not made, within the time-limit allowed. </em></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the appellant was directed by the Registry to cure a defect and the defect was that the "Order-in-Original is not legible". </font></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reminders on a couple of occasions viz. 14/06/2012, 26/09/2012 and then after more than a year on 13/11/2013 met with no response. </font></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench heard the appeal E/870/12 filed against an O-in-A dated 16/01/2012 last month and observed that although three opportunities were given to the appellant the defect was not cured. </font></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the CESTAT dismissed the appeal by citing Rule 11 of the CESTAT (Procedure) Rules, 1982."</font></em> </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant is again before the Tribunal with an application for restoration of appeal and with a "<em>typed copy of the order-in-original </em>" and requests that the appeal be restored. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench is satisfied and restores the appeal but with a condition that the appellant pays a cost of Rs.2000/- to the account of the <em>CCE, Mumbai-I </em> within a period of fifteen days and reports compliance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thankfully, it is not to be credited to the Prime Minister's Relief Fund <strong>[See <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20014" target="_blank">DDT 2315</a>]</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTI3NTA=" target="_blank"><font size="1">2014-TIOL-451-CESTAT-MUM </font></a> </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Classic Case of Corruption by a US Customs Officer </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> the U.S. Customs and Border Protection officer as their insurance policy, smuggling was almost easy for the Mexican traffickers, whose small loads of undocumented immigrants grew under his watch to 5-ton loads of drugs packed in semi trucks. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Veteran U.S. Customs and Border Protection Officer Lorne "Hammer" Jones was sentenced yesterday by U.S. District Judge to seven and a half years in custody for his role in a decade-long crime spree in which he sold his badge to alien-smuggling groups and ultimately to marijuana transportation cells working for Mexican drug cartels. In court, the defendant acknowledged he has waived his right to appeal. Prosecutors contended Jones pocketed USD 500,000 in his role - money he flashed around town with blowout parties in hotels, a boat, Chargers season tickets and fancy dinners. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A dozen witnesses testified that Jones was on the take, including Michael Taylor, a former colleague and friend who was also being paid by smugglers to corruptly allow contraband into the United States; Jones' ex-wife, who recruited him to be a smuggler; a friend and financial adviser who testified that the two had discussed ways to hide ill-gotten gains, and who had personally used Jones to smuggle his girlfriend across the border twice; and several of Jones' co-conspirators. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to testimony, Jones volunteered to work overtime shifts as a primary inspector so he could wave through vans jammed with aliens and drugs, and trucks full of marijuana. Jones also employed a beeper code system to notify smugglers which one of the 24 inspection lanes he was working when their loads approached the border crossing. But the system failed in 2002 when Jones was randomly and unexpectedly reassigned to another position, and a load driver was forced to abandon his van full of drugs in the inspection line. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBP Director of Field Operations said, <em>"My CBP officers are hard-working professionals who are vigilant in their protection of the U.S. border and service of the traveling public. <strong>CBP does not tolerate corruption within our workforce </strong> and we will seek out and work to prosecute to the fullest extent of the law any employees who commit unethical or unlawful acts that tarnish our badge."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An Assistant Attorney said, "Jones' criminal activities betrayed all of the officers <strong>by helping the very criminals they give their hearts, souls and sometimes their lives defending us from</strong>."</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"> – Thursday's cases</font></strong></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Amount collected from customers not paid to Government but kept in escrow account - whether provisions of Section 73A are attracted - NO: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SINCE</strong> the appellant had no clarity on liability of service tax while settling the accounts finally with the buyers of the apartments, they collected certain amount which was in the interest of protecting both the buyers and the appellant from any future exposure to service tax liability if their service falls under the category of ‘works contract'; and the amounts collected were kept in a separate escrow account. The only issue to be considered in this case is whether service tax collected from the customers and kept in the escrow account and not paid to the Government would attract provisions of Section 73A of the Finance Act, 1994 or not. </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether when close relative of assessee has been working with him for several years, huge payment of commission in particular year can be construed as subterfuge to reduce tax liability - YES: HC </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee an individual is engaged in supply and maintenance of sophisticated electronics equipment. He had filed his return of income tax for AY 1989-90 declaring his income as Rs.24,34,593/- which as per revised return was changed to Rs.20,62,310/-. Pursuant to notice issued u/s 148, assessee had filed his revised return on 1.7.1991 finally declaring his income as Rs.26,66,840/-. Thereafter, notices u/s 143(2) and 141(1) were served. The AO after finalizing the assessment vide assessment order, made an addition of Rs.1,74,484/-, interalia, on account of commission paid to one Anil Kumar Gupta. On appeal, CIT(A) affirmed the said addition made on account of commission paid though gave relief with regard to some other additions which had been made by the AO. Agreeing with the order of the CIT(A), Tribunal vide a joint order upholding the re-opening of assessment by the CIT(A), gave no relief to the assessee with respect to the addition made by the AO. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether when a close relative of the assessee has been working with him for several years, the huge payment of commission in a particular year can be construed as a subterfuge to reduce tax liability of the assessee and Whether <em>"nephew"</em> can be considered as a relative as per the provisions of section 2(41). And the verdict goes against the assessee. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Vocational Training - training in areas such as export import management, retail management and merchandising - Exempted for period 01.07.2003 to September, 2008 : HC </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT </strong>is evident that the term <em>"vocational training institute"</em> included the commercial training or coaching centers which provide vocational coaching or training meant to<em> "impart skills to enable the trainees to seek employment or to have self employment directly after such training or coaching"</em>. The notion of such training institute having been recognized or accredited to nowhere emerges from such a broad definition. The further Notification of 2010 substitutes the existing explanation to the term "vocational training institute" and narrowing it to those institutes affiliated to National Council for Vocational Training offering courses in designated trade in fact supports the assessee. Had the intention been to exempt only such class or category of institutions, the appropriate authority would have designed such a condition in the original Notification of 2003 and Notification No.10 of 2004 which had been relied upon in this case. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>