TIOL-DDT 2323 · 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 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><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><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong><font color="#663399" size="3">TIOL-DDT 2323</font><br> 28.03.2014</strong><br> <strong>Friday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT in Limca Book of Records - Third Time in a row </strong></font></p> <p align="center"><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/Limca_Book_2014_01.jpg" alt="" width="580" height="339" hspace="5" border="0" align="center"></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YOUR </strong> <strong>DDT </strong>has entered the Limca Book of Records - AGAIN - in the 2014 edition as the longest running daily online column on tax matters. This is the longest running daily column by a single author on any matter in any publication. This is the <a href="http://www.taxindiaonline.com/RC2/accolades/accolades.htm" target="_blank">third</a> time in a row that DDT has entered the Limca Book of Records. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As the citation above shows, DDT had completed 2137 issues by June 30, 2013. That is the cut-off date for Limca Book of Records for entries for the year 2014. After that date, <strong>DDT </strong>has come out with nearly 200 issues, as today's DDT is numbered 2323. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> is grateful for all the support from the Netizens, the Government and colleagues, who made this possible. <strong>DDT </strong> will continue its pursuit relentlessly, with your support - to make the records straight for you. </font></p> <p align="center"><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/Limca_Book_2014.jpg" alt="" width="436" height="600" hspace="5" border="0" align="center"></font></strong></font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> A BIG <strong>Thank You </strong>! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on Builders prior to 1.7.2010 - Cochin Commissionerate starts fresh investigation</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">BY now, as they say, it is no more <em>res integra </em> that builders who construct residential flats and sell them to customers were not liable to pay Service Tax prior to 1.7.2010. Please see <em>RF Properties Vs Commissioner of Central Excise </em> - <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODg4NDg=" target="_blank"><strong><font size="1">2013-TIOL-971-CESTAT-DEL</font>.</strong></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Cochin Central Excise Commissioner wants to start a fresh investigation. In a letter to the President of CREDAI, the Commissioner informs that they have been directed to examine the Service Tax liability of all builders/developers by verifying whether the agreements fall within the ambit of Board's Circular 108/02/2009 dated 29.01.2009 during the period from 1.10.2008 to 30.6.2010. CREDAI was asked to furnish the details of their members and also to direct their members to co-operate with the department by providing the tons of information the department requires - like month wise amount collected from each client ……. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CREDAI faithfully communicated the Commissioner's missile to their Members. CREDAI tells its members that the good Commissioner is asking for information based on the recommendation of an <em><font color="#FF0000">empowerment</font> </em> committee consisting of the Chief Commissioners of various states and that the <em><font color="#FF0000">Department had made it clear that if the members co-operate with the enquiry proceedings, the same can be concluded without difficulty</font>.</em>What does this mean? Is it a threat or a promise? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A beleaguered assessee laments, “ <em>The Commissioner earlier had taken a stand that the builders are not liable to tax till 1/7/2010. BUT now the Chief Commissioner is reopening this closed issue. Large number of demands was dropped and amount of tax paid was refunded. The CERA had closed the DAP on the issue, and then the Commissioner issued instructions to the effect that pre 1/7/2010 cases may be closed dropping demands. <strong>It is rather unfortunate that as per whims and fancies of top bureaucrats, the assessees are being troubled </strong></em>.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board act or advise other Commissioners to follow suit? </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Export of River Sand to Maldives - Annual Ceiling </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has permitted Export of River Sand to Maldives with the annual ceiling of 2 lakh tons in 2014-15 and 2.5 lakhs and 3 lakhs in the next two years, under Bi-lateral Trade Agreement between Government of India and Government of the Republic of Maldives. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not075.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 75/(RE - 2013)/2009-2014, Dated: March 27, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Export of Stone Aggregate to Maldives - Annual Ceiling </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has permitted Export of Stone Aggregate to Maldives with the annual ceiling of 5 lakh tons in 2014-15 and 5.5 lakhs and 6 lakhs in the next two years, under Bi-lateral Trade Agreement between Government of India and Government of the Republic of Maldives. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not076.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 76/(RE - 2013)/2009-2014, Dated: March 27, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Export of Pulses to Maldives - Annual Ceiling </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has permitted Export of Pulses to Maldives with the annual ceiling of 87.85 tons in 2014-15 and 96.63 lakhs and106.29 lakhs in the next two years, under Bi-lateral Trade Agreement between Government of India and Government of the Republic of Maldives. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of pulses had been prohibited vide Notification No. 15(RE-2006)/2004-09 dated 27.06.2006 which had initially been imposed for a period of 6 months and is presently extended till 31.03.2014 vide Notification No. 38(RE - 2012)/2009-2014 dated 25.03.2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the above quantities of pulses is being allowed for export to the Republic of Maldives under bilateral trade agreement between Government of India and Government of Maldives during the period 2014-15 to 2016-17 which is an exception to the prohibition imposed by the above notifications: </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not077.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 77/(RE - 2013)/2009-2014, Dated: March 27, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Government Issues Orders for Revised DA to Babus - to be paid before 1.4.2014 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT </strong>has issued orders enhancing the Dearness Allowance to Central Government employees and pensioners with effect from 1st January 2014. The existing DA of 90% is enhanced to 100%. The additional installment of Dearness Allowance payable under these orders shall be paid in cash to all Central Government employees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<em><font color="#FF0000">But how? These orders were issued yesterday and the Government is virtually closed for the year from tomorrow. The Pay for March 2014 is to be paid on 1.4.2014 - that means the DA has to be paid by 31st March 2014 which is a holiday in many parts of the country. They can do one thing - pay the salary for March a little later - DDT</font></em>) </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/da01012014.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MoFDept of Expenditure O.M. No. No. 1/1/2014-E-II (B), Dated: March 27, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT promotes 18 Chief Commissioners as Principal Chief Commissioners - Cadre Review Set in Motion </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CBDT yesterday promoted 18 Chief Commissioners as Principal Chief Commissioners in the pay scale of Rs. 80,000/-. This is perhaps the first step in implementation of cadre review. And this is the first time in history that field officers of the Income Tax Department are getting the Apex Scale. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a message, CBDT Chairman said, “ <em>Chairman and Members, CBDT Congratulate, all officers who have been elevated to the grade of Principal CCIT in the Apex scale of Rs.80000/-. This is a <strong>Historic day </strong> for the Income Tax Department.Best Wishes to All.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes, it is a historic day for them that they have 18 posts in the field in the grade of Secretary to the Government of India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the new scenario, you will have Principal Chief Commissioners on a pay of Rs. 80,000 reporting to the CBDT Members who are also on the same pay. These CBDT Members report to the CBDT Chairman who is also in the same pay. The CBDT Chairman will report to the Revenue Secretary who also is in the same pay of Rs. 80,000. And there will be some Chief Commissioners also in the pay band of Rs. 80,000. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is rather a little too crowded at the top. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When are the CBEC Chief Commissioners becoming Principal Chief Commissioners? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As of now they are not able to promote about 150 superintendents/appraisers who are already cleared by a DPC and some of them will retire in a couple of days with that elusive promotion beyond their reach. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Annual Budget 2014-15 - CBDT invites suggestions - by next year </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE </strong>the politicians are busy with elections, it is business as usual for the babus. The CBDT seems to be busy with the next budget and wants suggestions from the field officers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a letter to the Chief Commissioners, the Board has asked them to send suggestions/recommendations of the Field Officers for the Annual Budget 2014-15 which will be presented before the Parliament shortly after the General Elections. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the suggestions latest by <strong style="background-color:#FFFF00" span="span">20.04.2015 </strong> and cautions that it would not be possible to examine the suggestions sent after <strong style="background-color:#FFFF00" span="span">20.04.2015.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span">Perhaps what they mean is 20 th April <strong><font color="#FF0000">2014</font>.</strong> But their unbridled enthusiasm and concern for the country's fiscals made them extend the submission date well after the presentation of the Annual Budget 2014 -15, which in all probability would be in the first week of July, 2014! This also reflects on the seriousness of the 'futile' exercise of seeking suggestions from the field. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/CBDT_Budget_01_2014.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT F. No. 134/13/2014-TPL, Dated: March 21, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Scheme for Collection of Taxes - RBI Instructions </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government of India has decided that the date of closure of Residual Transactions for the month of March 2014 be fixed as April 15, 2014 for the Financial Year 2013-14. Accordingly, RBI has issued instructions on special arrangements and Reporting and Accounting of March Transactions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a whole clever exercise to show next year's revenue as this year's and for this the entire system is made to undergo a fraudulent procedure. We should stop this sometime. The Revenue received in April does not go to Pakistan - it remains with India; nothing is going to happen if it is not shown as March Revenue. The election year is the best time to put an end to this fiscal budgetary fraud. </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"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/anything_ddt.jpg" alt="" width="500" height="564" hspace="5" border="0" align="center"></font></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"> - Monday's cases</font></strong></font></strong></font></p> <p align="justify"><strong><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">Central Excise </font></strong></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Valuation - buyer agreed to provide interest free advance to assessee to help him set up factory with an undertaking that assessee would supply at least 90% of their production to buyer - such 'compensation' is not includible in AV as SCN did not bring out categorically allegation that arrangement was to influence sale price - CESTAT by Majority </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant was manufacturing re-treading and supplying 97% to 98% of their production to M/s Black Stone Rubber Industries Pvt. Ltd ("the buyer"). During 1996-97, the buyer paid an amount of Rs.6,84,780/- as "compensation" to the appellants in addition to the declared price of the goods. During 1997-98 the buyer paid Rs.6,50,500/- in similar manner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case of Revenue is that these amounts should have formed part of the assessable value of goods sold by the appellant to the buyer. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, a SCN demanding excise duty of Rs.2,20,835/- was issued and confirmed by the adjudicating authority and also upheld by the Commissioner. However, the Commr(A) set aside the penalty of Rs.25,000/- on the appellant manufacturer and reduced the penalty on the partner to Rs.10,000/- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Aggrieved by this order, the appellant is before the CESTAT. </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 assessee -Trust would lose exemption for entire income even if there is one instance of application or use of income or property of Trust directly or indirectly for benefit of any prohibited person - YES: Delhi HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>assessee is a Charitable Trust which was granted registration under section 12A of the Act. In respect of the assessment year 2006-07, it filed a return of income declaring Nil income. The return was processed under Section 143(1). Subsequently a scrutiny of the return was initiated and notices under Sections 142(1) and 143(2) were issued. A sum was shown by the assessee as the proceeds of the sale of assets, being land. The assessee in furtherance of its objects to open a school, entered into agreements with M/s A for purchase of land. In these agreements the assessee paid 95% of the price of the land to M/s A and simultaneously obtained possession of the plots. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether the trust would lose exemption in respect of its entire income even if there is one instance of application or use of the income or property of the trust directly or indirectly for the benefit of any prohibited person; Whether where assessee-trust pays advance to the extent of 95 per cent of cost of property purchased to prohibited person without taking possession and without concluding a proper sale deed even after one year from the date of deal and then cancelling the deal and getting the advance back without interest would amount to violation of section 13(1)(c)(ii) read with section 13(2)(a) and Whether it would amount to violation of Section 13(1)(c)(ii) read with Section 13(2) and Section 13(3) of the Act, where assessee in furtherance of its objects intended to open a university, proper formalities were completed but due to Supreme Court order the object could not be achieved in the hands of the assessee and it formed this charitable society with same objects and trustees and incurred the expenses which were shown as advance to the educational society. And the verdict partly favours it. </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>Vessel arrived at Marmagao port and after conducting dredging operation for more than one month it sailed - fact that nobody objected the dredging operation during that period meant that necessary documents had been submitted to Customs authorities - in this view of matter, it cannot be alleged that facts were suppressed - Revenue appeal dismissed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONE</strong> vessel 'Dredger VolvoxHansa' arrived at Marmagao port on 18.08.2000 and commenced dredging operation on same day till 29.09.2000 and thereafter it sailed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A show cause notice was issued on 09.10.2001 for proposing penalty under section 114A of the Customs Act, 1962 alleging suppression. The Commissioner held that as the activity of the respondent was in the knowledge of the department on 18.08.2000 itself, therefore, extended period of limitation cannot be invoked. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The order was reviewed by the Committee of Chief Commissioners and an appeal came to be filed before the CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative submitted that the observation of the Commissioner that the copies of documents which were submitted to Port Trust have been sent to the Customs is not based on record. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Monday for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Mondaywith more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice weekend. </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>