TIOL-DDT 2369 · 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="3" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><s><strong><font size="2"><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=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2369</font><br> 06.06.2014 </strong><br> <strong>Friday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Taxation - Is Politics a Profession or Occupation? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NEARLY</strong> forty years ago in 1975, the Supreme Court was called upon to decide the issue as to whether politics is a profession or occupation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent was PVG Raju a rich Maharajah practicing the politics of socialism, spending lavishly for furthering his party's popularity and the prospects of his fellow candidates at the elections to the Andhra Pradesh Legislative Assembly.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court had to examine whether politics of the socialist brand or otherwise is a profession or occupation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There can hardly be any doubt that it is either, or both. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Harold Laski treated politics as a science and wrote his well-known book on the Grammar of Politics, but the art of politics at a practical level has also been the subject of comment and has been praised and denounced on the basis that it is a profession. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To Gandhiji it is sacred as religion. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Lincoln it rises to noble heights of statesmanship. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Lenin, Nehru and a galaxy of other great visionaries and makers and moulders of the modern world have dedicated themselves to politics as a profession. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Of course in its vulgar and vicious manifestations, this occupation has been regarded by literary giants like Dr. Johnson as the last refuge of a scoundrel'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Robert Louis Stevenson has used barbed words: 'Politics is perhaps the only profession for which no preparation is thought necessary (Familiar studies of Men and Books, 'Yoshida- Torajiro '). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">George Bernard Shaw uses stinging language in Major Barbara: 'He knows nothing; and he thinks he knows everything. That points clearly to a political career'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is thus clear, without reference to the wealth of case-law relied on by the High Court, that politics has been a profession and, indeed, under modern conditions in India, perhaps the most popular and <strong>uninhibited </strong>occupation-with its perils, of course. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Supreme Court held: Being a politically important man with plenty of money and vitally interested in boosting his Party's standing in the State, he donated liberally for candidates set up by the party. In this view s. 5(j) of the Expenditure Tax Act, 1957applies to these donations which earn exemption from the expenditure tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally PVG Raju, the respondent in this case was the father of the present Civil Aviation Minister Ashok Gajapathi Raju. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/DDT2369.jpg" alt="" width="222" height="227" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-811-SC-MISC.htm"><strong><font size="1">2002-TIOL-811-SC-MISC </font></strong></a></em></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Budget in early July </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Joint Secretary in the Department of Economic Affairs, Finance Ministry has informed all the Financial Advisors that the Regular Budget for the Financial Year 2014-15 is likely to be presented in early July. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He informs that allocations projected in the interim budget are not generally halted. However, cases of schemes/decisions, which have the effect of raising expenditure commitments, may be sent to the Budget Division for examination. In case the additionality is agreed to by this Ministry, then revised Statements of Budget Estimates (SBEs) would need to be forwarded to Budget Division. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For such cases, necessary approvals have to be obtained on or before 9th June, 2014 so that the revised SBEs can be forwarded to the Budget Division latest by 19th June, 2014. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He clarifies that that additionality will only be for <strong>committed liabilities</strong>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/regularbudget.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MoF, Dept of Economic Affairs, D.O Letter No. 2(29)-B(D)/2014,Dated : June 03, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Budget 2014 - Write off Pakistan Dues - 300 Crores </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE </strong> is one item consistent and uniform in all Union Budgets from 1950. If you look at the Annexure-5(i) to the Receipts Budget of India, 2013-14, you will find certain interesting figures. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">India' s debt by the end of March 2014was around rupees 56 Lakh Crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the Statement of the Liabilities of the central Government, the Total Liabilities are Rs. 56,51,784 Crores. From this an amount of Rs. 300 crores is deducted and the net liability is shown as Rs. 56,51,484Crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is this amount of Rs. 300 Crores? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is supposed to be <em>"Amount due from Pakistan on account of share of Pre-partition debt (Approx)".</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This same amount had been shown consistently in all our budgets since 1950, including the interim budget of 2014-15. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1950-51, when our total liability was Rs. 2865 Crores, this 300 Crores was deducted to arrive at Rs. 2565 Crores. Thus, the dues from Pakistan constituted slightly more than 10 percent of our debts. Ten percent of the present liabilities would amount to about 5.5 Lakh Crores, about a third of today's budget. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even at 6% interest per annum, this would amount to approximately Rs. 15,000 Crores now. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fact is that we are not able to collect this amount from Pakistan for the last 65 years. Why should we keep showing it in the budget year after year? Is it to show our inability to collect from Pakistan or do we send a copy of our Budget to Pakistan to remind them gently that they owe us Rs. 300 Crores? Why can't we simply write off this 300 Crores and be done away with it instead of having this blot in all our annual budgets year after year? As a goodwill gesture, can't we tell Pakistan that their dues are written off? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now that the Prime Minister of Pakistan has responded to Modi's gesture by presenting a sari to Modi's mother, we should strengthen our ties with our neighbor and write off the 300 Crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is something that the Finance Minister can consider without sacrificing any pecuniary benefits. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>How did 300 Crores get into Budget? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>position of the undivided Government as on the date of partition was that its outstanding liabilities exceeded its assets so that ultimately it was the debt that was being divided between the two Governments of India and Pakistan. On a rough estimate the outstanding debt of the Central Government as on the 14th August 1947, was likely to be of the order of Rs. 3,300 crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In his Budget Speech of 1948, Finance minister Shanmukham Chetty said, “<em>On a very rough estimate this debt is likely to be of <strong>the order of Rs. 300 crores </strong> and the rate of interest may be near about 3 per cent. Pakistan's total debt is to be repaid in Indian rupees in fifty annual equated instalments for principal and interest. As a measure of assistance to the new Dominion in its earlier years it has been agreed that the first repayment should commence only in 1952. In addition to the Rs. 75 Crores given to her out of the cash balance of the undivided Government it has also been agreed that India would make available to Pakistan a further sum of Rs. 6 crores for meeting the expenditure on the setting up of Ordnance factories and similar special institutions required by her. This amount will also be added to Pakistan's debt. With this settlement, the terms of which, as the Deputy Prime Minister has already told the House, are generous and conceived in a real spirit of assistance to Pakistan, the purely financial problems arising out of the partition may be said to have been satisfactorily solved."</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That was in 1948, but when it came to payment, nothing came from Pakistan. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the 1952-53, budget, credit had been taken for a recovery of Rs.9crores from <strong>Pakistan </strong>as the first instalment of its debt repayment to India, but not a paisa came. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In his 1954 Budget Speech, Finance Minister Deshmukh said, “ <em>the budget for the current year placed the revenue at Rs.439.26crores and the expenditure at Rs.438.81crores leaving a nominal surplus of Rs.45 lakhs. In balancing this budget, I had taken credit for a recovery of Rs.18crores from Pakistan on account of two instalments due from that country in repayment of the partition debt. I have been having discussions on this subject with the Finance Minister of Pakistan and we both hope that it will be possible to commence the repayment of the debt in the coming year. This single factor has made for a deterioration of Rs.18crores in the revenue budget for the current year, and converted the surplus of Rs.45 lakhs into a deficit of Rs.16.96crores </em>.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the next year's budget speech, he said, “I am not taking any credit for repayment of partition debt by Pakistan in <strong>view of what has happened in the last two years </strong>.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the debt continues and is without fail shown in every budget! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manufacturers subjected to two Audits in a year </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a recent RAC meeting of the Hyderabad Central Excise Zone recently, a point was raised: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Many manufacturers are subject to two audits almost at the same time. First Excise Audit will be done which will cover areas of Excise, Customs and Service Tax etc. After few months a notice is received that Service Tax department is coming for audit. The industry wants to know whether service tax audit is also done for a manufacturer who is merely a Service Recipient and not providing any taxable service. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department replied: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Central Excise & Service Tax Audit of a unit is generally conducted simultaneously at single point of time to avoid multiple visits, wherever the registration of Service Tax as well as Central Excise fall in the same Commissionerate. Whenever Central Excise Registration is falling under one Commissionerate and Centralized Service Tax Registration is under other Commissionerate, this situation may arise. However, this problem will be addressed effectively when new Audit Commissionerates are formed in the ensuing reorganization. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Difficult to cancel Excise Registration </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the same RAC meeting, another issue raised was: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department is not accepting cancellation of registration of a factory, if a case is pending. In one case, the unit was closed and it was shifted to another bigger location. New registration was taken for the new factory. The first unit was rented one and vacated and some other person occupied the premises. No stocks were there. The unit, as stated above, was shifted to a new location and registration taken. The assessee applied for cancellation of registration but department declined on the ground that a case is pending. The assessee also suggested that he can give an Undertaking/Bond etc as company is not closed but only shifted. But department made the unit to file NIL returns for 2 years. Till date registration has not been cancelled. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department replied: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">As the issue is resolved no comments are offered. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the fact remains that it is more difficult to get a registration cancelled than getting a new registration. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs - New Exchange Rates from Today </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC </strong> has notified new exchange rates for Imported Goods and for Export Goods with effect from 6th June 2014.The US Dollar is 59.85 rupees for imports and 58.85 rupees for exports. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The popular perception is that the rupee would dramatically surge with a stable government at the helm. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Exchange rates were last notified on 15th May, 2014. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2014/cnt14_045.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No.45/2014-Cus (N.T.), Dated: June 05, 2014 </strong></font></a></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/unhelpful_taxpayer.jpg" alt="" width="569" height="643" 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 align="justify"><font 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 color="#663399"><strong>Customs</strong> </font></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti dumping duty on Cold Rolled Flat Products imposed vide Notification No 14/2010 Cus - ADD is not applicable for products having width more than 1250 mm - Corrigendum dated 07.02.2012 to Notification cannot be applied to imports made prior to 07.02.2012: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant was regular importer of the Stainless Steel Cold Rolled Coils. The said products were imported by the appellant during the period 2009-12 and appropriate customs duty was discharged. All the Bills of Entry during the relevant period were finally assessed by the lower Authorities after physical examination of the goods. Government of India on an application made by the domestic industries, initiated an investigation for imposition of anti dumping duty on Cold Rolled Flat Products of Stainless Steel and definitive anti dumping duty were imposed by Notification No. 14/2010-customs dtd. 20, Feb., 2010. Subsequently, after initiating a midterm review, the designated authority issued corrigendum which was notified by Notification No. 86/2011-Customs wherein the scope of the subject goods was expanded as also extending the tolerance limit of the products under consideration on which anti-dumping duty was imposed. </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 any payment made towards acquisition of new residential house by way of advance payment towards booking or by paying instalments has to be treated as investment towards purchase or construction of a new house - YES: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, as an individual, derives his income from long term capital gain and from other sources. For A.Y. 2009-10, he filed his return of income (RIICO) declaring income. The assessee had derived income from other sources, from long term capital and from of interest. During the relevant period, the Rajasthan State Industrial Development and Investment Corporation Ltd. (in short, 'RIC') acquired land owned by the assessee jointly with other members of his family. The assessee claimed exemption under section 54F. The Assessing Officer called for the complete details regarding this claim. In his reply, assessee stated that he had utilized an amount in terms of section 54F of the Act. He had deposited certain amount under capital gain account scheme opened with the Bank of Baroda and an amount was utilized in purchasing residential flat. The assessee also claimed further expenditure given to the Interior Designer towards supervision and interior decoration. After receipt of this reply, the Assessing Officer sought clarification from the assessee as to how section 54F of the Act applied to this case and why he should allow this exemption. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether in the absence of completion and possession by way of registration and transfer of its title of flats booked by the assessee on the date of transfer of original capital asset, the income from House Property could be assessed and Whether any payment made towards acquisition of a new residential house by way of making payment in advance even by booking or by paying instalments within the prescribed has to be treated as investment towards purchase/construction of a new house. And the verdict goes in favour of the Revenue. </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>CENVAT - appellant cannot be both 'manufacturer' and 'service provider' at same time in relation to particular activity - Credit taken on input services for job work activity cannot be denied: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is engaged in the manufacture of Polyester Chips, Lump Waste, and Polymer Waste [Ch. 39] and availing CENVAT. The appellant also manufactured Polyester Chips on job work basis out of raw materials received from their own factory, located at <em>Athola, Silvassa </em>and sent back the same to their <em>Athola </em>factory without payment of central excise duty in terms of Notf. No. 214/ 86-CE dated 25.03.1986. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department <em>entertained </em> a view that the CENVAT Credit of <em><font color="#FF0000">service tax paid on input services</font></em>, used by the appellant in the manufacture of goods on job work basis, exempted under Notf. No. 214/86-CE was not admissible to the appellant in terms of the provisions of Rule 6(1) of the CCR, 2004. </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 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 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>