TIOL-DDT 2431 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><s><strong><strong><strong><strong><strong><font color="#663399"><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></strong></strong></strong></strong></s></strong></strong><font color="#663399" size="3">TIOL-DDT 2431 </font><br>
05.09.2014 </strong><br>
<strong>Friday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ST - VCES - Open Ended Scheme? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECENTLY,</strong> the Karnataka High Court extended the benefit of the VCES 2013 to an assessee who had not opted for it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you remember, the Government had introduced a Scheme called <strong>Voluntary Compliance Encouragement Scheme, 2013 (VCES) </strong>as part of the Union Budget 2013. The Scheme in brief was like this: </font></p>
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<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">(i) The scheme could be availed of by non-filers or stop-filers or persons who have not made a truthful declaration in their return. However, it was not applicable to persons against whom any inquiry or investigation is pending by the issue of search warrant or summon or by way of audit; </font></font></p>
<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">(ii) The defaulter was required to make a truthful declaration of all his pending tax dues (from October1, 2007 to December 31, 2012) and pay at least half of that before December 31, 2013; remaining half to be paid by: </font></font></p>
<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">(a) June 30, 2014 without interest; or </font></font></p>
<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">(b) By December 31, 2014 with interest from July 1, 2014 onwards; </font></font></p>
</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">(iii) On compliance with all the requirements the person was to have immunity from interest, penalties and other proceedings; </font></font></p>
</blockquote>
</p>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the case of an assessee, the Original Adjudicating Authority confirmed a demand of Service Tax of Rs. 48,746/- with interest and equal penalty. On appeal by the party, the Commissioner (Appeals) has upheld the order of the original authority on 16.02.2010 - three years before the VCES came into existence. </font>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal confirmed the lower order and dismissed the appeal of the party - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-1741-CESTAT-BANG.htm"><strong><font size="1">2011-TIOL-1741-CESTAT-BANG. </font></strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee took the matter in appeal to the High Court and the Karnataka High Court in a recent judgement observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Without going into the merits of the case, we are of the view that the Government of India introduced an amnesty scheme where, those persons who have not paid tax, if they pay the tax within the stipulated period under the scheme, the entire interest and penalty is waived. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In the instant case, when the assessee has paid the tax and the interest, the benefit of the scheme should be given to him. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the High Court affirmed the duty and interest (which were already paid by the assessee), but set aside the penalty. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTUyMTI="><font size="1">2014-TIOL-1242-HC-KAR-ST </font></a>.</font></strong></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Missing IRS Officers - what happened to them? </strong></font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOMETIME </strong>back <strong>DDT </strong> had reported about 19 missing IRS officers, which news was picked up and widely circulated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It had its echo in Parliament too. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Lok Sabha Prof.Saugata Roy asked, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Minister of FINANCE be pleased to state? </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) whether some senior officers including a Commissioner rank officer in Central Board of Excise and Customs (CBEC) are missing and not reported for duty since the last five years; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) if so, the details thereof and the action taken by the Government to trace such senior officers and achievements made therefrom; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) whether the Government has taken any disciplinary action in this regard; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) if so, the details thereof? </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is heard that in a written reply, the Government had informed that out of the 19, two have been dismissed and one had resigned. What happened to the 16 others? God Knows! </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjA3ODk=" target="_blank">DDT 2386 01.07.2014</a> and <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTIzNzQ=" target="_blank">DDT 1588 - 13.04.2011</a></font></strong></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Chief Justice as Governor? </strong></font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was in 1967 that the then Chief Justice of India KokaSubba Rao shocked the Nation by resigning from the post of the Chief Justice of India to contest the election for the post of President of India which he lost badly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now we have a former Chief Justice being sworn in as a Governor. Governors live life like a king in splendorous palaces with hundreds of State Servants to help them to govern which includes gardeners and cooks. They get State aircrafts for their private tours and some VIP treatment even after retirement - too attractive even for a former CJI to refuse? </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"><img src="http://www.taxindiaonline.com/RC2/image/stories/Cartoon_2431.jpg" width="500" height="565" hspace="5" border="0" align="center"></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="5">tiol</font><font color="#006600"> - Monday's cases</font></strong></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><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">Central Excise </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>When there is no extra consumption of electricity, purchase of raw materials and transportation payment, then manufacturing of extra goods is not possible - unless there is clinching evidence, demand cannot be confirmed solely on the basis of presumptions and assumptions - High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) To find out the excess production details. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) To find out whether the excess raw materials have been purchased. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) To find out the dispatch particulars from the regular transporters. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) To find out the realization of sale proceeds. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) To find out finished product receipt details from regular dealers/buyers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) To find out the excess power consumptions. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. </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 there is no willingness on part of developer to perform his part of contract, it will still be treated as transfer of capital asset u/s 2(47)(v) - NO: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee company is engaged in real estate business. It had filed its return, declaring income at Rs. 2,97,79,960. A search was conducted and consequently a notice u/s 153A was issued. In response to the said notice, assessee filed his return showing the same income as was declared originally. During assessment, the AO noticed assessee along with 33 others had entered into a development agreement with a developer and as per the agreement, the land owners had handed over the possession of the entire land for development. The market value for the entire project as per the registered document was Rs. 720 crore with sharing ratio of 35% with the land owners on the built up area and undivided land. Therefore, the developer had given a total advance to all land owners at Rs. 21,26,15,000. The AO, thus held that there being a transfer of capital asset under the development agreement, assessee was subject to capital gain. Whereas the assessee submitted that the land transferred by the assessee was an agricultural land, which also remained as agricultural land at the time of transfer to the developer. Hence, the property transferred not being a capital asset as per section 2(14) of the Act, was exempt from capital gain. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when there is no willingness on part of the developer to perform his part of the contract, it will still be treated as a transfer of capital asset u/s 2(47)(v). NO is the answer. </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>Furnishing Bank Guarantee by Two Star Export House - the repugnancy between clause 4.7.3 of the Handbook of Procedures and paragraph 3.10.4(v) of the Foreign Trade Policy must be resolved in favour of the Foreign Trade Policy - High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> petitioner is a two star export house status holder and has filed the present petition impugning the communication dated 31.05.2013 issued by the office of Additional Director General of Foreign Trade. By the said communication, the Additional DGFT had informed the petitioner that it's entitlement under the Advance Authorization dated 09.05.2012, was limited to a sum of Rs 38,83,52,050/- instead of Rs 77,03,73,810/-. The petitioner was further advised to submit the said Advanced Authorization for endorsement of Bank Guarantee condition for the differential amount. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns on Monday for the judgements. </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT </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@tiol.in"><strong>vijaywrite@tiol.in </strong></a></font></p>
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