TIOL-DDT 2513 · 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"><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 color="#663399" size="3">TIOL-DDT 2513 </font><br> </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>08 01 2015 <br> Thursday </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font></p> <p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>FICCI wants non-adversarial tax regime </em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FICCI</strong> has urged the Finance Minister to make earnest efforts to move away from the aggressive revenue approach and provide a genuine non-adversarial and conducive tax environment for industry and the economy to flourish. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For creation of such an environment, they suggested: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Revenue estimates and targets should be arrived at realistically in accordance with the state of the economy; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Parameters for evaluating and reporting the performance of tax officers annually need to be revised. Revenue realized should not be a factor for appraising the performance of an assessing officer. Performance of the tax officers should be judged on the basis of the quantum and quality of different items of work rendered in all areas including assessment of traits like judiciousness and facilitation. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">FICCI told the FM, "<em>The overwhelming focus of the Government machinery on revenue ‘Targets' puts too much pressure on the tax officers to maximise revenue collections leading to arbitrary assessments, denial / delay in sanction of refunds, disputes and unwarranted litigation. Revenue generation is primarily dependent on the economic activity in the country; revenues cannot be enhanced by prescribing artificially high targets for the tax officers.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the next two months we will see all the hyper action to meet the revenue targets. </font></p> <p align="center"><font color="#006600"><strong><font size="3" face="Georgia, Times New Roman, Times, serif"><em>Fair, equitable and transparent Tax regime - ASSOCHAM </em></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</STRONG> FICCI wanted a non-adversarial tax regime, ASSOCHAM wanted a Fair, equitable and transparent Tax regime and suggested: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Amendments to tax laws, other than the tax rates, be delinked from Budget. This will help make these amendments through discussions or debate with other stakeholders and the public at large. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Withdraw retrospective amendment made by the Finance Act, 2012. This will go a long way in creating conducive business environment and improving investor confidence. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Make tax compliance easier by removing separate levies of surcharge, education cess, etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Provide tax relief to corporates for mandatory CSR spend. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In order to boost infrastructure development, treat infrastructure projects, particularly water, roads, power at par with SEZ projects to extend all applicable exemptions and tax benefits. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Simplify indirect taxation structure, especially excise duty (2 slab rates) and customs duty (3 slab rates) to facilitate GST implementation. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is the FM listening? </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><font color="#006600"><strong>Ease of Doing Business - High Priority for Government - FM </strong></font></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADDRESSING </STRONG>the captains of Industry and Trade, the Finance Minister Mr Arun Jaitley said, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ease of doing business is high priority for the Government. We are working on a task given by the Prime Minister to improve India's ranking on the ease of doing business index. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Implementation of GST is expected to improve the tax administration regime and would help in bringing more transparency in the system and ensure smooth flow of goods. It will also help in better implementation and collection of taxes. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Reforms measures undertaken by the present Government in coal sector, insurance and amendments in Land Acquisition Act etc. will make a major difference in improving the Indian economy's performance. </font></p> </blockquote> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600" size="3">Anti Dumping Duty on Melamine - Extended well before Expiry </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> once, the CBEC has been able to extend an anti dumping notification well before its expiry. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Melamine falling under Chapter 29, originating in, or exported from, People's Republic of China, was imposed by Notification No. 10/2010-Customs, dated the 19th February, 2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is valid till 18th February 2015. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Government has extended the validity of the notification till 18th February 2016. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how the Government should work. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc1NDA=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 02/2015-Cus (ADD)., Dated: January 07, 2015 </strong></font></a></p> <p align="center"><em><font face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600" size="3">Customs 'Haats off' to India Bangladesh Border Bazaar - New Haat in Tripura to be effective from 13th Jan </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</STRONG> No.60/2011-Cus dated 14.07.2011 exempts certain goods imported into India from Bangladesh from the whole of the duty of customs. The importer has to produce evidence to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, that such goods have, in fact, been locally produced in Bangladesh and are imported into India through the land route from Balat or Kalaich ar land customs station for sale in Balat or Kalaichar border haats. </font></p> <p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Border_Bazaar.jpg" alt="" width="346" height="244" hspace="5" border="0" align="center"></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now <em>Srinagar (Tripura) border </em>is added as another border haat through which the goods can be imported. This Tripura border haat exemption will come into effect from 13th January 2015. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Haats are weekly rural bazaars that happen on a weekly basis across thousands of villages in India. We talk so much of FDI in retail and WalMart, but these Haats of India have more retail outlets than WalMart and they offer a variety that the best of WalMart stores can never dream of providing. With most rural people being regular visitors to Haats (including about 40% women), these Haats can if properly used, change the political and economic scenario of the country. And no WalMart can drive out these Haats </em>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc1Mzg=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 02/2015-Cus., Dated: January 06, 2015 </strong></font></a></p> <p align="center"><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600">Hiring a lawyer to get bail in Customs case - Deductible Expenditure in Income Tax? </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> assessee was arrested by DRI in a Customs Duty Evasion case. He had to go up to the High Court to get a bail. The High Court directed him to pay a deposit of Rs. 70 lakhs (of the alleged evasion). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He claimed Rs. 6,45,000 as expenditure for hiring lawyers and other support services to get the bail for him, as the assessee was in judicial custody due to his arrest by DRI in the Custom Duty Evasion criminal case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He also claimed the Rs. 70 lakhs paid as deposit as expenditure. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Assessing officer disallowed both. The CIT(A) allowed the deposit of Rs. 70 lakhs but did not allow the lawyer expenditure. Both the assessee and the Department appealed to the Tribunal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT observed, <em>there was a criminal case against the assessee with an allegation of custom duty evasion and he incurred impugned expenditure of legal fees for hiring lawyers to represent his criminal case before the Hon'ble High Court and Lower Courts to get the bail order. As the assessee was arrested and sent in judicial custody by the DRI in the Custom Duty Evasion case which cannot be said to be incurred bona fidely wholly and exclusively for the purpose of business of the assessee </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal held that the payment of legal fees and expenses towards defending in a criminal prosecution is not allowable as business expenditure because the same was not expended wholly and exclusively for the purpose of business. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Regarding the 70 lakh deposit, the ITAT noted that the payment was not for penalty, at least till the case was adjudicated and held that this payment of Customs Duty is an allowable expenditure irrespective of the previous year in which the liability to pay such sum was raised against the assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTc0Njc=">2014-TIOL-869-ITAT-DEL </a></strong></font></p> <p align="center"><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600">FERA Prosecution dropped - No 'consent' and 'connivance' </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Show Cause Notice in this FERA case was issued in 1994 against a bank and some of its officers on charges of negligence, consent and connivance in a FERA violation. The charges of consent and connivance were later deleted. But this did not stop the Government from filing a prosecution case. FERA was replaced by FEMA in 2000, but due to a sunset clause, cases could be filed under FERA till 31.5.2002 and the Government filed the complaint on 29.5.2002 and the Court took cognizance of the complaint on the same day. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court on Tuesday quashed the criminal proceedings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=22481" target="_blank">Breaking News</a></strong></font></p> <p align="center"><strong> <font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font color="#006600">Jurispruden</font></strong></strong></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><font color="#FF6633" size="4">tiol<font color="#006600" size="3">-</font></font></em></strong></font></strong></font><em><strong><strong><font color="#006600">Friday's cases</font></strong></strong></em></font></strong></p> <p align="justify"><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">Central Excise </font></strong></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Goods cleared from factory but not exported - Fraudulent records created to show export - For recovery of duty on goods which were cleared without payment of duty but not exported, there is no time-bar as such clearances are covered by the bond which was executed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are a 100% EOU. They<em> "exported" </em>polyester dyed and grey fabrics under 6 ARE-1 all dated 9.4.2002. They submitted proof of export in the form of (photo) copies of the relevant documents. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On perusal of the said proof of export, it was revealed that while the goods were cleared from the factory on 9.4.2002, the (14) shipping bills claimed to be related thereto were noted between 5.9.2002 to 18.9.2002 at Calcutta Custom House. On enquiry, the CHA whose seals appeared on the shipping bills categorically denied having dealt with the said documents or the goods. They also found that seals marks on the S/Bs were not identical to their seals. The enquiries at the port also revealed that the goods claimed to have been cleared under the said six ARE-1s were never presented at the port. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether expenditure incurred on refurbishing of existing assets to achieve international standards is to be construed as revenue in nature - YES: High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a Public Limited Company carrying on the business of hotel. The AO disallowed a sum towards expenditure incurred under repairs and Maintenance of the hotel building. On appeal, CIT(A) dismissed the assessee's contentions. On further appeal, Tribunal held that the details of expenditure incurred for the repairs/renovation/ refurbishing of building, plant and machinery along with interior decoration expenses which in no way suggest that an item of enduring benefit had come into being requiring necessary maintenance of records for the life of the asset so installed requiring determination of scrap value, if any, at the end of their term. The target was therefore only the customers who were used to certain basic amenities when booking a room in a star rated international chain of hotels. Ambience and luxury were related terms which cannot be assigned a life or duration for a business house to capitalize for a term to claim depreciation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether expenditure incurred on refurbishing of existing assets to achieve international standards is to be construed as revenue in nature. And the verdict favours 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>Department has to first fix the classification of a particular activity and only then proceed to work out the demand of service tax which is due - classification under which charge of non-payment is made in the show cause has not been specified - Matter remanded: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is engaged in the activity of constructing and maintaining sewage treatment plants, effluent treatment plants and water treatment plants. It was detected by the department that the appellant had not paid service tax on the above activities undertaken by them as well as on Goods Transport Agency Service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against a total demand of Rs.31.82crores the appellant has deposited Rs.92 lakhs and is before the CESTAT seeking a stay in the matter. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our Columns Tomorrow for the judgements </font></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">Have a nice day.</font></p> <div 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"> <strong><a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in</a></strong></font> </div> </body> </html>