TIOL-DDT 257 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<html>
<head>
<title>Untitled Document</title>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1">
</head>
<body bgcolor="#FFFFFF">
<div align="left">
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT
257</font><br>
08 12 2005<br>
Thursday</strong></font></p>
<p align="center"> <font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service
Tax - advertising agency -draft remains a draft</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Yesterday we carried the same caption with a question mark. Today there is
no question. It is out – the circular is not to be issued. Yesterday
<strong>DDT</strong> asked,<br>
“It is nearly two months since the Board released a draft circular to
the effect, "the amount paid by the advertising agency to the media for
obtaining space for display or exhibition, being in the nature of input service
used in providing the taxable service, is liable to be included in the value
of the taxable service". This has caused the appropriate furore. Now
has the government decided to bury the draft circular or go slow on it? “<br>
<br>
<strong>DDT</strong> is happy to report that the Board has decided not to
pursue this line and the print media can heave a sigh of relief. Whenever
the government reacts positively to popular sentiments, it enhances the status
of the government. Thank You Board! <br>
<br>
<strong>Please see</strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2852"><strong>TIOL-DDT
235 - 07. 11. 2005 </strong></a><strong>-</strong> <strong>Draft circular
on advertisement: Some unanswered questions </strong><br>
<br>
<strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/st_draft_circ.htm">F.NO.341/43/2005-TRU.
Dated 7th December 2005</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong><font color="#006600">Taxation Laws Bill introduced</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
A recap of the Taxation Laws (Amendment) Ordinance, 2005 promulgated on 31.10.2005.
<br>
<br>
(i) Clause (15A) of section 10 of the Income-tax Act has been amended so as
to provide that any payment received in respect of a lease of an aircraft
or an aircraft engine by the Government of a foreign state or a foreign enterprise
from an Indian company engaged in the business of operation of an aircraft
under an agreement entered into before 1st, April, 2006 shall be exempt from
Income-tax. A consequential amendment of clause (6BB) of section 10 of the
Income-tax Act has been carried out.<br>
<br>
(ii) The following new clauses have been inserted in section 10 of the Income-tax
Act:-<br>
<br>
(a) Clause (39) exempts specified income of the persons notified by the Central
Government arising from any international sporting event conducted in India,
approved by the recognised international body responsible for regulating the
relevant sport and having multi-nation participation.<br>
<br>
(b) Clause (40) exempts any income of any subsidiary company by way of grant
or otherwise received from an Indian company, being its holding company engaged
in the business of generation, transmission or distribution of power if such
receipt is for settlement of dues in connection with reconstruction or revival
of an existing business of power generation taken over by an Indian company,
referred to in sub-clause (a) of clause (v) of sub-section (4) of section
80-IA.<br>
<br>
(c) Clause (41) exempts any income arising from transfer of a capital asset,
being an asset of an undertaking engaged in the business of generation, transmission
or distribution of power where such transfer is effected on or before 31.3.2006
to the Indian company notified under sub-clause (a) of clause (v) of sub-section
(4) of section 80-IA.<br>
<br>
(iii) Section 80-IA of the Income-tax Act has been amended so as to provide
that an undertaking owned by an Indian company and set up for reconstruction
or revival of a power generating plant shall be eligible for tax benefit under
the said section if it fulfils the following conditions:-<br>
<br>
(a) such Indian company is formed before 30.11. 2005 with majority equity
participation by public sector companies for the purposes of enforcing the
security interest of the lenders to the company owning the power generating
plant and such Indian company is notified before 31.12.2005 by the Central
Government;<br>
(b) such undertaking begins to generate or transmit or distribute power before
31.3.2007.<br>
<br>
(iv) Section 115W of the Income-tax Act has been amended so as to provide
that a political party registered under section 29A of the Representation
of the People Act, 1951 with Election Commission of India and companies registered
under section 25 of the Companies Act,1956 and section 12AA of the Income-tax
Act will not be liable to fringe benefit tax in terms of section 115WA of
the income-tax Act.<br>
<br>
(v) Chapter-VII of the Finance Act, 2005 has been amended so as to provide
that inter- bank transactions would be exempt from Banking Cash Transaction
Tax. <br>
Now the Ordinance is to be replaced with the <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/2nd_amendment_taxation_bill.htm">THE
TAXATION LAWS (SECOND AMENDMENT) BILL, 2005</a></strong> introduced in the
Lok Sabha on 6th December. The Bill after becoming the Act will have retrospective
effect from 31.10.2005, the date of the ordinance.<br>
<strong>Profits from transfer of DEPB and DFRC included in income chargeable
to Income Tax under Section 28 and for deduction under Section 80 HHC. Exporters
should be happy.</strong><br>
<br>
Section 28 of the Income Tax Act enumerates the items of income chargeable
to tax under the head “profits and gains of business or profession”
This includes profits from transfer of certain export scrip but does not include
DEPB and DFRC, which are now added. But what really matters is not the taxability
under Section 28 but the deductability under Section 80 HHC. Under this Section
profits from exports are deducted from the total income and this deduction
is also allowed to the extent of 90% of the profits earned by sale of export
incentive scrips but here also DEPB and DFRC were not included which had led
to several disputes. <br>
<br>
<strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1411">TIOL-DDT
85 on 31.03.2005</a> had pointed out </strong></font></p>
<table width="450" border="0" align="center" cellpadding="2" cellspacing="3">
<tr>
<td><p align="left"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exporters allege harassment –
not from Customs but from Income Tax</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Yesterday we carried a news story about the travails of the exporters
who are now stuck with demands from Income Tax authorities on the sale
of DEPB. Under Section 28 of the Income Tax Act the following are classified
under profits:-<br>
<br>
1. Profit on sale of licences (under Exim Policy)<br>
2. Cash assistance for exports<br>
3. Drawback <br>
<br>
Under Section 80 HHC export profits are allowed as a deduction. This
concession is to end with this financial year. The problem of the exporters
is that Section 28 does not mention DEPB and Section 80HHC does not
take into consideration losses, both of which they want to be rectified
with retrospective effect. But Income Tax authorities seem to be serious
in collecting their arrears. The exporters who had availed these benefits
are doomed if the taxmen proceed to collect the arrears! Contrary to
common belief, exporters don’t earn huge profits to meet the retrospective
demands of the taxmen. North Block is indeed a potential repository
of possible Tsunamis for the Indian businessman.</font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Now this problem is sought to be addressed, subject of course to certain conditions.
Now <br>
<br>
1. 90% of any profit on the transfer of the Duty Entitlement Pass Book Scheme
on the transfer of Duty Free Replenishment Certificate in the case of an assessee
having export turnover not exceeding rupees ten Crores during the previous
year will be allowed deduction under Section 80HHC<br>
<br>
2. For exporters having turnover of more than Rs. Ten Crores, the benefit
will be allowed if the assessee has necessary and sufficient evidence to prove
that, - <br>
(a) he had an option to choose either the duty drawback or the Duty Entitlement
Pass Book Scheme/ Duty Free Replenishment Certificate<br>
<br>
(b) the rate of drawback credit attributable to the customs duty was higher
than the rate of credit allowable under the Duty Entitlement Pass Book Scheme/
Duty Free Replenishment Certificate <br>
<br>
3. If the Income from exports is a loss it will be set off against the profits
from the transfer of export schemes scrips.<br>
<br>
4. These benefits are available from the 1st day of April, 1998 <br>
<br>
<strong>THE TAXATION LAWS (SECOND AMENDMENT) BILL, 2005</strong></font></p>
<p align="center"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong><font color="#006600">Commissioner for specific adjudication</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Commissioner of Customs, Inland Container Depot, Tuglakabad, is appointed
to act as,- . <br>
<br>
1. Commissioner of Customs (Import), Jawaharlal Nehru Pot Trust, Nhava Sheva
and;<br>
<br>
2. Commissioner of Customs , (Import), New Custom House, Mumbai<br>
<br>
to adjudicate a specific DRI case.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2005/cnt05_106.htm"><strong>NOTIFICATION
NO. 106 /2005-CUSTOMS (N.T.) Dated : December 6, 2005</strong></a></font></p>
<p align="center"> <font color="#990000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>The real power of money is in giving it away – Infosys Narayan
Murthy<br>
<br>
Three essential ingredients for a successful man – Passion, Intelligence
and Integrity – Bill Gates<br>
There has not been a single byte of wasted moment – Bill Gates</strong></font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong> <font color="#FF6666">Until tomorrow with more DDT <br>
<br>
Have a nice day. <br>
<br>
Mail your comments to</font></strong> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
</div>
</body>
</html>