TIOL-DDT 261 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 261</font><br> 14 12 2005<br> Wednesday</b></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Don’t change laws too frequently - Parliamentary Committee tells Government</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>THE</b> Parliamentary Committee on Finance in its 27th report to Parliament told the government, “The Committee finds that the Government are bringing in amendments to the Income Tax Act very frequently, which cause difficulties in comprehending the law by various people concerned. The Committee, therefore, urge the Government to come out with a comprehensive simplified single legislation at the earliest.”<br> <br> The Committee headed by Maj. Gen B.C. KHANDURI gave its report on the Taxation Laws amendment Bill 2005. On 30th September, 2005 the Committee heard the views of the representatives of <b>Taxindiaonline</b>.<br> <br> The Committee received written views /suggestions on the various provisions of the Taxation Laws (Amendment) Bill from (i) Confederation of Indian Industry, (ii) Shri R.N. Lakhotia, Senior Tax Consultant and Advocate, (iii) <b><font color="#663399">Shri K. Vijay Kumar, Editor-in-Chief, Taxindiaonline.com, </font></b>(iv) Shri Krishnan, (v) Shri S. Sampath, (vi) Shri P.N. Mittal, (viii) Shri Vijay Mathur and (viii) Shri A.N. Prasad. <br> <br> The Committee noted that the amendments proposed in the Income Tax, Customs and Central Excise Acts are mainly intended to rationalise and simplify certain procedures, widen the tax base and plug loopholes, that lead to leakage of revenue. While some of the proposals, which inter-alia include streamlining the approval and monitoring processes for Charitable Institutions, Scientific Research Institutions etc. under the Income tax Act; and issuance of ‘speaking order’ within 15 days in the event of contradictory views on valuation of import and export goods under the Customs Act have been generally welcomed by the Experts and other interested bodies, certain other provisions have been viewed with an element of scepticism.<br> <br> <b>Power of AO to TRO:</b> On the Tax Recovery Officer being given the power of the Assessing officer, the Committee observed that “By way of conferring additional powers of the Assessing Officer on the TRO – which are proposed to be limited to rectification of mistakes in the assessment orders, giving effect to orders of appellate authorities etc., it is intended to enable speedy and effective settlement of the demands/applications of the assessees. Though the proposal enabling for speedy settlement of assessment related issues would be tax payer friendly, for achieving the intended purpose it may be essential to comprehensively address the prevailing norms, procedures and regulations relating to the functioning of the ‘Tax Administration’.<br> <br> So the Committee suggested that the administrative instructions/regulations relating to the additional powers proposed to be conferred on the TRO are clear and specific on confining such powers to rectification of mistakes in assessment orders, effecting orders of Appellate Authorities etc.<br> <br> <b>Granting of approvals to research institutions for tax exemption: </b> The Committee suggested that matters relating to granting of approvals to research institutions for tax exemption purposes, as well as rescinding of such approvals or recognition should also involve such authority concerned with the activity of the institution. The Committee felt that the assessing officer may not be competent enough to recommend either for according approval or withdrawal of the licence of the institutions<br> <br> The Committee further recommended that a donee who is entitled for tax deduction on sums donated to a ‘recognised’ research institution should not be deprived of such benefit owing to the subsequent rescinding of the recognition within the same financial year. So the Committee wanted that suitable provisions be made to protect the interests of the taxpayer/donee in such instances<br> <br> <b>Crossed Cheque vs Account payee cheque- Prevent bogus claims:</b> As per Section 40A of the Income Tax Act, 20% of the expenditure exceeding Rs.20,000 made other than by crossed cheque or crossed draft is not allowed as deduction. Now the crossed cheque or crossed draft is proposed to be changed to account payee cheque/draft. From the information furnished by the Ministry, the Committee noted that the proposal to replace the words “a crossed cheque or crossed bank draft” with “an account payee cheque or account payee draft” in Section 40A is intended to prevent bogus claims of expenditure on account of third party endorsement of crossed cheques or bank drafts. But the Committee wanted the Government to address this issue in clear terms so that the intended purpose of preventing bogus claims of expenditure on account of third party endorsement of cheques and drafts is achieved. <br> <br> The Committee had made another suggestion in this regard:- It is observed that the modes of payment permissible for the purpose of deduction in computation of income are sought to be confined to the instrument of account payee cheques/drafts. In the present day circumstances, payments made through other modes or instruments, inclusive of Electronic Clearance System (ECS), that may be offered or made available by banking companies, should be made permissible for purposes of deduction in computation of income in clear and unambiguous terms.<br> <br> So the Committee recommended to the Government to seriously consider enlarging the scope of section 40A to include bonafide payments made through such instruments.<br> <br> <b>Taxindiaonline</b> is proud and honoured to have been associated with the Committee and thanks all its netizens who made this possible.<br> <br> The moot question is, Will the Government accept the recommendations of the Committee? If not, why a Committee at all?</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Strike by Central Government employees – brewing</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Central Government employees are planning a strike in February next to press for their long pending demands, including setting up of the sixth pay commission. Finance Minister Chidambaram was against implementing the recommendations of the Fifth Pay Commission and is on record as having bowed to pressure from all political parties and the employees do not have much of a chance as long as he heads the Finance ministry.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Kutch exemption to end this month</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The excise holiday for the goods produced in Kutch in Gujarat is to expire on 31st December 2005 and the Finance Minister is reported to have conveyed his decision not to extend this exemption any further. Kutch will no more be a favourite destination.<br> <br> <font color="#663399"><b>In face of calamities like excess rains, drought, riots, epidemics, invasion, acute famine and the sight of evil people; one who runs away saves his life</b></font> – <b><i>Chanakya</i></b><br> <br> <font color="#FF6666"><b>Until tomorrow with more DDT<br> <br> Have a nice day.<br> <br> Mail your comments to </b></font><a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>