TIOL-DDT 2750 · 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> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2750</font><br> 22 12 2015<br> Tuesday</strong></font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">CBEC Wants Action Initiated against Officers for Serious Lapses </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Public Accounts Committee of the 16th Lok Sabha had recommended to have action initiated against the officers responsible for serious lapses in furnishing remedial/corrective ATNs on Audit paras. The Committee, further reiterated its earlier recommendation, and desired that a system of fixing responsibility for serious lapses be put in place.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has noticed that generally the lapse is on the part of departmental officers on revenue such as non-detection of lapse during scrutiny of B/E and Shipping bills, non- detection of lapse during internal audit or non conducting of audit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board reiterates officers involved in the audit should be clearly directed to follow the instructions scrupulously given in the Audit Manual. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board in a letter to all Commissioners (and above) directs that </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<em>the assessing officers involved in the assessment of B/E and Shipping Bills should follow the instructions issued by the Ministry and DG(System) from time to time. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The jurisdictional Commissioner should examine the audit objection at the time of submitting the comments/Action Taken Note to the Ministry carefully in light of lapses on the part of the officers noticed by the C&AG Audit. In case of serious lapse of not following the instructions given supra or any other serious lapse noticed by the Commissioner, the Commissioner should initiate action for fixing responsibility and initiate action against the officers under CCS(CCA) conduct rules</font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">." </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#623094" span="span">Can't they do a spell check? : </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT has been suggesting that the Board should appoint an English Teacher or at least use ‘Microsoft Word' to check the spelling in the great sanctified documents released by it.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this small letter, see how many spelling mistakes are there. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>4. With regard to non-detection of lapse during the internal audit, it is once again reiterated that officers involved in the audit should be clearly directed to follow the instructions </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span"><em>scupulously </em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>given in the Audit Manual. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">assesing </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">officers involved in the </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">assessmsnt </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">of B/E and Shipping Bills should follow the instructions issued by the Ministry and DG(System) from time to time. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">jurisctional </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner ...</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are small and negligible mistakes, but you should remember this is a department that would take the assessee to Supreme Court for a comma. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They will correct these mistakes tomorrow - with retrospective effect. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg5NDI=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC letter in F.No.307/32/2015-SO(PAC-Cus.)., Dated December 18, 2015</font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Company Law - Auditors to Report Fraud of over 1 Crore </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Rule 13 of the Companies (Audit and Auditors) Rules, 2014, the Auditor is required to report to the Central Government if any offence involving fraud, is being or has been committed against the company by officers or employees of the company. Now, this rule is amended to stipulate that such reports are to be submitted to the Central Government in cases of frauds involving more than one crore rupees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of a fraud involving amount less than one crore, the auditor shall report the matter to Audit Committee constituted under section 177 or to the Board. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This will apply to a Cost Auditor and a Secretarial Auditor also. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg5NDA=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoCA Notification in F.No. 1/33/2013-CL-V., Dated December 14, 2015. </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Revenue Boards Needs Members </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Department of Revenue has invited applications for the posts of Members in CBDT and CBEC. Officers having one year regular service in the HAG scale of pay of 67,000-79,000 are eligible to apply if they have at least one year of residuary service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last date for receipt of applications is 19.01.2016.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg5NDM=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DoR F.No.A.12026/22/2015-AD.1., Dated December 18 2015</strong></font></a></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg5NDQ=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DoR F.No.A.12026/23/2015-AD.1., Dated December 18 2015</font></strong></a></p> <p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>Excess Salary refunded - Income Tax Liability </em></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HERE</strong> is an interesting story: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vrajeshwari is an Associate Professor in a Medical College. As a result of the V Pay Commission, her salary was re-fixed in 1998. However, it came to be known in 2006 that her pay was fixed wrongly and she was paid an excess salary of Rs.2,13,132. When this error was detected, she refunded the excess amount to her department by cheque. It was in this backdrop that she disclosed net salary income of Rs.2,43,689 as against actual salary received by her at Rs.4,56,821. The same net salary was disclosed in form no.16 issued by the employer as well. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the ITO did not agree. And the learned Commissioner (Appeals) agreed with the AO. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The aggrieved professor took the matter in appeal to the ITAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question before the ITAT is whether the amount becoming due to the assessee in the present year was Rs.4,56,821, as computed by the Assessing Officer, or it was only Rs.2,43,689 (i.e. net of excess salary adjustment of Rs.2,13,132/- for earlier years) as claimed by the assessee. In other words, could the assessee be legitimately demanded, as a matter of right, that she should be paid Rs.4,56,821 whether or not the excess payments made in earlier years are adjusted by the employer or refunded by the assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal observed: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The salary received or allowed can be taxed on the basis of it's becoming due or it's being received or allowed - whichever is earlier. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The salary is not to be taxed on the basis of "<em>accrual</em>" since, in it's conscious choice of words, legislature has chosen the taxability on due basis or payment basis - whichever is earlier. We may add that the use of the expression "<em>allowed</em>", alongside "paid" refers to perquisites which are essentially non monetary and cannot be paid as such. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Scheme of taxability of salary permits taxability of salary becoming due only once. Explanation 1 and Explanation 2 to section 15 unambiguously shows this thrust of the scheme of taxability of salaries.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT further observed, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ it was not open to the assessee to demand that she should be paid entire amount of Rs.4,56,821 without any adjustments or refunds of the excess amount received in the earlier years. If the assessee was entitled to receive only the net salary, net of recovery in respect of excess salaries received earlier, it cannot be said that the entire amount of salary, without such a recovery, was due to her. What was due to the assessee was the salary accrued during the year minus the excess salary received earlier. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ On the facts of this case, the employer was well within his powers to make recovery for excess payments made earlier. The excess payment made to the assessee was already detected. The amount which constituted "salary due from an employer" was only the amount net of recovery, which the employer was legally empowered to make, in respect of excess payments made on account of wrong pay fixation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The fact that the assessee, on her own, refunded the amount of excess salary received due to wrong pay fixation, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">was a gracious gesture, which is hallmark of academic fraternity anyway, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">on her part. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The salary due to the assessee this year was only Rs.2,43,689. However, since she had refunded Rs.2,13,132 by cheque immediately upon coming to know about excess salary payments to her, she was paid the amount of Rs.4,56,821/- which would have been due to her but for this recovery. Whether she refunds the excess salary received in earlier years and gets full salary for this year, or whether she gets net of recovery salary this year, the amount due to her from employer, which can only be net of recoveries, remains the same. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT did not approve the stand of the authorities below and therefore, directed the Assessing Officer to delete the impugned addition of Rs 2,13,132. </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"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></strong></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" target="_blank"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>