TIOL-DDT 2805 · the untouched capture
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<p><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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2805</font><br>
11 03 2016<br>
Friday</strong></font></p>
<p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600" size="3">Ease of Filing Appeal to CESTAT - Attestation <u>of Order Appealed Against</u> by Department - Is it Necessary? </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Modi Government is against troubling the citizens with attestation of documents and affidavits. The Prime Minister has advised his Secretaries to do away with this archaic unnecessary procedure which has only nuisance value. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Opening of new CESTAT Benches has created some new procedural problems. It seems the Registry in some new Benches are insisting on the appellants filing copies of the impugned orders certified by Central Excise Superintendents. Why should a Central Excise Superintendent oblige an appellant with attested copies of the orders appealed against? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At least one registry is asking it to be signed by the Range Superintendent. On being asked as to what is to be done if the Range Superintendent refuses to sign, an Assistant Registrar is reported to have said, "you must maintain relations with the Superintendent.” It is also insisted that all four sets of appeal memorandum should be signed by the appellant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 9 (1) of the CESTAT (Procedure) Rules, states </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What to accompany memorandum of appeal? </font></strong></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Every Memorandum of appeal required to be heard by a two-Member Bench shall be filed in quadruplicate and shall be accompanied </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF">by four copies, one of which shall be a certified copy of the order appealed against </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">in the case of an appeal against the original order passed by the Additional Commissioner or Commissioner of Excise or Customs and where such an order has been passed in appeal or revision, four copies (one of which shall be a certified copy) of the order passed in appeal or in revision and four copies of the order of the original authority.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong> Explanation </strong></em><strong>- "Copy" </strong>for the purpose of this Rule shall </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF">mean a true copy certified by the appellant </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">or appellant's representative to be a true copy. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 2(f) has defined certified copy as: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFFCA" span="span"><em>"</em><strong>Certified copy</strong><em>"</em> means the original copy of the order received by the party or a copy (including a photostat copy) thereof duly authenticated by the <strong>concerned department; </strong></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is an apparent contradiction here. Now, should the order copy be certified by the appellant or authenticated by the <strong>concerned department</strong> and who is the <strong>concerned department</strong> or rather who in the <strong>concerned department</strong> should authenticate it. Can anybody in the concerned department do it? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In any case, e-filing of appeals would be a reality one day and then you can't ask the Superintendent to certify the original order and maintain relations with the Assistant Registrar. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is obviously a similar provision in the ITAT, the mother of all Tribunals in India. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 9(1) of the Income Tax (Appellate Tribunal) Rules states, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Every memorandum of appeal shall be in triplicate and shall be accompanied by two copies (at least one of which shall be a </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">certified copy</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">) of the order appealed against, two copies of the order of the <em>Assessing Officer</em>, two copies of the grounds of appeal before the first appellate authority and two copies of the statement of facts, if any, filed before the said appellate authority.] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation : For the purpose of this rule, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">"<em>certified copy</em>" </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">will include the copy which was originally supplied to the appellant as well as a photostat copy thereof </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">duly authenticated by the appellant </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">or his authorised representative as a true copy. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a complicated and totally useless procedure to get the orders certified by the Central Excise Superintendents. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellants request the CESTAT to clarify the position and instruct the Registries of the Zonal Benches to desist from insisting on copies of the orders certified by Superintendents. Maybe the Registrar can issue the clarification that appeals filed with orders self attested by appellants should be accepted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps the Rule also needs a little more clarity. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Keeping in view the policy of the Government of India on attestations and ease of filing appeals, it is hoped CESTAT would do the needful immediately. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue Department in its communication <a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/self-certfn.pdf" target="_blank"><strong>MoF Dept of Revenue F. No. A-60011/21/2014-Ad.IIB, Dated: September 04, 2014</strong> </a>has stated </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#F3DBCF">Government of India is keen to promote self-attestation/certification instead of Attestation by Gazetted Officer or Magistrate; Accordingly, in respect of all copies of documents hitherto requiring certificate / attestation by a Magistrate or Gazetted Officer, Self certification by the applicant should be treated as sufficient subject to production of the original certificates as and when required.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the CESTAT also follow the Government's lofty ideals and make filing of appeals less cumbersome with less interaction with the minions of the Registry? </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a name="f2" id="f2"></a></font></strong></strong></em></font></em></strong></font></em></strong></font><font color="#006600">Revised Instructions on Transfer Pricing </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> provisions relating to transfer pricing are contained in Sections 92 to 92F in Chapter X of the Income-tax Act, 1961. These provisions came into force w.e.f. Assessment Year 2002-2003 and have seen a number of amendments over the years, including the insertion of Safe Harbour and Advance Pricing Agreement provisions and the extension of the applicability of transfer pricing provisions to Specified Domestic Transactions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any income arising from an international transaction or specified domestic transaction between two or more associated enterprises shall be computed having regard to the Arm's Length Price. Instruction No. 3 was issued on 20th May, 2003 to provide guidance to the Transfer Pricing Officers (TPOs) and the Assessing Officers (AOs) to operationalise the transfer pricing provisions and to have procedural uniformity. Due to a number of legislative, procedural and structural changes carried out over the last few years, Instruction No. 3 of 2003 was replaced with Instruction No. 15/2015, dated 16th October, 2015. After the issuance of Instruction No. 15/2015, the CBDT has received some suggestions and queries, which have been examined in detail. Accordingly, new Instruction is issued to replace Instruction No. 15 of 2015. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For administering the transfer pricing regime in an efficient manner, it is clarified that though AO has the power under Section 92C to determine the ALP of international transactions or specified domestic transactions, determination of ALP should not be carried out at all by the AO in a case where reference is not made to the TPO. However, in such cases, the AO must record in the body of the assessment order that due to the Board's Instruction on this matter, the transfer pricing issue has not been examined at all. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under sub-section (4) of Section 92C (read with sub-section (4) of Section 92CA), the AO has to compute the total income of the assessee in conformity with the ALP determined by the TPO under sub-section (3) of Section 92CA. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzODA=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Instruction No. 3/2016., Dated: March 10, 2016 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a name="f3" id="f3"></a></font></strong></strong></em></font></em></strong></font></em></strong></font><font color="#006600">More than a crore of rupees as Agricultural Income - IT Scanner on </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INCOME</strong> Tax Department has noticed that several assessees have declared income from agriculture of more than Rs.1 Crore in the income tax return filed for earlier years especially from AY 2011-12 to 2013-14. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a PIL matter pending before the Patna High Court wherein concerns have been raised that a few assesses may be engaged in routing their unaccounted / illegal money in the garb of agricultural income thereby not only claiming exemptions on such income but also engaged in the money laundering activities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While most of the real farmers hardly get any income, there are several rich people who have cultivated agriculture to reap rich harvest by converting their black money into non-taxable white money by declaring it as agricultural income. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate of Systems wants the Assessing Officers to </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Verify whether the taxpayer may have made a data entry error while filling up the return. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Wherever scrutiny assessment is completed, AO may provide feedback based on assessment records. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) In cases where proceedings u/s 143(3) are pending, assessing officers may be informed to thoroughly verify the claims. </font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzNzk=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DIRECTORATE OF INCOME TAX (SYSTEMS) No. DGIT(S)/DIT(S)-3/AST/PIL Matter/Agriculture Income/97/2015-16., Dated: March 10, 2016 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a name="f4" id="f4"></a></font></strong></strong></em></font></em></strong></font></em></strong></font><font color="#006600">Service Tax - whether services provided by Banks such as collection of telephone bills, collection of insurance premium on behalf of client companies are liable to service tax under category 'business auxiliary service': NO, SC </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is a long story. The period is 01.07.2003 to 31.03.2005. The assessee bank provided Cash Management Services such as:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) Maintenance of accounts of CMS clients and undertaking all types of transactions including receipt and payment of cash in such accounts, Collection of cheques </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Collection of bills and other receivables </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Payment of invoices on behalf of the clients </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) Pooling of funds from various centres </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e) Transfer of funds to various locations </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f) Issue of TT/MT/DD/PO </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">g) Distribution of funds for credit of the accounts of beneficiaries at various centres </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">h) Centralized Collection and Payment accounting solution etc. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue proceeded against the banks on the ground that they are carrying out "Business Auxiliary Services" and the usual confirmation of duty, interest and penalty was carried out sincerely. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT observed that Cash Management Services would be taxable under the category of Banking and other financial services only with effect from June 2007; that it is very clear during this period the Cash Management Service is specifically excluded; that when the service is excluded from the scope of Banking and other financial services, the intention of the Government is not to subject it to service tax at all; that Revenue cannot say that the said service would be classifiable under the category of Business Auxiliary Service and subject it to levy, and allowed the Bank's appeal. (<strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-584-CESTAT-BANG.htm" target="_blank">2009-TIOL-584-CESTAT-BANG</a></strong>) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue took the matter in appeal to the High Court. The High Court observed, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Banking and other financial services are specifically covered by clause 12 and there is no scope for charging tax on any service rendered by Banks under any other head. In other words, we are of the view that clause 12 of Section 65 covers all charging services rendered by Banks. When Cash Management Services stood excluded from the purview of service tax at the hands of the Bank until 31.5.2007, the authorities cannot sustain service tax on an essentially Cash Management Service under any other charging head including Business Auxiliary Service. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court upheld the order of the Tribunal, though not for the same reasons. (<strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-775-HC-KERALA-ST.htm" target="_blank">2009-TIOL-775-HC-KERALA-ST</a></strong>).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The persistent Revenue took the matter in further appeal to the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court recently upheld the High Court order and dismissed the Revenue appeal. The Supreme Court also noted "when for any reason, a taxable service is, <em>prima facie</em> classifiable under two or more sub-clauses of clause (105) of Section 65, classification shall be effected as follows: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, insofar as this criterion is applicable; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration." </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court opined that the the stand of the High Court is supported by the above statutory provision also and requires no interference. </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=MTExODk4" target="_blank">2016-TIOL-26-SC-ST
</a></font></strong></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a name="f5" id="f5"></a></font></strong></strong></em></font></em></strong></font></em></strong></font><font color="#006600">If a Board Circular favours an assessee, it should be so done</font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>QUITE</strong> often, the tax officers in the field have a different view from the one expressively communicated through Board Circulars and the highest court in the land has on several occasions clarified that Board Circulars are binding on the Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was reiterated by the Delhi High Court on 9th March 2016. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue Counsel argued that the Board Circular has to be harmoniously constructed with the Section. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court emphatically noted that there is no question of 'harmonious construction' of a CBDT Circular. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">It is well settled that if a Circular issued by the Department favours an Assessee then it should be so done even where such interpretation goes contrary to the legislative intent . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consistency and discipline are of far greater importance than the winning or losing of court proceedings. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTExODQ1" target="_blank"><strong>2016-TIOL-460-HC-DEL-IT </strong></a></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</font></p>
<p><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>
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