No penalty and interest on Income Tax Liability due to retrospective amendment of Section 80 HHC – CBDT clarifies
The CBDT has issued a very important circular yesterday that would bring a little cheer to the harried exporters. The immediate fallout of the recent Taxation Laws (Amendment) Act, 2005 which amended Section 80 HHC with retrospective effect is a demand of around Rs. 7000 Crores on the exporters. The Federation of Indian Export Organisations (FIEO) will take up the issue at its managing committee meeting slated for January 25 in Chennai and along with other export promotion councils and organizations are likely to petition the Union finance ministry to bring in yet another amendment in the Budget session of Parliament to take out profits on transfer of DEPB from purview of tax laws. At this juncture the Board circular comes as a small relief. The circular clarifies that
++ No penalty shall be levied or interest shall be charged in respect of any fresh demand raised consequent to the enactment of Taxation Laws (Amendment) Act, 2005, on account of variation in the returned/assessed income attributable to profits on sale of DEPB credits or DFRC.
++ Where the assessments have been completed and interest has been charged, the Chief Commissioner of Income-tax shall waive the interest relating to claim of profit
++ Where the assessments have been completed and penalty has been imposed, the Chief Commissioner of Income-tax shall waive the penalty relating to claim of profit
++ Where penalty proceedings are initiated but no penalty imposed yet, penalty proceedings will be dropped.
++ The demand will be recovered over a period of five years.
Board wants the Assessing officers to maintain these details in a separate register and hand them over to their successors on their transfer.
CIRCULAR NO. , Dated : January 17, 2005