TIOL-DDT 30 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#0000FF" size="3">TIOL-DDT
30</font><br>
12 1 2005<br>
Wednesday</b></font></p>
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<b>Income tax deduction for hundred percent EOUs – CBDT issues clarification.</b></font></p>
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<b>AS</b> per Section 10-B of the Income Tax Act, profits of 100% EOUs are allowed
100% deduction for a period of 10 consecutive years from the year of starting
of manufacture, but the deduction is not available after the year 2009-10.
Doubts have been raised as to whether this deduction under section 10B is available
to a DTA unit on conversion as a 100% EOU. <br>
<br>
The benevolent Board has now clarified that it is indeed available, but only
for the remaining period till 2009-10. The Board has given certain examples
to drive home its points. Shorn of North Block bureaucratic English, it means:-<br>
<br>
1. A unit in DTA started in 1999-2000, gets approval as EOU in September 2004.
It shall be eligible for deduction under Section 10B from the Assessment Year
2005-06 to 2009-10.<br>
<br>
2. A DTA unit started in 96-97, becomes EOU in 2007-08. It is not eligible for
10B deduction as the ten year period is over. (This is most unfair as the period
is to be computed from the time the unit becomes an EOU, not before)<br>
<br>
3. A unit formed by transferring old machinery is not eligible for deduction.<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2005/it05cir01.htm">Income
Tax Circular No 1/2005 dated 6.1.2005</a></font></p>
<p align="justify"><font color="#009933" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Clearance of excisable goods for manufacture of export goods- export only
under Rule 19</b></font></p>
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As per Rule 19(2) of the central excise Rules, 2002, goods can be removed without
payment of duty for manufacture of export goods subject to the procedure prescribed
under Notification No.43/2001 –CE(NT). This notification was amended by
notification No.10/2004 – CE(NT) dt.3.6.2004 to stipulate that the
resultant goods manufactured out of these duty free goods has to be exported
under the procedure prescribed under notification No. 42/2001 – CE(NT).
Board had also issued a circular stating that the amendment was only clarificatory.
If the amendment was clarificatory, the question that arose was whether it had
retrospective effect. Seven months and several show cause notices later, Board
now clarifies that the clarificatory amendment will have only prospective validity
from 3.6.2004. <br>
<br>
The whole crux of the notification is that exports cannot be made under claim
for rebate. TIOL in its “looking back, the year 2004” had
wondered why this restriction at all.<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2005/excircular805.htm">Board
circular No.805/2005 – CE dt.11.1.2005</a></font></p>
<p align="justify"><font color="#009933" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Customs valuation – 2500 years ago</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The
merchandise being placed near the flag of the toll-house, the merchants shall
declare its quantity and price, cry out thrice ‘who will purchase this
quantity of merchandise for this amount of price,’ and hand over the same
to those who demand it (for that price). When purchasers happen to bid for it,
the enhanced amount of the price together with the toll on the merchandise shall
be paid into the King’s treasury. When under the fear of having to pay
a heavy toll, the quantity or the price of merchandise is lowered, the excess
shall be taken by the King or the merchants shall be made to pay eight times
the toll. The same punishment shall be imposed when the price of the merchandise
packed in bags is lowered by showing an inferior sort as its sample or when
valuable merchandise is covered over with a layer of an inferior one. Those
merchants who pass beyond the flag of toll-house without paying the toll shall
be fined eight times the amount of toll due from them." {From (Book II,
chapter XXII) -KAUTILYA’S ARTHASASTRA (1915 Ed. - translated by R. Shamasastry)}<br>
<br>
<font color="#FF00FF"><b>Doesn’t the present 100% mandatory penalty look
simple and saintly?</b></font><br>
<br>
<font color="#FF0000"><b>Until tomorrow with more of DDT</b></font></font></p>
<p align="justify"><font color="#FF0000"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Have a Nice Day </font></b></font></p>
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