TIOL-DDT 484 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
484</font><br>
06 11 2006<br>
Monday</b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Service
Tax - Centralised Registration- AG’s Audit exists under Central Excise Act?
- Instructions and press note issued</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On
Friday DDT 483 had covered this issue and mentioned about the new power given
to CAG to audit Service Tax assessees. We understand that Service Tax assessees
as well as departmental officers across the country are aghast at this most
unwanted act of the Board. Now CAG’s audit will be all over the place manufacturing
para after para of Audit objections and at the slightest drop of a para, the
department is instructed to issue Show Cause Notices. You can expect thousands
of Show Cause Notices in the next few years. Remember the outlandish issue of
abatement for GTA that the AG had pointed out which resulted in thousands of
Show Cause Notices floating around. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consultants
should be grateful to the Board for giving them a vast area to earn good money.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
the Board instruction says there is a similar provision in the Central Excise
Act. No, Sir; there is no such provision in the Central Excise Act passed by
Parliament. There is such a provision only in the Central Excise Rules framed
by the Board. So it is not Parliament but the Board which has given the power
to the AG’s Audit to visit Central Excise assessees and now the Service Tax
assessees.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/Instruct01.htm">Board’s
F. No. 137/50/2005 -CX.4 dated November 3 , 2006.</a></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Income
Tax – e returns and post office returns – centralised processing - directions</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The CBDT has issued detailed directions on the processing of returns. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
may be noted that it has been made mandatory to furnish e-return by the corporate
taxpayers after 24.7.2006. However, for other taxpayers it is optional to furnish
the return electronically. Important aspects relating to this have been clarified
in Circular No. 9/2006. See <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4368">TIOL-DDT
468 - 12 10 2006.</a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central
Processing:</b> Board has decided that the following returns are to be processed
centrally:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
Returns furnished at postal offices. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
Returns furnished under the Electronic Furnishing of Return of Income Scheme.
Under this Scheme, e-return has to be filed through e-Return Intermediary,
followed by a paper return. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Returns furnished under the Furnishing of Return of Income Internet Scheme,
2004.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
Returns furnished under two step-procedure. First step is to transmit the
details of the return and schedules electronically (without digital signature
and then to furnish a paper return.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
Returns furnished under digital signature.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Procedure:</b>
For centralised processing, following procedure has to be followed<br>
<br>
1. In the region of each Regional Computer Centre (RCC)/Computer Centre, the
concerned Chief Commissioner of Income-tax shall designate at least one officer
to ensure that all the returns furnished with the postal offices are collected
and stored centrally. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
Chief Commissioner/Director General of Income-tax shall make necessary arrangement
to separately receive the paper returns in respect of e-returns. These returns
shall be transferred to the Assessing Officer designated for centralised processing
of these returns.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Every cadre Controlling Chief Commissioner, in consultation with other Chief
Commissioners/ Directors General of Income-tax of his region will decide the
number of Assessing Officers (hereafter named as designated Assessing Officers)
required for centralised processing of the above mentioned returns for each
RCC/CC in his region. The designated Assessing Officer should be based at
net-work stations only.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
Every Chief Commissioner/Director General of Income-tax shall pass an order
assigning concurrent jurisdiction to the Assessing Officers selected by the
Cadre Controlling Chief Commissioner.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
The cadre Controlling Chief Commissioner of Income-tax shall ensure that adequate
number of Senior Tax Assistants/Tax Assistants (erstwhile Data Entry Operators)
are posted with the designated officers for data entry and processing of paper
returns.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.
The Joint Commissioner/Additional Commissioner of Income-tax, Commissioner
of Income-tax, Commissioner of Income-tax (Appeals) or Chief Commissioner
of Income-tax will continue to hold the jurisdiction over such processed returns,
as at present.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.
The jurisdiction over a case for all the actions after selection of the case
for scrutiny shall rest with the Assessing Officer with whom the designated
Assessing Officer exercises the concurrent jurisdiction.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.
Where e-return does not tally with the paper return, the designated Assessing
Officer shall correct the data in the e-return and process the case accordingly.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.
If there is a refund, the designated Assessing Officer shall, before completing
the processing of the return, adjust the demand, if any, outstanding as per
Individual Running Ledger Account (IRLA).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.
If the amount of refund after adjustment of demand as per IRLA does not exceed
Rs. 25,000/-, the processing shall be completed and the refund, if any, shall
be issued forthwith. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.
No separate approval of refund by CCIT/CIT/Addl. CIT/JCIT shall be required.
</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2006/instruct0607.htm">INSTRUCTION
NO. 7/2006, Dated: October 10, 2006</a></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Indiscriminate
issue of certificates for non deduction or lower deduction of Tax – CBDT
cautions field</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT
is concerned that assessing officers are issuing certificates for lower deduction
or no-deduction of tax at source under section 197 (1) of the Income tax Act
indiscriminately and in contravention of the methodology and procedure laid
down in rules 28AA and 28AB of the Income Tax Rules.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such
arbitrary issuance of certificates not only adversely affects the collection
of tax at source but also seriously jeopardizes the chances of disclosure/detection
at a later stage.<br>
<br>
So CBDT directs that</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
Assessing officers should ensure that all certificates under section 197 (1)
are issued by them strictly as per the manner prescribed under rule 28AA or
rule 28AB.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
The assessing officer shall obtain prior administrative approval of the Range
JCIT/Addl. CIT before issuing a certificate under section 197(1).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
The JCIT/Addl. CIT shall satisfy himself of the fact that the certificate
is being issued strictly in accordance with rule 28AA/28AB before according
his approval for issuance of the certificate.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
A record of such certificate issued should be maintained in the office of
the assessing officer.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
who are eligible for these certificates? Relevant extracts fro Section 28AA
and AB are reproduced below. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">28AA.
(1) The Assessing Officer, on an application made by a person <strong>98</strong>[under
sub-rule (1) of rule 28, may issue a certificate in accordance with the provisions
of sub-section (1) of section 197] for deduction of tax at source at the rate
or rates calculated in the manner specified below :</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(i) at such average rate of tax as determined by the total tax payable on estimated
income, as reduced by the sum of advance tax already paid and tax already deducted
at source, as a percentage of the payment referred to in section 197 for which
the application under sub-rule (1) <strong>99</strong>[* * *] of rule 28 has
been made; or</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) at
the average of the average rates of tax paid by the assessee in the last three
years;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-----------------------------</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>28AB.</b><i>(1)
Subject to the conditions specified in sub-rule (2), a person</i></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a)<i>
in receipt of income or deemed income derived from property held under trust
wholly for charitable or religious purposes and who claims exemption under
section 11 or section 12; or</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b)<i>
required to file a return in respect of a scientific research association,
news agency, association or institution, fund or trust or university or other
educational institution or any hospital or other medical institution or trade
union referred to in sub-section (4C) of section 139,</i></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i>may
make an application to the Assessing Officer for the grant of a certificate
under sub-section (1) of section 197 authorizing him to receive incomes without
deduction of tax at source.</i></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2)
<i>The conditions referred to in sub-rule </i>[<i>(1)</i>]<i> are the following,
namely :</i></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) <i>
the person concerned has furnished the returns of income for all assessment
years for which such returns became due on or before the date on which the
application under sub-rule (1) is made;</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(ii) <i>the trust, scientific research association, news agency, association
or institution, fund or trust or university or other educational institution
or any hospital or other medical institution or trade union referred to in
sub-rule (1) is for the time being approved for the purpose of exemption from
income-tax; and</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
<i>the applicant gives a list of deductors from whom amounts are to be received
without deduction of tax at source every six months alongwith the names, addresses
and the amounts received.</i></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3)<i>
An application for the certificate is to be made to the Assessing Officer in
accordance with sub-rule (1) of rule 28.</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4)
<i>The Assessing Officer may issue a certificate authorizing payment of incomes
without deduction of tax at source if he is satisfied that all the conditions
laid down in sub-rule (2) are fulfilled and the issue of any such certificate
will not be prejudicial to the interests of revenue.</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5)<i>
The applicant may furnish copies of certificate issued under sub-rule (4) to
the person responsible for paying the income for the purpose of no deduction
of tax at source.</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6)<i>
The certificate shall be valid for the financial year specified therein unless
it is cancelled by the Assessing Officer at any time before the expiry of the
said financial year.</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(7)
<i>An application for a fresh certificate may be made, if the assessee so desires,
after the expiry of the period of validity of the earlier certificate.</i>]</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2006/instruct0608.htm">INSTRUCTION
NO. 8/2006, Dated: October 31, 2006</a></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
tomorrow with more DDT </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </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@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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