TIOL-DDT 491 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
491</font><br>
15 11 2006<br>
Wednesday</b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CII
admits defeat on FBT – PC hard nut - wish list for Budget 2007</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CII
president and Ashok Leyland. MD, R Seshasayee is reported to have conceded defeat
on FBT. PC is known not to budge easily. The CII wish list for Budget 2007 includes,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
Reduction in the peak rate of customs duty to 10 per cent from 12.5 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
a cut in the excise duty rate to 14 per cent from 16 per cent and in the duty
on processed food and agro-based products to 8 per cent from 16 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
reduction in central sales tax to 2 per cent from 4 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
reduction of customs duty rates on intermediaries and raw materials, including
that on non-ferrous metals, to 5 per cent from 7.5 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
raising the limit under section 80 C of Income Tax by Rs 1 lakh to encourage
investments in infrastructure bonds.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.
alternative payment procedures for FBT. If FBT is not abolished, the choice
should be given to tax paying firms to pay a per cent additional corporate tax
on its total income in lieu of FBT</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.
No surcharge on income tax to domestic companies.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.
have one single rate of taxation rather than have a number of cesses and surcharges
which only complicate estimation of tax burden.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.
an increase in the depreciation rate from 15 per cent to 25 per cent for plant
and machinery.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.
Hold Service Tax at 12%.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.
FBT should be levied only on element of personal benefit to employees. It should
not be imposed on pure business expenses as is the norm of countries having
FBT tax structure”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12.
abolish minimum alternate tax.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax DD arrested by CBI</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CBI, <st1:City>Chandigarh</st1:City> has caught red-handed a Deputy Director
of Income Tax (Investigation Wing) while accepting a bribe of Rs.Onelakh from
a property dealer for returning the passport of the mother-in-law of the property
dealer and also help him in a case that was pending against him with the Investigation
Wing of Income Tax Department. The accused officer has been arrested.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI
registered a case after it received a complaint from the property dealer against
the accused Deputy Director posted in the Office of DG (Investigation), North
West Region, Panchkula. </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Plane
recalled; Airhostess arrested by Customs; dismissed by airlines, gets 8 years
wages in Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prabha
D. Kanan joined Indian Airlines as an Air Hostess on 28th September, 1977.
She was promoted as Deputy Manager in In-flight Service Department. On 18th
June, 2002, she was put on duty in Flight IC-617-961 operating on sector Mumbai
Hyderabad Bangalore Sharjah. When the flight landed at <st1:City>Hyderabad</st1:City>,
she along with other crew members went for customs clearance from the Departure
Hall to board the connecting flight from <st1:City>Hyderabad</st1:City> to Sharjah
via <st1:City>Bangalore</st1:City>. Immediately after take off, it was called
back at the request of the Customs Authorities. She was asked to deplane by
Custom Authorities. She was arrested for carrying Indian currency amounting
to Rs. 22,07,978/- along with foreign currency, viz., 180 UAEDirhams, 13 Kuwaiti
Dirhams, 3 Bahraini Dirhams and 20 Nepali Rupees. She is said to have made
a confessional statement before the Custom Authorities under Section 108 of
the Customs Act that she had been carrying unauthorisedly the said amount.
Her husband on the basis of her statement was also arrested. The news was widely
reported. She was released on bail. Her services were terminated invoking Regulation
13 (which authorizes the Board to dismiss an employee against which there is
no appeal) by the Board of Directors of Indian Airlines. On her writ petition,
the Delhi High Court held Regulation 13 as ultra vires. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Indian
Airlines went in appeal before the Supreme Court and high profile counsel ArunJaitley
appearing for the Indian Airlines pleaded</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i)
that the High Court committed a manifest error in holding Regulation 13 to
be unconstitutional insofar as it failed to take into consideration that the
same does not confer any unguided or arbitrary power. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii)
Regulation 13, does not speak of misconduct. It speaks of justifiable lack
of confidence having regard to (a) incompetence, (b) unsuitability and (c)
security. Regulation, thus, provides for the specific contingencies specified
therein. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
An assessment of such contingencies is required to be made by the highest
available authority. What would be the material for arriving at a conclusion
is a reasonable apprehension that the act on the part of the employee would
be detrimental to the interest of the country. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv)
The High Court also failed to take into consideration the history of the precedents
of the Supreme Court as also how the Regulation was amended having regard
to the directions issued by the Supreme Court.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Supreme Court in its order delivered on Friday observed that </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i)
Prabha D. Kanan was holding a very high ranking post.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii)
She was incharge of a flight. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
She was holding a post of trust and confidence. She had been issued a 'Red
Airport Entry Pass' which gave unrestricted access to all civil airports in
India and flying to other countries on the network of Indian Airlines. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv)
Admittedly, a suit case was found which was booked by her, which, however,
remained unclaimed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v)
The Custom Authorities found the same. Only Respondent was singled out as
the owner of the suit case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi)
It is not in dispute that the suit case contained a large sum of money including
foreign currencies.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii)
She was arrested only on her confession. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii)
The CESTAT had exonerated her.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ix)
In the criminal case, no charge was framed. She was discharged only on the
ground that she had not been found liable in the civil proceedings. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Supreme Court held that Regulation 13 is not unconstitutional but the same is
not applicable in the present case. The Court ordered that she be paid eight
years' salary towards both back wages as well as for loss of employment in future.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.hrindiaonline.com/laws4u/sc1.php?filename=sc/2006/2006-HRIOL-28-SC-SERVICE.htm">See
the full text of the judgement in www.hrindiaonline.com </a></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Medical
treatment in private hospitals - reimbursement taxable – Bombay High Court</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
State Bank of Indiaofficer Subhash Banhatti while traveling in a taxi met with
an accident. He was admitted in a private hospital which charged him Rs. 3.6
Lakhs which he claimed from is bank. The bank generously granted reimbursement
but added the amount t to his taxable income. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PB
More, a typist with RBI was asked to pay more tax than what he could afford
because he had claimed reimbursement for his son’s treatment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Bombay High Court had in 1992 stayed recovery of income tax on such medical
reimbursement. But in a recent judgement which we will carry soon, the High
Court held that reimbursement above Rs.15,000 is a taxable perquisite. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government
servants should now be very careful before they check into those fancy private
hospitals. If the hospital bill is Rs. 5 Lakhs, you will end up paying Rs. 1.5
Lakhs as income tax. It is sickening to get sick. And what would happen if the
employee dies in the hospital? Will there be income tax on the corpse? </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </font></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@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></span></font></p>
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