TIOL-DDT 688 · the untouched capture
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<p align="justify" ><font size="2"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL</font></b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><b>-DDT 688</b></font><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
29.08.2007<br>
Wednesday</b></font></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Section 11C notification issued but demand already confirmed ?</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As explained in <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5975" target="_blank">DDT 686 - 27.08.2007</a></u><b><u>, </u></b>Section 11C is a provision to help the babus to correct their mistakes retrospectively. DDT is aware of a case where the counsel argued that a Section 11C notification is proposed to be issued and the Adjudicating Commissioner held, " The Counsel submitted that the government is proposing to issue a Section 11C notification and so the case may be kept in abeyance. The very submission of the counsel that a 11C notification is proposed to be issued proves the fact that duty is payable and since no 11C notification has been issued as of date, I confirm the demand". We had reported a case where the Government had exempted blank coins supplied to the government mint for a particular period, but <em>Salem Steel Plant </em>which had supplied the blank coins had already paid duty. When they claimed refund, it was held to be time barred! See <u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2004/2004-TIOL-1005-CESTAT-MAD.htm" target="_blank"><font size="1">2004-TIOL-1005-CESTAT-Mad</font></a></u><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2004/2004-TIOL-1005-CESTAT-MAD.htm">.</a></font></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently, it seems it was noticed that the benefit of a Section 11C notification has been denied by the field formation, on ground that prior to issuance of the said exemption notification, the demand has been confirmed and upheld by the Appellate Authorities. It has been argued that in cases where the demand has been confirmed they become the arrears of revenue and the benefit of 11C notification cannot be extended in such cases. In order to examine the request to write off such amount, the Finance Minister desired to know whether there are similar cases pending in hand, where even though exemption under section 11C has been granted but prior to issue of Section 11 C notification, order confirming demand had been issued and such cases are being shown as arrears on the ground that Section 11C notification was issued subsequent to confirmation of demand.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board wants Chief Commissioners to furnish information about the orders where such demands are confirmed by various authorities before the Section 11C Notification was issued. The Board wants the Chief Commissioners to furnish the information by 25<sup>th</sup> August 2007 so that they can answer the query made by the FM. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This letter was written by the Board on 22<sup>nd</sup> August 2007. Assuming it was faxed to the Chief Commissioners on the same day, as the Chief Commissioners would not have the information ready, they will have to ask the Commissioners and assuming they did ask the Commissioners on the same day (virtually impossible) and if the Commissioners take two or three days to get the information, it cannot be ready before 27<sup>th</sup> August, 2007. They want the info by 25<sup>th</sup> August, which is a Saturday, a holiday for the Chief Commissioner as well as the Board. So obviously 25<sup>th</sup> August is a joke and they all know that no report will reach the Board by that time. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who are they fooling? The FM? The Chief Commissioners? Or the stupid taxpayers of this nation? </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/11C.htm">CBEC F.No. 156/01/2004-CX4 Dated : August 22, 2007</a></u></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Rupee Loans to NRI Employees of Indian Companies under ESOP Scheme </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Banks are allowed to extend loans in Rupees to resident employees of an Indian company to purchase shares of the company under Employees Stock Option (ESOP) Scheme, to the extent of 90 per cent of the purchase price of the shares or Rupees 20 lakh, whichever is lower. Rupee loans extended by banks under ESOP Scheme are treated as bank's exposure to capital market, within the overall ceiling of 40 per cent of its net worth.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has received requests from banks for allowing them to grant Rupee loans to NRI employees of Indian companies for the purpose of buying shares of the companies under the ESOP scheme. The requests have been examined and it has been decided to allow Authorised Dealer Category - I (AD Category - I) banks to grant Rupee loans to NRI employees of Indian companies for acquiring shares of the companies under the ESOP Scheme. The loan scheme should be as per the policy approved by the bank's Board and would further be subject to the following conditions :</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The loan amount
should not exceed 90 per cent of the purchase price of the shares or Rupees
20 lakhs per NRI employee, whichever is lower.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The rate of
interest and margin on such loans may be decided by the banks, subject to
the directives issued by the Reserve Bank from time to time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 3. The amount
shall be paid directly by the bank to the company and should not be credited
to the borrowers' non-resident accounts in India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The loan amount
should be repaid by the borrower by way of inward remittances or by debit
to his NRO / NRE / FCNR(B) account. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The loans will
be included for reckoning capital market exposures and the bank will ensure
compliance with prudential limits, prescribed by the Reserve Bank from time
to time, for such exposure to capital market</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=49&filename=notification/rbi/2007/rbi07cir007.htm" target="_blank">RBI CIRCULAR NO. 7/RBI., Dated: August 22, 2007</a></u></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Lumbini Park or Gokul Chaat - It was India that was blown up</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The blasts that rocked Hyderabad was not a local bomb, it hit India hard. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Injured in the blasts were tourists from Tamil Nadu as well as students from Maharashtra. Anxious students outside a city hospital from different states of India waited for their friend, a student of the Central University, as he had no relatives in Hyderabad. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The injured include engineers from Indian Railways sent to Hyderabad for training in microprocessor-based speedometers for diesel locomotives.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The blast knew no religion. One of the dead was 19-year-old Irshad Ahmed, a student of Maharashtra's Amrutvahini College of Engineering, a brilliant electronics engineering student. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thirty one-year-old K V Ananda Rao was doing super-specialisation in medical oncology at the Nizam's Institute of Medical Sciences in Hyderabad and little did his mother Lalitha Kumari in Orissa's Berhampur realise that his call to her was his last and she had to receive his dead body.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Milind Mandage, son of a school teacher from Pimpri Gawali village in Parner in Maharashtra wanted to drive his mother in an Indica Car, but he was simply blown up in Hyderabad.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19-year-old Sujeet Kumar Jha from Laheriasarai in Bihar's Darbhanga was also a student of the Amrutavahini College of Engineering. His father, an Income Tax lawyer, had taken a loan for Sujeet's studies. Sujeet's body landed up in Patna airport on Monday with no government in sight anywhere near.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Kiran Chaudhari, from the Amrutavahini College of Engineering, was from Kalyan near Mumbai. His sister had posted a rakhi well in advance, confident that Kiran would get it when he returned from Hyderabad. But he didn't!</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">The blast and SMS:</font> </b>I rarely see and never reply to SMS messages in my cell phones. On the day of the blast, I received several SMS messages, to which I never replied. My son asked me, "do the senders assume that you have been blown up because you have not replied to their messages?" </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner - tomorrow's cases</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></b></b></font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Credit on input service - Outward freight - Gujarat Ambuja disagreed with - referred to Larger Bench </font></b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>THE Delhi Bench of the Tribunal had in Gujarat Ambuja case held that outward freight is not input service. We had carried many comments and articles on the issue. Now the Bangalore Bench has taken a different view.</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question before the Tribunal was whether Service Tax paid on outward transport of goods can be taken credit as input service. The issue is too well known for any detailed elaboration. Straight to what the Tribunal had to say; In a lucid and analytical dissection matching mathematical precision, the Tribunal observed ......</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5384" target="_blank">DDT </a></u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5384"><u>601 - 26.04.2007,</u></a><u></u> we had mentioned, Now what can this Bench do, since there is already a decision by another Bench? It has only two choices - agree with the Delhi Bench or refer the matter to a Larger Bench.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And that is exactly what the Tribunal did. Please have a look at that DDT and <b><font color="#663399">No credit of Service Tax on outward freight - landmark order from Tribunal - </font></b><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5374" target="_blank">TIOL-DDT 599 - 24.04.2007.</a></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And <b><font color="#663399">Service Tax on Goods Transport - yet another hornet's nest - no credit on outward transport? Will the Board clarify? </font></b><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2870" target="_blank">TIOL-DDT 239 - 11</a> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2870">-11- 2005</a></font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax</b></font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Corruption case against Income Tax Commissioner - Departmental proceedings can continue simultaneously with prosecution proceedings - one need not wait for another to conclude : Delhi HC </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">PETITIONER</font></b> is facing criminal prosecution for the alleged offense punishable under the Prevention of Corruption Act. At the relevant time, the Petitioner was functioning as Commissioner of Income Tax (Appeals), Ludhiana. Allegations against the Petitioner is that he demanded a bribe of Rs. 5 lakhs, later reduced to Rs.3 lakhs from one Shri Mohinder Singh for favourably deciding his four appeals and with the help of his brother in law Shri Deepak Chugh accepted part payment of Rs.2.5 lakhs through a close friend P.S. Makkar. The Petitioner has been suspended from service. On the basis of investigation, charge sheet under Section 173 of the Cr.P.C. was filed sometime back and charge has already been framed. Matter is at the stage of trial and the prosecution witnesses are being examined.</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Reward to informers - information furnished from 1973 to 1981 - no reward given - Revenue says no additional tax generated - Income Tax practitioner's claim for Rs 5 lakh reward rejected : Bombay HC </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE plaintiff is a retired Income Tax practitioner and is a perseverant litigant as the following events would show. Can a practitioner really file information apparently based on facts he came to know because of his profession?</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns tomorrow for the judgements</u></b></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></font></p>
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