TIOL-DDT 726 · 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 726</font><br>
24.10.2007<br>
Wednesday </b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>FBT on shares to employees- CBDT issues Rules</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per clause (d) of sub-section (1) section 115 WB, introduced by Finance Act, 2007, an employer is liable to pay Fringe Benefit Tax on any consideration for employment provided by way of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by such employer free of cost or at concessional rate to his employees. The value of the fringe benefit is determined as the fair market value of the specified security or sweat equity share on the date on which the option vests with the employee as reduced by the amount actually paid, by or recovered from the employeein respect of such security or shares.The fair market value for this purpose is to be determined in accordance with the <b><font color="#663399">method prescribed</font></b> by the Board.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first instalment of this FBT was to be paid by 15<sup>th</sup> June, but as CBDT was not ready with the method, this was postponed to 15<sup>th</sup> September, even by which date Board was not ready.[<u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5628" target="_blank">see DDT 636 - 15.06.2007</a></u>]. Without a further postponement, Board is now ready with the rules.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>How to determine the fair market value?</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.It is the average of the opening and closing price of the share in the Stock exchange on the date of vesting the option with the employee.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.What happens if the share is listed in more than one exchange? Then take the average from the exchange which had the highest volume of trading. [Customs could have helped you with 'normal transaction value']</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.What happens if there is no trading on the date of vesting of option?
</font>
</p>
<ol>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Take the closing price of the nearest date - but what happens if there is trading in more than one exchange?</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Simple! Follow Step 2 above; take the exchange with the highest volume of trade in this particular scrip.</font></p>
</blockquote>
</ol>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.So far, so good, but what is the value if the share is not listed at all? [Which employee would want shares of an unlisted company? Sometimes they are also sought after - anyway <st2:Sn w:st="on">Law</st2:Sn> has to take care of all situations] If the shares are not listed, then the fair market value has to be determined by a merchant banker.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2007/it07not264.htm" target="_blank">NOTIFICATION. 264/2007, Dated : <st1:date ls="trans" Month="10" Day="23" Year="2007" w:st="on">October 23, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Special Pay for difficult regions - Board invites suggestions from field</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was suggested at a Chief Commissioners conference that officers posted in the Border and other difficult regions should be given a special pay. Now what are difficult posts? Is it at Leh or North Block? Does a small special pay, usually not more than five hundred rupees really help? In the difficult areas, can't you make life a little better by offering facilities like accommodation, vehicle, communication and entertainment facilities apart from an incentive of a choice posting after a fixed tenure? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Difficulty in posting is not geographical alone and when it comes to a special pay, there are many well deserving claims. Don't the officers working in the Board, who work donkey's hours, facing the wrath of all concerned and not so concerned from the Minister down and who do not get any appreciation for their good work, deserve a special pay? Don't the officers working in specialised fields deserve a special pay? But then there will be too many claimants and everybody who works or avoids work will think that he is the only one who deserves a special pay. Even the protocol boys may demand it - really tricky!</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=25&filename=notification/custom/2007/letter.htm" target="_blank">F.No. A-26017/157/2007-Ad.II.A Dated : <st1:date
ls="trans" Month="9" Day="28" Year="2007" w:st="on">September 28, 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Treat the DRs a little better - give them also a special pay</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Don't the Departmental Representatives slogging it in the Tribunal benches, with pathetic facilities, fighting valiantly for revenue deserve a better compensation, especially when they see their more clever colleagues in the field having a field day? As <st1:PersonName
w:st="on"><st2:GivenName w:st="on">Lynn</st2:GivenName> <st2:Sn w:st="on">Truss</st2:Sn>, says in her book, "Eats Shoots and Leaves", while other girls were out getting their necks disfigured by love bites, she was sitting at home learning grammar! The DRs are some of the most hardworking sincere officers of the department and they are the most neglected, ill treated and condemned lot. An assessee appellant in the tribunal will be after his lawyer, constantly supporting him physically and fiscally, but for an appellant Commissioner, the DR is a nuisance. The DRs should get vehicle, secretarial assistance both at home and office, unlimited library and may be a small fee for each case - pay them a token hundred rupees per case for each appearance. After all when others are necking why should they learn grammar? </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Adultery - <st1:stockticker
w:st="on">IRS vs IAS - spouses included</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No Bollywood pot-boiler could be more intriguing than this - difference- this is not a story. The husband of an <st1:stockticker w:st="on">IRS officer, an additional commissioner has charged an IAS officer who is PA to a minister - for adultery. The wife of the IAS officer is in the High Court seeking departmental action against the <st1:stockticker w:st="on">IRS officer for her immoral conduct. To avoid confusion let's call the <st1:stockticker
w:st="on">IRS officer as <st2:title
w:st="on">Mrs</st2:title> <st2:Sn w:st="on">WIRS</st2:Sn> and let us call the IAS officer <st1:PersonName
w:st="on"><st2:title w:st="on">MR.</st2:title> <st2:Sn w:st="on">MANS</st2:Sn>. Now there are two cases</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <st1:PersonName
w:st="on"><st2:title w:st="on">Mr.</st2:title> <st2:Sn w:st="on">WIRS</st2:Sn> against Mr MANS alleging adultery</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <st2:title
w:st="on">Mrs</st2:title> <st2:Sn w:st="on">MANS</st2:Sn> against <st1:PersonName w:st="on"><st2:title w:st="on">Mrs</st2:title> <st2:Sn
w:st="on">WIRS</st2:Sn> alleging immoral conduct.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the High Court is yet to give its verdict, the Magistrate's Court has already summoned <st1:PersonName
w:st="on"><st2:title w:st="on">Mr.</st2:title> <st2:Sn w:st="on">MANS</st2:Sn> to face trial for adultery.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:PersonName w:st="on"><st2:title
w:st="on">Mrs</st2:title> <st2:Sn w:st="on">MANS</st2:Sn> had earlier in 2006 approached the High Court seeking departmental action against Mrs. WIRS, which was dismissed by a Single judge who told her that her husband is also responsible for allegedly maintaining the illicit relation. In her appeal against the single bench decision, she pleaded that the Single Judge failed to appreciate the fact that the "conduct of Mrs WIRS is unbecoming of a government servant as she had been indulging in immoral and unethical relationship with my husband in violation of the Central Civil Service (Conduct) Rules"</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">She claims that she had submitted written complaints, along with photographs of the <st1:stockticker w:st="on">IRS officer with her husband, to the Director General Vigilance (IT), Revenue Secretary, and other top officials, but did not elicit any response from them.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally in adultery, there is no punishment for the woman. </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Dhoni's boundary for Income Tax</b> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If there is a success story, there is Income Tax following it. Indian captain <st1:PersonName w:st="on"><st2:GivenName
w:st="on">Mahendra</st2:GivenName> <st2:middlename
w:st="on">Singh</st2:middlename> <st2:Sn w:st="on">Dhoni</st2:Sn> has become the highest individual income tax payer in Jharkhand with the Income Tax department expecting around Rs four Crore from the daring cricketer. He has already paid Rs 73 lakh up to September as advance tax.</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"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><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></b></font></strong></font></b></font></strong></font></b></font></strong></font></b></font></strong></font></b></font></strong></font></b></font></strong></font></b></font></strong></font></b></font></strong></font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Judicial indiscipline </b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Commissioner's findings in denovo adjudication anger Tribunal so much so that it endorses copy of order to CBEC Chairman for taking appropriate action</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal remanded a case to the Commissioner in 1992 to decide the case within six months. He did it after 13 years in 2005 and blamed the Tribunal for the department's failure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal while observing that the order was an act of judicial indiscipline could not resist commenting - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i>"Not only the specific directions/terms contained in the remand order are not fulfilled but there are certain findings, comments and observations in the order of the Commissioner which are unwarranted. His observations "from skin deep submission such remand order was passed", "CEGAT's order had become as if a boon and an armour to the assessee", "the order of the CEGAT somehow brought the department at a receiving end", "the Hon'ble Tribunal's order and the indifferent attitude on the part of Income Tax Department had placed the Central Excise Department in a precarious position to decide a case of evasion of duty for which sufficient and tangible evidence has been collected and brought on record by way of investigation had been as if undone" do not show the ld. Commissioner was aware of his role in de-novo adjudication in pursuance of Tribunal's order. He ought to have decided strictly following the directions or should have filed appeal against the order of the Tribunal. <b><font color="#663399">His attitude towards the higher judicial forum is not at all healthy. The observations and insinuations are totally unwarranted </font>.</b> He has dealt with the de novo adjudication proceedings as if he was dealing with an appeal against the order of the Tribunal dated 27.4.92."</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What should you do with such Commissioners? Immediately promote them to Chief Commissioner.</font></p>
<p align="justify" ><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Adjudication without hearing - neither SCN issuing authority, nor Adjudicating Authority has seen relied upon documents - classic example of mindless negation of natural justice - another <st1:stockticker w:st="on">DRI case falls flat - CESTAT</font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>premier investigating agency has again fumbled. The <st1:stockticker w:st="on">DRI issues a SCN but does not give copies of the relied upon documents. Normally no Commissioner would dare to quash a notice issued by <st1:stockticker w:st="on">DRI. But what is often forgotten is that there are still courts in <st1:country-region w:st="on"><st1:place
w:st="on">India</st1:country-region>.</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 color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Non-inclusion of TR-6 challan issued by <st1:stockticker
w:st="on">GTA as a notified document in rule 9 of CCR, 2004 prior to insertion by Not 28/2005-CE is an inadvertent omission - Credit allowed for past period : Tribunal</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TR-6 challan is the most primary document evidencing payment of duty/tax. No doubt the TR-6 challan was not included in the list of specified documents. It was included by virtue of notification no. 28/2005-CE(N.T) dated 7.6.05. I find that this is an inadvertent omission, which was rectified by issuing the said notification. This is so because any duty payment documents is related to and based on TR-6 challan which is the source document. Similar view has been taken up by the Hon'ble Tribunal in the case of National Organics Chemical India Ltd.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Maintenance cost of website is revenue expenditure but development cost is capital in nature : ITAT</font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>NOWADAYS</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> </b>maintaining a website has become a business compulsion. Any business entity worth its salt has to have its presence in the world wide web for faster interaction with its target audience. Given that a company's website only provides information about its businesses and product portfolios, it is certainly not an end in itself. It only projects the forward-looking, modern and agile image of the company and does not earn any revenue in most cases. In this background, an interesting case came up before the Chennai Bench of Tribunal which had upheld the <st1:stockticker w:st="on">CIT(A) order, allowing half of the expenditure as revenue expenditure and the rest to the capital account. Why?</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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