TIOL-DDT 753 · the untouched capture
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<p ><font size="2"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 753</font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
03.12.2007<br>
Monday</font></b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Deduction under Section 80 ID - Hotels and Convention Centres</b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the new Section 80 ID inserted by Finance Act 2007 effective from 1.4.2008, 100% of the profits from Hotels and Convention Centres will be allowed as deduction for five years, subject, of course, to certain conditions like</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.The hotel or convention centre should be located in the National Capital Territory of Delhi, <st2:City w:st="on">Faridabad</st2:City>, Gurgaon, <st2:PersonName w:st="on"><st1:GivenName w:st="on">Gautam <st1:middlename w:st="on">Budh <st1:Sn w:st="on">Nagar</st2:PersonName> or <st2:City w:st="on"><st2:place w:st="on">Ghaziabad</st2:place></st2:City>.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.The hotel is constructed and starts functioning between 1.4.2007 and 31.3.2010</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.The convention centre is constructed between 1.4.2007 and 31.3.2010</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.The deduction will not be allowed for an existing unit split or transferred to a new unit.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.The assessee should submit along with the return an audit report in such form as<font color="#FF6633"> <b><i>prescribed</i></b>.</font></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.The convention centres should have the minimum area and facilities as <b><i><font color="#FF6633">prescribed.</font></i></b></font></p>
</blockquote>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the CBDT has <b><i><font color="#FF6633">prescribed</font></i></b> the audit report form and the specifications of the convention centres. A new Rule 18DE has been inserted in the Income Tax Rules. The prescribed specifications for the convention centre are that it should have a minimum covered plinth area of 25000 sq.mtrs, should have a minimum seating capacity of 3000 and should have at least 10 convention halls. In addition the facilities mandatorily required are </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. modern public address system, slide and power point projection system and LCD projector or Video screening facility. (What is a power point projection system? Power point is a Microsoft programme - the LCD projector can easily be used for this.)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.Documentation centre with computers and printers, telephone with <st2:stockticker w:st="on">STD</st2:stockticker>/ISD facilities, <b><font color="#FF6633">E-mail</font></b>, photocopy and scanning facility along with trained operators to provide these facilities.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. completely centrally air-conditioned.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. adequate parking facility and other public conveniences as per the local building regulations and should also fulfill all local building regulations in respect of fire and safety.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new form No. 1OCCBBA has been prescribed for filing the audit report.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> <br>
<font color="#006600">LTU, Chennai to be operational soon - notification issued for jurisdiction</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The jurisdiction of LTU, Chennai is to include the jurisdiction of the Chief Commissioner of Income Tax, Chennai-I and II. Central Excise Notification is amended. It seems several officers have been posted to <st2:PersonName w:st="on"><st1:GivenName
w:st="on">Chennai <st1:Sn w:st="on">LTU</st2:PersonName> which may come into existence any moment now.</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=30&filename=notification/excise/2007/exnt07_40.htm" target="_blank">Notification No<b>. </b>40 /2007- Cex.,(<st1:GivenName
w:st="on">N.T.),dated 30<sup>th</sup> November , 2007</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Double Tax Avoidance Agreement with <st2:country-region w:st="on"><st2:place w:st="on">Kuwait</st2:place></st2:country-region> effective 1.4.2008</b></font></p>
<p class=MsoListParagraph style='text-align:justify;
'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Agreement between the government of the republic of India and the government of the state of Kuwait for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, is to come into force from 1.4.2008 which will apply to persons who are residents of one or both the Countries for income tax, including any surcharge thereon in India and for Kuwait, the corporate income tax; the contribution from the net profits of the Kuwaiti shareholding companies payable to the Kuwait Foundation for Advancement of Science (KFAS); the Zakat; the tax subjected according to the Supporting of National Employees law.</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/it07not277.htm" target="_blank">Income Tax Notification No.</a></u> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2007/it07not277.htm"><u>277/2007, Dated: <st2:date ls="trans"
Month="11" Day="27" Year="2007" w:st="on">November 27, 2007</st2:date></u></a><u><st2:date ls="trans"
Month="11" Day="27" Year="2007" w:st="on"></st2:date></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DTAA with UAE amended</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st2:country-region w:st="on"><st2:place
w:st="on">India</st2:place></st2:country-region>'s Minister of State of Finance (Revenue) <st2:PersonName
w:st="on"><st1:GivenName w:st="on"><strong><font color="#FF6633">S.S. <st1:Sn w:st="on">Palanimanickam</font></strong></st2:PersonName><font color="#FF6633"><strong> and UAE's Minister of State for Finance & Industry, Mohammed K. Khalfan Bin Khirbash had signed a protocol to amend the</strong></font><strong> </strong>Agreement between the Government of the Republic of India and the Government of the United Arab Emirates for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed in India on 29th APRIL <st2:metricconverter ProductID="1992 in" w:st="on">1992 in</st2:metricconverter> March 2007 and accordingly the amendment is notified with effect from 1.4.2008.</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=35&filename=notification/cbdt/2007/it07not282.htm" target="_blank">Income Tax Notification No.</a></u> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2007/it07not282.htm"><u>282/2007, Dated: <st2:date ls="trans" Month="11"
Day="28" Year="2007" w:st="on">November 28, 2007</st2:date></u></a><u><st2:date ls="trans" Month="11"
Day="28" Year="2007" w:st="on"></st2:date></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Positive Chidambaram cautious at the Indian Economic Summit (<st2:stockticker w:st="on">IES</st2:stockticker>)</b> </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With India and China now contributing 60% or more to global <st2:stockticker
w:st="on">GDP</st2:stockticker> growth, it is clear that the drivers have shifted from the developed world to developing economies, said Palaniappan Chidambaram, Minister of Finance at the Indian Economic Summit (<st2:stockticker w:st="on">IES</st2:stockticker>) organised by the Confederation of Indian Industry (CII) and World Economic Forum (WEF) yesterday. However, he went on to say that this does not mean that economic power has shifted; developed countries have enormous competitive advantages in the areas of knowledge (and attracting human talent) and financial resources, and in the control of material resources (especially oil and gas).</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram pointed out that <st2:country-region w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region>'s competitive advantage will come from its ability to produce quality goods and services at lower cost, its nimbleness and ability to innovate, its diversity and its huge human asset - its demographic dividend.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FM stressed that, while the economic outlook is favourable, there are some risks that could derail <st2:country-region w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region>'s future growth prospects. Some of these risks are beyond <st2:country-region
w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region>'s control, he argued, including exogenous economic crises and an oil price shock. Other risks are endogenous and can be overcome - for example, risks associated with demographics and the lack of freshwater.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<st2:country-region
w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region> can reap the benefit of its demographic dividend and avoid it turning into a demographic liability by ensuring that every child can access quality education and stay in school for at least 10 years," Chidambaram stated.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With respect to freshwater, he pointed out that <st2:country-region w:st="on"><st2:place
w:st="on">India</st2:place></st2:country-region> has enough precipitation, but not enough storage in terms of dams and reservoirs, and needs improved groundwater recharge. On the larger issue of climate change, the minister stated that, "<st2:country-region w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region> will play its part," but the focus must be on reducing emissions in the developed world, which remain many times higher in <st2:stockticker w:st="on">GDP</st2:stockticker> per capita terms.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram was asked to elaborate on the reform of which he is most proud. "The major economic success, of which any government would be proud, is the average 8.6% growth over five years, as well as the acceptance that inclusive growth is an imperative for <st2:country-region w:st="on"><st2:place w:st="on">India</st2:place></st2:country-region>," he said.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Concluding his formal remarks, Chidambaram stressed that <st2:country-region w:st="on"><st2:place
w:st="on">India</st2:place></st2:country-region>'s immediate task is to achieve the Millennium Development Goals. Like many countries, <st2:place
w:st="on"><st2:country-region w:st="on">India</st2:country-region></st2:place> is behind in some areas, and the global community that helped to set the dates and targets can still do much to help meet them.</font></p>
<p align=center style='text-align:center'><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Gopal's cartoon</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today I bring you yet another cartoon from DDT's new friend <st2:PersonName w:st="on"><st1:title
w:st="on">Dr. <st1:Sn w:st="on">Gopalakrishnanan</st2:PersonName>, retired IAS officer who is a repository of intellectually stimulating articles, poems, paintings and cartoons. Gopal as he likes to be called instead of the formal Sir or <st2:PersonName w:st="on"><st1:title w:st="on">Dr. <st1:Sn w:st="on">Gopal</st2:PersonName> has promised to write for us and we hope to bring one of his articles for us soon. In the meantime enjoy one of his cartoons.</font></p>
<p align=center style='text-align:center'> <font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_cartoon_753.jpg" alt="Legal Corner Icon" width="300" height="428" hspace="5" border="0" align="center"></b></strong></b></font></b></font></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Jurispruden<font color="#663399" size="5">tiol</font></b> <b>- Tomorrow's cases<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><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></strong></b></font></b></font></b></font></p>
<p align="justify" ><font color="#663399" 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"><st2:stockticker w:st="on"><b><font color="#FF6633">TDS</font></b></st2:stockticker><font color="#FF6633"><b> - Failure to deduct or pay- vires of Sec 40a (ia) challenged- High court grants interim stay. </b></font></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What are the consequences of not deducting the <st2:stockticker w:st="on">TDS</st2:stockticker> or after deducting not paying the deducted tax to the Government? </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per section 201 of Income Tax Act 1961, </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Without prejudice to any other consequences, the defaulter will be deemed to be an assessee in default.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. He is liable to pay an interest at 12% <st1:GivenName w:st="on">P.A. from the date on which the tax was deductible till the date of actual payment.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The <st2:stockticker w:st="on">TDS</st2:stockticker> along with the interest will be a charge on all the assets of the defaulter.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. He is liable to rigorous imprisonment for a term which shall not be less than 3 months, but which can extend up to 7 years and fine. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He is liable to a penalty equal to the tax not deducted.</font></p>
<p align="justify" ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise </b></font></p>
<p align="justify" ><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>In absence of proof that assessee collected any amount in excess of what is shown in invoice, demand cannot be sustained - Supreme Court</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">IT</font> </b>started in 1995 when the Central Excise department charged the TELCO with evading excise duty.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee-appellant is, inter alia, engaged in the manufacture of chassis for various models and parts thereof falling under Chapter 87, at its factory at <st2:City w:st="on"><st2:place
w:st="on">Jamshedpur</st2:place></st2:City>. The appellant manufactures motor vehicles of various models. For each model the parts are according to its configuration and technical specifications and the price is also declared accordingly to the department. In other words, the value of the chassis depends upon its fitments. All the chassis in question had been actually fitted with Engine No. 697 <st2:stockticker w:st="on">NA</st2:stockticker> and Gear Box GBS 40. There is no dispute on this factual position between the parties.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department issued Show cause Notices assuming that the appellant has collected Rs.15,290/- per chassis over and above the value declared in the price lists. This demand was confirmed by the Commissioner. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">Vicco vajradanti ayurvedic medicine not cosmetics - High Court was right in quashing the fourth Show cause Notice on the issue - Supreme Court</font></b></font></p>
<p align="justify" ><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>NORMALLY </b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a High Court would not interfere at the Show Cause Notice stage, but when the Revenue is bent on breaking every rule in the book, the High Court had to act and the Supreme Court did not find anything wrong with it! It is frightening to even imagine what would have been our position if we did not have the Courts!</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent is a manufacturer of various products including <st2:PersonName w:st="on"><st1:GivenName
w:st="on">Vicco <st1:Sn w:st="on">Vajradanti</st2:PersonName> and Vicco Turmeric which are stated to be ayurvedic medicines. A show cause notice dated 8th November, 1976 was issued requiring the respondent to satisfy as to why the said products should not be classified as "cosmetics" and not "ayurvedic medicines". </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case has a chequered history. </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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