TIOL-DDT 789 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong><font color="#663399" size="3">TIOL-DDT
789</font><br>
24.01.2008<br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax – Mandatory e-payment from April? </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The optional
scheme of electronic payment of taxes for income-tax payers was introduced
in 2004. With a view to expand the scope of electronic payment of taxes, it
is proposed to make the scheme mandatory for the following categories of tax-payers:-</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) All corporate
assesses;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) All assesses
(other than company) to whom provisions of section 44AB (those who are mandatorily
required to get their accounts audited) of the Income Tax Act are applicable.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scheme of
mandatory electronic payment of taxes for income-tax payers is proposed to
be made applicable from 1st April, 2008.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tax-payers can
make electronic payment of taxes through the internet banking facility offered
by the authorized banks. They will also be provided with an option to make
electronic payment of taxes through internet by way of credit or debit cards.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cbdtepayment.htm" target="_blank">CBDT
Press release Dated: January 23, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EPCG
– additional EO – DGFT clarifies</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT PN 99/2008
had stated “Additional Export Obligation (over and above indicated average)
for all previous EPCG licences, which have not been redeemed, will be indicated
separately.”</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now DGFT has
issued an explanatory note:-</font></p>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
(a) Company “A” applies for EPCG licence in 2007-08 with previous
exports of Rs 10 Crore, 20 Crore and 30 Crore in 2004-05,2005-06 and 2006-07
respectively. While issuing the first license, ( presuming the duty saved amount
is Rs.1 Crore), licensing authority will impose average export obligation of
Rs.20 Crore and additional export obligation of 8 times of Rs.1 Crore. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b)
However, while issuing the second license, the licensing authority shall impose
average export obligation of Rs.20 Crore, “previous additional export
obligation “of 8 times of Rs.1.5 Crore (presuming the duty saved amount
in the second license is Rs.1.5 Crore).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(C)
Similarly, while issuing the third license, the licensing authority shall impose
average export obligation of Rs. 20 Crore, “previous additional export
obligation “of 8 times of Rs.2.5( Rs.1+ Rs 1.5 ) Crore and additional
export obligation of 8 times of Rs.2 Crore ( presuming the duty saved amount
in the second license is Rs.2 Crore.)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
(a) Fulfillment of additional exports obligation against the first license shall
also subsume “ previous export obligation” of the second and subsequent
licenses to that extent. For example, if the license holder fulfill an average
export of Rs. 20 Crore annually and additional export obligation of 8 times
of Rs 1 Crore, it will subsume the “previous additional EO” imposed
on the second and subsequent licenses to the extent of 8 times of Rs.1 Crore.
The “previous export obligation” on the second license shall stand
fulfilled and “previous export obligation” on the third license
shall stand reduced to 8 times of Rs.1.5. Crore.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b)
Upon completion of additional EO of 8 times of Rs. 1.5 crore, with maintenance
of average of Rs.20 Crore annually, the export obligation imposed on the second
license shall stand fulfilled and “previous additional export obligation”
imposed on the third licence ( after being reduced to Rs.1.5 Crore) shall be
subsumed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(C)
Upon completion of additional EO of 8 times of Rs.2 Crore, with maintenance
of average of Rs.20 Crore annually, the export obligation imposed on the third
license shall stand fulfilled.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
After redemption of an EPCG license, the exports made against such licenses
shall be added to arrive at the average of proceedings three licensing years.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2007/dgft07cir028.htm" target="_blank">DGFT
Policy Circular No. 28/07(2004-09) Dated: January 22, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exit
from EOU scheme – DGFT amends policy</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per para 6.18(d) of the FTP, </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">An
EOU / EHTP / STP / BTP unit may also be permitted by Development Commissioner,
to exit on payment of duty on capital goods under the prevailing EPCG Scheme
as a onetime option. This will be subject to fulfilment of eligibility criteria
under that Scheme and standard conditions indicated in HBP v1.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
this is amended to read as,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An
EOU/EHTP/STP/BTP unit may also be permitted by Development Commissioner, to
exit from the scheme at any time on payment of duty on capital goods under the
prevailing EPCG Scheme for DTA Units. This will be subject to fulfillment of
positive NFE criteria under EOU scheme, eligibility criteria under EPCG Scheme
and standard conditions indicated in HBP V.1.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2007/dgft07not072.htm" target="_blank">DGFT
Notification No. 72/(RE-2007)/2004-2009 Dated: January 22, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Committee
of Chief Commissioners/commissioners for Service Tax for Chennai LTU</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An
LTU has started functioning in Chennai and the necessary notifications are slowly
trickling in. When they appointed the Committees of Chief Commissioners and
Commissioners to review the adjudication orders under Central Excise, perhaps
they forgot that similar notifications are to be issued for Service Tax too,
which of course was noticed soon enough and the notifications are issued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_046.htm" target="_blank">Service
Tax Notifications 46</a><strong> and </strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_047.htm" target="_blank">47 Dated: January 18, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exim
Bank's Line of Credit (LOC) of USD 5 million to Nigerian Export-Import Bank</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export-Import
Bank of India (Exim Bank) has concluded an agreement dated September 14, 2007
with the Nigerian Export-Import Bank, making available to the latter, a Line
of Credit (LOC) of USD 5 million (USD Five million only) for financing export
of capital and engineering goods, industrial manufactures, consumer durables,
commodities and services including consultancy services from India. The goods
and services for export under the agreement are those which are eligible for
export under the Foreign Trade Policy of the Government of India and whose purchase
may be agreed to be financed by Exim Bank under this agreement. Out of the total
credit under this Agreement, the goods and services of the value of at least
85 per cent of the contract price shall be supplied by the seller from India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=49&filename=notification/rbi/2007/rbi07cir024.htm" target="_blank">RBI
Circular No24 Dated: January 23, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC
announces Presidential awards to 35 officers</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Government has announced Presidential award to 35 officers of the Customs, Central
Excise and Narcotics for achieving and maintaining excellence in the discharge
of their duties. As usual officers of DRI and DGCEI have walked off with 50%
of the awards. Of course these are organizations where performance can be measured
to some extent. The Department’s spokesperson Hemabika Priya find a place
in the list. Who is more competent to talk about the department than a Presidential
awardee?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Press Note signed by the Chairman CBEC requests wide publicity to be given on
the eve of republic Day.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL</strong>
congratulates the officers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/president_award.htm" target="_blank">DOR
Press Note F.No.394/57/2007-Cus (AS) Dated: January 23, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC
amends Transfer Policy</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CBEC has made certain changes in the Transfer policy with effect from 1.1.2008.
The highlights</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
The number of ‘Areas’ increased from 4 to 5 by adding ‘Central’
Area w.e.f. 01.01.2008.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
A new para 5.6 added</font></p>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">5.6
The total tenure of an officer in all ‘A’ Stations (combined),
during his entire tenure up to and including the rank of Commissioner, shall
not exceed 16 years (excluding the exempted postings indicated in Para-5.5
above) and shall not exceed 22 years (including all the exempted posting
indicated in Para-5.5 above as also the tenure of Central Deputation to
other Ministries/ Departments referred in Para-6 below). However, the length
of stay of an officer in one or more ‘A’ stations continuously,
without a posting in a ‘B’ or ‘C’ Station, shall
not exceed 14 years.</font></div>
</li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Postings in all Directorates excluding DRI and DGCEI apart from the Board, CEIB,
AAR, CESTAT, and Settlement Commission will not be counted for stay in a particular
station/area. <font color="#FF6633">The tenure of posting in a particular Directorate shall not exceed
5 years</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
Officers having less than two years of service before superannuation may be
considered for posting at a place of their choice as far as possible.</font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/amend2008.pdf" target="_blank"><font size="2">See Amended Policy </font></a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5"> tiol</font> <font color="#006600">– Tomorrow's cases</font> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><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_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></strong></b></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Expenditure
made for use of domestic customer base and transfer of human skills –
revenue in nature - allowable deduction: ITAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE
assessee company was incorporated during the financial year 1997-98. Originally,
there was a company jointly promoted by Tatas and IBM, which were known as Tata
IBM. During the financial year 1997-98, it was mutually agreed between the two
promoters to bifurcate the business activities into separate entities viz. IBM
Global Services India Private Limited (the assessee company) and Tata IBM .
As per the agreement entered into, various assets of the erstwhile Tata IBM
were transferred to the assessee company has paid amounts of Rs. 9,38,57,925/-
and Rs. 5.3 Crore on account of transfer of certain employees to the assessee
company and on account of transfer of the data base of the domestic business.
The assessee company actually paid a sum of Rs. 18.4 crore for the transfer
of the employees to the assessee company but claimed an expenditure of Rs. 9,38,57,925/-
as the remaining sum of around Rs. 9.01 crore was attributable to STP Unit,
income of which was exempt.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
transferred data base gives the information about various customers who have
purchased IBM computers in the past who continue to have service maintenance
contracts. Such database enables the assessee company to provide the maintenance
support services. The Assessing Officer asked the assessee company to furnish
the basis of valuation at Rs. 5.3 crore in respect of value of data base. It
was stated before the Assessing Officer that no independent valuation has been
determined by the independent valuer. The Assessing Officer, therefore, concluded
that the amount represented a mutually agreed amount payable for the transfer
of data base.</font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Jayalalitha
wins - Agricultural income and cash expenditure, not bogus: ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AFTER
Mayawati, it’s now Jyalalitha’s turn to win a battle royal in the
ITAT! </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Validity
of a retracted statement. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One
Mr. TSR Vasudevan who had given a statement before the Deputy Commissioner,
Income Tax filed an affidavit that the statement was obtained by coercion and
harassing his wife and daughters and he had signed the statement around midnight
just to get rid of the raiding party. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Tribunal observed, </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On
a perusal of affidavit filed by Shri T.S.R. Vasudevan , it is clear that retracted
from the statement recorded on the search day. It is pertinent to note that
the statements recorded on the search day have evidentiary value and credibility
in law, the same should be viewed with great caution, particularly, when the
same is denied, retracted or claimed to have been obtained under mental stress
coercion or due to any abnormal condition and circumstances when such statements
were recorded. Therefore, if a person at a later stage retracts from the statement
given on the search day, it is necessary to ascertain the reasons or circumstances
from such person for doing so and if satisfied not to place any reliance on
such earlier statements which have subsequently been denied or retracted. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service
Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service
Tax paid on repairs and maintenance of civil construction - residential colony
for factory employees eligible for Cenvat Credit : Tribunal</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN
the case of Bajaj Electricals</font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-1886-CESTAT-MUM.htm" target="_blank">2007-TIOL-1886-CESTAT-MUM</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>, </strong>the
manufacturer had availed Cenvat credit of Service Tax paid on ‘Outdoor
Catering services’ that were provided in the canteen of the applicant’s
factory premises. The lower authorities denied the Cenvat Credit of Rs.33,956/-
and imposed a penalty of Rs.5000/-.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Although
the applicant argued that they are entitled for Cenvat Credit in terms of Rule
2(1) of the CCR, 2004 inasmuch as that the said services are provided to the
employees and the same indirectly assists in manufacturing activities, the Tribunal
observed that there was no prima facie case for complete waiver & hence
ordered for a pre-deposit of Rs.15000/-.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Karnataka
Sales Tax – works contract </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
Composition not entitled if goods are received from outside the state –
amendment applicable from notified date – assessee’s agreement irrelevant
– receipt of goods by branch transfer is also covered under the bar –
Supreme Court </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
appellant is a limited company and has its registered office at Gujarat and
branch office at Bangalore , Karnataka. It is a sub-contractor for M/s Larsen
and Toubro Ltd. for execution of works contract. It is registered as a dealer
under the Act as well as Central Sales Tax Act, 1956 (in short the Central Act).
It had opted for composition under Section 17(6) of the Act. But the benefit
of composition was denied in view of the amendment to sub-section (7) of Section
17. The appellant undisputedly had received goods from the head office situated
at Gujarat for execution of the work in Karnataka.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>See
our columns tomorrow for the judgements</u></strong></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 time.</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" target="_blank">vijaywrite@taxindiaonline.com</a></font></p>
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