TIOL-DDT 833 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 833 </font><br> 27.03. 2008<br> Thursday</strong></font></div> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs Act –<font color="#CC3333"> <em>specified area</em></font> notified </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“The inland area, fifty kilometres in width, from India’s land border with Bangladesh falling within the territories of West Bengal, Tripura, Assam, Meghalaya and Mizoram.” </em>,has been notified as the “specified area” under Section 11H of the Customs Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To prevent or detect illegal export of goods, the Government is empowered to notify specified area, date and goods, to which certain special provisions are applicable – like there are restrictions on transport and sale of specified goods in the specified area. </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=24&filename=notification/custom/2008/cnt08_031.htm" target="_blank">NOTIFICATION NO. 31/2008 – Cus(NT) Dated March 25, 2008</a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Prohibition on export of non-basmati rice – exemption for export to the Republic of Sierra Leone.</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has notified that the prohibition on export of non-basmati rice shall not be applicable to export of 40,000 MT of non-basmati rice to the Republic of Sierra Leone through PEC.</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/dgft07not088.htm" target="_blank">NOTIFICATION NO. 88 (RE-2007)/2004-2009, Dated: March 26, 2008</a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT notifies CAB</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT is the ‘Designating Authority’ for registering <font color="#FF6633"><strong>Conformity Assessment Bodies(CAB).</strong></font> Now the DGFT has notified and registered M/s. TUV SUD PSB Pte Ltd. as Conformity Assessment Body in Singapore for certification to meet India’s requirements under Singapore-India Comprehensive Economic Cooperation Agreement (CECA) for for Electrical & Electronic sector under the Mutual Recognition Agreement.</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=47&filename=notification/dgft/2007/dgft07pn129.htm" target="_blank">DGFT PN NO. 129 (RE-2007)/2004-2009, Dated: March 26, 2008</a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Visiting US of A? Be ready for a ten fingerprint!</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The U.S. Department of Homeland Security (DHS) has begun collecting additional fingerprints from international visitors arriving at New York's John F. Kennedy International Airport (JFK). The change is part of the department's upgrade from two- to 10-fingerprint collection to enhance security and facilitate legitimate travel by more accurately and efficiently establishing and verifying visitors' identities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Biometrics have revolutionized our ability to prevent dangerous people from entering the United States since 2004. Our upgrade to 10-fingerprint collection builds on our success, enabling us to focus more attention on stopping potential security risks," US-VISIT Director Robert Mocny said. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For more than four years, U.S. Department of State (DOS) consular officers and U.S. Customs and Border Protection (CBP) officers have been collecting biometrics -- digital fingerprints and a photograph -- from all non-U.S. citizens between the ages of 14 and 79, with some exceptions, when they apply for visas or arrive at U.S. ports of entry. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Quite simply, this change gives our officers a more accurate idea of who is in front of them. For legitimate visitors, the process becomes more efficient and their identities are better protected from theft. For those who may pose a risk, we will have greater insight into who they are," added Paul Morris, Executive Director of Admissibility and Passenger Programs, Office of Field Operations, CBP. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department's US-VISIT program currently checks a visitor's fingerprints against DHS records of immigration violators and Federal Bureau of Investigations (FBI) records of wanted persons and known or suspected terrorists. Checking biometrics against the watch list helps officers make visa determinations and admissibility decisions. Collecting 10 fingerprints also improves fingerprint matching accuracy and the department's ability to compare a visitor's fingerprints against latent fingerprints collected by Department of Defense (DOD) and the FBI from known and unknown terrorists all over the world. Additionally, visitors' fingerprints are checked against the FBI's Criminal Master File. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On an average day at JFK, almost 14,400 international visitors complete US-VISIT biometric procedures. Visitors from Mexico, the United Kingdom, Germany, Italy, France and Japan comprise the largest numbers of international visitors arriving at JFK. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">JFK is the tenth port of entry to begin collecting 10 fingerprints from international visitors. Washington Dulles International Airport began 10-fingerprint collection on November 29, 2007. Hartsfield-Jackson Atlanta International Airport, Boston Logan International Airport, Chicago O'Hare International Airport, George Bush Houston Intercontinental Airport, San Francisco International Airport, Miami International Airport, Orlando International Airport and Detroit Metropolitan Wayne County Airport have also begun 10-fingerprint collection. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">US-VISIT is evaluating 10-fingerprint collection at these airports. It will use the results to inform the deployment of the technology to the remaining air, sea and land border ports of entry that will transition to collecting 10 fingerprints by December 2008. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since US-VISIT began in 2004, DHS has used biometric identifiers to prevent the use of fraudulent documents, protect visitors from identity theft, and stop thousands of criminals and immigration violators from entering the country. US-VISIT, in cooperation with CBP, is leading the transition to a 10-fingerprint collection standard. This upgrade is the result of an interagency partnership among DHS, FBI, DOD and DOS. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">If we are serious about ending poverty, the place to start is to make food and fuel available at reasonable prices – FM</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you extracts from the brilliant speech of our FM delivered at the Lee Kuan Yew School of Public Policy in Singapore yesterday. This speech is but a sample of the erudition of our FM and is a must read for any student of economics. The Harvard class shows! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let me recount, briefly, the steps that we have taken to sustain economic growth amidst growing uncertainty. At the start of the tenure of the present Government, we took a bold step and notified the Fiscal Responsibility and Budget Management Act, for short the FRBM Act. In retrospect, it is acknowledged that it was a wise and courageous decision. The FRBM Act requires the Government to reduce the fiscal deficit every year by 0.3 per cent of GDP and, eventually, to bring it to a level below 3 per cent by 2008-09. It also requires the Government to reduce the revenue deficit every year by 0.5 per cent of GDP and, eventually, to eliminate it by 2008-09. The Government inherited a fiscal deficit of 4.5 per cent in 2003-04. We are on course to bring down the fiscal deficit to 2.5 per cent in 2008-09. Likewise, the Government inherited a revenue deficit of 3.6 per cent in 2003-04. While we have been able to reduce the revenue deficit by 0.5 per cent a year – and that means that we have adhered to the path of correction – we are not able to eliminate the revenue deficit and it will be 1.0 per cent by the end of 2008-09. In order to eliminate the revenue deficit completely, we ought to have done better than a reduction of 0.5 per cent a year. That, however, has not been possible because much of our expenditure on education, health care, drinking water, sanitation, rural roads etc is classified as revenue expenditure. Nonetheless, our achievement is considered very satisfactory. On a lighter vein I may add that critics of the FRBM Act have expressed satisfaction that we have allowed ourselves a revenue deficit of 1 per cent and have not compressed unduly the revenue expenditure! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The second instrument to contain inflation as well as to stimulate job-creating growth is fiscal policy. In January 2004, the peak rate of customs duty was 25 per cent. Today, it is 10 per cent. In fact, the “collection rate” – that is the effective applied rate – for all goods is only 10 per cent. Excise duty, which is a duty on value addition in manufacture, has also been moderated to 14 per cent. In the cases of goods of mass consumption, the rates are even lower: many goods are at zero percent and many others are at 8 per cent. Service tax, which is a tax on value addition in services, is kept at 12 per cent, well below international benchmarks. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let me give you two examples where fiscal policy has been used to advance the objectives of price stability and growth. We think that India can become a hub for small cars. Accordingly, excise duty on small cars has been slashed to 12 per cent and, when cars are exported, as in the case of all export goods, even that duty is refunded to the manufacturer. The second example would be the case of the food processing industry. Encouragement to this industry would mean that a large proportion of the agricultural produce – especially fruit and vegetables – will be processed; it would also mean that many thousands of jobs will be created. Hence, excise duty has been reduced to zero in the case of many processed and packaged food items or kept at a low rate of 8 per cent. Last week, we slashed the customs duties on edible oils in order to cushion the impact of very high FOB prices of palmolein, sunflower oil and other edible oils. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The battle against inflation is a continuous battle. The struggle to maintain a balance between growth and inflation is also a continuous struggle. As growth rates have moved upward, higher demand has put pressure on prices. Yet, we were able to contain wholesale price inflation at an average level of 4.1 per cent between 2001-02 and 2003-04 and, even as the growth rate of the economy accelerated in the last five years, we have been able to contain wholesale price inflation at 5.4 per cent between 2003-04 and 2006-07. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is also another dimension to the problem of unemployment. This is unemployment among the very poor whose livelihood depends upon earning a daily wage through low skilled manual labour. The problem is acute when there is no seasonal demand for agricultural labour or when there is deficiency in rainfall. These workers have little or no skills that can help them find work outside agriculture. Hence, in order to provide a safety net for these workers and to assure each family at least Rs.8,000 (equivalent to US$200) per year, we have introduced the National Rural Employment Guarantee Scheme. It is a wage employment programme that guarantees work for 100 days in a year at a wage of Rs.80 per day. In 2007-08, 27 million families have been benefited and 965 million person-days of work have been generated. It has also arrested distress migration. More than anything else, the wage employment programme has brought a degree of security to the most vulnerable sections of the population, namely, the agricultural labourers.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Looking back, from the point of view of prices, it was a benign world in 2004 and earlier. Let me share with you some numbers which will give you an idea of the enormous burden that is put on developing economies as a result of a relentless rise in commodity and food prices. Crude oil, Dubai, cost US$34 per barrel in 2004. By April 2007, it was quoting at US$64 per barrel; in February 2008, it was at US$90 a barrel; and, as you are aware, in recent weeks it has on several days crossed US$110 a barrel. Urea is another commodity that is vital for agriculture. India imports significant quantities of urea. The price of urea was US$175 per metric tonne in 2004. By April 2007, it had increased to US$288 per MT and in January 2008 it was quoted at US$370 per MT. The prices of metals and minerals such as copper, iron ore, lead, nickel, tin and zinc have either doubled or tripled or, as in the case of iron ore, quadrupled between 2004 and February 2008. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Turbulence in the financial markets has added to the difficulties of sustaining high growth. As you are aware, it began with the sub-prime mortgage market crisis in the US. Some banks in Germany and the United Kingdom were also affected by the crisis and they were bailed out. There have been more bailouts in the U.S., the most recent being the case of Bear Stearns. There is a growing feeling among international experts that the US economy faces serious recessionary pressures. Indian banks, save one, did not have any exposure to the sub-prime mortgage market and hence did not suffer any first order consequences. However, as the crisis moved from one market to another, and when it entered the credit market, the consequences of the crisis are being felt in India too. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are clear signs of a slowdown in the world economy. There are also signs of rising inflation in many countries of the world. Among the fast-growing economies, China’s inflation is estimated at 8.7 per cent; Russia’s at 12 per cent; and Vietnam’s at 15.7 per cent. When stories of a growth slowdown do the rounds, investors prefer to wait and watch. This has obvious negative effects on future growth. Global slowdown, rising inflation and subdued interest in investment make for a combination that can have only negative consequences for developing countries. Anticipating these consequences, we have taken steps to stimulate domestic demand in the Indian economy. We believe that the measures announced in the recent budget – including significant reductions in the personal income tax, expanding and deepening the corporate debt market, and large outlays of public expenditure on education, health, roads, irrigation etc – should encourage both domestic and foreign investors to continue to have faith in the India growth story. Gross capital formation (investment) has increased from 22.8 per cent of GDP in 2001-02 to 35.9 per cent of GDP in 2006-07. Broken down into sectors where investment has taken place, it is seen that investment in manufacturing grew at a phenomenal rate of 33.6 per cent per annum during the period 2002 to 2007. This confirms the boom witnessed in the manufacturing sector. It is our intention to keep the environment for investment helpful and friendly to investors so that the investment-led India growth story continues to unfold and grow over the next ten years and more. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As far as India is concerned, growth is not an end in itself. Growth is the means to achieve the objectives that we desire. Among these are free and compulsory education for children; improvement of nutrition, standard of living and public health; adequate infrastructure including roads and connectivity; and full employment and a living wage for all workers. High growth has enabled us to increase the tax to GDP ratio from 9.2 per cent in 2003-04 to 12.5 per cent in 2007-08. We have budgeted for tax revenues that will increase the ratio to 13.0 per cent in 2008-09. An increase of one-half per cent may appear small, but in real terms this will give us additional revenues of nearly US$25 billion. It is high growth in the last four years that has given us the capacity to provide large sums of money for health, education, drinking water, sanitation, roads and rural development. Therefore, it is imperative that we maintain high growth, raise more resources and acquire the capacity to spend more money on the provision of goods and services that will mitigate the hardship of millions of poor people and bring some cheer in their lives. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under an umbrella programme called “Bharat Nirman” or “Building India”, we are implementing a four year business plan for building infrastructure in rural India. The plan comprises bringing an additional ten million hectares of land under assured irrigation; connecting all villages with a road; providing drinking water to all habitations; reaching electricity to all villages; giving telephone connectivity to all villages; and constructing six million additional houses for the poor. We will, by the end of 2008-09, substantially achieve the physical targets that have been set under Bharat Nirman. However, the programme would have to be continued beyond 2008-09 so that more houses are constructed for the poor and more villages and homes are provided with drinking water, electricity and telephone connectivity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is also the larger and more ambitious goal of improving infrastructure. Huge investments are required to be made in roads, railways, airports, seaports, power, telecommunications, mining, and oil and gas exploration. It is estimated that over US$500 billion will be required over a period of five years. The bulk of this investment ought to – and will – come from domestic sources, including Government. We cannot garner these resources unless there is high growth and unless Government and the private sector are able to realise and retain large sums of money that can be ploughed back as investment. In short, India has no option but to aim to grow at a high rate over the next 10-20 years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I think I have made out a convincing case why high growth is an imperative. You will now, I am sure, better appreciate why we are deeply concerned about global developments that will affect our capacity to sustain high growth. I take pride in the fact that India has proved to be a model player on the global financial stage. India’s trade intensity – that is the value of merchandise imports and exports – is about 34 per cent of GDP. The exchange rate of the Rupee is determined by the market. India has a modest current account deficit. India’s regulators, especially in the financial markets, have proved to be conservative and wise. India, therefore, has made little or no contribution to the current turbulence in the financial markets. We are therefore doubly unhappy that we should be, along with other developing countries, the helpless victims of global uncertainty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who is responsible for the global uncertainty? The sub-prime mortgage market crisis that seems to have triggered the current turbulence is solely due to poor regulations and lax supervision. A senior policy maker told me that it was because “innovation was ahead of regulation!” That is an ingenious spin on regulatory failure. Once the crisis exploded in the face of regulators and governments, there was little choice but to rush to the aid of failing banks and financial institutions. If this had happened in developing countries, we would have been lectured on the virtues of bankruptcy. Since this is happening in developed countries, no one pauses to ask whether all the old arguments are not being made to stand on their head. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The rise in the price of crude oil is another example of greed overtaking the common good of the world. What is the justification to price crude oil at US$110 a barrel? Surely, it is nobody’s case that the cost of producing a barrel of crude oil is close to US$110. Equally, it can be nobody’s case that the risks of exploring and producing oil have risen so high that the price of crude oil should spiral from US$34 to US$110 in a matter of four years. The same could be said of food prices. While there is indeed some supply-demand mismatch, there is no case for raising the prices so high that many poor people cannot afford to buy food anymore. I wonder what has happened to the brave declaration of the Millennium Development Goals. I wonder what has happened to the inspiring slogan “Make Poverty History.” If we are serious about ending poverty, the place to start is to make food and fuel available at reasonable prices – prices at which people can consume adequate quantities of food and at which fuel becomes, not a constraint, but a driver of growth. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I have shared with you both the achievements and concerns of India. I am certain that a similar story can be told about many developing countries. The world must heed the voice of developing countries. In the development of these countries lies the key to putting an end to poverty and making the world a better and safer place for all of humanity.”</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><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"><strong><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"><strong><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"><strong><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"><strong><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"><strong><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"><strong><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"><strong><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"><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></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Kar Vivad Samadhan Scheme - even irregular or incomplete filing of appeal would come within purview and ambit of ‘pending’ litigation : Madras High Court</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WRIT Appeals Nos.2619 and 2824 of 2004 have been filed against the common order passed by a single Judge in writ petitions Nos.2890 and 2891 of 2004 by which the the appellant was non suited for the prayer to call for the records relating to the order of the respondent - the Commissioner of Customs, (Port) Chennai dated 28.05.1999 to have it disposed of under the Kar Vivad Samadhan scheme and for a further direction to the respondent to issue final certificate to the appellant under the said scheme. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The single Judge, after referring to section 95 of Finance (No.2) Act, 1998 has ultimately held that it is true that the word 'pending' would mean 'undecided issues' and a legal proceedings deemed to have been pending as soon as it is commenced and until it is concluded, but nevertheless the commencement of the legal proceedings would not mean the mere presenting of papers to the Registry. Even though the papers were presented on 28.12.1998, the papers were returned from the Registry for certain compliance on 13.01.1999. Again the papers were represented after compliance only on 25.01.1999. In those circumstances of the case, it could not be construed that the writ petition was pending as on 28.12.1998 inasmuch as the presentation of the same by the appellant itself was not proper and therefore, the relief claimed by the appellant under the Kar Vivad Samadhan Scheme is barred by limitation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The correctness of the said order is canvassed in these two appeals.</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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provision made to meet anticipated cost of change over form Central DA to Industrial DA scale – allowable expenditure; Airport terminal building is plant; modernisation of airport – revenue expenditure : ITAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Provision made to meet the anticipated cost of change over form Central DA to Industrial DA scale</font></strong> despite the fact that such an amount represented mere provision and not any ascertained liability. "The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in presenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain." If the business liability has definitely arisen in the accounting year, deduction will be allowed although liability may have to be quantified and discharged on a future date. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Prior period depreciation</font></strong> disallowance of Rs. 71.28 lacs representing prior period depreciation despite the fact that it is only the current years depreciation which can be claimed as per the provision of sec. 32 of the IT Act 1961 and despite the fact that the assessee had not made any provision for such depreciation in earlier years. The depreciation of earlier years has not been clubbed, rather it has been shown separately. Each year's depreciation is allowable separately as per rules. The assessee has added the earlier year's depreciation as per its books of account. In the computation of income, the claim has been made as per I.T. Rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Airport Terminal - Plant and machinery:</font></strong> It is argued that the building is specially designed to accommodate these assets so that the traffic is smoothly managed and functioning of the flights is not disturbed. The counsel has gone to the extent of submitting that these buildings are part of the air-craft for ingress and egress of the passengers and therefore the whole of the building should be treated as plant for the purpose of deduction of depreciation. On careful consideration of the entire material on record and after seeing the requirement of the building in the context of special services rendered by the assessee for the purposes of its business, the terminal buildings are to be treated as 'plant'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Modernisation of airport – revenue or capital?</font></strong> There is no dispute about the fact that the commitment fee paid to US Exim Bank, guarantee fee paid to Government of India; Export credit agency fee and management fee were all related to foreign loan obtained by the assessee, the purpose for obtaining such loan was stated to be modernization of Delhi and Bombay Airport . The department has not been able to point out that the loan was taken for any other purpose or that the expenses referred to above were not in connection with the obtaining of foreign loan. The modernization of the Airports for the rendering of various services as claimed by the assessee were directly and closely connected with the business activity of the assessee and thus the expenditure had direct nexus with the business activity of the assessee as the loan was obtained for carrying out the business.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reversal, on own, of ineligible Cenvat credit of Rs 8.85 lakhs without utilization does not attract interest u/s 11AB of CEA’44 : Tribunal</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THE</font> </strong>assessee availed Cenvat credit of more than Rs.8.85 lakhs rupees but realized almost a year later that they were not eligible to avail the same. Without waiting for the jurisdictional authorities to flex their muscle, they reversed the credit down to the last penny!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And maybe their conscience told them to inform the jurisdictional authorities about the misdemeanor, an act for which they may never pardon themselves!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee was served with a notice asking them to pay interest of Rs.93,345/- and proposing to impose penalty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The adjudicating authority was obviously a practical person. He checked up whether by utilizing this inadmissible credit, the assessee had gained any financial advantage – he noticed that the cenvat credit balance statement for the entire period of dispute always showed a credit balance of Rs.30 lakhs plus. Satisfied that there was no “utilization” of the inadmissible credit, he found that there was no question of recovering any interest u/s 11AB. But, since the assessee had contravened the law & taken the credit which by their own admission is inadmissible, he imposed a penalty of Rs.10,000/-.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a </font><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">nice day.</font></p> <p align="justify"><font color="#FF6633" 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> </body> </html>