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<div align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="3">TIOL-DDT
834</font></strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
28.03.2008<br>
Friday </font></strong></div>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income
Tax - Method for determining amount of expenditure in relation to income not
includible in total income – CBDT amend Rules</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Income Tax Rules have been amended to insert a new Rule 8D to prescribe the
method for determining amount of expenditure in relation to income not includible
in total income.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
expenditure in relation to income which does not form part of the total income
shall be the aggregate of following amounts, namely:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i)
the amount of expenditure directly relating to income which does not form part
of total income;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii)
in a case where the assessee has incurred expenditure by way of interest during
the previous year which is not directly attributable to any particular income
or receipt, an amount computed in accordance with the following formula, namely:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
x B/C</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where
A = amount of expenditure by way of interest other than the amount of interest
included in clause (i) incurred during the previous year;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">B
= the average of value of investment, income from which does not or shall not
form part of the total income, as appearing in the balance sheet of the assessee,
on the first day and the last day of the previous year;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">C
= the average of total assets as appearing in the balance sheet of the assessee,
on the first day and the last day of the previous year;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
an amount equal to one-half per cent of the average of the value of investment,
income from which does not or shall not form part of the total income, as appearing
in the balance sheet of the assessee, on the first day and the last day of the
previous year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total
assets = total assets as appearing in the balance sheet excluding the increase
on account of revaluation of assets but including the decrease on account of
revaluation of assets.</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=35&filename=notification/cbdt/2008/it08not045.htm" target="_blank">CBDT
Notification NO. 45/2008., Dated: March 24, 2008</a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti
Dumping Duty on Caustic soda – JIT extension</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Anti Dumping Duty on Sodium Hydroxide, commonly known as Caustic Soda, originating
in, or exported from, the European Union (excluding France), Indonesia and Chinese
Taipei, imposed vide notification No. 168/2003-CUSTOMS dated the 14th November
2003, would have expired on 27th March 2008. And Just In Time (JIT) before the
expiry, the Government has extended it up to 26th March, 2009. A great feat
indeed!</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=23&filename=notification/custom/2008/ctariff08_039.htm" target="_blank">NOTIFICATION
NO. 39/2008-Cus. Dated: March 26, 2008</a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mumbai
LTU today </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After
Bangalore and Chennai, the Mumbai LTU is all set to be inaugurated today. Rashtriya
Chemical Fertiliser, Bajaj Auto Ltd, Bayer (India) Ltd, Cipla Ltd, Lupin Pharmaceuticals,
Bank of India and Union Bank of India are among the eighteen units who have
already agreed to join the Mumbai LTU. The Department is hoping to rope in another
110 assessees into the LTU set up. There are some 300 large tax payers in Mumbai,
who are eligible under the scheme, which is optional. Many of them are waiting
for others to join and see their experience.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Gross
National Happiness - the Bhutan Story – where happiness is Law</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Money
can't buy happiness; only in Bhutan that observation is the basis of government
policy. Bhutan, an insular Himalayan kingdom sandwiched between India and Tibet,
measures its progress not in GDP - gross domestic product, a measure of economic
health and development used by most nations—but in GNH, or Gross National
Happiness.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
is not a tally of the number of cable movies without advertising interruptions,
chocolate desserts, days off work, hugs from little children or free skybox
seats for the playoffs. Rather, it's a way of looking at development in
more than economic terms, balancing material gains with immaterial ones.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According
to Bhutan's King Jigme Singye Wangchuck, who invented the concept for his
country in 1972, Gross National Happiness is built on four pillars: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
fair and sustainable economic and social development, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
protection and promotion of cultural values, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
environmental conservation and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
Good government.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
practice, that means any economic development project in Bhutan is considered
progress only if it doesn't dramatically widen the income gap between rich and
poor, pollute the country's rivers, sicken its people or line a government official's
pocket.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Gross
National Happiness is not about happiness," The country, with about
635,000 people, has the highest per capita income in mainland South Asia,
with most of its money derived from sales of clean hydroelectric power to
neighbouring India and from luring high-end exclusivity-seeking tourists,
who must spend at least USD 200 a day while visiting the country.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bhutan's
rushing glacier-melt rivers are surprisingly clean and its pine, oak and hemlock
forests largely intact. Ancient traditional sports such as archery are still
a passion, and more than 90 percent of Bhutanese have access to free health
care and education. Until four years ago, there was no personal income tax.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
country, which allowed in television and the Internet in 1999, has issued
other restrictions for the sake of culture, including banning the World Wrestling
Federation channel after Bhutan's impressionable youth showed too much enthusiasm
for the feigned violence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before
being exposed to Hollywood fare, "the Bhutanese farmer was happy and thought
he had everything he needed: a house, a plot of land, all the food he could
produce, festivals in the winter,". Now, "suddenly he has television
and sees all the things he doesn't have. He wants more and feels he has less."</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Faced
with "the onslaught of global media," the country must work
on emphasizing "the refined human values of compassion, generosity, humility
and selflessness as necessary conditions for furthering human development,"
Prime Minister Lyonpo Kinzang Dorji emphasized in a speech late last year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Still,
most Bhutanese say they feel their country is on the right track—more
than can be said for many other places in the world—even if the king did
just abolish absolute royal rule and bring in an elected parliament and prime
minister, over the objections of the largely royalist population.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
Bhutan, "Gross National Happiness is not something new. It's a reminder
of what we have and what we should preserve."<br>
<br>
(Source : <a href="http://www.chicagotribune.com/news/nationworld/chi-letter_happiness-bhutanmar27,1,2168963.story">http://www.chicagotribune.com/news/nationworld/chi-letter_happiness-bhutanmar27,1,2168963.story</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">– Monday’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>Service
Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Money
grows in ATMs – Revenue loses another high profile Service Tax case –
Introduction of a new entry for purpose of levy of tax presupposes that it was
not covered by any of pre-existing entries : Tribunal</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
assessee had executed contracts awarded by various banks for supply, installation
and commissioning of Automated Teller Machines (ATMs) and, accordingly, received
their charges from the banks. On 33% of the gross amounts so charged and collected
by the assessee from the banks from July 2003 to April 2006, the department
sought to levy service tax by treating the assessee as "commissioning and
installation agency" and the work undertaken by them as "commissioning
or installation" as defined under clause (28) of Section 65 of the Finance
Act, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
adjudication, the Commissioner confirmed the demands running into crores of
Service Tax. In cases were penalties were not imposed, Revenue filed appeals
whereas in all the cases the assessee is in appeal before the Tribunal.</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Final
say</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the result, the assessee's appeals succeed on all counts and the same are allowed
& the revenue appeals are dismissed.</font></p>
<p align="justify"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So,
Revenue - Do you want to make another transaction?</font></em></strong></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>Assessee's
profit-making capabilities dented - Receipt under non-compete agreement –
Capital receipt: Delhi HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
notice under Section 148 of the Act was issued to the Assessee and the re-assessment
order was passed on 21st February, 2003. The reopening of the assessment proceedings
has been upheld both by CIT (A) as well as by the Tribunal. Even we have not
issued any notice on the grievance made by the Assessee in this regard. The
reopening having been held to be valid, the question of consistency would not
arise because if this argument were to be accepted, then it would mean that
the reopening was erroneous. We cannot do something indirectly if it cannot
be done directly. We are, therefore, not in agreement with learned counsel for
the Assessee that the rule of consistency would be applicable to the facts of
this case.</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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Clearance
of capital goods as such – only 50% credit taken reversed - recipient
eligible for only 50% : Madras HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THE</font></strong>
appellant purchased capital goods from one M/s.Vairava Textiles Limited, who
had purchased the same from the manufacturer of machines. As per Rule 57AC(2)
of the erstwhile Central Excise Rules, 1944, the credit of duty paid on capital
goods could be availed only upto 50% of the duty paid on such capital goods
in the financial year in which it was received and the balance credit may be
taken in any subsequent financial year. M/s.Vairava Textiles Limited on purchase
of the capital goods by them during the year 2000-01 availed 50 percent of the
duty paid by the manufacturer. In the very same financial year, the said Vairava
Textiles Limited sold the capital goods to the appellant and reversed the 50%
of the credit availed by them and thus showing fifty percent of the reversed
credit as duty paid. The appellant having purchased the capital goods availed
50 percent of the credit on the duty paid by the manufacturer during 2000-2001
and the balance 50 percent of the credit on the duty paid by the manufacturer
during the year 2001-2002. On appeal, the Tribunal though confirmed the finding
of the original authority as to the non-entitlement of 100% modvat credit on
the duty paid by the manufacturer of the capital goods, however deleted the
imposition of penalty on the ground that the appellant has availed the credit
on a bona fide belief that it was entitled to such claim. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The
correctness of the said order of the Tribunal is the issue in this appeal before
the High Court.</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Monday with more<strong> DDT </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a 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">
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