TIOL-DDT 921 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 921 </font><br>
01.08.2008 <br>
Friday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AP High Court stays export duty on clearances to SEZs – so does Madras High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">About a week ago, an enlightened Netizen sent us a rather uncomplimentary mail, which read as follows, </font></p>
<blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is appears from the words of DDT for the last one month or so, Shri Vijay Kumar (Editor of Taxindiaonline.com) appears to have feeling that no export duty is payable on the supply of steel products to SEZs by DTA units. So, let him write a detailed article on the same in his DDT immediately instead of commenting on investigating agencies or customs or central excise authorities. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We fondly cherish any mail which does not appreciate our efforts and are ever grateful to such Netizens who tell us when we don't reach up to their expectations, for they are doing us a great favour by taking time off to tell us how we are wrong. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coming back to our SEZs and exports, we had carried quite a few detailed analytical articles on the subject that I thought it did not need further analysis in DDT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the issue is alive and the Revenue Department is silent and the Commerce Ministry just caved in. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the only available remedy was to knock the doors of the judiciary and that is exactly what we did. Today as I was arguing the case before the Andhra Pradesh High Court, I was gratefully thinking of this concerned Netizen, on whose suggestion I had prepared a detailed note on the subject, which I could successfully use in the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway, now the matter is <em>sub- judice </em> and let there be no more public debate. Let the Judiciary decide. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The position is that the AP High Court has restrained the Authorities from acting on the letter from the Director in the Commerce Ministry requiring export duty to be realised before goods are allowed into the SEZ . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We should hasten to add that we were not the first to get this stay–the Madras High Court had already granted stay to two petitioners and even the AP High Court granted stay in another case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Needless to say this stay is applicable only to the petitioners in the respective cases. That means, the High Courts are going to be flooded with identical cases all over the country. And this is going to help only the lawyers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As of now, we have two stay orders each from the Madras and AP High Courts–more should follow in the days to come. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is there a way out? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Project Offices — Foreign Currency Accounts in India RBI clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present, foreign companies having Project Offices in India are permitted to open only one foreign currency account for each project. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to avoid currency exposures, many foreign companies have been approaching the Reserve Bank for permission to open more than one foreign currency account, usually in their home currency and another in US Dollar. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has decided to liberalise the procedure and allow AD Category–I banks to open an additional foreign currency account for each Project Office (established under the general/specific approval of Reserve Bank) subject to the same terms and conditions as applicable to the existing foreign currency account provided that both the foreign currency accounts are maintained with the same AD Category–I bank. The other conditions shall continue. </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=280&filename=notification/rbi/2008/rbi08cir002.htm" target="_blank">RBI Circular NO. 02/ RBI ., Dated: July 31, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS 22- Treatment of deferred tax assets (DTA) and deferred tax liabilities (DTL) for computation of capital – RBI clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In terms of Accounting Standard 22 issued by the Institute of Chartered Accountant of India (ICAI), on ‘Accounting for Taxes on Income', taxable income is calculated in accordance with tax laws and the requirements of these laws to compute taxable income differ from the accounting policies applied to determine accounting income. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tax effects of timing differences are included in the tax expense in the statement of profit and loss and as deferred tax assets (DTA) (subject to the consideration of prudence) or as deferred tax liabilities (DTL) in the balance sheet. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As creation of DTA or DTL would give rise to certain issues impacting the balance sheet of the company, RBI clarifies that the regulatory treatment to be given to these issues are as under :- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The balance in DTL account will not be eligible for inclusion in Tier I or Tier II capital for capital adequacy purpose as it is not an eligible item of capital. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. DTA will be treated as an intangible asset and should be deducted from Tier I Capital. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbiclarification.htm" target="_blank">DNBS (PD) C.C. No. 124/ 03.05.002/ 2008-09 Dated 31 July, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Vacant Space </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT's</strong> comments yesterday on the elusive promotions in the Department evoked sharp response from the Departmental officers. A young Assistant Commissioner told me that she should have become a Deputy Commissioner two years ago and now if she doesn't get it before the Pay Revision, she would be put to a great loss. A retired Assistant Commissioner called up to complain that because of the Board's callous attitude, he had to retire as an Assistant Commissioner instead of Deputy Commissioner. A Commissioner wanted to find out if there were any charge sheets against some of his seniors, so that he can ascertain his chances of becoming a Chief Commissioner. And there are Inspectors and Superintendents waiting for more than fifteen years with the hope of a promotion. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe they should all get a promotion once in five years! I know a PSU officer who got promoted from the rank of Deputy Manager to Deputy General Manager in the last twenty years, doing (or rather not doing) the same work all these twenty years. </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></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><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>Totally frivolous ROM application by Revenue–Tribunal says it is a figment of imagination and dismisses the same </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Revenue seems to have a developed a fetish for ROM applications. Naturally, this escapist tendency of filing ROM applications in almost all matters instead of filing an appeal before the next appellate authority is going to take a toll in the days to come! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the Revenue had appealed against an order of the Commissioner of Customs(Import), Nhava Sheva and the Tribunal had <strong>allowed the appeal </strong>by holding that the goods are to be confiscated with an option to redeem them on payment of fine of Rs.7 lakhs. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Encashment of bank guarantee is not same as payment of duty–Refund provisions under Section 27 of Customs Act not applicable: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal held that refund of amounts encashed by bank guarantee is not covered by the provisions of Section 27 of the Customs Act and therefore there is no time limit to seek refund of the same. With the result the Revenue's desire of denying the refund claim to the respondent assessee came a cropper. </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>India-Netherlands
DTAA-term 'tax' under Article 3-default or omission related to TP provisions
u/s 92 not covered by default or omission in Article 3(d) - DTAA benefits
allowed to assessee: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN the context of India-Netherlands DTAA, the bone of contention is related to the term 'tax' used under Article 3. The issue is that does it exclude any amount payable in respect of omission or default? And the Tribunal has now held that the default or omission relating to the provisions of section 92 to 92F of the Act are not covered by the default or omission mentioned in Article 3(d) of DTAA. Thus the CIT(A) order was upheld and the Revenue's appeal was rejected. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </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 Weekend. </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">vijaywrite@taxindiaonline.com </a></font></p>
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