TIOL-DDT 922 · 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 922</font> <br>
04.08.2008 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export Duty on Steel products to SEZ– High Court Ruling </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are flooded with requests for copies of the order of the High Court restraining the Authorities from collecting export duty on the goods supplied to SEZs. As it has become a little difficult to send individual copies, we are carrying the AP High Court's order today. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the High Courts are going to be flooded with writ petitions and the Government should seriously consider solving the problem. </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=27&filename=legal/hc/2008/2008-TIOL-378-HC-AP-SEZ.htm" target="_blank">Click here for the order</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Renting of immovable Property– Bombay High Court Relief </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly, we are also flooded with requests for copy of the order of the Bombay High Court on renting of immovable property. Of course we had a solitary Netizen, who found fault with us for giving so much hype to interim orders of the High Courts, which are not final. The Netizen, who seems to be a committed Departmental officer, tells us that ultimately the Government will win and then all these stay winners, will have to pay the tax with interest!. True, but should we hide the interim orders? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway, the Bombay High Court in its order observed that the matter is now moved before the Supreme Court and so the High Court cannot decide the issue finally. So till the matter is finally decided by the Supreme Court, the High Court has ordered, in the petition filed by the Retailers Association of India that:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In the event, demand of service tax being made under the provisions of Section 65(90a), Section 65(105) (zzzz) and section 66 of the Finance Act, 1994 as amended by Finance Act, 2007 in respect of the Petitioner's member's premises, such members of the Petitioners shall file undertaking in this Court stating that in the event the challenge is disallowed, they shall make payment of service tax due and payable in accordance with the aforesaid provisions as may be directed by this Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. It is further directed that in case such undertaking is given, the person who is submitting the undertaking shall not be entitled to transfer his interest in the property in relation to which the demand of service tax is made without first giving two weeks prior notice of his intention to transfer his interest and the nature of the transfer to the Respondents. In case within the period of two weeks, objection is raised on behalf of the Respondents to the proposed creation or transfer of interest, then no interest will be created or transferred without seeking leave of the Court. It goes without saying that if the objection is not raised within the period of two weeks, the person shall be free to create or transfer proposed interest in the property. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. On the undertaking mentioned above being filed by the members of the Petitioners, no coercive steps shall be taken by the Respondent for recovery of service tax in respect of the premises of such members of the Petitioners. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-379-HC-MUM-ST.htm" target="_blank">Click here for the order </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Receipts by Ex-servicemen's Corporation – exempted from TDS – CBDT directive </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT has exempted Central/State established Corporations for the welfare and economic uplift of ex-servicemen and whose income qualifies for exemption from Income-tax u/s. 10(26 BBB) of the Income Tax Act, 1961, from Tax Deduction/Collection at Source on their receipts. This is valid for three years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However this exemption will not absolve such organisations from their statutory obligations of deducting TDS on all contractual payments made by them to other parties including sub-contractors etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="CBDT%20Circular%20No.%207/2008,%20Dated:%20August%201,%202008%20">CBDT Circular No. 7/2008, Dated: August 1, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax in Sikkim </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Income from any source in the State of Sikkim, or income by way of dividend or interest on securities accruing or arising to a Sikkimese individual is exempt from tax. This was retrospectively exempted from 1990-91. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However income accruing or arising to a non-Sikkimese individual residing in the State of Sikkim continues to be liable to tax. In the case of such individuals, CBDT had decided that- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) For assessment year 2007-08 or any preceding assessment year, no assessment or reassessment shall be made with regard to – </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) income from any source in the State of Sikkim; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) income by way of dividend or interest on securities </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) In case any proceedings have been initiated for assessment year 2007-08 or any preceding assessment year for not filing the return of income, such proceedings shall be dropped. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) In case any assessment or reassessment proceeding has been initiated for assessment year 2007-08 or any preceding assessment year and assessment orders have not been passed, the aforesaid income shall be accepted as per the return. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) For the assessment year 2008-09 and subsequent assessment years, assessment or re-assessment, if required, shall be made in accordance with the provisions of the Income Tax Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These instructions shall apply only to non-Sikkimese individuals residing in the State of Sikkim. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="CBDT%20Instruction%20No.%208/2008,%20Dated:%20July%2029,%202008%20">CBDT Instruction No. 8/2008, Dated: July 29, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax – Audit – take action against erring accountants - CBDT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAG</strong> has pointed out that in many cases the information available in the tax audit reports is not being properly analyzed during assessment proceedings thereby defeating the very purpose of providing for audit of accounts in the I.T. Act i.e. to ensure that correct deductions are claimed by the assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So <strong>CBDT</strong> directs that </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the tax audit reports as well as other statutory audit reports should be critically examined along with connected records and other available evidence and the information as available in these reports should be effectively utilized while finalizing assessment of cases selected under scrutiny. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In case of e-filed returns as well as annexure-less returns, tax audit reports and other statutory audit reports should be requisitioned and thoroughly examined during assessment proceedings in cases under scrutiny. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) With effect from 10th August, 2006, the 'Accountants' are required to indicate in Form 3CD as to whether a certificate has been obtained from the respective assessees regarding payments relating to any expenditure/ taking or accepting of loans or deposits or repayment of the same through account payee cheque/bank draft. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Instead of simply relying on the said certificates given by the assessees, the assessing officers should undertake a test check of such transactions while completing the assessments under scrutiny. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Results of such test check should also be kept on record. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) In case, any violation is noticed, follow up action as per the I.T. Act including invoking of penal provisions should be taken. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) <strong>In cases where any factual misrepresentation by the Accountants is observed, suitable action should be taken against them </strong> as provided u/s 288 of the I.T. Act, 1961. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="CBDT%20Instruction%20No.%209/2008,%20Dated:%20July%2031,%202008%20">CBDT Instruction No. 9/2008, Dated: July 31, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Assessment of Banks - deduction to rural branches- CBDT instructions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While computing the income under the head 'Profit and Gains of Business & Profession' a scheduled bank or a non scheduled bank or a cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural bank is entitled to claim deduction of provision for bad debt of an amount not exceeding ten percent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG has informed the Board that claims made by banks for deduction are being allowed without verification as to whether the concerned branches come with the definition of 'rural branch'. In several cases, this has resulted in large under-assessment of income. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board directs that the Assessing Officers should ensure that the claims of deduction towards advances given by rural branches of banks are allowed only after verifying (at least by way of test check) as to whether such branches are eligible to be treated as a 'rural branch' according to the definition given in Explanation (ia) to section 36(1)(viia) of the I.T. Act, 1961. A review of completed assessments may also be carried out and appropriate remedial action may be taken as may be necessary. </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=67&filename=notification/cbdt/2008/instruct0810.htm" target="_blank">CBDT Instruction No. 10/2008, Dated: July 31, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of onions – DGFT conditions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> has stipulated that </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Export of Onions is allowed without quantitative ceiling subject to conditions of quality laid out by NAFED from time to time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The designated STEs can issue NOC to the Associates Shippers and the service charges levied by them for issue of NOC will be to a maximum rate of 1% of the invoice value of export of onion. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) The STEs are not allowed to levy any other charges except above by way of fees, guarantee or deposits or in any other form whatsoever. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) All onions exported will be subject to a Minimum Export Price (MEP) fixed by NAFED. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) The careful selection of exporters is made to eliminate the trading in permits to export onions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) The agencies shall ensure that quality of onion is maintained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) A weekly report of permits issued shall be provided to NAFED which shall act a nodal agency to keep the Government of India informed of the outflow of onions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) Periodic reports of the actual shipment of onion by different agencies be submitted to the Department of Consumer Affairs. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="DGFT%20Notification%20No.%2027(RE-2008)/2004-09,%20Dated:%20August%201,%202008%20">DGFT Notification No. 27(RE-2008)/2004-09, Dated: August 1, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rupee Export Credit Interest Rates - interest rate subvention on export credit – Scheme to end on Sept 30 </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has directed that interest rates subvention scheme on export credit would be brought to a close with effect from September 30,2008. RBI wants this to be brought to the notice of the exporters so that the exporters get adequate time to make necessary adjustments. </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/rbi_notification.htm" target="_blank">RBI
DBOD.Dir. (Exp).BC.No.28/04.02.01/2008- 09, Dated: August 1, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RIGHT TO INFORMATION – LAW AND PRACTICE – book by Central Excise JC </strong></font></p>
<p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong></strong></strong></strong></strong></strong></strong></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/guest/vermas.jpg" alt="Legal Corner Icon" width="156" height="187" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The RTI Act has made the common citizen as powerful as an elected representative by bestowing upon him the right to demand all the information, which can be laid before the Parliament or the State Legislature. The provisions of the Act have overriding effect over any provisions of the Official Secrets Act, 1923 or any other law or instruments which are inconsistent with the provisions of the Act, i.e. the information sought under this Act cannot be denied citing the provisions of any other Act. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Right to Information originates from the judicial pronouncements over the fundamental right of speech and expression under Article 19 of the Constitution of India that also prescribes the restraints that may be placed upon based on the belief that there is no such thing as absolute or uncontrolled liberty free from restraint, for that may lead to anarchy. Any power, if absolute, can only lead to chaos. The Act recognizes that revelation of information in actual practice may conflict with other public interests including efficient operations of the Governments, optimum use of limited fiscal resources and preservation of confidentiality of sensitive information. Therefore, to protect such interests, certain categories of information have been specifically exempted from disclosure. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Hence, the rule of the thumb which all the PIOs may like to follow is to provide to the applicant all the information sought by him, unless it is specifically exempted from disclosure under the Act. However, even amongst these exempted categories, access to information may be permitted if the public interest in disclosure outweighs the harm to the protected interests. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">says, Dr. R K Verma, Joint Commissioner of Central Excise in Bhopal in his very informative book, <strong>RIGHT TO INFORMATION–LAW AND PRACTICE. </strong>This book should be very useful, not only to senior officers of the Central Excise Department but all Government Departments who are shy to part with information. It is commendable that a Central Excise & Customs officer has come out with such a precious book. Perhaps the Government should buy the book in bulk and supply to all PIOs. </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 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise</font> </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Certificate from Department of Psychiatry is not sufficient to hold that the MD was incapacitated from filing the appeals – Seven year delay not condoned by Tribunal. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> “We do not find satisfactory explanation for the inordinate delay– medical certificate furnished by the appellant states that the Managing Director of the appellant company had consulted the Doctor on 1.3.2000 for his psychological problem, that he was suffering from Schizophrenia, he was advised medicine and regular follow up and therefore, he was referred to Department of Psychiatry, Sir J.J.Hospital, Mumbai. This certificate is dated 31.10.06. However, this certificate is not sufficient to hold that the Managing Director of the company was incapacitated from filing the appeals.” </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>One cannot suppress a fact which was never within his knowledge: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal has held that the VAO's certificates and the Tea Board Registration certificate are statutory documents in favour of which there is a presumption under Section 114(e) of the Evidence Act, which, of course, is a rebuttal presumption. Further the AITRs relied by the department cannot be accepted as having an effect of disproving the assessee's bonafide belief which was based on statutory documents like VAO's certificates. The bench also accepted the argument that they had no knowledge about the AITRs and concluded that the assessee cannot be held to have suppressed anything which were never within their knowledge and set aside the demand on the grounds of limitation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax </font> </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Silver seized by police - Income Tax Department cannot claim possession before case is decided: MP High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the CIT was not in the possession of such information as to arrive to a conclusion that the silver pertains to undisclosed assets of the assessee. Moreover, silver was found in the possession of the employees of the respondent company and neither the police nor the CIT had at this stage of the proceedings gathered any information on record regarding the ownership of the silver to dispute the version of the respondent company. It was then fallacious on the part of the Chief Judicial Magistrate, Neemuch to have entertained the application under s. 132A of the IT Act and directed the handing over of the seized silver/assets to the Department. </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 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">vijaywrite@taxindiaonline.com </a></font></p>
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