TIOL-DDT 947 · 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 947</font><br>
09.09.2008<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Advance Remittances for Import of Services – FEMA – Limit Raised</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present AD Category – I banks are required to obtain a guarantee from a bank of international repute situated outside India or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the counter guarantee of a bank of international repute situated outside India for advance remittances exceeding USD 100,000 or its equivalent for import of services into India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to liberalizing the procedure further, RBI has decided to raise the limit of USD 100,000 for advance remittance for all admissible current account transactions for import of services without bank guarantee to USD 500,000 or its equivalent. AD Category – I banks may frame their own guidelines to deal with such cases as per the policy approved by the bank's Board of Directors.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where the amount of advance exceeds USD 500,000 or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AD Category – I banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter in India, failing which, the amount should be repatriated to India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2008/rbi08cir015.htm" target="_blank">RBI Circular No. 15/RBI., Dated: September 8, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Forest officers in Haryana with hardly any forest will get more salary than Chief Commissioner of Income Tax – IRS Grouse</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IRS officers are shocked that the Government has not accepted the Pay Commission recommendation to upgrade the Members of CBDT to the rank of Secretaries. Directors General of Police and Principal Chief Conservators of Forests will now have Secretary rank and pay, while the CBDT Members and Chief Commissioners are left far behind.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The IRS Association wants the Prime Minister to interfere. They have also met External Affairs Minister Pranab Mukherjee , Agriculture Minister Sharad Pawar and Railways Minister Lalu Prasad demanding restoration of parity.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Association lamented that six members of the Board would be getting Rs 4,450 a month less against the recommendation of the Pay Commission, while the DGPs and PCCFs , whose rank earlier used to be equivalent to the members of CBDT, would get Rs 14,230 more than what has been recommended by the Commission.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Association wants the six Members of the CBDT and 18 Senior Chief Commissioners to be upgraded to the Secretary's salary of Rs. 80,000/-. They want the remaining 75 Chief Commissioners to be placed in the Higher Administrative Grade (HAG) plus scale that is being worked out for General Managers of Railways and other equivalent senior posts.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the above apply<strong> mutatis mutandis</strong> to CBEC.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Immediately after the Pay Commission released its report, <strong>DDT </strong> called up a CBEC Member and told him that his post is going to be upgraded to the level of secretary. His immediate reaction was, “No, they will not accept this recommendation”. How right you were Sir?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT and CBEC together do not have a single Secretary Level post among them – And they collect all the money to pay the arrears for all those forest officers who have no forests to administer.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a strong feeling among the Revenue officers that the Finance Minister is not bothered about their welfare.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A frustrated Revenue Force does not augur well for a healthy economy.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IRS generally failed to consider the taxpayer's perspective – what it is like to be a taxpayer</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“It was clear that IRS employees and management felt enormous pressure to produce tangible enforcement results – assessments, collections, and penalties. IRS employees were unwilling or unable to take the time to talk with taxpayers or representatives. Instead, they moved cases along to the next level rather than working them completely at the point of first contact.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Most importantly, IRS employees generally failed to consider the taxpayer's perspective – what it was like to be a taxpayer in the crosshairs of the IRS.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I viewed this situation primarily as a management failure, exacerbated by vacillation on funding. That is, IRS management failed to provide the necessary oversight, guidance, training, and other tools vital for striking the correct all-important balance between collecting tax and assisting taxpayers. And Government, by withdrawing funding even as it placed greater expectations on the IRS for revenue collections, created further pressures on the IRS to produce.”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not about the Indian Revenue Service (though it very much looks so), but about the dreaded US Internal Revenue Service. These are the remarks of the US National Tax Payer Advocate Nina Olson in her report to the US Congress.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Report adds,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here are just a few of the provisions that make tax administration more fair and just:</font></p>
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<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.The requirement that the IRS include an explanation of its entire examination and collection process (including information about the Taxpayer Advocate Service) in the first communication that provides the taxpayer with an opportunity to request an administrative Appeals.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.The right to a Collection Due Process hearing prior to the first levy or within five days after filing of the first lien with respect to a tax liability;</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.Expansion of relief from joint and several liabilities on a married-filing jointly income tax return.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.Additional taxpayer protections with respect to IRS seizures of residences and businesses, including the requirement that the IRS receive the written approval of a U.S. District Court judge or magistrate prior to seizure of a principal residence;</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.Additional safeguards with respect to the Offer in Compromise process, including the requirement of an administrative review and appeal of any rejected offer in compromise (or instalment agreement);</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.The establishment of a new basis for accepting offers in compromise on grounds of hardship, equity, and public policy;</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.Suspension of the statutory period of limitations during any period the taxpayer is financially disabled;</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.Extension of the common-law confidentiality privilege to federally authorized tax practitioners ( <em>e.g</em>., certified public accountants and enrolled agents) in federal civil tax proceedings;</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.Creation of a matching grant program for Low Income Taxpayer Clinics that provide free or nominal fee representation to low income taxpayers in tax disputes with the IRS or conduct outreach and education to taxpayers who speak English as a second language.</font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <strong>IRS </strong> mission statement now reads as:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Worth emulating by Indian Tax Administration. Incidentally in the US, the IRS Chief reports to the President while in India, the IRS chief reports to an IAS officer who is three years his junior.</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 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>Sale and lease back of assets - Depreciation permissible - Leasing business is a legal business in the country - Overvaluation of assets - CIT(A) right in remanding case for quantifying actual cost: ITAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Tribunal dealt with miscellaneous applications filed by the Revenue wherein it was urged that the final order passed by the Tribunal had not dealt with the issue of legality in sale/lease back transaction of certain assets and depreciation claim thereof by the appellant. After perusing the history of the case, the Tribunal agreed with the Revenue's arguments on this aspect and took up the miscellaneous applications filed by Revenue for disposal.</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>Appeal to High Court - High Court has no power to condone delay - Limitation Act not applicable: Bombay High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Limitation Act not applicable - </strong>It is not essential for the special or local law, in terms, to exclude the provisions of the Limitation Act. It is sufficient that if on a consideration of the language of its provision relating to limitation, the intention to exclude can necessarily be implied. The essence of providing a limitation is that a legal right of remedy available at a given point of time could distinguish in law after expiry of the said period. Where the Legislature gives no power to the court to condone the delay after the specified period of limitation, the court may not be able to assume such a power in exercise of its inherent jurisdiction. The law is what it reads on its plain and simple reading. The provisions of section 35G admit no ambiguity. In no uncertain terms it commands the institution of the appeal within a period of 180 days from the date of receipt of the order of the Appellate Tribunal by the aggrieved party whereafter the provisions do not give or vest the court with any power to entertain an appeal thereafter. Such exclusion of the provisions of the Limitation Act is, thus, implicit by necessary implication.</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>Bio Aloevera , Bio Bhringraj , Bio-cucumber - medicines or cosmetics - No attempt made by Revenue to prove these are cosmetics - When there is a classification dispute, suppression cannot be alleged: Supreme Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> has been no attempt on the part of the Revenue to prove that these products are cosmetic as has been held in BPL Pharmaceutical's case. In that view we are of the clear opinion that the Tribunal was right in holding these products to be the medicinal products and we approve of the findings of the Tribunal in that behalf regarding the classification of the product.</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>CENVAT Credit - Re-assessment of Input services cannot be done by the receiver's jurisdictional authorities: Tribunal sets aside order with consequential relief</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> considering the submissions and noticing that there also existed Service Tax Credit Rules, 2002 w.e.f 01.08.2002 [notification 14/2002-ST], the Bench found no merit in the stand of the Department and set aside the order of the Commissioner (A) with consequential relief to the appellant.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6633">Mail your comments to</font> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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