TIOL-DDT 949 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 949</font><br> 11.09.2008<br> Thursday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Scrutiny of FBT Returns – CBDT issues instructions</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT </strong> has directed that for all the Corporate cases selected for scrutiny as per the guidelines contained in the Action Plan document 2008-09 which have returned income to Rs.5 crore or more and where provisions of Fringe Benefit Tax ( FBT ) apply, assessment order shall also be passed u/s 115 WE of the Income-tax Act, 1961 after scrutiny of all such cases.</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/instruct0811.htm" target="_blank">CBDT Instruction No. 11/2008, Dated: September 5, 2008</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Processing of Returns – Clearance of backlog – CBDT instructions</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is concerned that a large number of IT returns are pending for processing and has issued the following instructions:-</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) All pending returns for A.Y. 2007-08 involving refund claims (including electronic returns with refund claims) must be processed on priority basis by <strong>30th September, 2008. </strong> Where any scrutiny assessment is pending in these cases, refund should be issued only after completion of the scrutiny assessment.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) For processing electronic returns involving refund claims, TDS data supplied by DGIT (Systems) on CDs along with AST instructions 68 may be utilized.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Refund returns involving inter- RCC migration of PAN may be processed on TMS.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Since data of electronic returns is already on the system, once this is acquired into the RCC data base, it will become part of the selection process under CASS. Therefore, electronic returns for A.Y. 2007-08 not involving refund claims can be taken up for processing after 30th September. However, it has to be ensured that all such returns are acquired and incorporated into RCC data base before the next round of CASS is run.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) Returns in forms ITR -4 and 5 filed in paper made by business assesses and not covered by section 44AB of the Income Tax Act, 1961 should be taken up for processing on AST at the stations on network, on priority basis at the earliest before next round of selection through CASS.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6) Salary returns for A.Y. 2007-08 in which there is no refund or demand and the TDS claim is below Rs.5 lakh , may be given the last priority for processing.</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=67&filename=notification/cbdt/2008/instruct0812.htm" target="_blank">CBDT Instruction No. 12/2008, Dated: September 5, 2008</a></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Doing Business 2009 – Sri Lanka tops the Region</font></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>good rules are a better basis for healthy business than ‘who you know'</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Regulatory reforms in South Asia continued this year, according to <strong>Doing Business 2009 </strong> (<a href="http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/Publications/448813-1215581662470/5192611-1221015124113/DB09SouthAsia.pdf" target="_blank">South Asia Overview</a>) —the sixth in an annual series of reports published by IFC and the World Bank. The report records reforms that eased the regulatory burden of doing business in four of the region's countries—Bangladesh, Bhutan, India, and Sri Lanka—between June 2007 and June 2008.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sri Lanka </strong>, the region's leading reformer of business regulations, made it easier to obtain credit by strengthening the legal rights of creditors and enhancing the availability of credit information. <strong>Bangladesh </strong> reduced the time for registering property by almost half and simplified business start-up. <strong>Bhutan </strong> made contract enforcement through the courts easier.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>India </strong> continued to make import and export procedures easier. A separate sub-national Doing Business report on the country will track the time and cost required to meet government regulations in 16 Indian cities and states. The aim is to encourage cities to bring about changes that improve their competitiveness nationally and globally and that attract more businesses.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No reforms were recorded in <strong>Pakistan </strong> this year, but the government has a Doing Business study underway to track business regulations in 12 cities. The goal is to facilitate the sharing of best practices locally and foster cooperation among various levels of government.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Doing Business </strong> ranks economies based on 10 indicators of business regulation that track the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Among regions, Eastern Europe and Central Asia led in reforms of business regulation for a fifth consecutive year, with more than 90 percent of its countries making improvements. East Asia and the Pacific was second, with China leading the way by making make it easier to access credit, pay taxes, and enforce contracts; the Middle East and North Africa tied at second. <strong>The top 10 economies for reforms of business regulations are </strong>, in order, Azerbaijan, Albania, the Kyrgyz Republic, Belarus, Senegal, Burkina Faso, Botswana, Colombia, the Dominican Republic, and Egypt.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Singapore leads the global rankings on the overall regulatory ease of doing business for a third consecutive year</strong>. New Zealand is runner-up, and the United States third. “ Economies need rules that are efficient, easy to use, and accessible to all who use them. Otherwise, businesses get trapped in the unregulated, informal economy where they have less access to finance and hire fewer workers, and where workers lack the protection of labor law,” said <strong>Michael Klein, World Bank/IFC Vice President for Financial and Private Sector Development</strong>. “ Doing Business encourages good rules, and good rules are a better basis for healthy business than ‘who you know," he added.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span class="MsoNormal"><span style='font-size:10.0pt;line-height:115%;font-family:"Verdana","sans-serif"'><a href="http://www.doingbusiness.org/" target="_blank">Doing</a></span></span></font><font size="2"><span class="MsoNormal"><span style='font-size:10.0pt;line-height:115%;font-family:"Verdana","sans-serif"'><a href="http://www.doingbusiness.org/" target="_blank"> </a></span></span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span class="MsoNormal"><span style='font-size:10.0pt;line-height:115%;font-family:"Verdana","sans-serif"'><a href="http://www.doingbusiness.org/" target="_blank">Business 2009</a></span></span> ranks 181 economies on the overall ease of doing business. The top 25 are, in order, Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Ireland, Canada, Australia, Norway, Iceland, Japan, Thailand, Finland, Georgia, Saudi Arabia, Sweden, Bahrain, Belgium, Malaysia, Switzerland, Estonia, Korea, Mauritius, and Germany.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fact Sheet – Summary of Reforms in South Asia</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong>Afghanistan </strong> no major reforms were recorded. Rank in Doing Business 2009: 162<br> <br> <strong>Bangladesh </strong> cut the time needed to register property by almost half, from 425 days to 245, through reforms at the Municipal Deed Registry Office. Starting a business has also become easier. Bangladesh made involving lawyers in company registration optional. That eliminated one procedure and reduced the cost by $100.<br> Areas of Reform: Starting a Business, Registering Property. Rank in Doing Business 2009: 110</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bhutan </strong> made it easier to enforce contracts by creating a Land Commission to handle cases involving the transfer of property. Because a large number of land disputes had been ending up in court, setting up the new commission took about 30 percent of all cases out of the district courts. As a result, the total time required to enforce a contract through the courts fell from 275 days to 225. Areas of Reform: Enforcing Contracts. Rank in Doing Business 2009: 124<br> <br> <strong>India </strong> implemented electronic data interchange (EDI), allowing exporters to submit documents to customs online. The EDI system also enables customs to automatically assess export documents, making customs clearance more efficient. The new system reduced the time needed to export by 1 day. Areas of Reform: Trading across Borders; Rank in Doing Business 2009: 122 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong>Maldives </strong> no major reforms were recorded. Rank in Doing Business 2009: 69</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong>Nepal </strong> no major reforms were recorded. Rank in Doing Business 2009: 121</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong>Pakistan </strong> no major reforms were recorded. Rank in Doing Business 2009: 77</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sri Lanka, </strong> the top regional reformer, strengthened the legal rights of creditors by enforcing the new Companies Act. When a company goes into liquidation, the claims of its secured creditors are no longer frozen. Secured creditors now have the right during liquidation to seize or attach their collateral or appoint a receiver. Sri Lanka also implemented an online system for uploading credit information. Now the Credit Information Bureau (CRIB) can collect data on all loans extended by its members. The minimum threshold for the loans recorded was eliminated and data can be maintained over a longer period. Areas of Reform: Getting Credit; Rank in Doing Business 2009: 102</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>You need government's permission to sell land</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ida is a Gambian entrepreneur who wants to sell her land to expand her manufacturing business. She has an interested buyer, but transferring property in The Gambia requires ministerial consent and can take up to a year. The Gambia is one of the 12 countries in the world where government approval is required for such economic transactions. Others are Lesotho, Madagascar, Nigeria, Papua New Guinea, Senegal, Solomon Islands, Tanzania, Tonga, Uganda and Zambia.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Simplifying procedures to register property encourages investment and gives entrepreneurs, like Ida, better access to credit to grow businesses and create jobs.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Twenty-four countries made it easier to register property this past year, according to Doing Business 2009, the joint World Bank- IFC publication, which tracks ten stages in the lifecycle of a business, ranks countries on their regulatory ease of doing business, and identifies the fastest reformers.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Registering property is one of the 239 reforms the report tracked in 113 countries between June 2007 and June 2008.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The CobWeb – Our weekly feature hits a century</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CPU of TIOL is going to occupy the monitor </strong>is how Natarajan of Swamy Associates, Chennai saw it, when we started our weekly feature the COBWEB on 12.10.2006. And today The CobWeb is a <strong>HUNDRED</strong>. Given our limitations, for us in <strong>TIOL</strong>, sustaining a column itself is a great achievement and we are<strong> justifiably</strong> proud that we could bring a hundred editions of the column without a break – and this week we talk about unjust enrichment.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today's CobWeb discusses the huge amount of money that is lying unclaimed with banks, Insurance Companies, etc, and not utilised for the people.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is one more problem with dormant accounts. Former President APJ Abdul Kalam had over a Lakh of rupees in his Savings Bank account with a leading nationalised bank. The scientist was too busy with Space and Science that he hardly had time to operate that account. A clever Bank Clerk, who thought that he could put that money to better use, simply withdrew it and spent it.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL </strong> is grateful to all the Netizens for the huge support to <strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7850" target="_blank">CobWeb</a></strong>.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The head note to Section 80HHC refers to deduction in respect of profits retained for export business. It is not profits retained from export business – Supreme Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Section 80 HHC of the Income Tax Act must have seen more litigation than any other Section. And this must be one of the most amended Sections of the Income Tax Act. In this latest judgement of the Supreme Court which we bring to you today, the Court has referred to the Heading of the Section. Remember yesterday's <strong>DDT</strong>, where we discussed about the head and tail of a Section.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7849" target="_blank">See Breaking News.</a></strong></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="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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>Income Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Indo-German DTAA: Limited Partnership firm, paying Trade Tax, a tax on income from business, in Germany is entitled to lower tax rate on royalty and fees for technical services: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issue in this case involving a German resident is not the taxability but the lower tax rate under the DTAA. The assessee on its own filed the return of income and claimed 10% rate of tax on royalty and fees for technical services. AO disallowd the same on the ground that the assessee is a 'Limited Partnership' firm which cannot be treated as a 'person' as per the DTAA. He further noted that the assessee cannot be said to be a resident of Germany. The AO also raised the objection that the assessee pays 'Trade Tax' on turnover in Germany which cannot be allowed under the DTAA. The CIT(A) however allowed the appeal<strong>.</strong></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>Interest on refunded amount – assessee approached High Court bypassing the regular appellate channel – High Court's Order set aside and assessee given four weeks time to appeal to Commissioner (Appeals) – Supreme Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Appellate Authority will decide the matter uninfluenced by the observations contained in the impugned judgment of the High Court as also those contained in its judgment dated 12th August, 2005 in Special Civil Application No.12251/2005. Subject to above, C.A. is dismissed as withdrawn.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gold Control</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Release of seized gold – Redemption Fine – based on market price at the time of seizure, not at the time of release – alternate remedy no bar for High Court to interfere to prevent injustice - High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>296 GRAMS</strong> of primary gold was seized by the Central Excise officers from a house on 12.09.1975. After 30 years, in 2005, the High Court ordered the gold to be released on payment of redemption fine.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner 1.12.2005, promptly fixed the redemption fine at Rs. 2,23,480/- that is Rs. 755/- per gram. The maximum price of gold in 2005 was Rs. 616/-. So it would have been cheaper for the party to buy the gold in the market than redeem it from the Central Excise Department.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“The impugned order is legally not sustainable as law permits the redemption fine at the rate prevalent when the goods were seized.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was the Commissioner not aware of this Law? Who pays for the Department's ignorance? The assessee, of course.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the High Court allowed the writ with a direction to the Department to refix the Redemption fine.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally gold price was Rs.54/- per gm in 1975 – so the RF cannot be more than Rs. 15,984/-.</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> </body> </html>