GOODS AND SERVICE TAX REPORTS (GSTR) HIGHLIGHTS ISSUE Dt 15.2.2010 Volume 1 Part 7

GOODS AND SERVICE TAX REPORTS (GSTR) HIGHLIGHTS ISSUE DATED 15.2.2010

Volume 1 Part 7

 

 

SUPREME COURT JUDGMENT

 

F Extended period of limitation for recovery of duty : Where assessee voluntarily disclosing facts on particular date, period of limitation cannot be extended thereafter : Kushal Fertilisers (P) Ltd. v. Commissioner of Customs and Central Excise, Meerut. . . 301

F Whether failure to disclose facts and period of limitation extended is a question of fact : Kushal Fertilisers (P) Ltd. v. Commissioner of Customs and Central Excise, Meerut . . . 301

F Secured debts or debts which by provision of statutes get first charge over property and would prevail over Crown debts which are unsecured : Union of India v. SICOM Ltd. . . . 346

HIGH COURT JUDGMENT

 

F In order to adjudicate claim of third party on goods confiscated due to failure on part of original importer to clear goods, original importer is necessary party : Commissioner of Customs (Exports), Chennai v. Ishwar Impex (Mad) . . . 293

F Presumption against retrospective operation is not applicable to declaratory statutes : Premium Suitings Pvt. Limited v. Commissioner of Central Excise, Division Kanpur (All) . . 310

CESTAT ORDER

 

F Prolongation of hearing from one day to another due to paucity of time or for non-conclusion of arguments not adjournment : Prakash Industries Ltd. v. Commissioner of Central Excise, Raipur. . . 328

F Where no reliable evidence showing clearance of excisable goods without payment of duty, order imposing penalty and interest set aside : Sarita Software and Industries Ltd. v. Commissioner of Central Excise, Visakhapatnam . . . 341

STATUTES AND NOTIFICATIONS

 

Rules :

Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2009 . . . 97

Notifications :

Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 :
Notification under section 1(3) : Commencement of sections . . . 98

Notification under section 25(1) : Authorised officers to act under sections 12 and 13 . . . 99

Notification under section 25(1) : Amendments . . . 100

Notification under section 25(1) : Amendments in rates . . . 111

Notification under section 9A(1) and (5) : Imposition of definitive anti-dumping duty on imports . . . 105, 112

JOURNAL

 

Goods and services tax : Optimal rate is vital (Dr. Geeta Das) . . 68

Goods and services tax : Threshold limit (Dr. Geeta Das) . . 65

Power of Commissioner (Appeals) for remand of case in Customs and Central Excise Appeals (K. Sankararaman) . . 72

NEWS BRIEFS

 

F Proposal to hike export duty on ore
The Steel Ministry has proposed an across the board increase in export duty on iron ore to discourage export and lower the import duty on ore to zero to ensure that there is adequate raw material available for the domestic industry.

The proposal will benefit domestic steel manufacturers as it will increase the availability of cheaper ore for value addition within the country, helping them to boost their bottomlines.

In its pre-budget memorandum to the Finance Ministry, the steel ministry has suggested that the export duty be hiked to 20 per cent. on all grades of iron ore from the current levels of 10 per cent. on iron ore lumps and pellets and 5 per cent. on iron fines.

The duty on pellets, lumps and fines was raised only recently on December 2009 following consistent rise in ore exports. Prior to December, the duty on iron ore fine was nil and on pellets and lumps was 5 per cent.

Iron ore imports, on the other hand, attracts a duty of 2 per cent. The Steel Ministry has recommended that this should be brought to zero to facilitate coastal steel plants who use high grade iron ore for blending.

The Steel Ministry justifying the increase in export duty has said, "Iron ore exports have been increasing on account of current global demand, particularly from China. During April-October, 2009, the exports of iron ore is higher by 20.8 per cent. in comparison to last year. Indications are that this may further increase".

The ministry had at times even argued for a ban on iron ore exports to conserve raw material for the industry, a demand that has found favour with the big steel players. The steel ministry also wants the customs duty on stainless steel and alloy steel melting scrap to be brought down from 5 per cent. to zero, to further boost the availability of raw material for the industry.

It is, however, keen to insulate the domestic industry from imports and suggested that the 5 per cent. import duty on flat and long steel products and sponge iron, pig iron, could be retained at the current levels. [Source : The Economic Times, February 6, 2010]

F Agriculture and Food Minister urges States to waive VAT, local taxes on food items
In his effort to bring down the soaring food prices, Agriculture and Food Minister urged States to waive the value-added tax and other local levies on foodgrain and sugar.

"I would urge the states to relook the issue of taxes levied by them on foodgrain and sugar," he said while addressing the chief ministers' conference on price rise convened by the Prime Minister.

The rate of VAT and other local taxes on foodgrain is over 10 per cent in states like Punjab and Haryana, while it ranges between 3 and 8 per cent in Uttar Pradesh, Rajasthan, Madhya Pradesh, Bihar and Gujarat, he said.

On sugar prices, the Minister said, Delhi, Karnataka, Gujarat, Bengal and Bihar have already abolished VAT on imported sugar and similar steps required in other states. The VAT on sugar was 12.5 per cent. in Delhi and Karnataka, while it was 4 per cent. in Bengal and Bihar.

Commending Chhattisgarh for abolishing entry tax on sugar, he asked Punjab, Madhya Pradesh and a few other states to remove such cess.

He also asked Uttar Pradesh to lift the restrictions on processing imported raw sugar in the state. [Source : The Economic Times, February 6, 2010]

F SC to examine Punjab's plea on VAT provisions
The Supreme Court has decided to examine the plea of Punjab Government pertaining to the provision of its VAT law which according to the Government provides no exemption to the assessees from the mandatory deposit of 25 per cent. of the tax, penalty and interest for entertaining their appeal by the appellate authority.

"It appears that the High Court did not considered the provision of section 62(5) of Punjab Value Added Tax Act, 2005", said a Bench comprising of Justice SH Kapadia and Justice Swatanter Kumar while issuing notice to Femina Jewellery Pvt Ltd. The High Court allowing the writ petition filed by Femina had directed that the appeal of the petitioner shall be entertained by the Appellate Authority without pre-deposit of 25 per cent. of the amount assessed by the authority. [Source : The Economic Times, February 8, 2010]

F Excise hike in Budget to set off stimulus exit
Excise duties are likely to be raised in the forthcoming Budget by between 2 and 4 percentage points.

Top sources in the Government have indicated that it is necessary to start increasing the rates now to get closer to the Goods and Services Tax rate when it is introduced, perhaps in a year.

The likely Central GST rate is around 14 per cent. But the current excise rates are down to between 4 per cent. and 10 per cent. The average rate is 8 per cent. "It would be too high a gap to bridge at one-go when GST comes," says a noted Government economist.
Top industry sources said : "We have more-or-less given up. But we are still trying to persuade the Government not to raise excise duties now. The producers will pass on the increase and that will only add to inflation."

However, inflation in manufactured products has been low, around 2 per cent on an average in the last six months (excluding sugar and other agri-products) compared to inflation in food products which has been ranging between 17 and 20 per cent. This gives the Government some elbow room to raise excise duty rates.

The Government slashed excise duty rates steeply during December 2008-March 2009 as part of its stimulus package to keep growth up after the global financial system collapsed in September 2008.

Excise rates since December 2008 had been progressively cut from 16, 12 and 8 per cent. to 10, 8 and 4 per cent. depending on the product in question. Service tax was also reduced from 12 to 10 per cent.

The Government is considering a phased increase in indirect tax rates, and not a one-shot withdrawal.

"The withdrawal is likely to be gradual," said Dr. C. Rangarajan, Chairman, Prime Minister's Economic Advisory Council. "I expect the Government to take some steps on fiscal consolidation in the Budget."

India had provided three rounds of stimulus packages in the aftermath of the global financial meltdown in September 2008.

The package included both monetary loosening and indirect tax cuts besides fiscal incentives for exporting community.

Recently, the Planning Commission Deputy Chairman said that with the growth impulses now back, the time has come to start exiting.

There are expectations that the Centre will in the Budget undertake some unwinding of the fiscal stimulus.

The RBI had in the second quarter policy review initiated the process of monetary exit and further moved in that direction by announcing a 75 basis point hike in cash reserve ratio in end January 2010 as part of the third quarter review of monetary policy. [Source : The Hindu Business Line, February 11, 2010]

 

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ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE Dt 8-2-2010 Volume 1 : Part 6

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 8-2-2010

Volume 1 : Part 6

REPORTS

F On failure of assessee to prove genuineness of transaction, amount received by way of share capital, added as cash credit : Dhingra Global Credence P.Ltd. v. ITO (Delhi) p.529

F Transfer of assets on conversion of proprietary concern into firm, revalued amount deemed to be full value of consideration, no deemd gift : Dharamshibhai B.Shah v. ITO/GTO (Ahd.) p.536

F Where no finding that consideration on sale of stock-in-trade above stated consideration, addition based on fair market value not justified : Asst.CIT v. Excellent Land Developers P. Ltd. (Delhi) p. 563

F Where surrender of income found during survey not connected with levy of penalty u/s 271E for violation of s.269T : Ajay Goel v.Addl. CIT (Delhi) p.569

F Receipt of sum by assessee in lieu of forgoing its right to use premises is not revenue receipt : Assessee holding premises on lease from Municipal Corporation, right as lessee is capital asset : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Receipt of one-time fee for forgoing right to use property assessable as capital gains : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Where financial capacity of donors and genuineness of gifts not established, addition justified : ITO v.Smt.Usha Aggarwal (Delhi) 593

F Assessee under duty to pay TDS on behalf of other persons to credit of Govt.: Assessee treated as assessee in default on failure to pay TDS : T.H.E. Makers P. Ltd. v. ITO (TDS) (Delhi) 611

F Where contracts are not interconnected, various sites cannot be considered together in computing minimum period for permanent establishment under art.5(2)(i) of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where income subject to TDS, interest u/s 234B cannot be charged : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where reimbursement of expenses incurred on travel not involving element of income, not taxable under art.12 of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

NEWS-BRIEFS

F Supreme Court defines "manufacturing" for Finance Ministry

The Supreme Court has asked the revenue department to take into account the process applicable to the product and not dictionary meaning of "manufacture" to decide the issue of benefits under the provisions of Income-tax Act, Excise Act and Customs Act. The apex court expressed its displeasure over Revenue's failure in such cases, saying the Department was not following its recommendations over the years.

"Repeatedly this court (Supreme Court) has recommended to the Department, be it under Excise Act, Customs Act or the Income-tax Act, to examine the process applicable to the product in question and not to go only by dictionary meanings (of manufacture). This recommendation is not being followed over the years", said a bench comprising Justice SH Kapadia and Justice HL Dattu.

The court dismissed a bunch of appeals filed by the Income-tax Department. In such appeals, the issue was whether twisting and texturising of partially oriented yarn amounts to "manufacture" for the purpose of extending benefits to the assessees in accordance with section 80-IA of the Income-tax Act, 1961.

Ruling in favour of the assessees, the court, however, clarified, "at the outset, we wish to clarify that our judgment should not be understood to mean that per se twisting and texturising would constitute 'manufacture' in every case. In each case, one has to examine the process undertaken by the assessee" .

The structure, the character, the use and the name of the product are distinguishing markings to be taken into account while deciding the question whether the process is a manufacture or not, said court in its order.

The apex court perused its earlier order on the issue. In that order, the court had said, "the term 'manufacture' implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word 'manufacture' ".

The Revenue, however, has amended the Income-tax Act in 2009 to define the word "manufacture". According to it, "manufacture" shall mean a change bringing into existence a new and distinct object or article or thing with a different chemical composition or integral structure.

Then the Department had filed appeals in the apex court in 2010. Dismissing the appeals, the court said, partially oriented yarn is not fit for being used in the manufacture of a fabric. [Source : www.economictimes.com dated January 25, 2010]

F Date for filing ITR-V form extended

The Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after April 1, 2009, up to March 31, 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No. 1, Electronic City Post Office, Bengaluru-560100 (Karnataka). However, in cases where e-mail acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka-560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated May 21, 2009 which allows taxpayers who file their income-tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No. 1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to March 31, 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. [Source : www.pib.nic.in dated January 27, 2010]

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE Dt 8-2-2010 Volume 1 : Part 6

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 8-2-2010

Volume 1 : Part 6

 

 

REPORTS

F On failure of assessee to prove genuineness of transaction, amount received by way of share capital, added as cash credit : Dhingra Global Credence P.Ltd. v. ITO (Delhi) p.529

F Transfer of assets on conversion of proprietary concern into firm, revalued amount deemed to be full value of consideration, no deemd gift : Dharamshibhai B.Shah v. ITO/GTO (Ahd.) p.536

F Where no finding that consideration on sale of stock-in-trade above stated consideration, addition based on fair market value not justified : Asst.CIT v. Excellent Land Developers P. Ltd. (Delhi) p. 563

F Where surrender of income found during survey not connected with levy of penalty u/s 271E for violation of s.269T : Ajay Goel v.Addl. CIT (Delhi) p.569

F Receipt of sum by assessee in lieu of forgoing its right to use premises is not revenue receipt : Assessee holding premises on lease from Municipal Corporation, right as lessee is capital asset : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Receipt of one-time fee for forgoing right to use property assessable as capital gains : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Where financial capacity of donors and genuineness of gifts not established, addition justified : ITO v.Smt.Usha Aggarwal (Delhi) 593

F Assessee under duty to pay TDS on behalf of other persons to credit of Govt.: Assessee treated as assessee in default on failure to pay TDS : T.H.E. Makers P. Ltd. v. ITO (TDS) (Delhi) 611

F Where contracts are not interconnected, various sites cannot be considered together in computing minimum period for permanent establishment under art.5(2)(i) of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where income subject to TDS, interest u/s 234B cannot be charged : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where reimbursement of expenses incurred on travel not involving element of income, not taxable under art.12 of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

NEWS-BRIEFS

F Supreme Court defines "manufacturing" for Finance Ministry

The Supreme Court has asked the revenue department to take into account the process applicable to the product and not dictionary meaning of "manufacture" to decide the issue of benefits under the provisions of Income-tax Act, Excise Act and Customs Act. The apex court expressed its displeasure over Revenue's failure in such cases, saying the Department was not following its recommendations over the years.

"Repeatedly this court (Supreme Court) has recommended to the Department, be it under Excise Act, Customs Act or the Income-tax Act, to examine the process applicable to the product in question and not to go only by dictionary meanings (of manufacture). This recommendation is not being followed over the years", said a bench comprising Justice SH Kapadia and Justice HL Dattu.

The court dismissed a bunch of appeals filed by the Income-tax Department. In such appeals, the issue was whether twisting and texturising of partially oriented yarn amounts to "manufacture" for the purpose of extending benefits to the assessees in accordance with section 80-IA of the Income-tax Act, 1961.

Ruling in favour of the assessees, the court, however, clarified, "at the outset, we wish to clarify that our judgment should not be understood to mean that per se twisting and texturising would constitute 'manufacture' in every case. In each case, one has to examine the process undertaken by the assessee" .

The structure, the character, the use and the name of the product are distinguishing markings to be taken into account while deciding the question whether the process is a manufacture or not, said court in its order.

The apex court perused its earlier order on the issue. In that order, the court had said, "the term 'manufacture' implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word 'manufacture' ".

The Revenue, however, has amended the Income-tax Act in 2009 to define the word "manufacture". According to it, "manufacture" shall mean a change bringing into existence a new and distinct object or article or thing with a different chemical composition or integral structure.

Then the Department had filed appeals in the apex court in 2010. Dismissing the appeals, the court said, partially oriented yarn is not fit for being used in the manufacture of a fabric. [Source : www.economictimes.com dated January 25, 2010]

F Date for filing ITR-V form extended

The Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after April 1, 2009, up to March 31, 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No. 1, Electronic City Post Office, Bengaluru-560100 (Karnataka). However, in cases where e-mail acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka-560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated May 21, 2009 which allows taxpayers who file their income-tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No. 1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to March 31, 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. [Source : www.pib.nic.in dated January 27, 2010]

 

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INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE Dt 8-2-2010 Volume 320 : Part 6

INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE DATED 8-2-2010

Volume 320 : Part 6

 

 

SUPREME COURT JUDGMENTS

* Twisting and texturising partially oriented yarn entitled to deduction in terms of section 80-IA : CIT v. Emptee Poly-Yarn P. Ltd. p. 665

* Determination of nature of gain or loss on renunciation, the crucial dates are date on which the right comes into existence and date of renunciation of such right : Navin Jindal v. Asst. CIT p. 708

HIGH COURT JUDGMENTS

* Court will not interfere with Tribunal's finding that house was partly used for purpose of business and partial relief of Rs. 1 lakh given by Tribunal : Rotomac Gobals P. Ltd. v. CIT (All) p. 616

* Remanding matter to examine matter afresh by Tribunal not proper where Commissioner (Appeals) examining identity, creditworthiness and genuineness of each of shareholders on merits held in favour of assessee : Bhav Shakti Steel Mines P. Ltd. v. CIT (Delhi) p. 619

* AO to issue notice u/s 143(2) to assessee where information contained in tax audit report does not enable AO to make any prima facie adjustments u/s 143(1)(a) : Peerless General Finance and Investment Co. Ltd. v. CIT (Cal) p. 622

* TRO empowered to investigate any claim or objection in connection with attachment or sale of property : Vishwanath Agarwala v. TRO (Cal) p. 636

* Amount spent by liquor manufacturer on giving free samples to defence establishments deductible : Brihan Maharashtra Sugar Syndicate Ltd. v. Deputy CIT (Bom) p. 658

* Loss due to fluctuation in rate of foreign exchange treated as business loss where assessee obtaining loan in foreign exchange and utilising amount for money-lending and bill discounting business : CIT v. Goyal M. G. Gases P. Ltd. (Delhi) p. 669

* Interest payable by assessee for failure to deduct tax till due date of filing return by payee : CIT v. Trans Bharat Aviation P. Ltd. (Delhi) p. 671

* Revision by Commissioner not valid where notice referring to four issues but order referring to nine issues : CIT v. Ashish Rajpal (Delhi) p. 674

* Opportunity to AO mandatory where assessee itself produce additional evidence before Commissioner (Appeals) : CIT v. Shree Kangra Steel P. Ltd. (HP) p. 691

* Surplus realised on sale of shares by assessee to its subsidiary companies exempt from capital gains : CIT v. Shahibaug Enterprises P. Ltd. (Guj) p. 695

* Amount paid to obtain additional share exempted : Lalitaben Hariprasad v. CIT (Guj) p. 698

* Difference between price of shares allotted to assessee and market price treated as income of assessee : CIT v. Kirtivan D. Kotian (Karn) p. 704

* Surplus received on cancellation of foreign exchange forward contract was a capital receipt not taxable : Deputy CIT (Assessment) v. Garden Silk Mills Ltd. (Guj) p. 720

JOURNAL

* Revenue subsidies vis-a-vis deductions u/s 80-IA, 80-IB or 80-IC (Sanjay Mody, Chartered Accountant) p. 1

* New Dispute Resolution Scheme : A critique (Himanshu S. Sinha, Partner, Associated Law Advisers, Delhi, formerly TPO) p. 12

* Condonation of delay in filing application under section 10(23C)(vi)-(T. N. Pandey, Retd. Chairman, CBDT) p. 17

NEWS-BRIEF

* Finance Ministry rearranges tax intelligence arm to counter evasion

The Finance Ministry has overhauled its income-tax (I-T) intelligence wing in order to speed up investigation of high-value cases of Rs. 10 lakh and above and stop new methods of tax evasion.

Commissioners of Income-tax (CITs) of the Central Information Branch (CIB) will now report to the intelligence wing, headquartered in the national capital.

CIB and the intelligence wing, which were till now performing a support role for the conduct of search and survey operations for the investigation arm of the department, would henceforth independently probe cases of tax evasion, official sources said.

CIB is the nodal office in the department to gather all documents pertaining to transactions in relation to which Permanent Account Number (PAN) or General Index Register Number are given during sale and purchase of property and monetary deposits.

Under the new arrangement, Commissioners (CIB) have been designated as the Directors of Income-tax (DITs), who will report to the Director General of Income-tax, Intelligence.

The intelligence wing would also feed exhaustive taxpayer information to the technology-based database of the department, called 360 degree profiling, sources said.

360 degree profiling enables the Income-tax Department to track all PAN card-based transactions of a taxpayer, including those done by debit and credit cards.

According to official I-T Department guidelines, the intelligence wing "takes up intensive investigation of selected cases or class of cases and develop them for further action or specialised operation. The wing also studies and analyses emerging trends in tax evasion, new modus operandi, create an economic offence data base both in traditional and non traditional fields".

The wing will have enhanced liaison with other enforcement agencies such as the Financial Intelligence Unit, Enforcement Directorate, Directorate of Revenue Intelligence, among others.

The Directorate also has access to all the information received by the department pertaining to Annual Information Return, Tax Deducted at Source, Banking Cash Transactions Tax and Securities Transaction Tax. [Source : www.businessstandard.com dated January 25, 2010]

* Date for filing ITR-V form extended

The Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after April 1, 2009, up to March 31, 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No. 1, Electronic City Post Office, Bengaluru-560100 (Karnataka). However, in cases where e-mail acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka-560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated May 21, 2009 which allows taxpayers who file their income-tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No. 1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to March 31, 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. [Source : www.pib.nic.in dated January 27, 2010]

* Corporate business restructuring gets a tax fillip

In a ruling that will provide great relief to corporates planning to restructure their businesses, the Authority for Advance Ruling (AAR) held that restructuring of businesses cannot be construed as an exercise for avoiding tax in India.

AAR, a quasi judicial body for settling tax disputes involving foreign entities, in an order last week on an application filed by a foreign group companies, held that any tax benefit resulting from the restructuring of businesses cannot be a ground for income-tax (I-T) authorities to conclude that the entire exercise was for avoiding tax.

The companies' rationale for the amalgamation was based on business and commercial grounds. The group had told AAR that with this amalgamation, all the three overseas entities' assets as well as liabilities would be transferred to the Indian company.

This ground was acceptable to AAR, which held that it is within the legitimate right of the parties to enter into transactions that would help them access the benefits given under the tax statute. The AAR also observed that the contracting parties are not expected to do transactions in a way that would entail any tax liability.

The three foreign entities had moved the AAR in relation to the tax benefits resulting from the amalgamation. The AAR's ruling is binding on the company paying taxes and the I-T department.

The I-T authorities did not dispute the fact that its laws provided exemption from capital gains tax on such cases. However, despite admitting that transfer of capital asset is entitled to exemption provided under section 47 with section 2(1B) of the Income-tax Act, the tax authorities held that since the entire exercise was driven by a motivation to avoid tax, the amalgamation should not be accepted by the AAR. It is this argument the AAR had declined to accept.

The I-T Department had told the AAR that the latter should not make any decision until the High Court decides on the application for amalgamation filed by the group. The I-T Department had proposed to intervene in this application and present its case of adverse revenue implications in the event of the approval of the scheme.

The AAR, however, observed that since the amalgamation includes taking over all assets and liabilities, which also included tax recoverable, tax avoidance cannot be seen as the objective of the foreign group. Besides, the Department is proposing to intervene in the matter in the High Court, it is free to request for appropriate direction for recovery of the I-T arrears. [Source : www.economictimes.com dated January 28, 2010]

* CBDT to cross-verify all high value refunds this fiscal

The Central Board of Direct Taxes (CBDT) has stated that an officer in the Income-tax Department, Mumbai noticed on or about January 12, 2010 that refunds had been issued from his jurisdiction without his knowledge or approval of his higher authorities. The officer immediately brought the matter to the notice of his superior officers.

On internal inquiry by the Income-tax Department, it was found that User Ids and Passwords of certain officers had been fraudulently used to generate refunds in some cases. Upon detection of the fraud, the following actions were taken by the Income-tax Department to contain the damage :-

(i) Stop payment orders were issued. As a result, refund outgo in at least two cases could be prevented.

(ii) Investigation and search action was undertaken by the Directorate of Income-tax (Investigation), Mumbai to detect the bank accounts to which the refunds had been credited and the beneficiaries.

(iii) I-T investigators have identified the bank accounts, beneficiaries and some of the scamsters involved.

(iv) Mumbai police and CBI Mumbai have been informed.

Further actions being taken to prevent the recurrence of such frauds are as follows :-

a) All high value refunds issued during the current financial year will be cross-verified.

b) The system of handling high value refunds will be replaced with a more robust and foolproof system. [Source : www.pib.nic.in dated January 25, 2010]

 

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Met personally to Mr Meena.

Dear Shri Makwana Saheb,
                                           Today I met to Mr. Meena Saheb. Two Refunds will be issued . One ECS by Indemnity bond. Other cheque was returned back to department. Reissue same again tomorrow.

               One thing is appreciable. He throw out all Tobaccos and other thing. He trtuned to be without Tobacco for ever.
               What I said he got by heart. One thing inmy life I did riight things.
God save him.

C A Shah D J

The INTERNET now has a personality. YOURS! See your Yahoo! Homepage. http://in.yahoo.com/

Quality tax audit scheme: a move to finetune tax assessment

The Central Board of Direct Taxes recently framed a scheme for ensuring quality tax assessments by its officers across India. In the preface to the scheme (issued in December 2009), the CBDT has expressed its concerns on the need for improving the general quality of tax assessments conducted by its officers. While in the past, the CBDT had issued instructions to the range heads (the country is divided into different revenue ranges) to monitor the quality of the tax assessments falling under their jurisdiction, there was no comprehensive plan in place for improving and monitoring the overall quality of tax assessments. While there are separate audit wings, an internal audit mechanism and the Comptroller & Auditor General audits, this scheme is a first of its kind aimed at improving quality of tax assessments by the revenue officers. Although the need for a plan to improve the quality of tax assessments has existed for several years, the CBDT has finally implemented a scheme effective from January 2010.

As per the scheme, the range head has to monitor at least five assessment cases for each of the revenue officers (assessing officers) falling under his jurisdiction. The cases will be jointly selected by range heads and assessing officers. The range heads would give appropriate directions for the guidance of assessing officers regarding the course of investigation to be adopted for completing these assessments in a proper manner and would also monitor the assessment proceedings in these identified cases. Once the assessments are completed, the assessing officers would send a copy of the assessment order to their range heads and to the concerned commissioner of income-tax. Also, monitoring, the scheme deals with quality assessments. The scheme mentions that for quality assessment, the assessing officer has to clearly identify the issues arising for consideration, has to give sufficient opportunity to the taxpayer to give his response, has to evaluate and analyse the response in detail and accordingly give his finding and conclusion in accordance with provisions of the law, resulting in substantial additions to income declared by the tax payer.

The scheme mentions that the cases identified for monitoring by the range head are expected to comply with this criteria of quality assessments and also authorises the chief commissioners of income tax to set monetary thresholds for assessments to qualify as quality assessments, normally not being less than Rs 5lakh, excluding recurring adjustments. Other than the identified...

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