ITR Volume 336 : Part 3 Issue dated 22-8-2011

INCOME TAX REPORTS (ITR)

Volume 336 : Part 3 (Issue dated 22-8-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to High Court --CBDT instruction prohibiting appeals where tax effect is below Rs. 4 lakhs--CBDT instruction that notional tax effect could be taken in loss cases--Does not apply to appeals filed prior thereto--Appeal not maintainable--CBDT Instruction No. 5, dated 24-10-2005 and O. M. dated 15-5-2008--Income-tax Act, 1961, s. 260A-- CIT v. Continental Construction Ltd. (Delhi) . . . 394

Association of persons --Member--Exemption--Exclusion of company, co-operative society or registered society--Refers to association of persons not member--Private company member of association of person entitled to exemption--Income-tax Act, 1961, ss. 40(ba), 67A, 86-- CIT v. Ideal Entertainment P. Ltd. (Mad) . . . 357

Best judgment assessment --Assessment should be on rational basis--Profit margin disclosed by assessee cannot be rejected arbitrarily--Income-tax Act, 1961-- CIT v. Aero Club (Delhi) . . . 400

Business expenditure --Accounting--Company following completed contract method of accounting--Method accepted by Assessing Officer--Provision for anticipated losses--Deductible --Income-tax Act, 1961-- CIT v. Triveni Engineering and Industries Ltd. (Delhi) . . . 374

----Assessee writing off 80 per cent. of cost of dies and tools--Finding that tools and dies once used had no resale value--Writing off regularly done by assessee--Amount written off deductible--Design and consultancy charges on tools and dies--Deductible--Income-tax Act, 1961-- CIT v. Metalman Auto P. Ltd. (P&H) . . . 434

----Deduction only on actual payment--Sales tax--State Government allowing deferred payment--Effect of Circular No. 674 dated 29-12-1993--Amount cannot be disallowed--Income-tax Act, 1961, s. 43B--CBDT Circular No. 674, dated 29-12-1993-- CIT v. Bihar Foundry and Castings Ltd. (Jharkhand) . . . 387

----Disallowance--Entertainment expenditure--Exclusion from disallowance--Expenditure on food or beverages provided to employees in office or other place of work--Meaning of other place of work--Amount spent on sales dealers conference, press conference and hotel--Part of amount spent on employees--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Indian Rayon and Industries Ltd. (Bom) . . . 479

----Roll over charges for repayment of principal amount of foreign exchange loans for capital investment--Not deductible--Expenditure on gift and presentation articles--Expenditure on school for children of staff and workers--Pro rata/proportionate premium on redemption of non-convertible debentures issued during assessment year 1988-89--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Indian Rayon and Industries Ltd .(Bom) . . . 479

Charitable purposes --Charitable trust--Registration of trust--Commissioner has power to cancel registration--Notice of cancellation must give reasons--Search operations against assessee--No assessment based on search--Order cancelling registration set aside by Tribunal--Notice again for cancellation of registration--Not valid--Income-tax Act, 1961, s. 12AA-- Kalinga Institute of Industrial Technology v. CIT (Orissa) . . . 389

Collection of tax at source --Liquor trade--State Government--Immunity from Union taxation--State Government doing wholesale business in liquor--State Government bound to collect tax at source from retailers--Failure to collect tax--Recovery proceedings against State Government justified--Not a case of taxation of State but of collection of tax in respect of income of retailers--Recovery not barred by article 289--Income-tax Act, 1961, ss. 44AC, 206C, 226--Constitution of India, art. 289-- State of Bihar v. CBDT (Patna) . . . 506

Co-operative society --Special deduction--Interest received on advances provided to member co-operative societies--Special deduction allowable after deducting expenditure incurred in earning the income--Income-tax Act, 1961, ss. 14A, 80P(2)(d)-- Punjab State Co-operative Milk Producers Federation Ltd . v. CIT (No. 1 ) (P&H) . . . 495

----Special deduction under section 80P--Apex co-operative society--Member societies engaged in marketing milk and milk products--Credit facilities provided by assessee for working capital of members--Interest not entitled to special deduction under section 80P--Income-tax Act, 1961, s. 80P-- Punjab State Co-operative Milk Producers Federation Ltd. v. CIT (No. 2 ) (P&H) . . . 501

Deduction of tax at source --Commission--Agreement for distribution of products manufactured by assessee--Distributor purchasing products at pre-determined price for sale within specified area--Assessee and distributor collecting and paying sales tax separately--Payment of incentive to distributor--Not commission--Tax not deductible at source on such payment--Income-tax Act, 1961, s. 194H-- CIT v. Jai Drinks P. Ltd. (Delhi) . . . 383

Depreciation --Air-conditioner purchased in name of managing director and his wife but used for purposes of business--Entitled to depreciation--Depreciation allowable on electrical installations--Income-tax Act, 1961, s. 32-- CIT v. Metalman Auto P. Ltd .(P&H) . . . 434

Exemption --Dividend--Omission to claim exemption for dividend--Not relevant--Assessee entitled to exemption--Disallowance under section 14A--Disallowance cannot be made on basis of presumption--No evidence that expenditure incurred in earning dividend--No disallowance permissible under section 14A--Income-tax Act, 1961, ss. 10(33), 14A-- CIT v. Metalman Auto P. Ltd . (P&H) . . . 434

Income --Assessability--Assessee shareholder in company having right to use particular trade mark--One-time payment for affirmative vote in resolution for transfer of trade mark--Not a revenue receipt--Income-tax Act, 1961, s. 2(24)-- CIT v. David Lopes Menezes (Late) (Bom) . . . 337

----Unclaimed credit balance unilaterally written back and credited in profit and loss account--Not assessable--Income-tax Act, 1961-- CIT v. Indian Rayon and Industries Ltd. (Bom) . . . 479

Income from house property --Annual letting value--Interest-free security deposit taken by assessee hugely disproportionate to monthly rent charged--Device to circumvent liability to income-tax--Notional interest on security deposit to be treated as income from house property--Income-tax Act, 1961, s. 23-- CIT v. K. Streetlite Electric Corporation (P&H) . . . 348

Industrial company --Concessional rate of tax--Assessee receiving income from shares in an industrial company--Assessee cannot be considered an industrial company--Finance Act, 1984, s. 2(8)(c)--Income-tax Act, 1961-- CIT v. Bhagyoday Investment (P) Ltd. (P&H) . . . 490

Industrial undertaking --Special deduction--Manufacturer of steel forging--Scrap sale charges and job works/labour charges--Finding that job works/labour charges derived from industrial undertakings--Receipts of sale of scrap part and parcel of activity--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Sadhu Forging Ltd. (Delhi) . . . 444

----Special deduction under section 80-IB--Assessee doing job work qualifying as eligible business under section 80-IB--Entitled to special deduction under section 80-IB--Miscellaneous receipts incidental to profits from eligible business--Entitled to special deduction under section 80-IB--Income-tax Act, 1961, s. 80-IB-- CIT v. Metalman Auto P. Ltd. (P&H) . . . 434

Investment allowance --Computer system installed in assessment year 1990-91 but put to use in assessment year 1991-92--Entitled to investment allowance--Income-tax Act, 1961, s. 32A-- CIT v. Indian Rayon and Industries Ltd. (Bom) . . . 479

Reassessment --Notice--Limitation--Income-tax Act, 1961, s. 148-- GVK Gautami Power Ltd . v. Asst. CIT (OSD) (AP) . . . 451

----Notice--Validity--Educational institution granted exemption under section 11--Deposit in chit fund not disclosed--Subsequent decision by Tribunal in another case that deposit in chit fund contravenes section 11(5)--Notice of reassessment--Valid--Income-tax Act, 1961, s. 148-- Little Angels Educational Society v. ITO (AP) . . . 413

----Notice after four years--No failure to disclose material facts necessary for assessment--Notice not valid--Income-tax Act, 1961, s. 148--S ayaji Industries Ltd. v. Joint CIT (Asstt.) (Guj) . . . 360

----Writ--Notices of reassessment on sixty seven companies based on confession following scam--Fifty-eight writ petitions against reassessment dismissed--Notices on remaining nine companies dismissed on ground of availability of effective alternative remedy--Income-tax Act, 1961, ss. 147, 148-- GVK Gautami Power Ltd. v. Asst. CIT (OSD) (AP) . . . 451

----Writ--Writ will issue only if there is no prima facie reason for notice--Income-tax Act, 1961, s. 148--Constitution of India, art. 226-- Little Angels Educational Society v. ITO (AP) . . . 413

Revision --Powers of Commissioner--Law applicable--Amendment of section 263 w.e.f. 1-10-1984--Amendment not retrospective--Order passed by IAC in 1982--Order of revision in February 1984--Not valid--Income-tax Act, 1961, s. 263-- CIT v. Triveni Engineering Works Ltd. (Delhi) . . . 366

Transfer of case --Notice on ground that principal business of assessee at New Delhi--Objection that principal business at Kolkata--Order stating transfer for co-ordinated investigation and meaningful assessment--Not proper--Order set aside--Income-tax Act, 1961, s. 127-- Dhoot Developers P. Ltd. v. CIT (Cal) . . . 487

Voluntary disclosure --Secrecy of declaration, scope of--Declaration filed for other years can be referred to to make best judgment assessment--Finance Act, 1997, s. 72-- CIT v. Aero Club (Delhi) . . . 400

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Reassessment--Writ--Writ will issue only if there is no prima facie reason for notice-- Little Angels Educational Society v. ITO (AP) . . . 413

Art. 289 --Collection of tax at source--Liquor trade--State Government--Immunity from Union taxation--State Government doing wholesale business in liquor--State Government bound to collect tax at source from retailers--Failure to collect tax--Recovery proceedings against State Government justified--Not a case of taxation of State but of collection of tax in respect of income of retailers--Recovery not barred by article 289-- State of Bihar v. CBDT (Patna) . . . 506

Finance Act, 1984 :

S. 2(8)(c) -- Industrial company--Concessional rate of tax--Assessee receiving income from shares in an industrial company--Assessee cannot be considered an industrial company-- CIT v. Bhagyoday Investment (P) Ltd . (P&H) . . . 490

Finance Act, 1997 :

S. 72 --Voluntary disclosure--Secrecy of declaration, scope of--Declaration filed for other years can be referred to to make best judgment assessment-- CIT v. Aero Club (Delhi) . . . 400

Income-tax Act, 1961 :

S. 2(24) --Income--Assessability--Assessee shareholder in company having right to use particular trade mark--One-time payment for affirmative vote in resolution for transfer of trade mark--Not a revenue receipt-- CIT v. David Lopes Menezes (Late)  (Bom) . . . 337

S. 10(33) --Exemption--Dividend--Omission to claim exemption for dividend--Not relevant--Assessee entitled to exemption--Disallowance under section 14A--Disallowance cannot be made on basis of presumption--No evidence that expenditure incurred in earning dividend--No disallowance permissible under section 14A-- CIT v. Metalman Auto P. Ltd . (P&H) . . . 434

S. 12AA --Charitable purposes--Charitable trust--Registration of trust--Commissioner has power to cancel registration--Notice of cancellation must give reasons--Search operations against assessee--No assessment based on search--Order cancelling registration set aside by Tribunal--Notice again for cancellation of registration--Not valid-- Kalinga Institute of Industrial Technology v. CIT (Orissa) . . . 389

S. 14A --Co-operative society--Special deduction--Interest received on advances provided to member co-operative societies--Special deduction allowable after deducting expenditure incurred in earning the income-- Punjab State Co-operative Milk Producers Federation Ltd . v. CIT (No. 1 ) (P&H) . . . 495

----Exemption--Dividend--Omission to claim exemption for dividend--Not relevant--Assessee entitled to exemption--Disallowance under section 14A--Disallowance cannot be made on basis of presumption--No evidence that expenditure incurred in earning dividend--No disallowance permissible under section 14A-- CIT v. Metalman Auto P. Ltd . (P&H) . . . 434

S. 23 --Income from house property--Annual letting value--Interest-free security deposit taken by assessee hugely disproportionate to monthly rent charged--Device to circumvent liability to income-tax--Notional interest on security deposit to be treated as income from house property-- CIT v. K. Streetlite Electric Corporation (P&H) . . . 348

S. 32 --Depreciation--Air-conditioner purchased in name of managing director and his wife but used for purposes of business--Entitled to depreciation--Depreciation allowable on electrical installations-- CIT v. Metalman Auto P. Ltd .  (P&H) . . . 434

S. 32A --Investment allowance--Computer system installed in assessment year 1990-91 but put to use in assessment year 1991-92--Entitled to investment allowance-- CIT v. Indian Rayon and Industries Ltd. (Bom) . . . 479

S. 37 --Business expenditure--Disallowance--Entertainment expenditure--Exclusion from disallowance--Expenditure on food or beverages provided to employees in office or other place of work--Meaning of other place of work--Amount spent on sales dealers conference, press conference and hotel--Part of amount spent on employees--Deductible-- CIT v. Indian Rayon and Industries Ltd. (Bom) . . . 479

----Business expenditure--Roll over charges for repayment of principal amount of foreign exchange loans for capital investment--Not deductible--Expenditure on gift and presentation articles--Expenditure on school for children of staff and workers--Pro rata/proportionate premium on redemption of non-convertible debentures issued during assessment year 1988-89--Deductible-- CIT v. Indian Rayon and Industries Ltd .  (Bom) . . . 479

S. 40(ba) --Association of persons--Member--Exemption--Exclusion of company, co-operative society or registered society--Refers to association of persons not member--Private company member of association of person entitled to exemption-- CIT v. Ideal Entertainment P. Ltd. (Mad) . . . 357

S. 43B --Business expenditure--Deduction only on actual payment--Sales tax--State Government allowing deferred payment--Effect of Circular No. 674 dated 29-12-1993--Amount cannot be disallowed--CBDT Circular No. 674, dated 29-12-1993-- CIT v. Bihar Foundry and Castings Ltd. (Jharkhand) . . . 387

S. 44AC --Collection of tax at source--Liquor trade--State Government--Immunity from Union taxation--State Government doing wholesale business in liquor--State Government bound to collect tax at source from retailers--Failure to collect tax--Recovery proceedings against State Government justified--Not a case of taxation of State but of collection of tax in respect of income of retailers--Recovery not barred by article 289-- State of Bihar v. CBDT (Patna) . . . 506

S. 67A --Association of persons--Member--Exemption--Exclusion of company, co-operative society or registered society--Refers to association of persons not member--Private company member of association of person entitled to exemption-- CIT v. Ideal Entertainment P. Ltd. (Mad) . . . 357

S. 80-IB --Industrial undertaking--Special deduction--Manufacturer of steel forging--Scrap sale charges and job works/labour charges--Finding that job works/labour charges derived from industrial undertakings--Receipts of sale of scrap part and parcel of activity--Assessee entitled to deduction-- CIT v. Sadhu Forging Ltd.  (Delhi) . . . 444

----Industrial undertaking--Special deduction under section 80-IB--Assessee doing job work qualifying as eligible business under section 80-IB--Entitled to special deduction under section 80-IB--Miscellaneous receipts incidental to profits from eligible business--Entitled to special deduction under section 80-IB-- CIT v. Metalman Auto P. Ltd. (P&H) . . . 434

S. 80P --Co-operative society--Special deduction under section 80P--Apex co-operative society--Member societies engaged in marketing milk and milk products--Credit facilities provided by assessee for working capital of members--Interest not entitled to special deduction under section 80P-- Punjab State Co-operative Milk Producers Federation Ltd. v. CIT (No. 2 ) (P&H) . . . 501

S. 80P(2)(d) --Co-operative society--Special deduction--Interest received on advances provided to member co-operative societies--Special deduction allowable after deducting expenditure incurred in earning the income-- Punjab State Co-operative Milk Producers Federation Ltd . v. CIT (No. 1 ) (P&H) . . . 495

S. 86 --Association of persons--Member--Exemption--Exclusion of company, co-operative society or registered society--Refers to association of persons not member--Private company member of association of person entitled to exemption-- CIT v. Ideal Entertainment P. Ltd. (Mad) . . . 357

S. 127 --Transfer of case--Notice on ground that principal business of assessee at New Delhi--Objection that principal business at Kolkata--Order stating transfer for co-ordinated investigation and meaningful assessment--Not proper--Order set aside-- Dhoot Developers P. Ltd. v. CIT (Cal) . . . 487

S. 147 --Reassessment--Writ--Notices of reassessment on sixty seven companies based on confession following scam--Fifty-eight writ petitions against reassessment dismissed--Notices on remaining nine companies dismissed on ground of availability of effective alternative remedy-- GVK Gautami Power Ltd. v. Asst. CIT (OSD)  (AP) . . . 451

S. 148 --Reassessment--Notice--Limitation-- GVK Gautami Power Ltd . v. Asst. CIT (OSD) (AP) . . . 451

----Reassessment--Notice--Validity--Educational institution granted exemption under section 11--Deposit in chit fund not disclosed--Subsequent decision by Tribunal in another case that deposit in chit fund contravenes section 11(5)--Notice of reassessment--Valid-- Little Angels Educational Society v. ITO (AP) . . . 413

----Reassessment--Notice after four years--No failure to disclose material facts necessary for assessment--Notice not valid--S ayaji Industries Ltd. v. Joint CIT (Asstt.)  (Guj) . . . 360

----Reassessment--Writ--Notices of reassessment on sixty seven companies based on confession following scam--Fifty-eight writ petitions against reassessment dismissed--Notices on remaining nine companies dismissed on ground of availability of effective alternative remedy-- GVK Gautami Power Ltd. v. Asst. CIT (OSD)  (AP) . . . 451

----Reassessment--Writ--Writ will issue only if there is no prima facie reason for notice-- Little Angels Educational Society v. ITO (AP) . . . 413

S. 194H --Deduction of tax at source--Commission--Agreement for distribution of products manufactured by assessee--Distributor purchasing products at pre-determined price for sale within specified area--Assessee and distributor collecting and paying sales tax separately--Payment of incentive to distributor--Not commission--Tax not deductible at source on such payment-- CIT v. Jai Drinks P. Ltd. (Delhi) . . . 383

S. 206C --Collection of tax at source--Liquor trade--State Government--Immunity from Union taxation--State Government doing wholesale business in liquor--State Government bound to collect tax at source from retailers--Failure to collect tax--Recovery proceedings against State Government justified--Not a case of taxation of State but of collection of tax in respect of income of retailers--Recovery not barred by article 289-- State of Bihar v. CBDT (Patna) . . . 506

S. 226 --Collection of tax at source--Liquor trade--State Government--Immunity from Union taxation--State Government doing wholesale business in liquor--State Government bound to collect tax at source from retailers--Failure to collect tax--Recovery proceedings against State Government justified--Not a case of taxation of State but of collection of tax in respect of income of retailers--Recovery not barred by article 289-- State of Bihar v. CBDT (Patna) . . . 506

S. 260A --Appeal to High Court--CBDT instruction prohibiting appeals where tax effect is below Rs. 4 lakhs--CBDT instruction that notional tax effect could be taken in loss cases--Does not apply to appeals filed prior thereto--Appeal not maintainable--CBDT Instruction No. 5, dated 24-10-2005 and O. M. dated 15-5-2008-- CIT v. Continental Construction Ltd. (Delhi) . . . 394

S. 263 --Revision--Powers of Commissioner--Law applicable--Amendment of section 263 w.e.f. 1-10-1984--Amendment not retrospective--Order passed by IAC in 1982--Order of revision in February 1984--Not valid-- CIT v. Triveni Engineering Works Ltd. (Delhi) . . . 366.......

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Dear Friends : The emails are schedule to be posted in the blog (itronline.blogspot.com)and will sent to the group on various dates and time fixed. Instead of sending it on one day.

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~Whether Sec 94 is attracted and penalty is justified when assessee sets o

Whether Sec 94 is attracted and penalty is justified when assessee sets off loss on sale of mutual fund units against profit on short-term investments but does not claim loss as deduction - YES, rules ITAT

MUMBAI, JUNE 13, 2011: THE issue before the Tribunal is - Whether section 94 is attracted and penalty is justified when assessee sets off the loss on sale of its mutual fund units against profit on short term investments but does not claim the loss as a deduction. YES is the Tribunal's answer.

Facts of the case

The assessee company revised its return of income declaring a slightly higher total income. However, the AO made certain additions and disallowances and completed the assessment under section 143(3). The CIT(A) confirmed the AO's order. Following disposal of the assessee's appeal by the Tribunal, the AO levied 100 per cent penalty on income sought to be evaded by the assessee, including short term capital loss incurred on sale of mutual fund units that were disallowed under section 94(7); SAP expenses incurred by the assessee; expenses relatable to investments under section 14A and deduction under section 80G and 80HHC, which was recomputed.

On appeal before the Tribunal, the assessee submitted that section 94 provisions were not attracted as the investment in units was made not with a view to incur loss and avoid tax. The assessee had set off the loss on sale of its units against profit on short term investments and not claimed the loss as a deduction. Therefore, what was offered to tax was only net short term capital gain whereby no penalty could be levied.

The assessee had also implemented the SAP project and claimed consultancy fees, professional charges and other incidental costs as deductible expenses. According to the assessee, it had been carrying on business for number of years and it had acquired and implemented various hardware and software systems from time to time, which required continuous upgradation and modification. Also, it had only claimed the net expenses, being revenue in nature, and which were not recovered from its various overseas branches, whereby penalty was not justified.

Deduction under 80G claimed on donation made by the assessee was disallowed in the absence of receipts and penalty levied on this amount. The CIT(A) confirmed the levy of penalty as the onus was on the assessee to prove the claim for deduction. According to the assessee, disallowance of deduction on account of non-production of receipts could not be considered as concealment of income or furnishing of inaccurate particulars of income.

DEPB benefits were excluded from business profits for computing deduction under section 80HHC, while excise duty and sales tax were added to the total turnover for computing the deduction. The CIT(A) had partly allowed the assessee's appeal but confirmed the levy of penalty on the excess deductions claimed under section 80HHC, including on indirect cost related to trading goods and interest received on income tax refund. Objecting to the penalty, the assessee submitted that the indirect cost of trading export had been computed on estimate basis and available data.

Having heard the parties, the Tribunal held that,

++ the CIT(A) had held that the assessee had adjusted the loss against profit on sale of short term capital gains which was illegal. Having furnished inaccurate particulars of income, the levy of penalty under section 271(1)(c) was justified. The order of the CIT(A) was confirmed as the assessee had wrongly claimed the loss when provisions of section 94 were clearly applicable to such transactions;

++ regarding penalty on SAP expenses, the CIT(A) had dismissed the appeal. However, in the quantum appeal as the issue had been set aside, along with issue of expenses on 14A investments, the penalty levied was also set aside;

++ regarding deduction under 80G, there was no infirmity in the CIT(A) order as the receipt had not been made available before more than one authority, in clear violation of the section. Penalty on this issue was confirmed;

++ computation of relief under section 80HHC was controversial as this section had undergone numerous amendments. The assessee had furnished all particulars of the individual components in computing the 80HHC relief. The particulars were accurate and supported by a certificate by the Chartered Accountant. Following the apex court decision, holding that as long as the assessee had not given any information in the return which were incorrect, making an incorrect claim in law was not tantamount to furnishing inaccurate particulars and penalty under section 271(1)(c) was not attracted, as well as the decision of the Delhi High Court, the penalty levied in respect of the disallowance under section 80HHC was deleted.

~TDS ON INTEREST ON REFUND FOR MNCs – DELHI TRIBUNAL SPECIAL BENCH DECIDES IN CLO

TDS ON INTEREST ON REFUND FOR MNCs – DELHI TRIBUNAL SPECIAL BENCH DECIDES IN CLOUGH ENGINEERING

The issue of TDS on interest on refund under section 244A/195 of the Income-tax Act, 1961 assumes significance for a MNC having a permanent establishment [PE] in India under the Double Taxation Avoidance Agreement [DTAA] and receiving tax refund from assessments completed under the Income-tax Act. The TDS rate on such refund can be as high as 42.23 per cent [as business profits] against say 15 per cent [as interest], thereby diluting the benefits from already tedious process to claim the tax refunds.

Recently, the Special Bench of Delhi Tribunal in the case of Asstt. CIT v. Clough Engineering Ltd. [2011] 130 ITD 137/11 Taxman 70 (Delhi)(SB) affirmed the gross basis taxation for such interest under the article dealing with taxation of 'interest' in the tax treaties, thereby settling the controversy set by divergent decisions on the subject.

This article attempts to discuss the rate of withholding tax applicable of the Act on interest on refund issued to an MNC [a tax resident of USA].

LEGISLATIVE PROVISIONS

Section 195 requires person responsible for paying to a non-resident any sum chargeable to tax in India to withhold taxes at the 'rates in force'.

Further as per section 2(37A)(iii), 'rates in force' means, for purposes of deduction of tax under section 195, the rate specified in the Finance Act or rate specified under an agreement under section 90, whichever is applicable as per the provisions of section 90.

Section 90(2) provides that in relation to the assessee to whom the agreement under section 90 applies, the provisions of the Income-tax Act shall to the extent they are more beneficial to the assessee.

As per Article 7(1) of the DTAA between India-USA,

"The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to:

(a) that permanent establishment; and"

However, Article 7(6) of the DTAA provides as follows,

"Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article."

As per Article 11 of the DTAA,

"(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such interest may also be taxed in the Contracting State in which it arises and according to the law of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed ...a) …..b) 15 per cent of the gross amount of the interest in all other cases.

** ** **

(4) The term 'interest' as used in this Convention means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities, and income from bonds or debentures, including premiums or prizes attaching to such securities, bonds, or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of the Convention. However, the term 'interest' does not include income dealt with in Article 10 (Dividends).

(5) The provisions of paragraphs 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the interest is attributable to such permanent establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply."

Suppose that MNC has a permanent establishment [PE] in India under the DTAA and tax refund arises to the MNC from assessments completed under the Income-tax Act.

There are two views on whether the interest on refund can be said to be effectively connected to the PE of MNC in India or not [which impacts the withholding tax rate], which are discussed below:

VIEW 1:

TAXABILITY OF INTEREST AS 'BUSINESS PROFITS' UNDER ARTICLE 7 OF DTAA [IF HELD TO BE EFFECTIVELY CONNECTED TO THE PE IN INDIA]

The Delhi Tribunal in BJ Services Co. Middle East Ltd. v. Asstt. CIT [2009] 29 SOT 312 has held that the income tax refund was connected to the permanent establishment and it was PE's business income assessable under article 7 and not interest income under article 12 of the India – UK Tax Treaty. The relevant extract from the order is reproduced as follows:

"7. Since there is no dispute to the fact that the appellant though being a resident of UK is carrying on business in India through a PE situated in India and, the interest is effectively connected with such PE in India, therefore, in terms of para 6 of art. 12, such interest can be taxed as business profits under art. 7."

Accordingly, the income tax on the same would be applicable at the rate of 40 per cent plus surcharge and education cess (effective withholding tax rate being 42.23 per cent1).

Given that taxability under article 7 is on net basis i.e. brought forward losses, if any, would be available be set off against the refund to determine the income attributable to the PE. However, while withholding tax, the benefit of brought forward losses is not likely to be allowed by the tax officer though MNC can claim the taxes withheld on interest on refund while filing the corporate income-tax return for year in which refund is received. This claim may be allowed by the tax authorities, upon completion of revenue audit of the tax return so filed.

This is a practical problem being faced by MNCs and resulting into cash flow issues resulting from time lag in issuance of refund [with consequent TDS on interest] and refund of TDS [in view of brought forward losses, on completion of assessment few years later].

VIEW 2:

TAXABILITY OF INTEREST UNDER ARTICLE 11 of DTAA [IF HELD NOT TO BE EFFECTIVELY CONNECTED TO THE PE IN INDIA]

The Delhi Tribunal in Asstt. CIT v. Pride Foramer France SAS [2008] 22 SOT 204 has held that interest on income-tax refund is taxable under the head 'Income from other sources' since it cannot be said to be derived or attributable to the business activity of the assessee. Hence the same was taxable under article 12 of the India-France DTAA [dealing with taxation of interest on gross basis].

** ** **

Further, reference in this regard is made to the decision in ABC, In re [1999] 236 ITR 637/102 Taxman 574 (AAR) wherein interest on income-tax has been held by the AAR to be not connected with the activity of permanent establishment in India. It was held that the right to interest arose because of the delay in making refund of the excessive collection of the tax and it was a case falling under article 12 of the India – UK DTAA [dealing with taxation of interest on gross basis]. The relevant extract of the ruling is as under:

"The interest amount in dispute has not arisen out of any business operation in India. It is statutory interest granted on delayed refund under the provisions of section 244/243 of the Income-tax Act. There cannot be any dispute that the interest has been paid on delayed refund. Refund due and payable to the assessee is debt owing and payable. For delayed payment of this debt, interest will have to be paid by virtue of the provisions of section 243/244 of the Income-tax Act The debt claim is not connected in any way with any activity of a permanent establishment or base in India. The right to get interest arose because of the delay in making refund of excessive collection of the tax. This is clearly a case falling under paragraph 2 of article 12 of the DTAA."

It is worth noting that the provisions of article 12(5) of the India France DTAA and article 12(6) of the India UK DTAA are pari materia to the provisions of article 11(5) of the India-USA DTAA.

In view of the above, an alternate view existed that the interest on refund is taxable in the hands of MNC under article 11 of the DTAA at the rate of 15 percent on gross basis. Since taxation is on gross basis, no set-off of brought forward losses shall be allowed to MNC.

Recent judgment of the jurisdictional Delhi Tribunal in the case of Clough Engineering Ltd. (supra).

(I) Facts of the case

The facts of the case were that Clough Engineering Ltd.'s case (supra) ('the assessee') had entered into a contract with ONGC Ltd., Cairn Energy India (P.) Ltd. and Niko Resources Ltd. The contract was composite and turnkey in nature. The assessee while filing the return of income declared the proceeds of the contract, interest on income tax refund and bank interest.

No dispute was raised regarding the taxability of bank interest under article VII read with paragraph (4) of article XI of the DTAA between India and Australia. However, with regard to interest on income tax refund, the contention of the assessee was that it is taxable at the rate of 15 per cent on gross basis in view of the provisions contained in paragraph (2) of article XI of the DTAA. The tax officer assessed the same under article VII read with paragraph (4) of article XI of the DTAA as the interest has been paid on the refund of tax deducted at source, made from business receipts and thus, it is directly connected with the business receipt.

The Commissioner (Appeals) also concurred with the finding of the tax officer. Against the same, the assessee filed appeal before the Income Tax Appellate Tribunal, Delhi ("ITAT"). In the course of hearing before the ITAT, it was observed that apparently there is a conflict in the decisions taken by the ITAT in the case of Pride Foramer France SAS (supra) and BJ Services Co. Middle East Ltd.'s case (supra). Therefore, a recommendation was made to the President, ITAT for constitution of Special Bench which after constitution framed the following question:

"Whether, on the facts and in the circumstances of the case, interest on income-tax refund and fixed deposits with the bank is liable to tax with reference to Article 7 read with paragraph no. 4 of Article 11 or paragraph no. 2 of Article 11 of the Indo-Australia Double Taxation Avoidance Agreement?"

The following arguments were placed by the assessee and the Indian Revenue Authorities before the ITAT:

(II) Arguments of the assessee

The assessee placed the following arguments before the ITAT in support of its position that interest on income tax refund is taxable under article XI of the DTAA at the rate of 15 per cent on gross basis:

l In various judicial precedents, it has been held that interest is normally taxable under the head 'Income from other sources' unless the source of the interest is the business of the assessee.

** ** **

l The income producing activity should be closely connected in terms of relationship besides being economically connected with the PE.

(III) Arguments of the Indian Revenue Authorities

The arguments of the Indian Revenue Authorities in support of the position adopted by the tax officer that interest on income tax refund is taxable under the provisions of article VII of the DTAA are as follows:

l Although the interest has not arisen out of the business transactions, but it is also a fact that tax was deducted from the monies receivable in the course of business of the PE and, therefore, there is a direct nexus of the indebtedness with the assets of the business.

l Expression used in the DTAA is to the effect that indebtedness is 'effectively connected with the PE' and not that the interest income is effectively connected with the PE. As the debt arose because of tax deduction at source from the business receipts of the PE, if the FAR analysis is carried out, the asset will have to be allocated to the PE. Further, since the tax was deducted from the business receipts of the assessee, even the activity test stands satisfied because it was in the course of the business transactions of the assessee that the debt arose. Therefore, both the asset use test and business activity test are satisfied.

l The OECD Commentary contemplates the economic ownership of the debt claim for taxability of interest under article VII. In the present case, if FAR analysis is made, the deduction from monies receivable as tax, would fall under the economic ownership of the PE.

(IV) Judgment of the ITAT Special Bench

After hearing the above arguments placed by the assessee and the Indian Revenue Authorities, the ITAT observed as followed:

l The real test to be examined for determining the taxability of interest under article XI or Article VII of the DTAA, is to examine whether the 'test of effective connection' is satisfied in this case or not.

l The judgment of the Delhi ITAT in the case of Pride Foramer France's2 case (supra) does not lay down the law in entirety as it misses the point of examination i.e. whether interest on indebtedness is effectively connected with the PE;

l The judgment of the Delhi ITAT in the case of BJ Services Co. Middle East Ltd.3 (supra) also does not help in deciding the said issue as in that case, there was no dispute that – (i) the assessee is a non-resident having a PE in India; (ii) the assessee is carrying on business in India through a PE situated in India; and (iii) the interest is effectively connected with such PE in India.

On the basis of the above observations, the ITAT Special Bench held as follows:

** ** **

l It is for the company to pay the tax from any source available with it. It so happened in this case that the tax got automatically deducted from the receipts of the PE by operation of law. Such collection of tax by force of law would not establish effective connection of the indebtedness with the PE as ultimately it is only the appropriation of profits of the assessee company.

l The bank interest in this case is an example of effective connection between the PE and the income as the indebtedness is closely connected with the funds of the PE. However, the same cannot be said in respect of interest on income tax refund. Such interest is not effectively connected with the PE either on the basis of asset test or activity test.

Accordingly, it was held that interest on income tax refund is taxable under paragraph (2) of article XI of the DTAA between India and Australia at the rate of 15 per cent on gross basis.

1. Tax is charged on net basis i.e. after deduction of expenses incurred to collect the interest of refund which shall be minimal.

2. The ITAT has held that interest on income-tax refund is taxable under the head 'Income from other sources' since it cannot be said to be derived or attributable to the business activity of the assessee.

3. The ITAT held that the interest on income tax refund is effectively connected with the PE and therefore taxable under article 7 of the DTAA.

Happy

Independence

Day.

Section 115BBD of the I.T. Act - Disguised Amnesty

Section 115BBD of the I.T. Act - Disguised Amnesty

T.N. PANDEY
EX-CHAIRMAN, CBDT

In this article, the author has examined the nuisances of newly introduced section 115BBD in the I.T. Act, 1961 by the Finance Act, 2011 for an year only and has demonstrated that this section is in the nature of disguised tax amnesty for short period for getting foreign funds taxed in India at 15% rate, making the country lose the balance tax @15% without mentioning any ostensible justification for doing so. Such an amnesty is against the assurance given on behalf of the Govt. to the Supreme Court of India and the Government's doing so is apparently unfair and morally unjustified.

A new section 115BBD titled 'Tax on certain dividends received from foreign companies' has been inserted in the Income Tax Act, 1961 (Act) by the Finance Act, 2011. The reason for such a provision has been explained in para 146 of the budget speech of the FM as under:-

"It has been represented that the taxation of foreign dividends in the hands of resident taxpayers at full rate is a disincentive for their repatriation to India and they continue to remain invested abroad. For the year 2011-12, I propose a lower rate of 15% tax on dividends received by an Indian company from its foreign subsidiary. I do hope these funds will now flow to India".

In the Explanatory Memorandum to the Finance Bill, 2011, the rationale for this provision has been elucidated saying that the provision is being enacted to give relief in respect of dividends received from foreign companies, which are presently taxable in the hands of the Indian taxpayers at the rates applicable in their cases. The provision is applicable only for one year. There is no corresponding section in the Direct Taxes Code, 2010.

The new section relates to taxation of dividends received from foreign companies. Under the existing provisions of the Act, dividend received from foreign companies is taxable in the hands of the recipient at applicable marginal rate of tax. Therefore, in case of companies, who receive foreign dividend, such dividend is taxable at the rate of 30% plus applicable surcharge and cess.

** ** **

The new section raises the issue as to why this provision for taxation of foreign dividends at reduced rate for one year has been considered necessary. The provision is seemingly in the nature of tax amnesty for facilitating transfer of tax evaded incomes from abroad at concessional rate of tax without any liability for penalty or prosecution.

The word 'amnesty' properly belongs to international law, and is applied to treaties of peace following a state of war, and signifies there the burial in oblivion of the particular cause of the strife, so that shall not be again a cause for war between the parties. And so amnesty is applied to rebellions, which by their magnitude are brought within the rules of international law, and in which multitudes of men are the subjects of the clemency of the government [Knote v. US, 95 US 149, 24, L.Ed. 442]. Broadly, it implies general pardon [see Deputy Inspector General of Police v. D. Rajaram, AIR 1960 AP 259, 262 [Constitution of India, Art. 72].

Tax amnesty implies an opportunity offered by a government to tax evaders to declare their past concealment of income, wealth, etc., without fear of being prosecuted. Tax amnesty (or impunity) is granted only for the past in order to secure better compliance and higher tax yield in the present and future.

Taxing dividends from foreign subsidiary company @15% rate only, without mentioning any cogent necessity for the same for the first time, gives an indication that at a time when there is so much stress for repatriation of tax evaded incomes slashed in foreign companies, the Govt. has quietly decided to lessen its quantum by giving incentive in the nature of an amnesty, when persons stocking such money abroad should be penalized.

** ** **

The last amnesty scheme under the Act was announced by the Finance Act, 1997 by Shri P. Chidambaram, the then Finance Minister titled "Voluntary Disclosure Scheme, 1997". The concept of this scheme has been explained in the Memorandum of the Ministry of Finance, explaining the Finance Bill, 1997, in the following words:-

"In order to mobilize resources and to channelise funds into priority sectors of the economy, and to offer an opportunity to persons, who have evaded tax in the past, to declare their undisclosed income, pay a reasonable tax and in future adopt the path of rectitude and civic responsibility, a voluntary disclosure of income and wealth is proposed to be introduced".

The validity of the scheme was challenged before the Bombay HC in the case of All India Federation of Tax Practitioners v. UOI. The HC upheld the constitutional validity of the VDIS, 1997. The matter was then taken to the Supreme Court, where an assurance was given by the Attorney General (AG) of India, inter alia, that amnesty schemes would not be introduced in future. On the basis of assurances by the AG, the SLP against the Bombay HC's decision was dismissed. Introducing section115BBD in the Act, when there is demand for transparency apparently flouts the assurance given to the Apex Court and is unfair and regrettable.

The FM needs to answer the following queries:-

(i) Why such scheme was not thought of earlier?

(ii) Why it has been brought in for one year only?

(iii) If the reply to the query at (ii) above is that the life left for the I.T. Act, 1961 is only one year then, why there is no such provision in the DTC, 2010?

Sec 158BC - Whether when no incriminating document is found during search,

Sec 158BC - Whether when no incriminating document is found during search, even then addition can be made on ground that some transactions shown in books are found to be fictitious - NO, rules HC

KOLKATA, JULY 08, 2011: THE issues before the Bench were - Whether when no incriminating document is found during the search, no addition can be made in respect of the transactions reflected in the regular books in the block assessment even if they are found to be fictitious and can only be considered under regular assessment and whether surcharge is applicable to the Income tax payable even though the search and seizure took place before insertion of the proviso to Section 113. And the verdict partially goes in favour the assessee.

Facts of the case

During the previous year ended March 31, 1993 relevant to the AY 1993-94, the assessee purchased for the purpose of resale HTS wire from `DKH' Stores - payment for purchases was made by account payee cheques partly during the impugned previous year and partly during the subsequent year - the entire quantity of wire was sold during the previous year ended March 31, 1993 to `SCL' giving rise to a profit of Rs.2.89 lacs – the entire sale proceeds were received by the assessee during the impugned previous year by account payee cheque deposited into the bank on 31st March, 1993. The transactions were duly accounted in the regular books of account – income tax return was filed declaring an income of Rs.3.42 lacs which was processed u/s 143(1). Search took place in Dec, 95 and the copy of audited accounts for impugned previous year was seized and the AO asked the assessee to produce the statement of `DKH' which was reflecting as creditor to whom the amount was due to payment. Assessee furnished the copies of bills, challans and details of payment made. AO made direct enquiry through the inspector who could not find the said person at the address mentioned in the documents – assessee explained the sales by submitting the copies of sales bills, sale price received by cheque and transactions were duly recorded in the books. AO held that the assessee did not require HTS wire for the fabrication work and it had inflated its expenses by claiming bogus purchases and treated it as undisclosed income.

Another issue arose was as regards to two payments of Rs.10 lakh each shown in the regular books of account allegedly made to `FC' and `SCC' in August 95 - the search took place as indicated earlier on December 21, 1995 before the close of the Financial Year 1995-96 and the assessee's return for the Assessment Year 1996-97 relevant to the Financial Year 1995-96 was due to be filed much later.

AO asked the assessee as to why the payments should not be treated as fictitious as the payments were shown as against old dues but the two parties were not shown as Sundry Creditors as on March 31, 1995. Assessee explained that the cheques issued in the names of the said parties were "Account Payee" but the endorsement in this behalf was cancelled and cash was drawn against the cheques by the assessee's cashier which was thereafter sent to Budge Budge site for payment of wages to the contractors and labourers where its receipts and subsequently disbursements were duly recorded which was duly verified by the Assessing Officer. AO, however, held that the payments were fictitious and bogus and included the same as undisclosed income for the Financial Year 1995-96. ITAT confirmed the additions made by the AO.

Assessee contended that the transactions being reflected in the return of the assessee and being also supported by the entries made in the books of account produced by the assessee cannot be added even if considered as fictitious, in block assessment. If those were disbelieved and treated to be fictitious, the AO could pass necessary order in the regular assessment, but there was no scope of passing such order in block assessment as the findings recorded by the AO were not based on any material recovered at the time of search and seizure – no incriminating papers were recovered from the office of the assessee in respect of these transactions.

Revenue contended that pursuant to a notice issued for block assessment, the AO had every right to pass the order impugned in block assessment.

After hearing both the parties, the High Court held that,

++ so far the finding of the AO that the assessee did not require HTS wire for the fabrication work and consequently, the assessee had inflated its expenses by claiming bogus purchases, it is found that such finding of the AO is not based on any material obtained during search and seizure but is founded on the documents reflected in the return of the assessee;

++ as regards the finding of the AO in respect of the two payments of Rs. 10 lakh, each shown in the regular books of account, in course of search and seizure, a certificate of license showing that Shri Umesh Narayan Jha as proprietor of `SCC' who was found to be an employee of the propriety concern of D. K. Goyal was recovered. The Photostat certified copy of the cheque which was encashed after deleting the account payee mark in favour of `SCC' and making it a self drawn one has been placed showing that the same was not seized at the time of search and seizure. The payment by the said cheque was not made to `SCC' and it was a self paid bearer cheque encashed by the drawer himself. Thus, merely because a license in the name of `SCC' was recovered from the office of the Assessee, such fact has nothing to do with the said encashment in favour of the drawer. Thus, the addition of Rs. 20 lakh which is shown in the regular books of account as payment made to `FC' and `SCC' as cash payment of Rs. 10 lakh each as fictitious entry in block assessment was patently illegal as it had no connection with the search and seizure;

++ the finding as regards addition is not based on any materials unearthed on search and seizure and thus, not liable to be assessed on block assessment under Chapter XIV B of the Act but should be subject to regular assessment;

++ the proviso to Section 113 of the Act is curative in nature as is held by the Supreme Court, in the case of CIT vs. Suresh N. Gupta (2008-TIOL-02-SC-IT). Therefore, it is held that surcharge is applicable to the Income tax fixed under Section 113 of the Act even though the search and seizure took place before insertion of the proviso to Section 113 of the Act.

ITR (Trib) HIGHLIGHTS ISSUE DATED 15-08-2011 Volume 10 Part 7

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS

ISSUE DATED 15-08-2011

Volume 10 Part 7

APPELLATE TRIBUNAL ORDERS

F Where no evidence of service of notice assessment of undisclosed income, notice not valid : Dr. Y. D. Singh v. Dy. CIT (All) p. 698

F AO declining to entertain on doctrine of mutuality that he has no power to entertain proper : Jay Bharat Co-op. Housing Society Ltd. v. ITO (Mumbai) p. 717

F Where no bona fide reason for receipt of loan, imposition of penalty proper : Mahak Singh v. ITO (Delhi) p. 727

F Assessee failing to show purchase details of shares, income from undisclosed justified : Smt. Kusum Lata v. Asst. CIT (Delhi) p. 737

F Production of pilferage proof caps from printed aluminium sheets is manufacture : Asst. CIT v. Pixie Enterprises (Chennai) p. 744

F Advance received for setting up facility before starting of business not chargeable to tax on its forfeiture :Velocient Technologies Ltd. v. ITO (Delhi) p. 750

F Appellate Tribunal : Tribunal cannot interfere through parallel proceedings : G.Venkateswaran v. Asst. CIT (Chennai) p. 770

F Where assessee providing bona fide explanation and furnishing all details, deletion of penalty justified : Deputy CIT v. Nokia India P. Ltd. (Delhi) p. 790

NEWS-BRIEF

F Income-tax waived on wrongly paid amount

Tax cannot be levied on an amount wrongly paid to a person because of a mistake made by the payer, according to a recent order by a division bench of the Income-tax Appellate Tribunal (ITAT).

In this case, the taxpayer company, Tata Investment Corporation, moved the ITAT after it was levied tax on dividend it received on the shares it had already transferred to other entities. The taxpayer is a non-banking finance company. Since the transfer of shares was not entered in the records of the company whose shares were sold by taxpayer company, the dividend for a particular year was wrongly issued to the taxpayer company.

In its order on July 15, the ITAT pointed out that section 72 of the Indian Contract Act, 1872 stipulates that a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it and therefore amounts received by the mistake of the paying party cannot be construed as income of the receiver and therefore not liable to be taxed.

All income cannot be taxed, but only those incomes on which the taxpayer has a legitimate and enforceable right is liable to tax, the ITAT held. The ITAT held that income can be considered "accrued" only when the taxpayer has a right to receive the income. Without a legally enforceable right, there cannot be an accrual of income. [Source :www.economictimes.com dated August 5, 2011]

F Government promote convenience of tax offices in foreign countries: Under pressure to bring back unaccounted money stashed abroad, the Government said it will set up tax overseas units in eight countries, including the US, France and Germany, this financial year.

"The proposal is being processed and (eight) Income-tax Overseas Units (ITOUs) are likely to be set up within the present financial year 2011-12," the Minister of State for Finance told the Lok Sabha in a written reply.

Cyprus, Japan, UK, the Netherlands and United Arab Emirates are the other countries where the Government wants to establish ITOUs.

The Government, the Minister said, had earlier set up ITOUs at Mauritius and Singapore.

He said the Government has framed a five-pronged strategy to fight the menace of tax evasion that include joining hands with international bodies like G-20 and United Nations, besides forming appropriate legislations, setting up domestic institutions, and manpower training.

The Government has also approved the cadre restructuring of the Directorate of Enforcement for increasing its effectiveness in implementing the provisions of the Prevention of Money Laundering Act and the Foreign Exchange Management Act.

"The approval includes increase in staff strength from 745 to 2,064 and the number of offices from 22 to 39. This is likely to involve an expenditure of about Rs. 60 crore annually. The restructuring process of the Directorate of Enforcement is likely to be completed in 2-3 years," the Minister said.

The Minister also informed Lok Sabha that Government has commissioned a study to estimate the quantum of unaccounted wealth, both inside and outside the country, and its ramifications on the national security based on recommendations of the Standing Committee on Finance. [Source : www.economictimes.com dated August 5, 2011]