TIOL-DDT 2466
30.10.2014
Thursday

THE Directorate of Income Tax (Systems) has noticed that 5,09,898 taxpayers who have submitted e-return of AY 2011-12, or 2012-13 or 2013-14 (upto 20th October, 2014) with returned income of more than Rs. 10 lakhs or paid self assessment-tax of more than/equal to Rs. 1 Lakh (as per ITR) have not filed their ITR for the AY 2014-15.

The CBDT wants all the Chief Commissioners to personally monitor these cases.

Those who have paid more than a lakh of rupees as Income Tax in any financial year in the last three years and have not paid any tax this year are sure to be honoured with a friendly visit from the nearest Income Tax Officer.

Directorate of Income Tax (Systems), F.No.DIT/(S)-II/Non-filers/2014-15/4011,Dated: October 29, 2014

Doing Business - India slips to Rank 142 in the world

JUST two days ago, I did a terrible mistake. I had predicted that our rank in the World Bank Group "doing Business" would improve slightly. The World Bank released its findings yesterday and we have simply slipped down in our rank.

Now we stand at 142 in world ranking in ease of doing business. Our bureaucracy can alone take credit for this great achievement.

Our present ranks are:

It is easier to do business in Nepal, Sri Lanka, Pakistan, Bhutan or China than in India. After this report, how difficult it would be for Mr.Modi to attract foreign business in India!

One bureaucrat built tax haven in Luxembourg

THE Wall Street Journal last week reported that a business friendly bureaucrat spent years engineering this country's most valuable export: tax relief. Marius Kohl, as the Head of a Government Department approved thousands of tax arrangements for multinational corporations, sometimes helping them save billions. Luxembourg has only 550,000 residents but has more than 50,000 Companies. Foreign Companies flocked to this tiny country because of the speed and ease of the approval process that Kohl presided over. "Sometimes it's easier if you only have to ask one person", Kohl said in a recent interview.

According to the WSJ report, a senior officer of the OECD said, "Luxembourg's wealth comes from helping companies not pay taxes in the countries where the value was created"

On per capita basis Luxembourg is the richest Country on Earth, with taxes as less as 0.4 percent compared to over 20 percent in many countries.

One of the advantages that businessmen find in Luxembourg is that the tax laws are very clear and if they are not clear, there is an open line with the ministers and problems are solved. It takes just a meeting to get a tax ruling and sometimes Kohl would give even oral rulings - binding and believable. Kohl earned a reputation for always honouring his preliminary rulings. "He never changed his mind." Kohl says none of his superiors in the finance ministry, including Mr.Juncker, who served as finance minister for two decades, questioned or criticized his approach. He was always careful to follow the law but if he could take the business-friendly reading, he would.

"The work I did definitely benefited the country, though maybe not in terms of reputation," he says.

While on Black Money and tax avoidance, it maybe worthwhile to read an interesting book, The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business. Though we all think that the taxmen and the taxpayers are like cat and mouse, the author of this book explains that the cats and the fattest mice are not enemies at all. He writes about how multi nationals with the help of world famous accounting firms have avoided tax in all the major countries of the world - with the support of the Cats.

Head and Tail of Headnotes - sometimes misleading

ONE of the major problems we in TIOL and any Law Journal faces is getting quality headnote writers. Cases have proliferated and headnote writers have dwindled. And the result is - quality of headnotes took a nosedive.

Unfortunately, lawyers and judges usually go by headnotes and not the whole text of the decision. Recently there was an interesting case in the ITAT.

In this appeal filed by BMW India Private Ltd, it was mentioned that the ITAT in the appellant's own case had held that the Special Bench Order in LG Electronics is not applicable, while the Tribunal in another case had held that it was applicable. Because of the conflict, the matter was almost referred to a Larger Bench of five members.

Then it was realised that the Special Bench Order was actually followed but the confusion arose due to the headnote.

The Tribunal observed, "The fact that headnotes can at times be misleading is a well known fact as they are only the reporting done for the convenience of the professionals and it is imperative therefore to read the entire order. Be it as it may, we would not be out of place to sound a caution that hasty conclusions based on arguments advanced on the basis of the headnotes in the reporting of the orders may not be advisable and it may lead to misleading conclusions."

The Supreme Court had observed in a case, "Headnotes by the editors of a Reports are not a conclusive guide to the text of the judgement reported. They are made only for the convenience of the readers as a short summary to the text and for easy reference and at times they are misleading."

The United States Supreme Court had observed, "In the first place, the headnote is not the work of the court, nor does it state its decision. ……………… It is simply the work of the reporter, gives his understanding of the decision, and is prepared for the convenience of the profession in the examination of the reports."

Also see Headnotes to a judgement are creation of the author and do not necessarily reflect the true content of decision : Cestat - (2006-TIOL-407-CESTAT-MUM)

Maybe the Courts themselves should write the headnotes too - but then the mountain of arrears will reach Himalayan heights!

Jurisprudentiol - Friday's cases

Customs

Exemption to goods imported for Common Wealth Games - Exemption extended to suppliers/contractors/vendors or sub-vendors of Organising Committee by amending Notification No 84/2010 cannot be applied retrospectively: CESTAT

VIDE Notification No.13 /2010-Customs 19th February, 2010, Government had exempted specified goods imported by the Organising Committee of the Common Wealth Games, 2010, National sports federations in relation to the Games from the whole of customs duties. Initially, the exemption was limited only to the Organising Committee, but it was later extended to the suppliers or contractors, vendors of sub-vendors of the Committee vide Notification No. 84/2010-Customs New Delhi, dated 27th August, 2010. The appellant is before the Tribunal contending that the exemption to the contractors/vendors etc is applicable retrospectively from the date of issue of original notification No 13/2010 Cus dated 19.02.2010.

Income Tax

Whether when income of assessee is finally assessed u/s 115JB and not under normal provisions of Act, addition can still be made with respect to income determined under normal provisions - NO: ITAT

THE assessee is a wholly owned subsidiary of M/s. O.N.G.C. and engaged in the business of overseas exploration and production of hydrocarbon, oil and gas to supplement the reserves of the parent company and to augment the National Energy Security of India. The assessee filed its return of income declaring loss under the normal provisions of the Act and Book Profit under section 115JB of the Act and paid taxes on Book Profit. The assessment u/s 143(3) was completed after making disallowance on account of depreciation inadmissible and disallowance on account of expenditure relating to project pending final evaluation/ approval written off. However, as a result of the order of the CIT(A) in quantum proceedings, addition made by the AO in respect Sakhalin project, and in respect of Myanmar Project was reduced. In the light of the above, the AO held that the assessee has furnished inaccurate particulars of income and thus levied penalty u/s 271(1)(c) of the Act. However, CIT(A) deleted the said penalty.

The issue before the Bench is - Whether when income of assessee is finally assessed u/s 115JB and not under normal provisions of the Act, addition can still be made with respect to income determined under normal provisions. And the verdict is NO.

Central Excise

Balance sheet figures included quantity of re-rolled products traded by appellant - demand on differential quantity dropped by CCE& Revenue appeal dismissed by Tribunal - in grounds taken by Revenue, there hardly exists any element of law and entire case is depending on facts - Reference rejected: HC

THE respondent is a manufacturer of re-rolled products of iron and non-alloy steel. During audit of the records it was observed that 26968.312 MTs of re-rolled products have been cleared on payment of excise duty for the year 1993-94 whereas the balance sheet for the corresponding period revealed the transaction in relation to 29049.747 MTs of re-rolled steel.

On that basis, a SCN was issued demanding CE duty on the differential quantity allegedly removed without payment of duty. The assessee submitted that the said quantum of re-rolled products was purchased from outside, and was traded, and in that view of the matter, it cannot be treated as a product manufactured by them. The explanation was found satisfactory and the Commissioner passed an order dropping the proceedings.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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