TIOL-DDT 2486
01.12.2014
Monday

DDT completes 10 years and even I cannot believe it!

As we have been mentioning when we crossed every milestone, not many encouraged this idea of a daily dose on taxation in the beginning. A few days before 1st December 2004, when I shared this idea of DDT with my close colleagues, they were not ready to believe that we could run a daily column on tax matters. Leave alone the content, imagine sending a mail everyday without interruption for 10 years. There could be a computer crash; there could be a power failure; there could be a connectivity issue. Even if everything was fine at my end, the above mentioned problems might be there with the uploading team at Delhi. Fortunately, we have overcome all these and could continue this column for 10 years. There were times when we sent DDT from Airport lounges, moving cabs, Hospital Beds and with hands working on computer on a table and fractured leg with POP resting on a teapoy; and this one is from a foreign land. It is possible today only because of the strong support from our netizens, especially those who corrected us when we made mistakes. We will try to continue this column with the same amount of dedication and determination.

During the last ten years, we have collected laurels; three Limca Records; hundreds of strong supporters and many acidic critics. Over the years DDT has become a daily habit for many netizens.

And DDT is all set for another milestone in a few days - DDT 2500.

I am grateful to all my colleagues who made this possible, especially two senior editors whose day starts with finding fault with DDT.

I am thankful to all netizens for their suggestions, criticisms and also the Government for keeping me busy and gainfully employed.

A big Thank You.

DDT 10 -a Netizen's review

Sell Me Houses to Launder My Ill-Gotten Millions -CBDT calls for report

www.cobrapost.com has recently reported that 35 real estate companies are willing to take illicit money and convert it into legit by allowing their clients to buy properties.

The CBDT has requested the Chief Commissioners and DGs (Investigation) to furnish brief findings (Investigation side and/or Assessment side) of investigations carried out and action taken, if any, within last 3 years by the officers of their charge on any of the entities of the Groups listed out in regard to the issues raised in the news item.

If not, CBDT wants them to carry out necessary investigations on those allegations. and take suitable action as per law.

CBDT wants compliance report latest by 15.12.2014 without fail.

Cobrapost reported that it found 35 real estate companies with a pan-India presence across nine states willing to do bulk transactions in black money. These companies admit helping their clients convert black money into white by letting them pay in cash a substantial part of the sale price of the properties they buy, in blatant violation of Income Tax laws, Foreign Exchange Management Act,Prevention of Money laundering Act and other laws. The black money component in these deals ranges from 10 per cent to 90 per cent. In one instance, a developer's employee was even willing to accept Rs.100 crore in black money. Senior officials said that accepting payments in black was nothing new for them and that it was an accepted norm of the real estate industry. They were willing to accept hard cash in any city and even abroad, through hawala. Some were ready to sell a property before all mandatory approvals are attained, knowing fully well that this is illegal. A senior executive of a company suggested depositing the entire component of the deal in a bank account which will be closed as soon as it is credited. Cobrapost investigated 35 firms in Delhi, Noida, Gurgaon, Ghaziabad, Jaipur, Lucknow, Mumbai, Kolkata, Hyderabad, Bangalore and Kochi.

CBDT Letter in F.No.286/61/2014-IT (Inv.II), Dated: November 28 2014

Tariff Value of Gold and Silver increased

THE Government has increased the Tariff value of Gold from 378 USD to 388 USD per 10 gms. The tariff value of Silver is also increased from 517 USD to 540 USD per kilogram. It is said that due to the unexpected scrapping of the 20:80 gold import rule by the RBI last Friday the prices of gold would drop to Rs.24,000/-per 10 grams. This norm was introduced on 14th August last year, together with a duty of 10%, at a time when the current account deficit had touched a record and gold imports had been surging. The restriction required the traders to export 20% of the precious metal they bought from overseas. The decision was welcomed by jewellers who were facing difficulties in sourcing gold during the wedding season that started a month ago.

Be that as it may, Indians are crazy about gold and would continue to buy irrespective of the price variations. Thankfully, petrol is becoming cheaper day by day and manufacturers of diesel motor vehicles are a worried lot!

Apart from the above, Tariff values of all oils have been brought down & even Brass Scrap meets a similar fate. The Tariff values of Poppy seeds and Areca nuts are not disturbed.

The Tariff values as on 14.11.2014 and with effect from 28.11.2014 are as under:

Notification No. 112/2014-Cus.(N.T.), Dated: November 28, 2014

Income Tax -Last Date for Filing Returns -Extended -in J&K

CONSIDERING the large scale devastation in September, 2014, due to floods in Jammu & Kashmir, the CBDT had, in exercise of powers conferred under section 119 of the IT Act, 1961, extended the due date for filing income tax returns from 30th September 2014 to 30th November 2014. This ‘due date' has been further extended to 31st March, 2015 in cases of Income-tax assessees in the State of Jammu & Kashmir which are covered under clause (a) or clause (aa) of Explanation 2 to sub-section (1) of section 139 of the Act.

The 'due date' for obtaining and furnishing reports of audit for the assessees in the State of Jammu and Kashmir under various provisions of the Act pertaining to such returns of income is also extended to 31st March, 2015.

CBDT Order Section 119, Dated: November 28, 2014

Income Tax Advance Ruling -100 crore club

BY the Finance Act, 2014 & with effect from 01.10.2014, sub-clause (iia) was inserted in clause (b) of section 245N [Definitions] of the Income Tax Act, 1961 [Chapter XIX-B pertaining to Advance Rulings] and it reads -

(b) "applicant" means any person who -

(iia) is a resident referred to in sub-clause (iia) of clause (a) falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify; or

The Central Government has utilized these powers and has specified a resident, in relation to his tax liability arising out of one or more transactions valuing rupees one hundred crore or more in total which has been undertaken or proposed to be undertaken, being such class of persons, as applicant for the purposes of Chapter XIX B of the said Act.

Income Tax Notification 73 of 2014, dated November 28, 2014

Law envisages that pre-deposit has to be made and this mandate cannot be wished away

THE appellant is an importer of alcoholic beverages from their related foreign suppliers. The Customs officer held that the value of the goods should be enhanced on the basis of the contemporaneous value of identical goods (imported by independent buyers) in terms of Rule 4 of the Valuation Rules, 2007 and directed that all pending provisional assessment be finalised accordingly.

The appellant preferred an appeal and the Commissioner(A) concluded that while taking the value of the identical goods, consideration should be given to the difference in commercial levels and quantities and accordingly, directed the adjudicating authority to re-determine the value by taking into account the above factors.

This order was challenged by the appellant before the CESTAT.

It is submitted that since there is no quantification of duty liability the appellant is not required to make any pre-deposit and the appeal should be heard without insisting on any pre-deposit. Reliance is placed on the Bombay High Court decision passed in case of Rochem Separation Systems (I) Pvt. Ltd. [WP no. 581 of 2013]

The AR submitted that the quantification of duty is yet to be done and, therefore, the appeal is premature. Moreover, in view of the amended provisions of section 129E of the Customs Act, 1962, the appellant is required to make a pre-deposit of 10% of the duty in pursuance of the appellate Commissioner's order but since the same is not yet computed the appeal is not maintainable.

The Bench observed that the appeal was filed in the Registry on 27th August, 2014 and the new provisions of section 129E of the Customs Act, 1962 came into force with effect from 06/08/2014.

After reproducing the contents of substituted section 129E, the Bench observed -

++ As per the amended provisions, the appellant is required to deposit 10% of the duty, in case where duty or duty and penalty are in dispute or penalty where such penalty is in dispute, in pursuance of the decision or order appealed against. The meaning of the expression "in pursuance" is "that which follows" or "in consequent upon a thing", "a consequence". Therefore, if as a consequence of the order, duty liability arises pre-deposit of 10% of the duty liability has to be made before an appeal against the order can be considered.

++ In pursuance of the order of the appellate authority dated 03/06/2014, the value has to be re-determined taking into account the difference in the commercial levels between imports made by the appellant and identical imports made by others. On account of such re-determination, there may be liability to pay additional duty which has not been quantified and discharged. It is not the case of the appellant that in pursuance of the above order there would not be any differential duty liability.

++ From a plain reading of the amended Section 129E of the Customs Act, 1962 to consider an appeal at the second appellate stage against an order of the lower appellate authority, 10% of the duty or penalty arising in pursuance thereof has to be pre-deposited. In other words, the law envisages that the pre-deposit has to be made. This mandate of law cannot be wished away.

++ As regards the reliance placed on the Bombay High Court decision, the said decision was rendered before the amendment was made to section 129E and, therefore, the said decision may not have any relevance or application in the context of amended provisions of law.

++ Therefore, the applicant is directed to approach the adjudicating authority for re-quantification of the duty liability in terms of the lower appellate authority's order and if they are still aggrieved, to come before this Tribunal, after making pre-deposit of the difference of duty so determined.

The appeal was disposed of in the above terms.

See 2014-TIOL-2408-CESTAT-MUM

Vacancies in GSTN

THE CBEC has called for applications from willing officers for filling up of the vacancies on deputation basis in Goods and Service Tax Network (GSTN). The posts to be filled are -Executive Vice President, Sr. Vice President, Vice President & Asst. Vice President.

Officers may note that Goods and Services Tax Network (GSTN) is a Section 25 company registered in March, 2013.

The initial period of deputation is three years.

Mouthwatering posts indeed…hopefully there would an overwhelming response!

F.No.A.35017/89/2014-Ad.II dated November 28, 2014

Jurisprudentiol-Tuesday's cases

Customs

Fraudulent exports under claim of export incentives - CHA is required to obtain an authorization from his client for job of clearance of import and export cargo and that he is also required to ensure proper conduct of his employee in transaction of business as Agent -No error in order of Commission revoking CHA licence: CESTAT

ON the basis of an intelligence received by the officers of Dock Intelligence Unit (Preventive) to the effect that a firm by the name of M/s Brij Spinners of Ludhiana, was involved in fraudulent exports under claim of export incentives, three export containers were intercepted. It was found that in one case, ARE-1 copy was tampered. All the three containers declared to contain acrylic blankets were opened and examined and gross mis-declarations in respect of description, quantity as well as value, were found. It revealed that the shipping bill in respect of the above export consignments, were filed by M/s S.C. Ghosh & Company (India) Pvt. Ltd. The Commissioner found that the CHA had violated the provisions of Regulation 13 (a) and that of Regulation 19 (8) of the CHALR, 2004, therefore, revoked the licence and forfeited the security deposit of the CHA.

Income Tax

Whether when sale price at which shares of company were sold to foreign party, can be bifurcated to attribute part of it to non-compete fee when no such clause is present in agreement -NO: HC

THE assessee, an HUF, had filed its return of income and certain amount was declared as business income source. A substantial part was declared as LTCG, during the examination of which it was found that there was a Private Limited Company and which was incorporated by Mandhana family on 10 September 1988. Subsequently, that company entered into a JV with Borememann, a German Company and issued fresh 8,00,000 shares and made the foreign company 50% partner. The name of the company underwent a change and it became Mandhana Bormemann Industries Ltd. in the year 1996. Thereafter, there was an arrangement, as between this company namely Mandhana Bormemann Industries Pvt. Ltd. and a Dutch company by name Paxar BV.

The issues before the Bench are -Whether when the sale price at which shares of the company were sold to a foreign party, can be bifurcated to attribute a part of it to non-compete fee when no such clause is present in the agreement and Whether such income can be brought to tax as business income or long term capital gains. And the verdict goes against the Revenue.

Central Excise

Remand order by Tribunal restored provisional assessment resorted to earlier by setting aside final assessment order and it is in pursuance of said remand order, Dy. Commr passed re-assessment order and confirmed duty liability -no infirmity in order -Appeal dismissed: CESTAT

THE appellant sought to classify Modified Vapour Absorption Chillers (MVAC) manufactured by them under CETH 8418 as heat pump other than air-conditioning machines and claimed the benefit of notification 155/86-CE and duty liability was discharged accordingly during 1991-92 and 92-93. The assessments were kept provisional.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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