TIOL-DDT 2952
19 10 2016
Wednesday

CBDT has amended the Income Tax Rules to insert Part VII-BA to determine amount received by a company in respect of the share issued by it, being the subject matter of buy-back. The Rule provides for determination of the amount in 12 situations:

2. Where the company had at any time, prior to the buy-back of the share, returned any sum out of the amount received;

3.  Where the share has been issued by a company under any plan or scheme under which an employees' stock option has been granted or as part of sweat equity shares;

4.  Where the share has been issued by a company being an amalgamated company, under a scheme of amalgamation;

5. The amount received by a company, being a resulting company in respect of shares issued by it under a scheme of demerger;

6. The amount received by the demerged company in respect of the original shares in the demerged company; 

7. Where the share has been issued or allotted by the company as part of consideration for acquisition of any asset or settlement of any liability;

8. Where the shares have been issued or allotted by a company on succession or conversion, as the case may be, of a firm into the company or succession of sole proprietary concern by the company;

9. Where the share has been issued or allotted, without any consideration, on the basis of existing shareholding in the company;

10. Where the shares have been issued on conversion of preference shares or bond or debenture, debenture-stock or deposit certificate in any form or warrants or any other security issued by the company;

11. Where the share being bought back is held in dematerialised form and the same cannot be distinctly identified;

12. In any other case.

CBDT Notification No. 94/2016., Dated: October 17 2016

GST Council Meet

THE Kerala Finance Minister tweeted yesterday:

•  Central govt want the entire Service Sector to be left to them. This is strongly unfair.

•  GST Council still stuck at compensations & on how we should treat exemptions & CSTs. Unanimity across states. Centre unwilling to budge.

•  Central govt. wants to impose a cess on GST to compensate the states. This is in contradiction with the concept of GST itself.

•  Compensation to be limited to taxes subsumed into GST.

•  GST assumed to grow by 14% for all states.

•  At last a solution to compensation issue.

He also blogged:

THE introduction of VAT in the mid 1990s robbed the states of much of its taxation powers and curtailed their fiscal autonomy. With the constitutional amendment and introduction of the GST what had been prevailing de facto has now been de jure abolished. Now states no more have independent powers for indirect taxation, except on alcohol and petrol. They are forced to abide by the decisions of the GST Council where no decisions can be made without the concurrence of the central government, not even if all the states take a united position. All decisions of the council require three fourths majority and the central government holds one third of the votes. The only saving grace is that the states have now access to service tax which was till now monopolised by the central government.

Almost all exemptions and tax concessions are going to be removed. The general principle that is being adopted is that if any area or sector has to be supported, it cannot be through the tax concession route, but, through direct budgetary support. What is the budgetary support that would be given for traditional industries like handloom and khadi when the tax exemptions are withdrawn? Currently, there is no excise tax on the small sector below the threshold of Rs 1.5 crore turnover. With GST this protection will be removed. All units above Rs 20 lakh turnover is within the tax net. What should be the demands to continue to provide the protection for small scale sector? I felt really depressed that even the national representatives of small scale manufacturers had not given a thought to this problem that they are going to face in the immediate future. 

There are very serious differences of opinion regarding the administrative machinery. There is an agreement that the central government would not directly deal with goods tax payers below the turnover of Rs 1.5 crores. But there is no such consensus with regard to the service sector. The central government is trying to grab the entire service sector including deemed goods like works contract, the composite tax payers who deal in both service and goods and even the new service entrants into the tax net. This is going to be a major issue of contention between the centre and the states .

Karnataka Sales Tax Act - Whether cutting and polishing granite amounts to manufacture to attract tax - matter remanded - Supreme Court

DISPOSING of 57 appeals, the Supreme Court yesterday remanded the issue to the Assessing Officers.

The Supreme Court observed, “ There is a distinction between polished granite stone or slabs and tiles. If a polished granite stone is used in a building for any purpose, it will come under Entry 17(i) of Part S of the second schedule, but if it is a tile, which comes into existence by different process, a new and distinct commodity emerges and it has a different commercial identity in the market. The process involved is extremely relevant. That aspect has not been gone into.

If a polished granite which is a slab and used on the floor, it cannot be called a tile for the purpose of coming within the ambit and sweep of Entry 8. Some other process has to be undertaken. If tiles are manufactured or produced after undertaking some other activities, the position would be different. A finding has to be arrived at by carrying out due enquiry and for that purpose appropriate exercise has to be undertaken. In the absence of that, a final conclusion cannot be reached.

Please see Breaking News for more details.

CESTAT Member Gets Relief from CAT against eviction from quarters

A Principal Commissioner of Customs and Central Excise was appointed as a Member of CESTAT and posted to the Principal Bench at Delhi where he joined on 06.07.2015.

He is entitled to Type-VII accommodation and he applied for accommodation under general pool on 06.07.2015. Vide allotment letter dated 10.08.2015, Type VI-A house bearing address 6-2-C, Floor - 5, Sector-13, R.K. Puram, New Delhi was allotted to him. He took technical possession of the flat on 11.08.2015 and physical possession of the flat was taken by him on 27.08.2015. Vide letter dated 04.11.2015, he was informed by the Assistant Director of Estates that he was not entitled to residential accommodation out of general pool in Delhi and that since the allotment was made inadvertently, it was cancelled with immediate effect. He made a representation to Assistant Director of Estates on 04.11.2015 followed by another representation dated 05.11.2015. The Assistant Director of Estates rejected the representation dated 04.11.2015 vide letter dated 13.11.2015 and directed the applicant to vacate the accommodation immediately to avoid payment of damage charges or any litigation proceeding.

The aggrieved Member approached the Central Administrative Tribunal (CAT). The CAT stayed the cancellation as well as eviction. (DDT 2762 - 11 01 2016)

Recently, the CAT passed the Final Order in this quashing the impugned order of the Assistant Director of Estates dated 04.11.2015. The Tribunal directed the respondents to continue the allotment of quarter no. 6-2-C, Floor - 5, Sector-13, R.K. Puram, New Delhi to the applicant (CESTAT MEMBER) for the period of his tenure as Member (Technical) as per existing provisions of Government Residences (General Pool in Delhi) Rules 1963 including retention after completion of tenure for period specified under the said rules.

In DDT 2762, I wrote,

This is the way, an Hon'ble Member of the Tribunal, whom we call Lordship, is treated by a Department of the Government. The might of the Government does not leave judges. If a Member of the Tribunal has to go round lawyers and courts to be allowed to stay in the house allotted to him, how can he peacefully discharge his duties as a Tribunal Member? This perhaps amounts to contempt of court on the part of the  concerned  babu in the Ministry of Urban Development.

As such, it is not a great favour, the Government is doing by allotting an accommodation for the Member. He would get a House Rent Allowance of about 50,000 rupees if he doesn't get that government accommodation. Even a Tribunal Member had to approach another tribunal to retain a house legally allotted to him.

Anyway, the Hon'ble Member is assured of a roof for as long as he is posted in Delhi, though he had to bear the cost of this litigation - the CAT has not allowed any cost.

Please see 2016-TIOL-01-CAT

PC Act - Prosecution of IRS Officer: sanction to prosecute not invalid only for the reason that different authorities have opined differently - SC

THE CBI filed a case in 2005 against an Additional Commissioner of Income Tax of the 1993 batch alleging that he has amassed the assets valued at Rs.1,27,38,353/- in his name and in the names of his wife and minor son during the check period 04.01.1993 to 31.03.2004, which is disproportionate to the known sources of his income. 

The investigation took five years and the officer was arrested on 02.09.2010, and after about three days released on bail. He was placed under suspension. On 09.10.2012, sanction was granted to prosecute him, which the officer challenged in the High Court and which was dismissed by the High Court.

The officer is in appeal before the Supreme Court challenging the dismissal of his petition by the High Court.

The Supreme Court dismissed his appeal finding no reason to interfere with the impugned order passed by the High Court dismissing the writ petition. The Supreme Court directed the trial court to conclude the trial expeditiously. (Please also see DDT 2236 - 22.11.2013)

Please see Breaking News for more details.

Can Justice Katju Appear Before the Supreme Court?

YESTERDAY we reported that the Supreme had requested Justice Markandey Katju to appear before it in person to participate in the proceedings on 11th November, 2016.

But can Justice Katju appear before the Supreme Court?

As per Article 124(7) of the Constitution, "No person who has held office as a Judge of the Supreme Court shall plead or act in any court or before any authority within the territory of India."

Justice Katju posted,

I have yet to receive the notice from the Supreme Court in the Soumya case, though I have been informally informed about it by the advocate on record of the Kerala Govt..

However, I am preparing my detailed response, which I will post on my fb page later.

I am mentioning therein that I would be delighted to appear and discuss the matter in open court, but would only like the judges to consider whether, being a former Supreme Court judge I am debarred from appearing by Article 124(7) of the Constitution. If the judges hold that it does not debar me, I would be happy to appear and place my views .

Until Tomorrow with more DDT

Have a nice day.

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