Rentals of retail spaces may rise with more FDI

Retail space rentals in India may go up as big global players try to expand rapidly in the country in the medium to long term following the government's decision to relax FDI norms in the sector further, according to realty consultants. "A lot of international brands will look at entering India and scout for retail spaces. The vacancy level will come down for the existing supply available in the market," Cushman & Wakefield (C&W) India Director (Retail Services) Jaideep Wahi told PTI. Asked about the rentals, he said there would be an upward trend in successful shopping centres and high-street sites, but declined to give any percentage of increase. Expressing similar views, CB Richard Ellis (South Asia) Chairman and Managing Director Anshuman Magazine said: "There could be marginal increase in rentals of major high-street destinations and shopping centres as there is very limited supply there."

Source : Business Standard

Body to monitor accounting & auditing

The government proposes to establish a National Financial Reporting Authority (NFRA) for better monitoring of corporate financial management, going by the revised Companies Bill, 2011. NFRA is, in fact, the renamed version of the earlier proposed National Advisory Committee on Accounting and Auditing Standards. Such an authority, says the Bill which the Cabinet cleared yesterday, will have the mandate to ensure scrutiny and compliance of accounting and auditing standards. It will also ascertain the quality of the service of professionals associated with the compliance. NFRA will have quasi-judicial powers. It can order investigation, levy penalty and bar professionals from practice in case of their indulgence in professional or other misconduct. The creation of this body may create a problem with the Institute of Chartered Accountants of India(ICAI), a senior expert associated with a leading CA firm pointed out on condition of anonymity.

Source : Business Standard

No plans to reduce taxes on petroleum goods

The government today said that it is concerned about frequent hike in prices of petroleum products but does not plan to reduce taxes on oil goods. "No, Sir. There is no such proposal (to reduce or withdraw taxes imposed on petroleum products) at this stage," Minister of State for Finance S S Palanimanickam told Lok Sabha. The Government, he added, was concerned about the frequent hike in prices. The government in the recent past has increased prices of petroleum goods including petrol, diesel, LPG and kerosene several times in view of the rising prices of crude oil in the international market. Taxes account for nearly 45 per cent of the retail price of petrol. In order to insulate the common man from the impact of rise in international oil prices, Palanimanickam said the government "modulates the retail selling prices of diesel, PDS kerosene and domestic LPG."

Source : Economic Times

Additional evidence

Powers under s 250(4) and Rule 46A — If the CIT(A) exercises his powers under s 250(4) to call for additional evidence, the AO need not be given an opportunity to show-cause; however, if the CIT(A) acts on an application under r 46A, then the requirement of giving the AO an opportunity as per r 46A(3) is mandatory — as held by DelHC in CIT v Manish Build Well Pvt Ltd — In favour of: Others.

The conditions prescribed in r 46A must be shown to exist before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with so that the Rule is meaningfully exercised and not exercised in a routine or cursory manner.

Account — In the case of construction contracts, the assessee can follow either the project completion method or the percentage completion method.

In favour of: The assessee.

Deemed dividend

When the shareholding of the assessee in the company who has advanced the payments to the assessee is less than 10%, provisions of s 2(22)(e) is not attracted — as held by AhdTrib in ACIT v Medical Technologies Pvt Ltd — In favour of: The assessee.

Disallowance under s 43B — When the service tax has neither been claimed as a deduction nor forms part of the receipt of the relevant period, no disallowance can be made under s 43B.

Bad debt — Deduction under s 36(1)(vii) can be allowed only when the assessee fulfils the requirement of s 36(2).

In favour of: The revenue.

Decided on: 20 October 2011.

Direct Tax Order, Dated: 21-11-2011[F. No. 504-31-2010-FTD-I]

Information on tax matters to be sought by field officers of the Income Tax Department from countries/jurisdictions with which India has Double Taxation Avoidance Agreement (DTAA) or Tax Information Exchange Agreement (TIEA) under the relevant “Exchange of Information” Article of DTAA/TIEA

1. Kindly refer to the above.

2. Information on tax matters is being sought by field officers of the Income Tax Department

from countries/jurisdictions with which India has Double Taxation Avoidance Agreement

(DTAA) or Tax Information Exchange Agreement (TIEA) under the relevant 'Exchange of

Information' Article of DTAA/TIEA through the office of competent authority viz. the Joint

Secretary in the Foreign Tax and Tax Division, CBDT. Presently the above information is

being sought obtained in a prescribed checklist/proforma (copy enclosed as Annexure-A).

Further in the case of U.K. for obtaining banking information, a separate proforma has been

prescribed by U.K. tax authorities (copy enclosed as Annexure-B).

3. Considering the developments at International Forums including the Model Proforma for

the exchange of information being developed by the OECD, it is proposed to change the

existing proforma. Further, it is proposed to have a separate proforma for obtaining any

information relating to Transfer Pricing and prescription of a separate proforma for the same.

4. In view of the above, I am directed to request you to give your comments and views on the

following to the FT and TR division by the 15th December, 2011:

(a) for developing separate proforma (T.P.) for Transfer Pricing cases

(b) for any improvement required to be made to the present Proforma prescribed for

obtaining information from countries/jurisdictions with which India has DTAA/TIEA.

(c) Any other suggestion relating to the above

5. I am also directed to state that, at present, the request may be sent to FTandTR Division by

the concerned Commissioner of Income Tax/Director of Income Tax as per the following

guidelines:

(a) Request should be made in the checklist/proforma as per Annexure A and

Annexure B.

(b) Request for the exchange of information may be addressed by the concerned

Commissioner of Income Tax/Director of Income Tax to JS (FT and TR-I), CBDT,

New Delhi, for the North America including Caribbean Island, Europe and Japan and

to JS(FT and TR-II), CBDT, New Delhi, for the rest of the world.

(c) The request for exchange of information for the cases getting time barred on 31st

December, 2011 should be received in the office of JS (FT and TR-I) or JS(FT and

TR-II), as the case maybe, by 15th December, 2011.

(d) Separate requests should be made for different tax payers even if the case pertains

to same country or same foreign entity. Further, separate requests should be made for

different countries even if the cases pertain to the same assessee.

6. The above may be brought to the notice of all officers of your region. This issues with the

approval of Chairman, CBDT.

Annexure - A

"Exchange of Information" Proforma/Checklist

Proforma for Seeking Specific Information under the Provisons of "Exchange of

Information" Article of Double Taxation Avoidance Agreement

1. Name and address of the specific taxpayer whose tax liability is the subject of

investigation.

2. Name and address of the concerned foreign person(s)/entity/company etc.

3. The specific tax periods (years) involved please specify the start date and ending date of

the tax year, e.g. April 1, 2002 through March 31, 2003.

4. The specific taxes involved; e.g. individual income, corporate income.

5. The specific question(s)/point(s) of the which information is needed.

6. Relevance of why the information is needed and the issue being examined; e.g. unreported

income, need bank records from taxpayer's account with XYZ bank in the concerned country,

specify the time period when records are required, if the time period is outside the year(s)

under investigation, please specify why this additional information is required.

7. Statement that the information is required purely for taxation purposes and will be used

solely for taxation purposes.

(It may be noted that CHECK LIST should be furnished in duplicate, meant for each country

separately, if information is required from more than one country)

Annexure - B

Details Required to Obtain Banking Information

1. Full name, date of birth and nationality (of both spouses if applicable).

2. Residence position if not of Indian origin (date became resident for tax purposes in India)

3. The date your investigation commenced, and the reasons for the investigation, for instance

if living beyond declared means then, a best estimate of annual expenditure should be given

together with known/declared income for the years covered by the request.

4. If self-employed, the following in respect of for the years covered by the request

• Nature of business operated

• Business address (if different from the private address)

• Annual value of sales (turnover)

5. If employed/ a director, the following in respect of for the years covered by the request

a. Name of the employer(s)

b. Date employment(s)/directorship (s) commenced/ceased

c. Amount of remuneration declared upon personal tax returns (and within company

accounts if a director)

d. The nature of the employers business

6. Full details of any other declared upon personal tax returns (on a yearly basis) by the

family unit in respect of for the years covered by the request.

7. Confirmation of whether or not any interest figure declared upon the personal tax returns in

the period covered by the request has been reconciled to known accounts, together with the

number of known accounts held

a. With Indian banks

b. Other banks

c. Clarifying whether or not any interest earned on the U.K. accounts may have been

omitted.

8. A comment convening cases involving capital accumulation, detailing the source, if

known, or extent of explanation provided.

9. The period of the investigation and the period for which the information is required, it is

different

10. A description of the documents/information required. In the case of bank statements all

the following is required.

a. Name of the bank

b. Sort code or branch address.

c. Account number.

11. The relevant fact or evidence established so far, identifying the source of the information

(that is the taxpayer's statement, third party statements, and documents). Copies of relevant

documents should be enclosed.

12. The relevance of the required documents. What you think they will show, how the will

assist your investigation and why they are considered essential to the outcome of your

investigation, (for instance the extent to which the transactions /income reflected therein are

suspected of being suppressed/needed for verification purpose etc.)

13. Details of any other irregularities uncovered by your investigation, any inferences or

conclusions drawn so far with reasoning. This is very important, if any irregularities have

already been discovered, then this carries a lot of weight before the Commissioners.

14. The actions already taken as part of your investigation to obtain the required documents

and the extent of the taxpayers' co-operation in this endeavour, (has the taxpayer made any

admissions or denials, or refused to provide either the documents or an authority enabling

you to approach the bank direct?). It may be appropriate to say that "All informal avenues

have been exhausted".

Revision

Where AO has granted depreciation on aircraft owned by assessee at 40% in accordance with the provisions of the Rule, therefore, such grant of depreciation cannot be considered to be a claim not supported by law, as the department cannot straightaway show that such claim of depreciation was not in accordance with the law and, in such, circumstances, the powers under s 263 could not be invoked — as held by DelTrib in SRC Aviation (P) Ltd v DCIT — In favour of: The assessee.

Depreciation — The difference between “aeroplane” and “aircraft”, in respect of depreciation being eligible under Income-tax Rules has been omitted in respect of assessment years falling after AYs 1987–1988.

Disallowance under s 14A — Rule 8D is inapplicable prior to AY 2008–2009, but the AO is duty bound to make the disallowance under s 14A, thus the matter is remitted to AO.

Deduction under s 40A(2)(b) — The matter remitted to the AO with directions to consider the issue whether payments made by the assessee to its directors were excessive or unreasonable.

In favour of: Others.

Disallowance under s 40A(3) — The payments made by the assessee in cash to AAI in relation to flights undertaken by the assessee in the course of its regular activities as certified by AAI, case of assessee fall under the exceptions specified in Rule 6DD(k) and thus no disallowance can be made under s 40A(3).

In favour of: The assessee.

Decided on: 26 August 2011

 

Disallowance under s 14A

No disallowance under s 14 or Rule can be made unless AO records a finding that the assessee’s calculation is wrong — as held by DelHC in Maxopp Investment Ltd v CIT — In favour of: Others.

If the expenditure in question has a relation or connection with or pertains to exempt income, it cannot be allowed as a deduction even if it otherwise qualifies under the other provisions of the said Act.

If no expenditure is incurred in relation to the exempt income, no disallowance can be made under s 14A.

The AO cannot proceed to determine the amount of expenditure incurred in relation to exempt income without recording a finding that he is not satisfied with the correctness of the claim of the assessee.

Decided on: 18 November 2011.

Additional evidence

Parties to the appeal shall not be entitled to produce additional evidence, either oral or documentary, before the Tribunal as a matter of right as — held by PHHC in CIT v Avinash Chander Ghai HUF and Others — In favour of: The assessee.

Additional evidence is admissible is only when Income Tax authorities have decided the case without giving opportunity to the assessee to adduce evidence, or if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, and not at the instance of the revenue.

Decided on: 15 November 2011.

Rectification

The omission to apply the judgment of the Supreme Court is a glaring and obvious mistake of law which can be corrected under s 154 — as held by DelHC in CIT v Satish Kumar Agarwal — In favour of: The revenue.

Non-consideration of the judgment of the Supreme Court and non-application of the ratio of the said judgment to the facts of the present case, with reference to the claim of the assessee under s 80HHC, is a glaring, patent and obvious mistake of the law which can be rectified by resorting to s 154 of the Act.

Decided on: 8 November 2011.

Penalty under s 271(1)(c)

Merely because the assessee made claim of deduction under a wrong head, would not mean that the claim was false for imposition of penalty under s 271(1)(c) — as held by DelHC in CIT v Sumangal Overseas Ltd — In favour of: The assessee.

During the penalty proceedings, it is open to the Tribunal to look into the transaction to see as to whether the claim was bona fide or it was bogus and result of falsehood even where no appeal is preferred by the assessee against the quantum order.

Decided on: 18 November 2011.

When two views were possible and the assessee made the claim on the basis of advice of the consultants, no penalty should be imposed under s 271(1)(c) — as held by DelHC in CIT v KAS Movie Pvt Ltd — In favour of: The assessee.

The assessee’s claim was rejected purely on legal grounds. The return was prepared as per the guidance/supervision of the tax consultant; there was no basis to hold that the claim was dishonestly made in collusion with the auditors, and no penalty should be imposed under s 271(1)(c).

Deduction under s 80HHF — Ownership of goods is not essential for the purpose of claiming benefit under s 80HHF.

Decided on: 18 November 2011.

Interest under s 220(2)

Where the original assessment order dated 28 February 1997 was set aside by the ITAT, once the fresh assessment order is passed dated 24 December 2006, the demands arising therefrom would not relate back to the date of service of the original demand notice and interest under s 220(2) would be leviable after thirty days of the service of the demand notice dated 24 December 2006 — as held by MumHC in CIT v Chika Overseas Pvt Ltd — In favour of: The assessee.

CIT v Chika Overseas Pvt. Ltd.

High Court of Bombay

ITA No. 3737 of 2010

J.P. Devadhar and A.R. Joshi, JJ

Decided on: 18 November 2011

Counsel appeared:

Vimal Gupta for the appellant

Ms. Aarti Vissanji with S.P. Mehta for the respondent

Oral Judgment (Per J.D. Devadhar, J.)

1. Whether the ITAT was justified in holding that the assessee was liable to pay interest u/s.

220(2) of the Income Tax Act, 1961 (‘the Act’ for short) after thirty days from the service

of the fresh demand notice dated 24/12/2006 pursuant to the fresh assessment order passed

under section 143(3) of the Act, is the question raised in this appeal.

2. The assessment year involved herein is AY 1994-95.

3. Initially, by an assessment order passed under section 143(3) of the Act on 28/2/1997, the

income for the assessment year in question was assessed at Rs.2.05 crores and by a demand

notice dated 28/2/1997, demand of Rs.1.76 crores was raised against the assessee. On appeal

filed by the assessee, the CIT(A), by his order dated 8/9/1997 partially allowed the claim of the

assessee, as a result whereof the income was reduced to Rs.18.30 lakhs. Lateron, the ITAT set

aside the assessment order dated 28/2/1997 and directed the assessing officer to pass fresh

assessment order.

4. Accordingly, the matter was heard afresh and by a fresh assessment order dated 24/12/2006

the assessing officer assessed the income at Rs.44.88 lakhs and raised a demand of Rs.22.02

lakhs. The assessee paid the amount beyond thirty days from the service of the demand notice

dated 24/12/2006. The assessing officer held that the assessee was liable to pay interest under

section 220(2) of the Act after thirty days from the service of the original demand notice dated

28/2/1997. Challenging the aforesaid order, the assessee filed an appeal before the CIT(A) who

held that the assessee is liable to pay interest after thirty days from the date of service of

demand notice dated 24/12/2006 and not after thirty days from the service of demand notice

dated 28/2/1997. The said order was upheld by the ITAT. Challenging the aforesaid order, the

revenue has filed the present appeal.

5. The argument of the revenue is that even though the original assessment order dated

28/2/1997 was set aside by the ITAT, once the fresh assessment order is passed, the demands

arising therefrom would relate back to the date of service of the original demand notice. In the

present case, the original demand was served on 28/2/1997 and, therefore, interest under

section 220(2) would be leviable after thirty days from 28/2/1997.

6) We see no merit in the above contention. Under section 156 of the Act, service of the

demand notice is mandatory. Section 220(2) of the Act provides that if the amount specified

in any notice of demand under section 156 is not paid within the period prescribed under

sub-section (1) of section 220, then, the assessee shall be liable to pay simple interest at the

rate prescribed therein.

7) In the present case, it is not in dispute that the original assessment order dated 28/2/1997 was

set aside by the ITAT with a direction to pass fresh assessment order. Accordingly, fresh

assessment order was passed on 24/12/2006 and the demand notice was served on 24/12/2006.

As per section 220(1) of the Act, the assessee was liable to pay the amount of demand within

thirty days from the service of demand notice dated 24/12/2006. It is only if the assessee fails to

pay the amount demanded, within thirty days of the service of the demand notice dated

24/12/2006 as stipulated under section 220(1) of the Act, the assessee was liable to pay

interest under section 220(2) of the Act. If the liability to pay interest under section 220(2)

arises after thirty days of the service of the demand notice dated 24/12/2006, the question of

demanding interest for the period prior to 24/12/2006 does not arise at all. Neither the

assessment order dated 24/12/2006 nor the demand notice dated 24/12/2006 required the

assessee to pay interest after thirty days from the date of service of the original demand notice

dated 28/2/1997. Since the demand itself was crystallized under the assessment order dated

24/12/2006 and the assessee under section 220(1) of the Act had time to pay that demand

upto thirty days of the service of the demand notice dated 24/12/2006, the argument of the

revenue that the assessee was liable to pay interest under section 220(2) of the Act, for

the period prior to the crystallization of the demand on 24/12/2006 cannot be sustained.

Therefore, in the facts of the present case, the decision of the ITAT in holding that the assessee

is liable to pay interest under section 220(2) of the Act from the end of the period mentioned in

section 220(1) of the Act i.e. thirty days after the service of notice of demand dated

24/12/2006 till the date on which the amount demanded was paid cannot be faulted.

8. In the result, we see no merit in the appeal and the same is hereby dismissed with no order as

to costs.

LEARN AND EARN

http://www.hits4pay.com/members/index.cgi?SaiprasadBagrecha A Method to Read and Earn

Anmol and Kartik joined a wholesale company together just after graduation. Both worked very hard.
After several years, the boss promoted Kartik to sales executive but Anmol remained a sales rep. One day Anmol could not take it anymore, tender resignation to the boss and complained the boss did not value hard working staff, but only promoted those who flattered him.
The boss knew that Anmol worked very hard for the years, but in order to help Anmol realize the difference between him and Kartik, the boss asked Anmol  to do the following. Go and find out anyone selling water melon in the market? Anmol  returned and said yes. The boss asked how much per kg?Anmol went back to the market to ask and returned to inform boss the $12 per kg.

Boss told Anmol, I will ask Kartik the same question? Kartik went, returned and said, boss, only one person selling water melon. $12 per kg, $100 for 10 kg, he has inventory of 340 melons. On the table 58 melons, every melon weighs about 15 kg, bought from the South two days ago, they are fresh and red, good quality.
Anmol was very impressed and realized the difference between himself and Kartik. He decided not to resign but to learn from Kartik.
My dear friends, a more successful person is more observant, think more and understand in depth. For the same matter, a more successful person sees several years ahead, while you see only tomorrow. The difference between a year and a day is 365 times, how could you win?
Think! How far have you seen ahead in your life? How thoughtful in depth are you

Excise duty on diesel cars likely to be raised in Budget

Despite frantic lobbying by the automobile industry, the Government is likely to hike the excise duty on diesel cars in the next Budget. While the Petroleum Ministry has been asking for some sort of check on diesel cars with a view to capping the burgeoning demand for diesel, the Heavy Industries Ministry has been opposing this. Now, the Heavy Industries Ministry, the nodal ministry for the automobile sector, is learnt to have indicated its support for increasing the excise duty. This will be bad news for the automobile sector, as the soaring demand for diesel cars has been helping to prop up sales volumes, even as sales of petrol variants have taken a hit after the recent surge in fuel prices. What's more, the industry's demand for reduction of duty on bigger cars (engine capacity of more than 1,200 cc for petrol and 1,500 cc for diesel) is also unlikely to be accepted.

Source : The Hindu Businessline

Power min seeks withdrawal of import duty on coal

The ministries of power and finance are likely to lock horns over a proposal to withdraw customs duty on imported coal. Apprehensive that the North Block may not be keen to entertain a proposal which entails revenue loss for the exchequer, the power ministry has moved to secure support of the Planning Commission on the issue. Taking up the cudgels for power projects hit by the unprecedented increase in international coal prices, the power ministry has moved to push for removal of customs duty on coal to provide relief to power projects using imported fuel. Currently, a 5% basic customs duty is levied on coal. Sources said power secretary P Uma Shankar has sought withdrawal of the customs duty on coal in a letter sent to the finance ministry recently.

Source : financial express

AIMPLB objects to provisions of Direct Tax Code Bill

The All India Muslim Personal Law Board has objected to certain provisions of the Direct Tax Code Bill that propose to tax donations received by charitable institutions, terming them harmful to the interests of religious institutions. The bill is with the Parliamentary Standing Committee at present and the government aims to replace the 50 years old taxation law with the new tax code by 2012. AIMPLB spokesperson Abdul Rahim Qureshi said the government should not bring the bill in a hurry because several communities have raised objections to its provisions. He said implementing the bill in its present form will not only bring religious educational institutions under the ambit of taxation but also temples and mosques.

Source : ibnlive .in.com

Reassessment

Lapse or error on the part of the AO to apply legal provisions/section cannot be attributed and regarded as a failure on the part of the assessee to make full and true disclosure of the material facts in the original assessment proceedings — as held by DelHC in Atma Ram Properties Private Limited v DCIT — In favour of: The assessee.

Where on account of delay and limitation, the remedial action cannot be taken by the revenue under the applicable provision of the Income-tax Act, the revenue was not justified in resorting to the provisions of s 147.

Decided on: 11 November 2011.

Vodafone India to prepare for possible IPO: Country head

Vodafone India, buffeted by brutal competition and regulatory woes, expects a shakeout finally to begin winnowing the dozen-plus player market in the next year or two as weaker players exit and pending rules enable mergers, its country head said. The world's biggest cellular carrier by revenue, Vodafone is the largest overseas corporate investor in India but has come to symbolise the perils foreign firms face doing business in Asia's third-largest economy. "I've been working in quite a lot of countries in the world and I have not seen any country where the regulation is so tough," said Vodafone India Managing Director and CEO Marten Pieters, who has worked in Africa and Eastern Europe.

Source : ET

Rupee touches 51-level; ends 7 paise down

The rupee on Wednesday touched 51-level after a gap of 32 months but closed at 50.74/75 against the US currency on persistent dollar demand from banks and importers in view of the strong dollar overseas. The rupee resumed lower at 50.90/91 per dollar at the Interbank Foreign Exchange (Forex) market, as against previous closing level of 50.67/68 a dollar. It dropped further to 32-month low to 51.01 a dollar, before ending at 50.74/75 a dollar, down by 7 paise over the last close. The rupee had last touched 51.20 per dollar on March 31, 2009. Meanwhile, Finance Minister Pranab Mukherjee said RBI is monitoring the situation and will intervene in the forex market “as and when necessary“.

Source : The Hindu

RBI to buy Rs 10k crore bonds to ease pressure on rates

The Reserve Bank of India said it will buy government bonds worth 10,000 crore from investors for the first time this fiscal, aiming to ease pressure on interest rates after three of the four bond sales this quarter did not have enough takers at the specified price. The move to ease the pressure of excess demand for funds than what is available, may be militating against the central bank's anti-inflationary stance as more funds in the market add to demand, fuelling price rise. This may not be the first such injection of funds into the system by RBI to temper the government's borrowing costs as the treasury may raise the borrowing target again as revenue growth falters. The government raised borrowing target in the second half to 2.2 lakh crore from 1.67 lakh crore forecast in February.

Source : ET

Sebi considers circuit limit on listing days to curb manipulation in IPOs

Outsized gains on the day a stock is listed could soon become a thing of the past. Stock market watchdog Sebi will consider imposing a circuit limit on share price movements on the first couple of days of listing to curb manipulation in initial public offers (IPOs). The primary market advisory committee of Sebi, or PMAC, as it is called, will take up the proposal on Thursday. The PMAC will go through the entire IPO process - from filing of application till allotment - to make it more efficient and transparent, a Sebi official told ET. One of the key proposals is introducing a 10% circuit filter on the first two days of trading, said another official privy to the matter. The move has been prompted after the market regulator Sebi found evidence of manipulation in some the recent public offers on listing.

Source : ET

Govt to release negative list for GST

A revised paper on negative list of services – consisting of 27 items which are not to be taxed under the proposed Goods and Services Tax (GST) – will be released in a day or so, the Central Board of Excise and Customs (CBEC) said on Wednesday. “We have received feedback from all concerned stakeholders and fine-tuned our earlier proposal,” said CBEC joint secretary V.K. Garg while addressing a national conference organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM). The government intends to announce the negative list in the forthcoming Budget as this will familiarise states and the industry with it before the GST regime rolls out from next financial year – most likely from October 2012. The idea behind the proposal is to curb duplication in taxing items falling under similar categories which could result in a lot of complications at the administrative level, said Mr Garg, adding that it will also result in making the tax collection process a lot more transparent.

Source : India blooms

Penalty under s 271D

Where transactions are in the nature of the current account with sister concerns without any conditions or stipulation as to the period of repayment, rate of interest, manner of repayment, etc, so as to treat the said transactions as loans or deposits, a penalty imposed under s 271D is unsustainable as held by AhdTrib in Bright Play Centre v ACIT — In favour of: The assessee.

Where transactions are not in the nature of loans or deposits, the provisions of s 269SS are not attracted and no penalty can be imposed under s 271D.

Decided on: 5 August 2011.

Income

Commission income — The commission income which has already been taxed in the earlier year cannot again constitute income for the succeeding year under consideration merely because the assessee was following a mercantile system of accounting as held by KolTrib in DCIT v Swaraj Marketing — In favour of: The assessee.

The service tax collected by the assessee on behalf of the Government, which was also paid, cannot be treated as income of assessee.

Decided on: 26 August 2011.

Reassessment

In the absence of failure on the part of the assessee to disclose truly and fully all the material facts, the reopening of assessment after the expiry of four year is unsustainable as held by MumHC in Lok Housing and Construction Limited v Dy CIT — In favour of: The assessee.

The assessee had clearly disclosed in the notes forming part of the account that as a result of the restructuring by the lenders, the finance cost to the tune of Rs 20.58 crores was waived/foregone and that the payment of the balance was to be made in accordance with the settlement terms.

The power of the Assessing Officer to reopen assessment beyond a period of four years is even more restricted than when the reopening takes place within a period of four years of the end of the relevant assessment year. In the present case, the condition precedent to the invocation of the jurisdiction is clearly absent since there is not even an averment to the effect that there was a failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment.

Decided on: 20 October 2011.

Search and seizure

Block assessment — Undisclosed income — No investigation can be allowed to be held pertaining to the Indian Development Bonds which were received from NRIs by assessee as gift and value of bonds not assessable as undisclosed income — as held by AllHC in CIT v Usha Omer — In favour of: The assessee.

No inquiry can be made to the bond holder regarding the source.

Decided on: 26 July 2011.

New Memorandum - Direct Tax Office Memorandum No. 6-1-2011-NS.II (Pt.), Dated: 11-11-2011

Report regarding the recommendations of the Committee on Thirteenth Finance Commission for comprehensive review of National Small Savings Fund (NSSF)

The Thirteenth Finance Commission in its Report had, inter alia, recommended that all

aspects of the design and administration of the NSSF be examined with the aim of bringing

transparency, market linked rates and other much needed reforms to the scheme. As a follow

up of this recommendation, the Government had constituted a Committee on 8th July, 2010,

headed by Smt. Shyamala Gopinath, the then Deputy Governor, Reserve Bank of India for

comprehensive review of NSSF. The terms of reference of the Committee included review of

the existing parameters for the small saving schemes in operation and recommend

mechanisms to make them more flexible and market linked; review of the existing terms of

the loans extended from the NSSF to the Centre and States and recommend on the changes

required in the arrangement of lending the net collection of small savings to Centre and

States; review of other possible investment opportunities for the net collections from small

savings and the repayment proceeds of NSSF loans extended to States and Centre; review of

the administrative arrangement including the cost of operation; and review of the incentives

offered on the small savings investments by the States.

2. The Committee submitted its report to the Government on 7th June, 2011.

Comments/views of Department of Posts, Department of Revenue, Department of Financial

Services, Department of Expenditure and all State/Union Territory Governments were sought

on the recommendations made by the Committee.

3. The recommendations of the Committee have been considered in detail, taking into

account the views/comments received from other Departments, States/UTs and

representations received from various agents' associations and others. After detailed

examination the following decisions have been taken:-

Rationalisation of Schemes

(i) The maturity period for Monthly Income Scheme (MIS) and National Savings

Certificate (NSC) will be reduced from 6 years to 5 years.

(ii) A new NSC instrument, with maturity period of 10 years, would be introduced.

(iii) Kisan Vikas Patras (KVPs) will be discontinued.

(iv) The annual ceiling on investment under Public Provident Fund (PPF) Scheme will

be increased from Rs. 70,000 to Rs. 1 lakh.

(v) Interest on loans obtained from PPF will be increased to 2% p.a. from existing 1%

p.a.

(vi) Liquidity of Post Office Time Deposit (POTD) - 1, 2, 3 and 5 years - will be

improved by allowing pre-mature withdrawal at a rate of interest 1% less than the

time deposits of comparable maturity. For pre-mature withdrawals between 6-12

months of investment, Post Office Savings Account (POSA) rate of interest will be

paid.

Interest Rates on Small Savings Instruments

(i) The rate of interest paid under Post Office Savings Account (POSA) will be

increased from 3.5% to 4% p.a.

(ii) The rate of interest on small savings schemes will be aligned with G-Sec rates of

similar maturity, with a spread of 25 basis points (bps) with two exceptions. The

spread on 10 year NSC (new instrument) will be 50 bps and on Senior Citizens

Savings Scheme 100 bps. The interest rates for every financial year will be notified

before 1st April of that year.

(iii) Assuming the date of implementation of the recommendations of the Committee

as 1st December, 2011, the rate of interest on various small savings schemes for

current financial year on the basis of the interest compounding/payment built in the

schemes, will be as given below:-

Instrument	Current Rate (%)	Proposed Rate (%)
Savings Deposit	3.50	4.0
1 year Time Deposit	6.25	7.7
2 year Time Deposit	6.50	7.8
3 year Time Deposit	7.25	8.0
5 year Time Deposit	7.50	8.3
5 year Recurring Deposit	7.50	8.0
5-year SCSS	9.00	9.0
5 year MIS	8.00 (6 year MIS)	8.2
5 year NSC	8.00 (6 year NSC)	8.4
10 year NSC	New Instrument	8.7
PPF	8.00	8.6

 (iv) Payment of 5% bonus on maturity of MIS will be discontinued.

Commission to Agents

(i) Payment of commission on PPF schemes (1%) and Senior Citizens Savings

Scheme (0.5%) will be discontinued.

(ii) Agency commission under all other schemes (except MPKBY agents) will be

reduced from existing 1% to 0.5%.

(iii) Commission at existing rate of 4% will continue for Mahila Pradhan Kshetriya

Bachat Yojana (MPKBY) agents.

(iv) Incentives, if any, paid by the State/UT Governments will be reduced from the

commission paid by the Central Government.

Investments from NSSF

(i) The minimum share of States in net small savings collections in a year, for

investment in State Governments Securities, will be reduced from 80% to 50%. The

remaining amount will be invested in Central Government securities or lent to other

willing States or in securities issued by infrastructure companies/agencies, wholly

owned by Central Government.

(ii) Yearly repayment of NSSF loans made by Centre and States, will be reinvested in

Central and State Government securities in the ratio of 50:50.

(iii) The period of repayment of NSSF loans by Centre and States will be reduced to

10 years, with no moratorium.

(iv) For the current financial year the prevailing interest rate of 9.5% will continue.

From 1st April, 2012 revised interest rate will be notified.

(v) Half yearly payment of interest by the Centre and the States will be introduced.

(vi) Interest rate on existing investments from NSSF in Central Government securities

till 2006-07 will be re-set at 9% and on those from 2007-08 till 2010-11 will be re-set

at 9.5%.

Operational Issues of NSSF

(i) A Monitoring Group drawn from Ministry of Finance, Reserve Bank of India,

Department of Posts, State Bank of India, other select banks and select State

Governments will be set up to resolve various operational issues like reducing the

time lag between collection and investment, etc.

4. Necessary notifications, including those requiring amendments to rules of various small

saving schemes and National Small Savings Fund (Custody and Investment) Rules, 2001 will

be notified separately. The above decisions will take effect from the dates to be specified in

the notifications.

5. This has the approval of Finance Minister.