TMI Tax Updates - e-Newsletter
April 7, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Articles
By: DR.MARIAPPAN GOVINDARAJAN
Summary: An employee's right to withdraw a resignation or voluntary retirement before its acceptance and communication is upheld by several legal precedents. The Supreme Court and various high courts have ruled that the jural relationship between an employee and employer continues until the resignation is communicated and the employee is relieved of duties. In a notable case, an employee's resignation was accepted but not communicated, and the High Court ruled in favor of the employee's right to withdraw the resignation. The court emphasized the need for flexibility in employment decisions, allowing employees to reconsider their decisions without automatically severing employment ties.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The article discusses the legal interpretation of tax exemptions, emphasizing that duties paid by mistake on exempted goods do not make those goods liable for duty. The Supreme Court case 'Bonanzo Engineering & Chemical Private Limited V. Commissioner of Central Excise' illustrates this principle. The appellant, a manufacturer, mistakenly paid duty on goods exempted under a specific notification. Despite not claiming a refund, the Court ruled that the goods remain exempt, and the duty paid by mistake does not alter their exempt status. The ruling highlights that exemptions should be liberally construed once applicable, regardless of procedural errors like unclaimed refunds.
News
Summary: The first Spices Park in Rajasthan, focused on processing seed spices such as cumin, coriander, and fennel, will be inaugurated in Jodhpur on April 7, 2012. The Union Commerce and Industry Minister, alongside the Chief Minister of Rajasthan, will officiate the event. Established on 60.07 acres provided by the Rajasthan Government, the park offers advanced processing facilities including pre-cleaning, grading, color sorting, grinding, and packing. The infrastructure supports international standards and has a processing capacity of two tonnes per hour, enhancing the region's spice production capabilities.
Summary: The Union Finance Minister addressed the Insurance Regulatory Development Authority's board meeting, highlighting the progress and challenges in India's insurance sector. Despite significant growth, India remains underinsured, with low protection levels relative to GDP. The Minister emphasized the need for a balanced approach to growth and profitability, urging improvements in underwriting performance and distribution capabilities. He advocated for digital channels, e-governance, and broader insurance coverage, particularly in rural areas. The Minister also stressed the importance of regulatory flexibility, product approval efficiency, and insurance literacy to enhance market penetration and ensure the sector's sustainable development.
Notifications
Customs
1.
31/2012 - dated
4-4-2012
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Cus (NT)
Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008, issued under the Environment (Protection) Act, 1986 (29 of 1986).
Summary: The Government of India, through the Ministry of Finance's Department of Revenue and the Central Board of Excise and Customs, issued Notification No. 31/2012-Customs (N.T.) on April 4, 2012. This notification, under the Customs Act of 1962, supersedes the previous notification No. 35/2004-CUSTOMS (N.T.). It prohibits the import and export of hazardous wastes specified in Schedule VI of the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008, under the Environment (Protection) Act, 1986. This action is taken to protect human, animal, and plant life and health, with exceptions as provided under the said Act and rules.
Circulars / Instructions / Orders
FEMA
1.
104 - dated
4-4-2012
Authorised Dealer Category II – Permission for additional activity and opening of Nostro account.
Summary: Authorised Dealer Category II entities are now permitted to issue forex pre-paid cards to residents traveling abroad for private or business purposes, provided they comply with KYC, AML, and CFT requirements. Settlement of these cards must occur through Authorised Dealer Category I banks. Additionally, Authorised Dealer Category II entities can open one Nostro account per currency for remittance settlements, with restrictions on balance usage and reporting requirements. All other instructions from the previous circular remain unchanged. These directions are issued under the Foreign Exchange Management Act, 1999, and do not override other legal permissions or approvals.
Highlights / Catch Notes
Customs
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India Updates Hazardous Waste Rules: Compliance Changes for Import, Export, and Management Under Notification No. 31/2012-Customs (N.T.
Notifications : Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008, issued under the Environment (Protection) Act, 1986 (29 of 1986). - Ntf. No. 31/2012-Customs (N.T.) Dated: April 4, 2012
FEMA
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Authorized Dealer Category II Gains Permission for New Activities and Nostro Account under Circular No. 104, FEMA Update.
Circulars : Authorised Dealer Category II – Permission for additional activity and opening of Nostro account. - Cir. No. 104 Dated: April 4, 2012
Case Laws:
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Income Tax
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2012 (4) TMI 496
Deletion of penalty u/s 271(1)(c) – LTCG on sale of factory land and building at Siliguri - deduction u/s 54G denied and penalty imposed on ground that area where assessee's undertaking was located was not declared to be 'urban area' – Held that:- Claim is declined on the ground that the place where assessee's industrial undertaking is located has not been declared to be an 'urban area' - something which is highly technical and it cannot be against the preponderance of probabilities, particularly in the light of legal advice rendered to the assessee, that the assessee made the error bona fide. As long as there is a reasonable explanation for the conduct of the assessee, the onus of the assessee stands discharged. CIT(A) was justified in deleting the penalty – Decided against the Revenue.
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2012 (4) TMI 495
Assessee firm of solicitors and advocates- in reassessment proceedings AO noted that the assessee has made payments to various lawyers for their professional services, but has not deducted tax at source under section 194J such payments are to be disallowed under section 40(a)(ia) - assessee's contention that the amounts paid to the lawyers were reimbursed by assessee's clients, and, therefore, the amounts paid to the lawyers were never claimed as a deduction in the first place - It was then contended that when deduction is not claimed in respect of these amounts, there cannot be any occasion to invoke section 40(a)(ia)- It appears from the copy of TDS certificates that the appellant had raised the composite bills for entire work on its clients and was accordingly paid after deduction of tax – Held that:- As a corollary to this position, unless a deduction is claimed in respect of the said amount, under sections 30 to 38, the disallowance under section 40(a)(ia) cannot come into play at all - the manner in which taxes have been deducted by the end user of the legal services cannot be determinative of whether the assessee has claimed it as reimbursement or no - restored to the file of the Assessing Officer for necessary verifications on this factual aspect.
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2012 (4) TMI 494
Exercise of extraordinary jurisdiction conferred by Article 226 of the Constitution Of India- Petitioner is engaged in the business of turn key projects - a warranty clause providing for warranty of performance - a notice u/s 143(2) of the Act issued in respect of the assessment years 1995-96 and 1996-97 stating that there were reasons to believe that the petitioner s income, chargeable to income tax, as estimated assessment for the aforesaid assessment years, within the meaning of Section 147 of IT Act - petitioner submitted that the said notices had been issued beyond the period of four years and the present assessment proceedings are based only on a change of opinion – Writ was filed - Held that:- the assessing authority had issued the impugned notices on the ground that there were reasons to believe that certain income chargeable to tax had escaped assessment within the meaning of section 147 - It is for the petitioner to raise its objections, if any, in respect of the impugned notices - Even assessing authorities concerned had accepted the methods of accounting for past years, it is for the assessee to substantiate its claim by furnishing the relevant pursuant to the impugned notices issued u/s 148 - when an efficacious alternative remedy is available under a statute, this Court would not exercise its extraordinary jurisdiction, under article 226 of the constitution of India - the writ petitions stand dismissed - open to the petitioner in the above writ petitions to raise its objections within a period of four weeks from date of Order.
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Customs
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2012 (4) TMI 493
Direction for release the goods - issues involved in this writ petition is covered by the order of this Court, wherein, this Court had directed the respondent therein to release the goods concerned subject to certain conditions – Held that:- Release of goods is directed subject to conditions namely:(i)The petitioner shall pay the entire amount of duty, as per the declared value, which may be based on the contract or price etc.(ii)the petitioner shall provide sufficient bank guarantee in respect of 50% of the difference in duty, in favour of the Department,(iii)the remaining 50% of the difference in duty, the petitioner shall furnish personal bond to the satisfaction of the respondent(iv)adjudication process to be completed by respondents
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