• DIRECT TAXATION

CBDT

Notification No. 94/2009 dated 18.12.2009  - Income Tax (Thirteenth Amendment) Rules, 2009 - Substitution Of Rule 3 And Insertion Of Rule 40f

CBDT released on 18.12.2009 the Income-tax (13th Amendment) Rules, 2009 which is to be taken as effective from 01.04.2009 amended Rule 3 which provided for rules for valuing perquisites provided by employer to assessee or to any member of his household by reason of his employment for the purpose of computation of income under the head "Salaries"

Instruction No. 07/2009 Dated 22.12.2009  - Section 197 of the Income-tax Act, 1961 - Deduction of tax at source - Certificate of lower deduction or non-deduction of tax at source

The present instruction was issued in relation to the subject of issue of certificates under Section 197. Instruction No- 8/2006 dated 13.10.2006, which was issued stating that 197 certificates for lower deduction or nil deduction of TDS u/s 197 are not to be issued indiscriminately and for issue of each certificate, approval of the JCI/Add. CIT concerned need to be taken by the Assessing Officer (AO). Further, a letter of even number dated 6.10.2008 was issued stating that power of issue of certificates under Section 197 would ordinarily be exercised by the officers manning TDS Administration. However, instances are being brought to the notice of Board that the AOs are issuing certificates for lower or non-deduction of tax at source under Section 197 indiscriminately, in contravention of relevant Income Tax Rules and Instructions. Accordingly an instruction has been issued further to the contents of Instruction No-8/2006, prior administrative approval of the Commissioner of Income Tax (TDS) would be taken (where the cumulative amount of tax foregone by non-deduction/lesser rate of deduction of tax arising out of certificate under Sec, 197 during a financial year for a particular assessee exceeds Rs. 50 lakh in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmadabad and Pune stations and Rs. 10 lakh for other stations. Once the CIT (TDS) gives administrative approval of the above, a copy of it has to be endorsed invariably to the jurisdictional CIT also.

Instruction No. 06/2009 Dated 18.12.2009  - Section 144A of the Income-tax Act, 1961 - Power of Joint Commissioner to issue directions in certain cases - Scheme for improving quality of assessments

The instruction was issued pursuant to decision taken that the following scheme for improving quality of assessments would be implemented from calendar year 2010 onwards,

(i) At the beginning of each calendar year i.e. in the month of January, the Range Head in consultation with the concerned Assessing Officer would identify at least 5 pending time-barring assessment cases in respect of each Assessing Officer of his Range for monitoring These should normally include cases taken up for scrutiny with the permission of CCIT. The selection should be done jointly by the Range Head and the concerned Assessing Officer. Cases of PSUs and loss-making concerns should normally not be identified for this purpose. This exercise should also include those Ranges which are held as additional charge by a Range Head in January.

(ii) The Range Head would issue directions u/s 144A in the identified cases for the guidance of the Assessing Officer regarding the course of investigation to enable him to complete these assessments in a proper manner. This should be done at the earliest available opportunity so as to allow the Assessing Officer to have sufficient time to complete the assessment proceedings. A copy of the directions issued by the Range Head would also be endorsed to the CIT. The Range Head should also monitor the subsequent developments in the assessment proceedings in these cases.

(iii) On completion of the assessment the Assessing Officer shall send a copy of the assessment order to the Range Head and the CIT,

(iv) In the event of a Range Head holding more than one Range the concerned CCIT may appropriately relax the requirement for Issue of directions under section 144A in respect of the cases of the Range(s) held as additional charge.

(v) For the purpose of this instruction, a quality assessment would be one in which issues arising for consideration are clearly identified, investigation of basic facts in respect of these issues is carried out, adequate opportunity to rebut adverse evidence is given to the assessee, the rival evidence are suitably analysed and evaluated in the light of correct interpretation of law, and these efforts result in substantial addition to the returned Income, The benchmark for the quantum of addition to the returned income, which may qualify for being a quality assessment, may be decided by the concerned CCIT depending upon the potential of the given Range/Charge. Normally, this should not be less than Rs.5 lakh excluding additions on account of recurring issues. It is expected that the selected cases will meet the parameters for quality assessment

(vi) As regards the remaining scrutiny assessments, it. is expected that 30% of assessments completed by the Range Head, 20% of the remaining scrutiny assessments completed by DC/ ACIT and 10% by ITOs will result in quality assessments. These benchmarks can be reviewed once the scheme has been in operation for some time,

(vii) The parameters for determining whether an assessment is a quality assessment should be decided by the concerned Chief Commissioner in the light of the above and should be widely circulated at the beginning of the calendar year i.e. in the month of January of every year.

(viii) At the end of the financial year, the data regarding assessments completed by Assessing Officers of the CCIT Region shall be got evaluated by the concerned CCIT in the month of next April according to the parameters decided earlier. The overall results will be tabulated in the enclosed proforma and circulated in the CCIT (CCA) Region for information. Separate performance ranking should be done for Range Heads in respect of cases completed by them u/s 143(3) out of the cases selected under Instruction 4 of 2007 dated 16.5.2007, and those monitored by them under this instruction.

(ix) CCITs may also devise methods for commending good performance of Assessing Officers in the area of quality assessments and reflecting the same in the annual appraisals. Important cases involving large successful additions may be reported to the Board in monthly D.O. letters. These can be also be sent to DIT (RSP&PR) for inclusion in the Annual Report of good assessment cases.

• INDIRECT TAXATION

CBEC Customs

Notification No. 147/2009 Dated 24.12.2009  - Amendment to the Notification No. 79/2008-Customs, dated the 13 th June, 2008

The Central Government has amended the Notification No. 79/2008-Customs, dated the 13th June, 2008, published vide number G.S.R. 458(E) by substituting for the figures and words "5% ad valorem", the figures and words "10% ad valorem".

Notification No. 146/2009 Dated 24.12.2009  - Exemption to the iron ore fines from duty of customs leviable under Customs Act

The Central Government has exempted exempts iron ore fines falling under Heading No. 11 of the Second Schedule to the Customs Tariff Act, 1975 (51 of 1975), when exported out of India, from so much of the duty of customs leviable thereon which is specified in the said Second Schedule as is in excess of the amount calculated at the rate of 5% ad valorem.

Notification No. 145/2009 Dated 24.12.2009 - Central Government rescinds the Notification no. 129/2008-Customs, dated the 7th December, 2008

The Central Government has rescinded the notification of the Government of India in the Ministry of Finance (Department of Revenue), no. 129/2008-Customs , dated the 7th December, 2008, which was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 843(E) of the same date.

• SERVICE TAX

Notification No. 119/13/2009 -ST Dated 21.12.2009  - Service tax valuation issues pertaining to Customs House Agents Service-regarding

It has been clarified that essentially, the exclusion should be allowed to such charges from the taxable value of CHA services, where all the following conditions are satisfied,-

a) The activity/service for which a charge is made, should be in addition to provision of CHA service (as mentioned in paragraph 1);

b) There should be arrangement between the customer & the CHA which authorizes or allows the CHA to (i) arrange for such activities/ services for the customer; and (ii) make payments to other service providers on his behalf;

c) The CHA does not use the activities /services for his own benefit or for the benefit of his other customers;

d) The CHA recovers the reimbursements on 'actual' basis i.e. without any mark-up or margin. In case of CHA includes any mark-up or profit margin on any service, then the entire charge (and not the mark-up alone) for that particular activity/ service shall be included in the taxable value;

e) CHA should provide evidence to prove nexus between the other (than CHA) services provided and the reimbursable amounts. It is not necessary such evidence should bear the name or address of the customer. Any other evidence like BE No./Container No./ BL No./ packing lists is acceptable for the establishment of such nexus. Similar would be the case for statutory levies, charges by carriers and custodians, insurance agencies and the like;

f) Each charge for separate activities/services is to be covered either by a separate invoice or by a separate entry in a common invoice (showing the charges against each entry separately) issued by the CHA to his customer. In the latter case, if certain entries do not satisfy the conditions mentioned herein, the charges against those entries alone should be added back to the taxable value;

g) Any other miscellaneous or out of pocket expenses charged by the CHA would be includable in the taxable value for the purposes of charging tax on CHA services.

The conditions mentioned above would be applicable for services provided with effect from 19th April 2006, i.e. after the introduction of the valuation rules. For the prior period, the taxable value should be determined in accordance with the prevailing instructions issued Board. Any communication issued by any of the subordinate offices contrary to the conditions referred or as the case may be, the prevailing Boards circulars stands superceded to the extent of the contradiction. It has further been stated that the pending disputes may be settled in terms of this circular.

• DIRECTORATE GENERAL OF FOREIGN TRADE 

Public Notice No. 26/RE 2009-14 Dated 23.12.2009  - Amendment in Handbook of Procedures (Vol.I) 2009-2014 - Amended Appendix 4D

The Director General of Foreign Trade has made an amendment in Handbook of Procedures (Vol. I) 2009-2014 by amending Appendix 4D, which after the amendment is amended to read as :

Appendix 4D

LIST OF AGENCIES AUTHORISED TO ISSUE CERTIFICATION FOR GLOBAL SYSTEM OF TRADE PREFERENCES (GSTP), INDIA SRI LANKA FREE TRADE AGREEMENT (ISLFTA), CERTIFICATES OF ORIGIN UNDER ASEAN-INDIA FREE TRADE AGREEMENT AND INDIA - KOREA COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT (CEPA).

Export Inspection Council through their field offices known as Export Inspection Agencies with 57 offices all over India.

• MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION

Order No. SO3249(E) Dated 18.12.2009  - Removal of (Licensing Requirements, Stock Limits and Movement Restrictions) on Specified Foodstuffs (Seventh Amendment) Order, 2009 - Effective from 9th January, 2010

The Central Government vide this order amended the Removal of (Licensing Requirements, Stock Limits and Movement Restrictions) on Specified Foodstuffs Order, 2002. The amendment shall be effective from the 9th day of January, 2010. It has been stated in the order that the words and expressions used in respect of purchase, movement, sale, supply, distribution or storage for sale in the Removal of (Licensing Requirements, Stock Limits and Movement Restrictions) on Specified Foodstuffs Order, 2002 shall be kept in abeyance for Commodity, namely Sugar for a farther period upto 30th September, 2010 or further orders, whichever is earlier. Nothing contained in this Order would affect the transport, distribution or disposal of sugar to places outside the State and also it would not be applicable to import of this Commodity, provided that the Central Government or State Governments may direct the importers to declare the receipts of stocks of sugar and stocks retained by them.

• SECURITIES AND EXCHANGE BOARD OF INDIA

Notification No. LAD-NRO/GN/2009-10/23/186926 Dated 11.12.2009  - Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009

The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009 provides for substitution of and insertion in the Securities and Exchange Board of India Act, 1992

• PRESS INFORMATION BUREAU

PIB Release dated 24.12.2009 - Anand Sharma releases first draft consolidation of FDI Policy/ FDI Framework

Department of Industrial Policy and Promotion, Ministry of Commerce and Industry released FDI Regulatory Framework vide Press Note No. (2010) rescinding all the earlier Press Notes on FDI in so far as they are inconsistent with the said press note. This Press Note consolidates into one document all the prior regulations on FDI and reflects the current 'regulatory framework' on FDI. This Press Note has a sunset clause of six months and will automatically lapse on 30th September 2010.

PIB Release dated 24.12.2009  - Amendment to the Copyright Act, 1957

The Ministry of Human Resource Development has proposed the amendments to the Copyright Act, 1957 with a view to bring the Act in conformity with the World Intellectual Property Organisation (WIPO) Internet Treaties, namely WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT) which have set the international standards in these spheres.