Providing adequate support staff to all assessment units – CBDT

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Letter [F. No. HRD/CMD/123/2/2011-12/2301], Dated 23-11-2012

Assessment officers of many charges have conveyed to the Board that they are not being provided any secretarial assistance or other office help and they are left with no option but to make private arrangement to finalise their assessment orders and other time bound matters.

2. Chairperson, CBDT has viewed this matter very seriously. While it is true that the Department is presently facing shortages of manpower, however, the current situation where assessing officers are forced to make private arrangements for secretarial assistance and other help to run their office is highly undesirable and cannot be allowed to continue without seriously compromising the functioning of the Department.

3. In this regard, the undersigned is directed to draw your kind attention to the Rule 178 of GFR 2005 which allows outsourcing of certain services in the Interest of economy and efficiency. It is also noted that every Commissionerate has already been sanctioned a budget of Rs. 30 lacs for meeting expenses of this nature. You are accordingly requested to ensure that these funds are properly utilised and every assessing officer in all the Commissionerates under your charge is provided with adequate secretarial assistance and other office help either through the regular employees of the department or through outsourcing. In case, further funds are needed in this regard, requisition should immediately be sent to the DIT (Expenditure Budget) under DG (Logistics). All action In this regard may be completed by the end of this month.

4. In order to assess the prevailing shortage of manpower in your respective charge, following information is required: -

1.	The total number of assessing officers presently in position In your charge
2	The number of (a) Secretarial assistants; (b) DEOs; (c) MTS provided to each of the assessing officers
3.	The total number of (a) Secretarial assistants; (b) DEOs; (c) MTS hired through outsourcing
4.	The total number of PS, Steno Gr. I, Steno Gr. II, STA, TA and MTS in position

5. The aforesaid information covering all the Commissionerates in the CCA region should be sent in the following format to the undersigned, with a copy sent by e-mail as well at cmd.hrd.cbdt@incometaxindia.gov.in positively by November 30, 2012:

Grade	Number in position	Number of Stenos		Number of DEOs		Number of MTS
		Regular employees	Through outsourcing	Regular employees	Through outsourcing	Regular employees	Through outsourcing
DCIT
ACIT
ITO
TOTAL

This issues with the approval of the Chairperson, CBDT and may be treated as most urgent.

Commission paid to overseas agents for export sales is an input service

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CESTAT, New Delhi Bench

Ajay Industries

v.

Commissioner of Central Excise, Jalandhar

Final Order Nos. ST/A/487-491 of 2012-Cus.

Appeal Nos. ST/741-745 of 2008

June 8, 2012

 

 Overseas commission agent services promotes the assessee’s business activities and adds to Revenue earning by manufacture and sale of incremental quantity, activity may have nexus to such sales and Service Tax paid on such services has to be held as includable in the definition of inputs services.

No Penalty on voluntary admission of Assessee of taxing the income @ 8%

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HIGH COURT OF DELHI

Pronounced on : 11.10.2012

ITA 1246/2010

THE COMMISSIONER OF INCOME TAX –VI

Versus

VATIKA CONSTRUCTION PVT. LTD.

 

In the present case, the assessee’s cash payments were concededly not the amount which was disallowed; they had no co-relation to what could not be established, and were disallowable. Further, the judicial record would show that when the AO decided to initiate penalty proceeding, he had no material to conclude that the assessee had concealed income or provided inaccurate particulars. The assessee did provide particulars, but could not back up its claim with confirmation; its explanation was that the payees insisted on immediate payment, to fulfill their contractual commitment to their suppliers. The payees were small vendors, willing to ensure supply of materials to the assessee’s site. Clearly, a case for business expediency had been urged. Most importantly, the material which led to the penalty order –i.e. absence of the payees at their places or address provided, was gathered after notice under Section 271 (1) (c) was issued. The assessee complained of this procedure, calling it unfair, as it ought to have been provided with opportunity in this regard during the assessment and that material which did not exist at time of initiation of the penalty proceeding ought not to have been put against it. This Court is of opinion that the objection is well-founded, because the AO did not have the benefit of such material, and therefore could not have, only on the basis of the assessee’s offer to be taxed at 8% on gross receipts, have concluded that it had provided inaccurate particulars in its returns. Moreover, the course of action suggested by the AO was in fact accepted by the assessee, as reasonable. In these circumstances, the imposition of penalty was not justified. The court therefore, is of opinion that there is no infirmity in the impugned order of the Tribunal. The question of law is therefore answered against the revenue, and in favour of the assessee; the appeal is accordingly dismissed. No costs.

Section 32(1) not applicable If assessee is only permitted to use trade mark /brand name of foreign collaborator with certain conditions

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IN THE ITAT CHENNAI BENCH ‘B’

Fenner (India) Ltd.

v.

Additional Commissioner of Income-tax

IT APPEAL NOS. 722 & 1047 (MDS.) OF 2009

[ASSESSMENT YEAR 2005-06]

APRIL 23, 2012

 

With regard to the contention of the revenue that the assessee has acquired intangible asset and therefore depreciation is allowable under section 32(1); it is opined that the provisions of section 32(1) are applicable when the assessee acquires on or after 1-4-1998 and owns wholly or partly any know-how, patents, copy rights, trade mark, etc. and uses the same for the purpose of business or profession. In this case, the assessee has not either owned wholly or partly any know-how, patents, copy rights, trade mark, etc. so as to apply the provisions of section 32(1). The assessee is only permitted to use trade mark and brand name of the foreign collaborator with certain conditions. Therefore, the provisions of section 32(1) are not applicable to the facts of the assessee’s case. 

No Capital gain tax firm if it doesn’t distribute any capital asset to retiring partners

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IN THE ITAT MUMBAI BENCH ‘F’

Income-tax Officer – 25(3)(4)

v.

Fine Developers

IT APPEAL NO. 4630 (MUM.) OF 2011

[ASSESSMENT YEAR 2008-09]

OCTOBER 12, 2012

 

Allocation of assets of the firm to the retiring partners is the basis for invocation of provisions of Section 45(4). In the case under consideration, neither there was any dissolution nor other event took place that had an effect of allocation of exclusive interest in any capital asset to the retiring partners. In these circumstances, FAA was justified in holding that conditions of Section 45(4) were not fulfilled. In our opinion the firm or the continuing partners were not liable to be taxed under the head ‘capital gains’, as held by the FAA. Retiring partners had relinquished their rights in the assets of the firm and in lieu of that firm had paid the retiring partners money lying in their capital account. Obviously, assessee-firm had not transferred any right in capital asset to the retiring partners rather it is the retiring partners who have transferred the rights in capital assets in favour of the continuing partners. So, even if capital gain has to be taxed it has to be in the hands of the retiring partners not in the case of the assessee-firm.

Carry forward business losses & depreciation cannot be set off against profits of an undertaking while working out claim u/s. 10B

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IN THE ITAT MUMBAI BENCH ‘A’

ASB International (P.) Ltd.

v.

Deputy Commissioner of Income tax, Circle-1

IT Appeal Nos. 245, 7040 to 7042 (Mum.) of 2011

[Assessment years 2005-06 to 2007-08]

JUNE 29, 2012

Since the provisions of section 10A and 10B are similar in nature and as the jurisdictional High Court decided the issue while considering the provisions of section 10B also respectfully following the above, we uphold the contention of assessee that carry forward business losses and depreciation cannot be set off to the profits of the undertaking while working the claim u/s 10B. Therefore, AO is directed to do the needful in light of the above principles laid down.

Splitting of cash payment to circumvent the provisions of law attracts Section 40A(3)

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IN THE ITAT JODHPUR BENCH

Vaishali Builders & Colonizers

v.

Additional Commissioner of Income-tax,

IT APPEAL NO. 391 (JODH.) OF 2011

[ASSESSMENT YEAR 2008-09]

JULY 25, 2012

 

The assessee did not produce sale deed or the agreement during the course of arguments to prove that part cash payments were made in instalments for purchase of land. If it was advance money given to the villagers for purchase of land in instalment, there was no necessity to make payment in cash in instalment. It could be paid by cheques/drafts. Further if the amount was paid at the time of execution of sale deed, the villager/seller would not accept cash payments in instalments everyday during the whole year after the execution of sale deed. Therefore, it is clear that the books of account of the assessee have been manipulated to circumvent the provisions of law. The assessee has, thus, failed to prove genuine payments in instalments to the villagers in cash. Hon’ble Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 and in the case of Sumati Dayal v. CIT[1995] 214 ITR 801 held that “the Courts and Tribunals have to judge the evidences before them by applying the test of human probabilities after considering the surrounding circumstances.”

Regarding the business expediency, the assessee has not filed any evidence before the authorities below and nothing is clarified as to what were the other relevant factors, for which the cash payment has been made and no specific Rule has been explained u/r 6DD, which is applicable to the case of the assessee. The ld. counsel for the assessee argued that for purchase of agricultural land and payment made to the villagers, the provisions of section 40A(3) may not be applied as provided in exception to Rule 6DD. We have gone through the Rule 6DD applicable now and prior to amendment also, in which none of the exception has been provided for making payment in cash for purchase of land. It is, however, provided that above rule can be avoided if payment is made for purchase of agricultural produce which is not the case of the assessee at all. The assessee is dealing in real estate and in land and as such, it was for the assessee to establish that the cash payments have been made for business exigencies, which the assessee has failed to prove in this case. Further Rule 6DD(j) would not apply in this case because the assessee failed to prove that on the date of payment whether banks were closed either on account of holiday or strike. The ld. CIT(A), therefore, rightly noted in his finding that the assessee has not satisfied as to under which Rule, the assessee’s case would fall. In the case of Trivedi Corporation Pvt. Ltd. (supra), ITAT Ahmedabad Bench considered the issue of disallowance u/s. 40A(3) in respect of cash payment made to Gujrat State Electricity Board, which was considered as one of the undertaking of the State Government. Therefore, it was considered to be a payment made to Government Body and was falling in exception. The case law cited by the ld. counsel for assessee would not support the case of the assessee because they are based on their own facts and that the theory of real income would not apply for dealing with the issue of section 40A(3) of the IT Act. Considering the facts and circumstances and above discussion, it is very clear that the assessee consciously split up the payments in whole of the year, which is impracticable, illogical as noted above and it was done just to circumvent the provisions of law. There was no justification for the assessee to split up the transactions of crores of rupees in small payments of Rs. 15,000/- to Rs. 20,000/- everyday. Whatever plea was taken before the authorities below was not supported by any evidence. Therefore, the assessee failed to prove any business expediency or other facts for making staggered payments in cash. The case of the assessee would not fall in any exception to Rule. The assessee deliberately and consciously split up the payments in part so as to circumvent the provisions of law. We, therefore, do not find any justification to interfere with the orders of the authorities below. There is no merit in these grounds of appeal by the assessee. Same are accordingly dismissed.