TIOL-DDT 2753
29 12 2015
Tuesday

SECTION  194A of Income Tax Act, 1961 stipulates deduction of tax at source (TDS) on interest other than interest on securities. Board had received references expressing difficulties in implementation of provisions of Section 194A of the Act in a situation where in the course of the proceedings before Supreme Court/ High Court/ any other court or tribunal, one or more than one litigant is directed by the court that a specified amount be deposited in the bank either directly or through the court in order to protect the interest of litigants.

CBDT in Circular No. 8/2011, dated 14.10.2011 clarified that Banks should deduct tax at source on the interest accruing on the above deposit(s).

The Himachal Pradesh High Court had quashed the CBDT Circular in 2014-TIOL-1815-HC-HP-IT

The Delhi High Court also quashed this circular in 2014-TIOL-1933-HC-DEL-IT

CBDT has now accepted the judgement of the Delhi High Court.

Board clarifies that interest on FDRs, made in the name of the Registrar General of the Court or the depositor of the fund on the directions of the Court, will not be subject to TDS till the matter is decided by the Court. However, once the Court decides the ownership of the money lying in the fixed deposit, the provisions of section 194A will apply to the recipient of the income.

Board directs that such issues may not be contested in appeal and pending litigation, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon.

CBDT Circular No. 23/2015., Dated: December 28, 2015

All Your Questions on CE & ST Audit

THE Hyderabad Audit Commissionerate has released a FAQ on Audit. However, the Commissionerate hastens to add a disclaimer that this is for general information - not statutory provisions.

Ans: Audit is a verification of financial accounts and other records particularly records relating to production, clearance of goods or provision of service by the assessees to ascertain that duties of Central Excise / Service Tax are correctly paid.

Ans: The Central Excise officers posted in Commissionerate of Audit conduct Audit which include Assistant / Deputy Commissioner, Joint / Additional Commissioner or Joint Director (Cost).

Ans: The returns filed with the department are based on self assessment. The correctness of the payment and application of statute are verified during the periodical Audits conducted by the department.

Ans: In terms of revised selection methodology prescribed vide Circular No. 995/2/2015-CX dated 27th Feb, 2015, which has come into effect from 01st July, 2015, an annual schedule for audit would be drawn based on the risk evaluation method prescribed by the Directorate General of Audit. The Audit Commissionerates could also select few units at random or based on risk perception in each category of large, medium and small tax payers.

Ans: It depends upon the quantum of the record to be scrutinized and period covered for audit. It may spread from two days to ten days.

Ans: No. A minimum of 15 days prior notice is served on the assessees regarding proposed audit.

Ans: Simultaneous Audit for Central Excise, Service Tax and OSPCA would be conducted.

Ans: If both the registrations i.e., Central Excise and Service Tax are in one zone, simultaneous audit would be conducted by Audit Commissionerate.

Ans: The statutory provisions relevant for audit is clause (x) of Section 37(2) and Rule 22 of the Central Excise Rules, 2002 for conducting Central Excise Audit and Rule 5A (2) of the Service Tax Rules, 1994 for Service Tax audit.

Ans: Since there are no prescribed Central Excise records, records maintained by the assessees are requested for scrutiny. These may include, financial statements, invoices, ledgers, bank statements, cenvat credit documents, accounting policies etc., apart from statutory returns.

Ans: As an intimation of 15 days is given in advance, all records should be furnished to the audit team on or before their visit to the unit for audit.

Ans: In such cases, normally Computer Aided Audit Programme is conducted. You are requested to produce the soft copy of the records and also the records maintained in physical form.

Ans: Yes. In genuine cases on production of proper evidence, the competent authority may consider the request for postponement. Since the audit programme is drafted months in advance, postponements are not encouraged.

Ans: Yes. The auditors discuss each and every objection they are going to raise and issue a spot memo. If assessees voluntarily rectify the error and correct the same by payment of duty, interest and penalty etc., the para would be settled in MMCM.

Ans: Yes.

Ans: Normally within 15 days from the date of approval of audit report in Monthly Monitoring Committee Meeting.

Ans: Yes, you may like to send your detailed reply to the concerned ADC/JC of the circle.

Ans: A Show Cause notice is issued by the Audit Commissionerate answerable to respective competent authority in executive Commissionerate. The assessee's written reply and submissions made in personal hearing will be considered and the case will be adjudicated.

Ans: You may contact the concerned circle Additional Commissioner. The assessees are also provided along with final audit report, a feed-back form regarding quality of audit and suggestions for improvement of audit.

FTP - MEIS - One Panama Deleted

TABLE 1 of Appendix 3B of MEIS (Merchandise Exports from India Scheme) Schedule notified vide Public Notice No.2 dated 1st April 2015 has listed Panama in two country groups as under:-

1. "Panama Republic" is listed in the country Group-B at Serial No. 95.

2. "Panama" is listed in the country Group-C at Serial No. 50.

DGFT has now realized the existence of Panama in two different lists and has deleted the entry "Panama" at Serial No.50 under Country Group-C of Table 1 of Appendix 3B- MEIS Schedule with effect from 01.04.2015.

DGFT Public Notice No. 51/2015-20., Dated: December 28, 2015

Make In India Week

GOVERNMENT of India has decided to organise "Make In India Week" in Mumbai during 13-18 February, 2016 which is to be inaugurated by the Prime Minister.

The "Make in India Week" would showcase the people, policies and partnership that are driving India's new manufacturing revolution. Set against the vibrant backdrop of India's commercial capital - Mumbai this week long calendar would offer unprecedented access, insights and opportunities to connect and collaborate with India and global Industry leaders/visionaries, academicians, central and state administration. A number of events have been planned around the themes of innovation, design and sustainability on the larger canvas of manufacturing during this week long event.

The CBDT, inter alia, has been given the responsibility to disseminate information about the "Make in India Week" to be held in Mumbai through various professional bodies and trade associations that the Income Tax Department interacts with on a regular basis.

The CBDT Chairman AK Jain has written to all the Principal Chief Commissioners requesting them to disseminate this information to various professional bodies and trade associations within their respective regions for creating awareness amongst their members about the "Make in India Week".

CBDT Chairman's Letter DO F.No.402/88/6/2015- Comm(coord)/ FTS-268649., Dated: December 28, 2015

CBEC Charge of Members

IN recent months, the charge held by Members of the CBEC had been changed several times mostly due to new Members joining.

It has now been decided with the approval of the Competent Authority to issue a consolidated charge order of the Members of CBEC.

There is a fairly stable Board now with most of the Members having more than a year of service left. This is a great opportunity to do some great work, if the Board can function as one cohesive unit.

There seems to be a mysterious Competent Authority lurking in the dark in every department. They don't tell us who this Competent Authority is. Most probably it is the Minister; if it is so, why are they shy of revealing his authority?

The Members of the CBEC with their charges and date of retirement are as:

Incidentally, the Chairman Mr. Najib Shah seems to be continuing as PDG, DRI. Couldn't the Government find one Chief Commissioner capable of heading the premier investigative agency? Now who does the DG, DRI report to? Is he an officer without a boss? Mr. Najib Shah, as DRI Chief will report to Mr. Najib Shah, the Chairman of CBEC.

CBEC Office Order No. 175 in F.No.C-50/25/2000-Ad.II., Dated December 28, 2015

Customs - Warehouse - No 'Crude' Interest

INTEREST is liable to be paid on imported goods stored in a warehouse beyond the time stipulated. However, Board is given the power to specify the class of goods in respect of which no interest is to be charged.

CBEC has specified ‘crude', imported and stored in underground rock caverns as a class of goods in respect of which no interest shall be charged under the said section 61.

Notification No.147/2015-CUSTOMS (N.T.)., Dated: December 23, 2015

Until Tomorrow with more DDT

Have a nice day.

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