TIOL-DDT 1037
22.01.2009
Thursday

The CBDT has amended the Table to the New Appendix-I prescribing the Rates at which depreciation is admissible. Now new commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of April, 2009 and is put to use before the 1st day of April, 2009 for the purposes of business or profession , will get 50% depreciation.

• “Commercial vehicle” means

• “heavy goods vehicle”,

• “heavy passenger motor vehicle”,

• “light motor vehicle”,

• “medium goods vehicle” and

• “medium passenger motor vehicle”

but does not include

• “maxi-cab”,

• “motor-cab”,

• “tractor ” and “road-roller”.

The expressions “heavy goods vehicle”, “heavy passenger motor vehicle”, “light motor vehicle”, “medium goods vehicle”, “medium passenger motor vehicle”, “maxi-cab”, “motor-cab”, “tractor” and “road-roller” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).

And the Motor Vehicles Act defines these as,

Any way for you to get a 50 % depreciation, all you have to do is buy that car and drive it before 1 st April 2009.

This may be a stimulus for the motor vehicle sector.

CBDT Notification NO. 10/2009 –Dated: January 19, 2009

CBEC appoints Commissioners for Adjudication

The CBEC has empowered certain Commissioners to adjudicate certain DRI cases.

Notification NO. 10, 11, 12, 13, 14, 15 ,16/ 2009 - Cus (NT)/–Dated: January 20, 2009

Committee of Chief Commissioners and Commissioners – Service Tax - CBEC amends

The CBEC has amended the notifications specifying the jurisdiction of the Committees of Chief Commissioners and Commissioners for Service Tax, mainly to rope in the DGST also a as Chief Commissioner and to include the newly created Guwahati Commissionerate.

With so many Commissionerates, Commissioners, Chief Commissioners and frequent transfers, it is virtually impossible to keep track of jurisdiction. Maybe we should seriously think of delinking adjudication from the Department by creating an independent Indian Revenue Judicial Service, which can be given the job of adjudication exclusively.

Notification NO. 2, 3, 4, 5/ 2009 – Service Tax Dated: January 15, 2009

CBI arrests CBN Officials (not NCB as reported by us) taking bribe of Rs. 1.5 Lakhs -

In DDT-1033 , we had reported that CBI has arrested NCB officials. The Zonal Director, NCB, Lucknow, Sanjay Kumar clarifies that the officials arrested were from the Central Bureau of Narcotics (CBN), not from Narcotics control bureau (NCB). NCB is the nodal agency dealing with narcotics in India and is under Ministry of Home Affairs, Deptt. of internal security, whereas CBN is under Ministry of Finance, Dept of Revenue.

He further states, “The basic problem is both CBN and NCB offices are located in Mahanagar Lucknow and people mostly know NCB being nodal organization for narcotics control in India. The Lucknow zone looks after Uttar Pradesh, Uttarakhand and Bihar whereas CBN is only at few places and mostly deals with legal cultivation of poppy along with enforcement. So a correction would also make people understand the difference between the two and would help keeping the image of NCB intact.

We deeply regret the mess-up and apologise for the lapse. It is nice to hear from such officers who are proud of their organisation and its reputation.

CVC's Code of Ethics for CAs and advice to Banks

The Central Vigilance Commission notes,

It has been observed that there have been a number of cases in banks and financial institutions wherein due to the erroneous/ambiguous advice tendered by the respective Chartered Accountants, borrowal accounts have had to face quick mortality resulting in loss for the bank. Many a time this has also resulted in vigilance cases being initiated with the allegations of connivance/malafide/gross negligence being attributed to the concerned Bank officials.

For the success of the profession of accountancy a self-imposed Code of Ethics is essential to command the respect and confidence of the general public. Chartered Accountants in the service of the affairs of others have responsibilities and obligations to those who rely on their work.

When in public practice, an accountant should both be, and appear to be, free of any interest which might be regarded, whatever its actual effect, as being incompatible with integrity and objectivity.

Some of the common points where reports of Chartered Accountants have not been of desirable level are :-

1. Valuation of stocks including work in progress.

2. Transactions with related parties.

3. Valuation of investments

4. Valuation and status of other assets.

5. Status of Sundry Debtors

6. Status of Creditors

7. Status of loans

8. Provision in respect of all the known liabilities.

All these issues have a considerable impact on profit and the real financial health of an enterprise, failure of which would prevent taking of a well informed, correct decision by banks and financial institutions.

The CVC has suggested that the following be mandated as a Policy :-

(a) That banks and financial institutions have independent assessment of the work of Chartered Accountants and a list of Chartered Accountants, who work objectively, may be evolved and simultaneously the list of Chartered Accountants, whose work is undesirable, can also be evolved. Such lists may be shared by nationalized banks amongst themselves. Further, if it is found that the Chartered Accountant has not adequately reported nonadherence of the laid down Statements Standards and/are Guidance Notes in preparing his reports, the concerned banks should report the matter to The Institute of Chartered Accountants of India, who should take the required action against the concerned Chartered Accountant within a specific time schedule.

(b) It could be made mandatory that companies should change their ‘statutory auditors' every 3 years. Periodic changes will be healthy.

(c) “Institute of Chartered Accountants of India” is the body to which banks normally complain. But this body, at the worst, only bars the concerned CA from practice. It could be seen whether deliberate mispresentation given by CAs can be treated as a criminal or an economic offence?

(d) Can the Institute of Chartered Accountants of India publish a list of names of tainted/banned CAs from time to time (like ECGC/DICGC list) so that banks can take cognizance of the same?

Yet another Satyam fallout?

Satyam Fiasco – Time for Introspection

After the leakage of Satyam fiasco, every CA is bowing his head in shame because of the loss of profession's loss of reputation and trust reposed by the society.

Five Chartered Accountants in a joint article with extreme candour say, “Please note that that Prima facie, the Satyam Fraud occurred not because of lack of any special knowledge but because of non adherence to basic minimum auditing standards.”

Read the Introspection. Also see our CobWeb today

Jurisprudentiol– Tomorrow's cases

Central Excise

CENVAT credit – exports – refunds - 100% EOU is entitled to take Cenvat credit on inputs procured indigenously and when they were not in a position to utilize the same, they are entitled for benefit of refund: High Court

THIS is a Revenue appeal against the CESTAT order reported in (2008-TIOL-424-CESTAT-BANG).

The CESTAT, having regard to the undisputed fact that the respondent is 100% Export Oriented Unit ('EOU') in respect of which, benefit of CENVAT Credit Rules, 2004  is available for the inputs which will be used for manufactured goods of 100% export.

Income Tax

capital gains - assessee granted additional floor space by municipality because of existing land holding - since there is no cost of acquisition nor asset falls in category of assets specified in Sec 55(2), no capital gains tax can be imposed: ITAT

THE charge and the computation of income constitute an integrated code in the Income Tax Act. And for the capital gains tax, a golden principle was decided by the Apex Court in the B C Srinivasa Shetty case (2002-TIOL-587-SC-IT-LB) where it was held that if the cost of acquisition of an asset cannot be ascertained, the computation mechanism fails. Thus, no tax is leviable.

Service Tax

Dispute between PSU and Central Excise department – Tribunal tells Revenue to obtain 'authentic' information from Union Cabinet Secretariat as to whether COD has been constituted

SINCE neither the appellant nor the Respondent Department was in a position to confirm the factual position, the Bench observed –

• If such Committee is in place, its clearance would be required for us to proceed with this appeal.

• If it is not, we are of the view that this appeal can proceed without what is called ‘COD clearance'.

• Hence it has become imperative or us to make sure whether the aforesaid Committee is in place or not.

See our columns tomorrow for the judgements

Until tomorrow with more DDT

Have a nice Day.

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