The CBDT has released a list dated 29.07.2011 of 49 candidates being considered for promotion to the post of Chief Commissioner of Income-tax

Santosh Hegde

The report dated 27th July 2011 by Karnataka Lokayukta Santosh Hegde exposes the illegal mining carried out in the State of Karnataka. The report claims that Rules were flouted, government officials bribed and private companies and banks too participated in this loot, throwing to winds all norms of corporate governance and propriety. The report says that the State has lost revenue of about Rs. 16,085 crores.

The report names several well known corporates as having paid bribes, under-invoiced exports and dealt in fudged permits. NMDC, the public sector giant, is accused of under-invoicing sales. Adani Enterprises is accused of paying bribes and permitting illicit iron ore exports through the Belekere port. JSW Steel is accused of not only paying bribes but also of colluding with G Janardhan Reddy to buy illegal ore

An extract from the report (page 413):

“One of the main reasons for explosive illegal iron ore mining during 2009-2010 was posting of favored officials at strategic posts of Police, Mines, Forest, Revenue and other departments. Because of this, a fearless atmosphere prevailed in the Bellary district. Law of the land was seemed to have been suspended and oral whip was used to keep silent. Consequently administration has allowed to loot the natural resources, in this case the iron ore, which continued without any opposition. Huge bribes were paid. Mafia type operations were the routine practices of the day”

From the desk of Chairman, CBDT
S.N. 51/ July 25,2011
Collection Strategy for FY 2011-12

I reviewed the arrears position yesterday in the context of our strategy to meet the collection target. On assessing the potential for recovery in different types of arrears categorized in column 9 of CAP I, I find that concerted efforts in certain categories may expedite cash collection. I suggest that our immediate approach should be to focus on the following:

• More than Rs. 20000 crore of tax demand is stayed by the courts/ITAT. Our counsels should be advised to get the stays vacated or ensure early hearings by brining the direction of the Supreme Court in the Vodafone case to the taxpayer to pay 25% of the disputed taxes and provide bank guarantee for the remaining, thereby endorsing the principle that stay of recovery in litigated matters should not be the norm, to the notice of the concerned court/ITAT.

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CIRCULAR NO. 4/2011 [F. NO. 402/69/2010-ITCC], DATED 19-7-2011

References have been received by the Board regarding issuance of guidelines for granting of prior permission u/s 281 of the IT Act, 1961 to transfer or create a charge on the assets of the assessee. The Board has considered the matter and in order to have uniformity on the issue, it has been decided that:

1. The taxpayers should apply in the prescribed form annexed hereto titled “Application u/s 281 of the IT Act, 1961″ which would be available on the departmental website, as well as with the Assessing Officers.

2. The taxpayer would have to file the form at least thirty days prior to the proposed date of transaction.

3. The circumstances under which prior permission u/s 281 should be granted by the Assessing Officers are as follows:

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Circular No. 144/13/2011-ST dated: July 18, 2011

Subject: – Clarification on “Completion of service”- regarding.

Representations requesting clarification on “completion of service” as provided under the Point of Taxation Rules, 2011 and Service Tax Rules, 1994 have been received from certain sections of service providers that in many situations it is not possible to issue invoices within 14 days of the completion of the service since the exact date of completion of service is difficult to identify. Instances have been given where after the task of providing the service may be physically accomplished, but certain other formalities are required to be completed from the client’s end before an invoice can be issued.

2. These representations have been examined. The Service Tax Rules, 1994 require that invoice should be issued within a period of 14 days from the completion of the taxable service. The invoice needs to indicate interalia the value of service so completed. Thus it is important to identify the service so completed. This would include not only the physical part of providing the service but also the completion of all other auxiliary activities that enable the service provider to be in a position to issue the invoice. Such auxiliary activities could include activities like measurement, quality testing etc which may be essential pre-requisites for identification of completion of service. The test for the determination whether a service has been completed would be the completion of all the related activities that place the service provider in a situation to be able to issue an invoice. However such activities do not include flimsy or irrelevant grounds for delay in issuance of invoice.

The above interpretation also applies to determination of the date of completion of provision of service in case of “continuous supply of service”.

3. Trade Notice/Public Notice may be issued to the field formations accordingly.

4. Please acknowledge the receipt of this circular. Hindi version to follow.

F.No.354/93/2011-TRU

(Samar Nanda)
Under Secretary, TRU

Vide Order No 122 of 2011 dated 15.7.2011 the CBDT has transferred and posted Deputy / Assistant Commissioners of Income-tax with immediate effect

Vide Order No 119 of 2011 dated 14.7.2011 the CBDT has transferred and posted Commissioners / Directors of Income-tax with immediate effect

The Hon’ble President, ITAT has constituted a Special Bench comprising of Shri GC Gupta, Vice-President (HZ), Shri BR Mittal, Judicial Member and Shri BV Mehrotra, Accountant Member to decide the following question in the case of M/s Merilyn Shipping & Transports, Visakhapatnam vs. ACIT, ITA No. 477/Vizag/2008 for A.Y.2005-06

Whether Sec. 40(a)(ia) of the Income Tax Act can be, invoked only to disallow expenditure of the nature referred to therein which is shown as “payable” as on the date of the balance sheet or it can be invoked also to disallow such expenditure which become payable at any time during the relevant previous year and was actually paid within the previous year?

The hearing will take place on 22.07.2011 at 10:30AM at Visakhapatnam Bench. Those advocates or other Representatives who are desirous of appearing before the Special Bench as Interveners are requested to contact the Assistant Registrar, Income Tax Appellate Tribunal, 5th floor, LIC Building, Visakhapatnam-S30004, Tele: 0891-2795058, Fax: 0891-2525961, enclosing the copies of the pending appeals along with its enclosure in triplicate, well in advance, so that necessary arrangements can be made.

The Hon’ble President, ITAT has constituted a Special Bench comprising of Hon’ble Vice President (MZ), Shri R.S. Syal, AM & Shri N. V. Vasudevan, AM in the case of M/s Summit Securities Ltd in ITA No. 4977/M/09 for AY 2006-07 to decide the following question of law:-

Whether in the facts and circumstances of the case, the Assessing Officer was right in adding the amount of liabilities being reflected in the negative net worth ascertained by the auditors of the assessee to the sale consideration for determining the capital gains on account of slump sale?

The Appeal is listed for hearing before the Special Bench on 27.07.11 at Mumbai. Those Advocates or other Representatives who are desirous of appearing before the Special Bench as interveners are requested to contact the Registrar/Deputy Registrar, Income tax Appellate Tribunal, Old C.G.O Building, 4th floor, 101 M.K. Road, Mumbai – 20 enclosing the copies of the pending appeal alongwith its enclosure in triplicate, so that the necessary arrangements can be made.

Vide Order No. 113 of 2011 dated 7.7.2011, the CBDT has transferred and posted officers in the grade of ACIT & DCIT to the Directorate of International Tax and Transfer Pricing