The Hindu Business Line : Village included in metro is still `rural'

MARADU village, Kanayannur taluk, Ernakulam district, was where Karunya Matha Social Centre ran an SSI unit assembling electronic voltage stabilisers. The unit claimed the benefit of Excise Notification applicable to rural area, defined as "area comprised in a village as defined in the land revenue records." But the Department declined, citing a certificate issued by the Tahasildar that according to the 1991 Census records, "the area falling under Maradu village is classified as urban area designated as Census Town."

Karunya argued that land revenue records were the only evidence to be relied on, and that the same supported the SSI unit's claim for rural area benefit. Mr Chacko George, Karunya's advocate, submitted that no notification had been issued by the State or the Centre notifying Maradu village as an urban area.

Mr G. A. Brahma Deva, Judicial Member of the Bangalore CESTA, had this to say: "The term metropolitan area, as per the definitions under Part IXA of the Constitution, means an area having a population of ten lakhs or more, comprised in one or more districts and consisting of two or more Municipalities or Panchayats or other contiguous areas... Hence, metropolitan area may be inclusive of rural area."

Accordingly, it is the notification by the Government that decides whether a place is rural or urban area. "In the absence of such notification, it is difficult for us to come to the conclusion that the area can be considered as urban area."

Perhaps, such village pockets may contribute a rural touch to our metros too.

E-return made easy

HERE is an excerpt from a recent Circular from the Central Board of Excise and Customs on electronic filing of returns: "The system will then display a Web form for entering the e-return details. After entering the required particulars in the Web form and saving the same, the assessee can file the e-return by clicking the `File your Return' option. Before filing/transmitting the returns, the return can be previewed by clicking `PREVIEW' button. By clicking the `PRINT' button in the main menu screen, the assessees can generate a hard copy of the return filed along with the system generated acknowledgement."

How nice it would be if there were a `REFUND' button too!

Question of jurisdiction

THE Bihar Caustic & Chemicals Ltd case that came up before the Jharkhand High Court is noteworthy because of strictures passed against a Department official for making "uncalled for observations about the competence and jurisdiction of a High Court". The court said: "If someone thinks that a court has no jurisdiction to pass a particular type of order, he is always at liberty to approach that court and bring to its notice the jurisdictional error and request the court to rectify the order on the ground of lack of jurisdiction."

The official was "warned to be careful in future."

Cracks in the shelter

ANYTHING common among these names — Delta Air Lines, Whirlpool Corp, Clear Channel Communications Inc, WorldCom Inc, Tenet Healthcare and AstraZeneca? They all made use of a KPMG tax shelter known as CLAS, that is, `contested liability acceleration strategy'. AccountingWeb reports that the latest disclosures to the IRS by the accounting firm lists 29 companies that were helped to cut tax liability by $1.7 billion. It cites a Wall Street Journal story on how the firm sold CLAS as `an aggressive strategy' for companies that had `implemented risky strategies in the past.' "If a prospective client objected on the grounds that `it's too good to be true,' salespeople were advised to respond: `Three elements are involved in any tax strategy: Legislation, regulation and court interpretation." Message is simple: don't overemphasise legislation alone. And, there is `KPMG's advantage': "We were involved in drafting the regulations and are acutely aware of the opportunity."

Shocking stuff.

Comma in contention

THE New Sandhu Metal Works case taken up by the New Delhi CESTAT is about a comma in an Excise Notification. The line that came under the lens was: "All goods other than trimmed or untrimmed sheets or circles of copper, intended for use in the manufacture of utensils or handicrafts." Sandhu was engaged in the manufacture of items that ended up in electrical goods; would the above line apply? The company argued, `Yes', because purpose was `other than' for `utensils or handicrafts.'

The Department, however, said the line applied only when the purpose was the manufacture of utensils or handicrafts, and so Sandhu would not qualify for the exemption. The Tribunal gave the benefit of comma to the assessee, rejecting the Revenue's contention that the benefit of Notification was available only for use in the manufacture of handicrafts and utensils.

See how precious a comma can be.

Marriage is different in tax

YOU would realise how tough life is for same-sex married couples in the US, if you read a recent posting on the AccountingWeb. The Internal Revenue Service has confirmed that it is unlawful for same-sex couples to file their taxes under any married status, even if the jurisdiction, in which the couple lives, recognises such a union. For this, the taxman has cited the Defense of Marriage Act where `marriage' is defined as the "legal union between one man and one woman as husband and wife." Also, `spouse' is defined as "a person of the opposite sex who is a husband or wife."

Accordingly, "only married individuals under this definition could elect to file a joint tax return." Even if a state may recognise a union of two people of the same sex as a legal marriage for the purposes within that state's authority, such recognition has no effect for purposes of federal law, clarifies the IRS. "A taxpayer in such a relationship may not claim the status of a married person on the federal income-tax return."

Any comments?

Tailpiece

Barber: "What do you think about VAT?"

Customer: "Go ahead, cut."

Detaxification@TheHindu.co.in

More Stories on : Taxation | Detaxfication

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Airports, airlines and reform

Common Minimum Programme — At cross purposes with FRBM?

Make ability a cornerstone

Plan before you Budget

The power of steam

Tiebreaker in a treaty tussle

Village included in metro is still `rural'

`Does globalisation make the world more unequal?' and other stories