The Hindu Business Line : Somebody stole my asset

Section 43(6) of the I-T Act requires one to reduce from the block the monies payable by the insurance company on discardment, demolition or destruction of the asset. Curiously, it does not in terms mention stolen assets and, therefore, there is no need to reduce the insurance money in respect thereof from the block account. Such insurance compensation is not taxable under Section 45(1A) either because this section too, while expressly talking of destruction or damage, does not talk of loss through larceny (stealing).

Borrowers' rights

HOT on the heels of the securities ordinance, demand for securing the borrowers rights is being made. What is the reference to? -- S. Srinidhi, Tirichi

The securities law has come as a shot in the arm for the banks and financial institutions of this country, which have had to bear the brunt of the endemic problem of non-performing assets (NPAs), an euphemism or an Americanese for what in simple language means bad debts. A secured creditor now can, among other things, takeover the management of the defaulting borrower or alternatively can sell the assets given to him as security without the order of the court and realise his dues.

Borrowers who have thus far been indulged, now find ground slipping from under their feet. Some of them have, therefore, orchestrated a campaign against the law, an offshoot of which is the clamour for respecting the borrowers' rights. Of course, there are a few genuine concerns of the borrowers which ought to be addressed in all fairness. For example, just as the borrowers must observe discipline in adhering to their repayment commitments, the lender should also be obliged to release the funds at promised intervals lest a project runs into trouble midway through. But this should not take us back to square one — freezing the right of recovery of creditors while a sick company is being rehabilitated by the BIFR or a similar body.

Aggrieved assessee

WHEN one is aggrieved by an order of the assessing officer, what should the assessee do — file an appeal or file a revision petition or file an application for rectification of mistake? -- Sambath Narayanan, Musiri

Filing a rectification application under Section 154 is costless as there is no fee for it, besides being expeditious now that there is a timelimit of six months from the end of the month in which the application was received for disposing of such application. But one cannot always resort to this remedy. The precondition is that the grievance must stem out of a mistake apparent from the record. In other words, the grievance must arise out of a mistake on which there is no scope for any argument. Indeed, if the grievance stems from a mistake apparent from record, it would be advisable to resort to this remedy.

The second best alternative, if the assessee is confident of his grounds, is to file a revision petition under Section 264. This is also a time-bound remedy in that the Commissioner has to dispose of the application within a year from the end of the financial year in which such application was made. But one has to pay a fee of Rs 500 along with such application. The inherent risk in taking recourse to this remedy is that should the Commissioner turn down the application on merits, that would be the end of the road for the assessee, as a revisionary application precludes resort to appellate mechanism. Another risk is that while the Commissioner cannot pass an order adverse to the assessee.

The Kerala High Court has held that once a revisionary petition is made by the assessee, the Commissioner can go even into those issues which have not been raised in the petition and, therefore, it is well possible that the assessee gets what he asked for all right but may simultaneously be constrained to give away something which he had not bargained for.

One, therefore, has to exercise this option judiciously.

Gas tax

WE IMPORT gas which is transported from Vizag to West Bengal to our customers by way of sales. We pay the freight in the first instance but raise debit notes on our customers therefor. The sales tax people are asking us to pay CST on the freight element too. Are they right? -- Radhakrishna, Vishakapatnam

The definition of the term sale price in the CST Act, 1956 clearly excludes freight and installation charges if they are separately charged and accounted for. In the event, you would be on a very strong wicket should you contest this claim of the sales tax authorities.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

S. Murlidharan

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
Peer review, peel by peel — II

Somebody stole my asset

Thumbing thru a tax lexicon

Better sell used cars than do asset-stripping

The brain formerly known as you