Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign countries with the Government of the Republic of Tajikistan
Notification No. 58/2009-FT & TR-II [F.No. 503/10/95-FT & TR-II], dated 16-7-2009


Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Republic of Tajikistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income signed in India on the 20th day of November, 2008 shall come into force on the 10th day of April, 2009, being the date of the later of the notifications after completion of the procedures as required by the respective laws for the entry into force of this Agreement, in accordance with Article 30 of the said Agreement.
Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement annexed hereto shall be given effect to in the Union of India with effect from the 1st day of April, 2010.

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND
THE GOVERNMENT OF THE REPUBLIC OF TAJIKISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME


The Government of the Republic of India and the Government of the Republic of Tajikistan, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic cooperation between the two countries, HAVE AGREED as follows:
Article 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political/administrative/territorial subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to which the Agreement shall apply are in particular:
a) in India, the income tax, including any surcharge thereon;
(hereinafter referred to as "Indian tax");
b) in the Republic of Tajikistan:
- taxes on income of legal persons;
- taxes on income of individuals;
(hereinafter referred to as "Tajik tax").
4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
a) the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;
b) the term "Tajikistan" means the Republic of Tajikistan, and when used in a geographical sense, it means its territory including inland waters and the air space over it, over which the Republic of Tajikistan can exercise its sovereign rights and jurisdiction, including rights on using the subsoil and natural resources, according to its legislation and international law;
c) the terms "a Contracting State" and "the other Contracting State" mean the Republic of India or the Tajikistan as the context requires;
d) the term "person" includes an individual, a company, a body of persons and any other entity which. is treated as a taxable unit under the taxation laws in force in the respective Contracting States;
e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
f) the term "enterprise" applies to the carrying on of any business;
g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
h) the term "international traffic" means any transport by a ship or aircraft, operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
i) the term "competent authority" means:
(i) in India: the Finance Minister, Government of India, or his authorized representative;
(ii) in Tajikistan, the Ministry of Finance or its authorized representative;
j) the term "national" means:
(i) any individual possessing the nationality of a Contracting State;
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
k) the term "tax" means Indian or Tajik tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes;
l) The term "fiscal year" means:
(i) in the case of India: the financial year beginning on the 1st day of April;
(ii) in the case of Tajikistan: the financial year beginning on 1st day of January.
2. As regards the application of the Agreement at any time by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies and any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
Article 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any political/ administrative/territorial subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode; c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop;
f) a warehouse in relation to a person providing storage facilities for others;
g) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and h) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3. The term "permanent establishment" like wise encompasses a building site, or construction, installation or assembly project or supervisory activities in connection therewith, but only if such site, project or activities last more than one year.
4. Notwithstanding the preceding provisions of this Article the term "permanent establishment" shall be deemed not to include:
a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed base of business a permanent establishment under the provisions of that paragraph. 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
Article 8
SHIPPING AND AIR TRANSPORT
1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State.
2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the Contracting State of which the operator of the ship is a resident.
3. Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in international traffic that is incidentally to income from the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other contracting State.
4. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business and the provisions of Article 11 shall not apply in relation to such interest. 5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) Five (5) per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least twenty five (25) per cent of the share capital of the company paying the dividends; (b) Ten (10) per cent of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution payment is a resident. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
Article 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:
a) the Government, a political/administrative/territorial sub-division or a local authority of the other Contracting State; or
b) (i) in the case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank; and (ii) in the case of Tajikistan, the National Bank; or
c) any other institution as may be agreed upon from time to time between the Competent authorities of the Contracting States through exchange of letters.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State; due regard being had to the other provisions of this Agreement.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraph 1 and 2 shall not apply if the beneficial owner of the royalties being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. in such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.(a) Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political/ administrative/territorial sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
(b) Where under sub-paragraph (a) royalties do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property in one of the Contracting States, the royalties shall be deemed to arise in that Contracting State.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident. 4. Gains from the alienation of shares in a company which is a resident of a Contracting State may be taxed in that State. 5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State:
a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or
b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any period of 12 - months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants.
Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft, operated in international traffic, by an enterprise of a Contracting State may he taxed in that State.
Article 16
DIRECTORS' FEES
Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors in a company which is a resident of the other Contracting State may be taxed in that other State.
Article 17
ARTISTES AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the activities are substantially supported by public funds of one or both of the Contracting States or of political/administrative/territorial subdivisions or local authorities thereof.
In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.
Article 18
PENSIONS
Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
Article 19
GOVERNMENT SERVICE
1. a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political/administrative/territorial subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. a) Any pension paid by, or out of funds created by, a Contracting State or a political/ administrative/ territorial subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political/administrative/territorial subdivision or a local authority thereof.
Article 20
PROFESSORS, TEACHERS AND RESEARCH SCHOLARS
1. A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding 2 years from the date of his arrival in that other State.
2. This Article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some private person or persons.
3. For the purposes of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.
Article 21
STUDENTS
1. A student who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training, shall besides grants, loans and scholarships be exempt from tax in that other State on:
a) payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and
b) remuneration which he derives from an employment which he exercises in the other Contracting State if the employment is directly related to his studies.
2. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than six consecutive years from the date of his first arrival in that other State.
Article 22
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any nature whatsoever, such income may be taxed in the other Contracting State. Article 23
METHODS FOR ELIMINATION OF DOUBLE TAXATION
1. The laws in force in either of the Contracting States will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Agreement. 2. Double taxation shall be eliminated as follows:
In India:
a) Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Tajikistan, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Tajikistan.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Tajikistan. b) Where in accordance with any provision of the Agreement income derived by a resident of India is exempt from tax in India, India may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
3. In Tajikistan:
a) Where a resident of Tajikistan derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Tajikistan shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in India.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in India. b) Where in accordance with any provision of the Agreement, income derived by a resident of Tajikistan is exempt from tax in Tajikistan, Tajikistan may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting, State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7. 3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 5. The provisions of this Article shall apply to taxes covered by this Agreement.
Article 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.
Article 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is necessary for carrying out the provisions of this Agreement or of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. in no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
b) to supply information (including documents or certified copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (order public). 4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting state to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
Article 27
ASSISTANCE IN THE COLLECTION OF TAXES
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 & 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount. 3. Where a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State, that revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection. 5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State. 6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State. 7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be
a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or
b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection. The competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request. 8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
b) to carry out measures which would be contrary to public policy (order public);
c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.
Article 28
LIMITATION OF BENEFITS
1. Except as otherwise provided in this Article, a person (other than an individual), which is a resident of a Contracting State and which derives income from the other Contracting State shall be entitled to all the benefits of this Agreement otherwise accorded to residents of a Contracting State only if such a person is a qualified person as defined in paragraph 2 and meets the other conditions of this Agreement for the obtaining of any of such benefits.
2. A person of a contracting state is a qualified person for a fiscal year only if such a person is either:
(a) Governmental entity; or
(b) a company incorporated in either of the Contracting States, if -
(i) the principal class of its shares is listed on a recognised stock exchange as defined in paragraph 5 of this Article and is regularly traded on one or more recognised stock exchanges, or
(ii) at least 50% of the aggregate vote or value of the shares in the company is owned directly or indirectly by one or more individuals residents of either of the Contracting States or/and by other persons incorporated in either of the Contracting States, atleast 50% of the aggregate vote or value of the shares or beneficial interest of which is owned directly or indirectly by one or more individuals residents of either of the Contracting States, or
(c) a partnership or association of persons, at least 50% or more of whose beneficial interests is owned by one or more individuals residents of either of the Contracting States or/and by other persons incorporated in either of the Contracting States, at least 50% of the aggregate vote or value of the shares or beneficial interest of which is owned directly or indirectly by one or more individuals residents of either of the Contracting States, or
(d) A charitable institution or other tax exempt entity whose main activities are carried on in either of the Contracting States:
Provided that the persons mentioned above will not be entitled to the benefits of the Agreement if more than 50% of the person's gross income for the taxable year is paid or payable directly or indirectly to persons who are not residents of either of the Contracting States in the form of payments that are deductible for the purpose of computation of tax covered by this Agreement in the person's state of residence (but not including arm's length payment in the ordinary course of business for services or tangible property and payments in respect of financial obligations to a bank incurred in connection with a transaction entered into with the Permanent Establishment of the bank situated in either of the Contracting States).
3. The provisions of Paragraph 1 and 2 shall not apply and a resident of a Contracting State will be entitled to benefits of the Agreement with respect to an item of income derived from the other. State, if the person actively carries on business in the State of residence (other than the business of making or managing investments for the resident's own account unless these activities are banking, insurance or security activities) and the income derived from the other Contracting States is derived in connection with or is incidental to that business and that resident satisfies the other conditions of this Agreement for the obtaining of such benefits.
4. A resident of a Contracting State shall nevertheless be granted the benefits of the Agreement if the Competent Authority of the other Contracting State determines that the establishment or acquisition or maintenance of such person and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under the Agreement. 5. For the purposes of this Article the term 'recognised stock exchange' means
(a) in India, a Stock Exchange which is for the time being recognized by the Central Government under section 4 of the Securities Contracts (Regulation) Act, 1956;
(b) in Tajikistan, The Stock Exchange of Tajikistan as recognized by the Securities and Exchange Act;
(c) any other stock exchange which the Competent Authorities agree to recognise for the purposes of this Article.
6. Notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies.
Article 29
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
Article 30
ENTRY INTO FORCE
1. The Contracting States shall notify each other in writing through diplomatic channels, the completion of the procedures required by the respective laws for the entry into force of this Agreement.
2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article.
3. The provisions of this Agreement shall have effect:
(a) In India, in respect of income derived in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force; and
(b) In Tajikistan, in respect of income derived in any financial year beginning on or after the first day of January next following the calendar year in which the Agreement enters into force.
4. The contracting States by mutual agreement may introduce amendments into the agreement by separate protocol, the provisions of which shall form an integral part of the Agreement.
Article 31
TERMINATION
This Agreement shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:
(a) In India, in respect of income derived in any fiscal year on or after the first day of April next following the calendar year in which the notice is given;
(b) In Tajikistan, in respect of income derived in any financial year beginning on or after the first day of January next following the calendar year in which the notice is given.
IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement.
DONE in duplicate at New Delhi this 20th day of November, 2008, each in the Hindi, Tajik and English languages, all texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.

CLARIFICATIONS REGARDING CENVAT CREDIT ON INPUT SERVICES AVAILED IN RELATION TO CAPITAL GOODS
Facility Circular No. 1/2009, dated 5-5-2009


Attention of the trade is drawn to Rule 6 of the Cenvat Credit Rules, 2004, which imposes obligation to be fulfilled by manufacturers of dutiable and exempted goods and provide of taxable and exempted services.
2. It has come to notice that the manufacturers and service providers are under mis-conception, that as per rule 6 ibid does not impose any restriction in respect of taking credit on capital goods even if they manufacture final products or provide output service which are chargeable to duty or tax as well as exempted goods or services, they can avail full credit of service tax paid on input services such as GTA, Erection & Commissioning, Maintenance, Insurance etc., availed in relation to the capital goods used in the manufacture or in providing the output service. In this regard, it is clarified that the Rule 6 restricts credit of duty paid on all inputs and credit or service tax paid on all input services irrespective of whether the input services are related to capital goods or otherwise. The only situation which attracts application of Rule 6 is that the manufacturer manufactures both dutiable and exempted goods and the service provider provides both taxable and exempted services.
3. The Trade & Industry Associations are, therefore, advised to inform their members suitably on the applicability of the provisions of Rule 6 of Cenvat Credit Rules, 2004 in the situation discussed above.

COLLECTION OF CENTRAL EXCISE DUTIES AND SERVICE TAX IN DELHI - NEW FOCAL POINT BRANCH OF BANK
Trade Notice No. 6/ST/2009, dated 1-5-2009


All the Trade and other concerned are hereby informed that the Chief Controller of Accounts, CBEC has authorized City Back Office Branch (BSR Code No. 0201997), Bank of Baroda, 16, Sansad Marg, New Delhi as the new Focal Point Branch instead of Parliament Street Branch, New Delhi (BSR Code No. 0200586) for collection of Central Excise Duties and Service Tax for Central Excise Commissionerates service tax commissionerate and LTU Commissionerate at Delhi and for payment of refund claims in respect of Central Excise and Service Tax under LTU Commissionerate, Delhi where Bank of Baroda is one of the nominated banks.
The Parliament Street Branch of Bank of Baroda (BSR Code No. 0200586) will be a collecting branch only for collection of Central Excise Duties and Services Tax.
The above arrangements will be effective from 1st May, 2009.
All trade associations and concerned are requested to give wide publicity to the contents of the above trade notice.

MENTOR DESIGNATED FOR BHOPAL ZONE FOR THE OPERATION AND SMOOTH FUNCTIONING OF SERVICE TAX RETURN PREPARER SCHEME, 2009
Trade Notice No. 2/2009, dated 14-5-2009


The Service Tax Return Preparer Scheme, 2009 has been notified vide notification No. 7/2009-S.T. dated 3-2-2009. The DGST, Mumbai has been designated as the Resource Centre for this Scheme. Further Board has decided that there should be a "mentor" in each zone who would be an officer of the rank of Addl. Commisioner/Jt. Commissioner to be designated by the respective Chief Commissioner for the smooth operationalisation and functioning of the Service Tax Return Preparer Scheme. The mentor would be responsible for supervising the Scheme at local level and would be looking into the issues raised by the service tax return preparers and assesses regarding effective implementation of the scheme.
I hereby designate Shri J.P. Sigh, Additional Commissioner, Central Excise Customs & Service Tax, 48, Administrative Area, Arera Hills, Hoshangabad Road, Bhopal (Telephone No. 0755-2574752, Mob. No. 09926453609) as "Mentor" in respect of Bhopal zone for the operation and smooth functioning of Service Tax Return Preparer Scheme, 2009, as per the instructions contained in DGST's letter F. No. V/DGST/30-Misc-135/2008/Pt/1155 dated 11-12-2009

Taxability of second instalment of arrears from the implementation of the recommendations of the Sixth Pay Commission in the financial year 2008-09
Instruction F.No. 173/163/2008/IT(A-1), dated 26-6-2009


Consequent to the acceptance of the recommendations of the Sixth Pay Commission, the Department of Expenditure, vide its O.M.F.No. 1/1/2008-IC dated 30-8-2008 issued an instruction that the first instalment of the salary arrears, amounting to 40% of the total arrears would be paid in the financial year 2008-09, and that separate orders will be issued in respect of payment of second instalment of salary arrears.
2. The Board has considered the question of taxability of the second instalment of salary arrears in the financial year 2008-09, i.e., the assessment year 2009-10. Section 15(1)(c) of the Income-tax Act, 1961, provides that arrears of salary shall be chargeable to tax in the previous year in which they are paid or allowed. It has accordingly been decided that the second instalment of salary arrears, comprising of 60%, arrears of salary, cannot to be brought to tax in the assessment year 2009-10 as the arrears had neither been paid nor allowed up to March 31, 2009.
This may be brought to the notice of all officers of your charge.

Section 35(1)(ii) of the Income-tax Act, 1961 - Scientific research expenditure - Approved scientific research associations/institutions
NOTIFICATION NO. 56/2009, DATED 9-7-2009


It is hereby notified for general information that the organization Man Made Textile Research Association, Surat has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income- tax Rules, 1962 (said Rules), with effect from 1-4-2008 in the category of 'other institution, Partly engaged in research activities subject to the following conditions, namely:-

(i) (i) The sums paid to the approved organization shall be utilized for scientific research;
(ii) (ii) The approved organization shall carry out scientific research through its faculty members or its enrolled students;
(iii) (iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the Said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;
(iv) (iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.
The Central Government shall withdraw the approval if the approval organization:-

(a) (a) fails to maintain separate books of accounts referred to in sub-paragraph (iii) of paragraph 1; or
(b) (b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or
(c) (c) fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or
(d) (d) ceases to carry on its research activities or its research activities are not found to be genuine; or
(e) (e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.

Section 35(1)(ii) of the Income-tax Act, 1961 - Scientific research expenditure - Approved scientific research associations/institutions
NOTIFICATION NO. 57/2009, Dated 9-7-2009

It is hereby notified for general information that the organization Eye Research Centre, Chennai has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act) read with rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), with effect from 1-4-2009 in the category of 'other Institution', partly engaged in research activities subject to the following conditions, namely:-

(i) The sums paid to the approved organization shall be utilized for scientific research;
(ii) The approved organization shall carry out scientific research through its faculty members or its enrolled students;
(iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;
(iv) To approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

The Central Government shall withdraw the approval if the approved organization:-

(a) fails to maintain separate books of accounts referred to in sub-paragraph (iii) of paragraph 1; or
(b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or
(c) fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or
(d) ceases to carry on its research activities or its research activities are not found to be genuine; or
(e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.

PROCEDURE FOR REPRESENTATION BEFORE BIFR AND AAIFR
CIRCULAR NO. 5/2009, DATED 2-7-2009

In supersession to all circulars and instructions of the Central Board of Direct Taxes (CBDT) issued on the above subject, the CBDT prescribes the following procedure to be followed before the Board for Industrial and Financial reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) in respect of granting Income tax reliefs/concessions to be given to sick companies for its rehabilitation under the Sick Industrial Companies (SICA) Act, 1985.

1. The Director General Income Tax (Administration), [DGIT (Admn.)] will be the Nodal agency for co-ordination between the BIFR and the CBDT and between the AAIFR and the CBDT.
2. It will be the responsibility of DGIT (Admn) to represent the CBDT before BIFR and AAIFR in every case in which Income Tax reliefs is sought under the Draft Rehabilitation Scheme or in the Sanctioned Scheme circulated by BIFR/AAIFR.
3. The DGIT (Admn) will consider each case of Income Tax reliefs/concessions under the Direct Tax Laws on merits of each individual case for the purpose of consent as contemplated in Section 19 (2) of the SICA, 1985. In cases where the company and the assessing officer have quantified the Income tax reliefs the DGIT (Admn) will communicate the consent or denial of consent to BIFR at the time of hearing itself after obtaining the approval of CBDT. Where the information from the company and the assessing officer is incomplete, the DGIT (Admn.) will obtain the necessary information from the concerned parties and put up the file for the consideration of CBDT and subsequently intimate the BIFR.
4. It is the responsibility of DGIT (Admn) to obtain the approval of CBDT in every case in which Income tax relief/concessions is sought and to communicate the approval of CBDT to BIFR and the concerned assessing officer. The decision thus communicated by the DGIT (Admn.) on behalf of the CBDT is binding on all assessing officers.
5. The assessing officer should give the Income Tax reliefs to sick companies only after obtaining the approval as mentioned above. In cases where BIFR/AAIFR is taking a different view from that of the CBDT, it will be the responsibility of DGIT (Admn) to file appeal before the appellate authority (AAIFR) or before the Delhi High Court as the case may be. It is also hereby clarified that in cases where the sick companies file appeals against the order of BIFR/AAIFR in any of the High Court other than Delhi High Court, it will be the responsibility of concerned Chief Commissioner of Income Tax (Administration) to defend the case in the respective High Court.

This Circular may be brought to the notice of all officers working in your region for strict compliance. This Circular should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties.

ELECTRONIC FURNISHING OF INFORMATION OF REMITTANCE OF PAYMENT TO A NON-RESIDENT OR TO A FOREIGN COMPANY IN FORM 15CA

Procedure for furnishing information under sub-section (6) of section 195 of the Income-tax Act, 1961 read with rule 37BB of the Income-tax Rules, 1962.
General
1. Form 15CA should be used for furnishing information of remittances in e-mode in accordance with the provisions of section 195 (6) of the Income-tax Act, 1961. The information should be furnished after obtaining a certificate in Form 15CB from an accountant as defined in the Explanation to section 288 of the Income-tax Act, 1961. The print out Form 15CA should be signed and submitted to the Reserve Bank of India/authorized dealer prior to remitting the payment.
2. The Form should be furnished at the website of the Tax Information Network www.tin-nsdl.com.
3. Fields marked with (*) are mandatory.
4. Select the values from the drop down wherever provided.
5. Each transaction detail should be filled in separately.
Guidelines for Part A of Form 15CA:
Remitter:
1. Permanent Account Number (PAN) and Tax Deduction and collection Account Number (TAN) allotted by the Income Tax Department should be mentioned. TAN is mandatory in cases where-
a. tax has been deducted or will be deducted at source;
b. the remitter has obtained an order under section 195 (2) of the Income-tax Act from the Assessing Officer.
2. In case an invalid PAN and/or TAN is filled in by the remitter, the Form will not be generated.
3. In case the remitter does not have a TAN, it is mandatory to quote PAN of the remitter.
4. PAN of the remitter should invariably be given. However, the same is mandatory if status of entity is Company or Firm. If PAN is not given in such cases, the remitter will not be allowed to generate the Form.
5. Details in at least two address fields for remitter shoule be mentioned.
6. Name of the entity should be mentioned in the "Name of remitter" field.
7. No value is to be provided in Area code, AO type, Range code & AO number. The fields will be entered by the system after validating the PAN and/or TAN.
8. Email id and mobile no., if any, should be provided.
Recipient of remittance:
1. Complete address of recipient of remittance, separated by coma, should be provided.
2. PAN, allotted by the Indian Income Tax Department should be mentioned.
3. If status of entity is "company", then provide type of company i.e., "domestic" or "other than domestic".
4. In the field "Principal Place of Business", the country of tax residence of the recipient of the remittance should be mentioned.

Information for accountant
1. Enter name of the Chartered Accountant in the field "Name of the accountant".
2. Details in at least two address fields should be mentioned.
3. Date of certificate should not be a future date.
4. Registration no. should be numeric.
5. Details of accountant are not required if point no. 15 is selected i.e. any order u/s 195 (2)/ 195 (3)/ 197 of the Income-tax Act has been obtained from Assessing Officer.
6. Certificate number is an alphanumeric field.
Guidelines for PART B of the Form (Particulars of Remittance and TDS)
1. Provide the values as per the accountant certificate obtained in Form 15CB.
2. In case name of the country is not available in drop down list, select value "other" from the drop down and provide name of the country.
3. In case currency name is not available in drop down then select value "other" from the drop down and provide name of the currency.
4. Proposed date of remittance should be current date or a future date.
5. Amount of TDS should be less than amount of remittance.
6. Actual amount of remittance after TDS should be less than amount of remittance.
7. BSR code of the bank through which the remittance is made should be mentioned.
8. Rate of TDS as per DTAA (if applicable) should be mentioned upto two decimal places.
9. Amount should be mentioned upto 2 decimal places.
10. Select any one out of fields 12, 13, 14 and 16. One form is to be filled for one type of remittance.
11. Details of "responsible person" should be mentioned for verification.
12. If no tax has been deducted then value "0.00" should be mentioned in "Amount of TDS" field (foreign currency and Indian Rs.)
13. Value for "rate of deduction as per the Income-tax Act" should be "0.00" if no tax has been deducted and "amount of TDS in Indian and foreign currency" should be "0.00".
Generation of Form 15CA
1. After filling up the information, click "submit". On submission of details if system shows any errors, rectify and re-submit the form.
2. A confirmation screen with all the data filled by the user will be displayed. The same can be either confirmed or edited.
3. On confirmation, a filled up Form 15CA with an acknowledgement number will be displayed. Print out of the Form should be taken, signed and submitted prior to remitting the payment.
4. Form 15CA can be re-printed by selecting the re-print option. For re-printing, please enter "acknowledgement no.", "PAN" and/or "TAN" mentioned in the Form.

FURNISHING OF ITR-V
PRESS RELEASE

Please furnish the Form ITR-V to the Income-tax, Department, CPC, Post Bag No. 1, Electronic City Post Office, Bangalore - 560100, Karnataka BY ORDINARY POST ONLY within thirty days after the date of transmitting the data electronically.
ITR-V sent by Speedpost, Registered Post or Courier will not be accepted.
No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner.

CLARIFICATION REGARDING DEDUCTION UNDER SECTION 80-IB(10) IN RESPECT OF UNDERTAKINGS DEVELOPING BUILDING AND HOUSING PROJECTS
INSTRUCTION NO. 4/2009, DATED 30-6-2009

Under sub-section (10) of section 80-IB an undertaking developing and building housing projects is allowed a deduction of 100% of its profits derived from such projects if it commenced the project on or after 1.10.1998 and completes the construction within four years from the financial year in which the housing project is approved by the local authority.
2. Clarifications have been sought by various CCsIT on the issue whether the deduction u/s 80-IB(10) would be available on a year to year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project u/s 80-IB(10).
3. The above issue has been considered by the Board and it is clarified as under:-
(a) The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year.
(b) In case it is late, found that the condition of completing the project within the specified time limit of 4 years as started in section 80-IB(10) has not been satisfied, the deduction granted to the assessee in the earlier years is should be withdrawn.
4. The above Instruction will override earlier clarififcation on this issue contained in Member(R)'s D.O. letter No. 58/Misc./2008/CIT(IT&CT) dated 29.04.2008 and Member (IT)'s D.O. letter No. 279/Misc./46/08-ITJ dated 2.5.2008.
5. This may kindly be brought to the notice to the notice of the all Assessing Officers in your charge.

NEW TDS RULES IMPLEMENTATION POSTPONED - FILE RETURN WITHOUT UTN
PRESS RELEASE NO.402/92/2006-MC (14 OF 2009), DATED 30-6-2009

The Central Board of Direct Taxes have further decided that the Notification No. 31 of 2009 dated 25.3.2009 amending or substituting Rules 30, 31, 31A and 31AA of the Income Tax Rules, 1962 shall be kept in abeyance for the time being.
Taxpayers filing their income tax returns for assessment year (AY) 2009-10, or any other earlier AY, may continue to file their returns without mentioning the Unique Transaction Number (UTN) as required under the said Notification. The filing of such returns shall be treated as valid and in compliance to the requirements under section 139 of the Income Tax Act, 1961.
Further, the date from which the Notification No. 31 / 2009 shall become applicable on tax deducted at source (TDS) or tax collected at source (TCS) and deposited during the current financial year shall be notified by the Central Board of Direct Taxes subsequently.
All deductors / collectors of TDS / TCS may continue to deposit their TDS / TCS and file their quarterly TDS / TCS returns as per procedure existing prior to issuance of Notification No.31 / 2009 dated 25.3.2009

Section 90 of the Income-tax Act, 1961 - Double taxation agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - With the Union of Myanmar
Notification No. 49/2009-FT & TR-II [F. NO. 504/10/2004-FT & TR-II], dated 18-6-2009

Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Union of Myanmar for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income has been signed in India on the 2nd day of April, 2008 and notifications of the procedures completed, as required by Article 29 of the said Agreement on 30th day of January, 2009;
Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India with effect from the 1st day of April, 2010.

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNION OF MYANMAR FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNION OF MYANMAR
Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, and with a view to promoting economic cooperation between the two countries, have agreed as follows :-
Article 1 : PERSONS COVERED - This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2 : TAXES COVERED - 1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amount of wages or salaries paid by enterprises.

3. The existing taxes to which the Agreement shall apply are in particular :-
(a) in Myanmar :-
(i) the Income-tax imposed under the Income-tax Law, 1974 (Law No. 7 of 1974); and
(ii) the profit tax imposed under the Profit Tax Law, 1976 (Law No. 4 of 1976)
(hereinafter referred to as "Myanmar tax");
(b) in India, the Income-tax, including any surcharge thereon;
(hereinafter referred to as "Indian tax").
4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.
Article 3 : GENERAL DEFINITIONS - 1. For the purposes of this Agreement, unless the context otherwise requires :-
(a) the term "Myanmar" means the Union of Myanmar;
(b) the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;
(c) the terms "Contracting State" and "the other Contracting State" means Union of Myanmar or the Republic of India as the context requires;
(d) the term "national" means :-
(i) any individual possessing the nationality or citizenship of a Contracting State;
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
(e) the term "enterprise" applies to the carrying on of any business;
(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(g) the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;
(h) the term "company" means any body corporate or any other entity that is treated as a body corporate for tax purposes;
(i) the term "tax" means Myanmar or Indian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes;
(j) the term "competent authority" means :-
(i) in the case of Myanmar, the Minister for Finance and Revenue Government of Union of Myanmar or his authorized representative;
(ii) in India, the Finance Minister, Government of India, or its authorized representative;
(k) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when, the ship or aircraft is operated solely between places in the other Contracting State;
(l) the term "fiscal year" means :-
(i) in the case of Myanmar, the financial year beginning on the 1st day of April;
(ii) in the case of India, the financial year beginning on the 1st day of April.
2. As regards the application of the Agreement at any time by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies and any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
Article 4 : RESIDENT - 1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any political sub-division or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows :-
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him;
(b) if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(c) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
(d) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
(e) if he is a national of both States or neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement.
Article 5 : PERMANENT ESTABLISHMENT - 1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" shall include especially :-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
(g) a sales outlet;
(h) a warehouse in relation to a person providing storage facilities for others;
(i) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on.

3. A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than 270 days.
4. Notwithstanding the preceding provisions of this Article the term "permanent establishment" shall be deemed not to include :-
(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person :
(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph, or
(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise;
(c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself.
6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.
7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.
8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6 : INCOME FROM IMMOVABLE PROPERTY - 1. Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
Article 7 : BUSINESS PROFITS - 1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein, if the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly and independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. However, no such deduction shall be allowed in respect of amount, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of banking enterprises by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than toward reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude a Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purpose of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
Article 8 : SHIPPING AND AIR TRANSPORT - 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.
2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
3. Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in international traffic which is incidental to its international operation of ships or aircraft shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State.
4. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.
5. The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
Article 9 : ASSOCIATED ENTERPRISES - 1. Where :-
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would but for those conditions, have accrued to one of the enterprises, but by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profit of an enterprise of the State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.
Article 10 : DIVIDENDS - 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends, is a resident of the other Contacting State, the tax so charged shall not exceed 5 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
Article 11 : INTEREST - 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by :-
(a) the Government, a political sub-division or a local authority of the other Contracting State: or
(b) (i) in the case of Myanmar, the Central Bank of Myanmar, Myanmar Foreign Trade Bank, Myanmar investment and Commercial Bank, Myanmar Economic Bank; and
(ii) in the case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank, the Small Industries Development Bank of India; and
(c) any other institution as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
Article 12 : ROYALTIES - 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. (a) Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base; then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
(b) Where, under sub-paragraph (a) royalties do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, in one of the Contracting States, the royalties shall be deemed to arise in that Contracting State.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
Article 13 : CAPITAL GAINS - 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), or of such fixed base, may be taxed in that other State.
3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident.
4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.
5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State.
6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5, shall be taxable only in the Contracting State of which the alienator is a resident.
Article 14 : INDEPENDENT PERSONAL SERVICES - 1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State :
(a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or
(b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any period of 12 months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State; or
(c) if the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment situated in that Contracting State and exceeds in the fiscal year US $ 16,000.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants.
Article 15 : DEPENDENT PERSONAL SERVICES - 1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if :
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State.
Article 16 : DIRECTORS' FEES - Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the Board of Directors of a company which is a resident of the other Contracting State may be taxed in that other State.
Article 17 : ARTISTES AND SPORTSPERSONS - 1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson from personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his/her capacity as such accrues not to the entertainer or sportsperson himself/herself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15 be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the activities are substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.
Article 18 : PENSIONS - 1. Subject to the provisions of paragraph 2 of Article 19, any pensions and other similar remuneration for past employment or any annuity for past employment arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State.
2. The term "annuity" means a stated sum payable periodically at stated times during the life of the annuitant or during a specified or ascertainable period of time under an obligation to make the payments in respect of past employment.
Article 19 : GOVERNMENT SERVICE - 1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority or a statutory body thereof to an individual in respect of services rendered to that State or political sub-division or local authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who :
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or political sub-division or local authority thereof shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration and to pension in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof.
Article 20 : STUDENTS - 1. A student who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training shall besides grants, loans and scholarships be exempt from tax in that other State on :
(a) payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and
(b) remuneration which he derives from an employment which he exercises in the other Contracting State if the employment is directly related to his studies.
2. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than six consecutive years from the date of his first arrival in that other State.
Article 21 : PROFESSORS, TEACHERS AND RESEARCHERS - 1. A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State.
2. This Article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some private person or persons.
3. For the purposes of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.
Article 22 : OTHER INCOME - 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident, of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in form of lotteries, winnings from games and gains from activities of similar nature, such income may be taxed in the other Contracting State. Article 23 : METHODS FOR ELIMINATION OF DOUBLE TAXATION - 1. The laws in force in either of the Contracting State shall continue to govern the taxation of income in the respective Contracting States except where express provision to the contrary is made in this Agreement. Where income is subject to tax in both Contracting States, relief from double taxation shall be given in accordance with the following paragraphs of this Article.
2. In Myanmar :
(a) Where a resident of Myanmar derives income which, in accordance with the provisions of this agreement, may be taxed in India, Myanmar shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in India.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in India.
(b) Where in accordance with any provision of the agreement, income derived by a resident of Myanmar is exempt from tax in Myanmar, Myanmar may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
3. In India:
(a) Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Myanmar, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the tax paid in Myanmar.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Myanmar.
(b) Where in accordance with any provision of the Agreement, income derived by a resident of India is exempt from tax in India, India may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
Article 24 : NON-DISCRIMINATION - 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence are or may be subjected. This provision shall notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an Enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirements connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
5. The provisions of this Article shall apply to the taxes covered by this Agreement.
Article 25 : MUTUAL AGREEMENT PROCEDURE - 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limit of the domestic law of tne Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.
Article 26 : EXCHANGE OF INFORMATION - 1. The competent authorities of the Contracting States shall exchange such information (including documents or authenticated copies of the documents) as is necessary for carrying out the provisions of this Agreement or of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political sub-divisions or local authorities insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in the first sentence. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information (including documents or authenticated copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information. 5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
Article 27 : LIMITATION OF BENEFITS - 1. A resident of a Contracting State shall not be entitled to the benefits of this Agreement if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to take the benefits of this Agreement.
2. The case of legal entities not having bona fide business activities shall be covered by the provisions of this Article.
Article 28 : MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS - Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
Article 29 : ENTRY INTO FORCE - 1. The Contracting States shall notify each other in writing, through the diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement.
2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article.
3. The provisions of this Agreement shall have effect:
(a) in Myanmar:
(i) in respect of taxes withheld at source, to the income derived on, or after the first day of April in the fiscal year following the fiscal year in which the Agreement enters into force;
(ii) in respect of other taxes on income, to taxes chargeable for any fiscal year beginning on or after the first day of April of the next fiscal year following the year in which this Agreement enters into force; and
(b) In India, in respect of income derived in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force.
Article 30 : TERMINATION - This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:
(a) in Myanmar:
(i) in respect of taxes withheld at source, to income derived on or after the first day of April in the fiscal year following the year in which the notice is given;
(ii) in respect of other taxes on income, to taxes chargeable for any fiscal year beginning on or after the first day of April of the next fiscal year following the year in which the notice is given;
(b) in India: in respect of income derived in any fiscal year on or after the first day of April next following the calendar year in which the notice is given.
IN WITNESS whereof the undersigned, duly authorized thereto, have signed this Agreement.
DONE in duplicate at New Delhi on the 2nd day of April in the year 2008 each, in the Hindi, Myanmar and English Languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.
Protocol
At the moment of signing the Agreement this day concluded between the Government of the Republic of India and the Government of the Union of Myanmar for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have agreed upon the following provisions which shall be an integral part of the Agreement.
1. For the purpose of computing the time limit in paragraph 3(a) of Article 5, the 270 days period begins as of the date on which the construction activity itself begins; it does not take into account the time spent solely on preparatory activities.
2. With respect to Article 7: - Where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of the income which is attributable to the actual activity of the permanent establishment for such sales or business. In particular, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits of such permanent establishment shall not be determined on the total amount of the contract, but shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the State where the permanent establishment is situated. The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the State of which the enterprise is a resident.
3. It is understood that the two Contracting States will review the provisions of this Agreement after a period of 4 years from the date on which this Agreement enters into force in order to consider the inclusion of an Article on "Fees for Technical Services" within the scope of this Agreement. 4. It is understood that the two Contracting States will review the provisions of Article 8 of this Agreement after a period of 4 years from the date on which this Agreement enters into force in order to consider the taxation of income of shipping enterprises from operations in international traffic, in the source State.
5. It is understood that if the domestic law of a Contracting State is more beneficial to a resident of the other Contracting State than the provisions of this Agreement, then the provisions of the domestic law of the first-mentioned State shall apply to the extent they are more beneficial to such a resident.
6. When Myanmar introduces a provision in its domestic law regarding assistance in collection of taxes to other treaty partners or agrees to extend such assistance to any other treaty partner, then the competent authorities of the two Contracting States shall extend assistance in the collection of taxes to each other.
In witness whereof, the undersigned, being duly authorized by their respective Governments, have signed this Protocol. DONE in duplicate at New Delhi on the 2nd day of April in the year 2008 each, in the Hindi, Myanmar and English Languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.

CBDT ON REMITTANCE TO NON-RESIDENTS UNDER SECTION 195
CIRCULAR NO. 04/2009, DATED 29-6-2009

Section 195 of the Income-tax Act, 1961 mandates deduction of income tax from payments made or credit given to non-residents at the rates in force. The Reserve Bank of India has also mandated that except in the case of certain personal remittances which have been specifically exempted, no remittance shall be made to a non-resident unless a no objection certificate has been obtained from the Income Tax Department. This was modified to allow such remittances without insisting on a no objection certificate from the Income Tax Department, if the person making the remittance furnishes an undertaking (addressed to the Assessing Officer) accompanied by a certificate from an Accountant in a specified format. The certificate and undertaking are to be submitted (in duplicate) to the Reserve Bank of India / authorised dealers who in turn are required to forward a copy to the Assessing Officer concerned. The purpose of the undertaking and the certificate is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.

2. There has been a substantial increase in foreign remittances, making the manual handling and tracking of certificates difficult. To monitor and track transactions in a timely manner, section 195 was amended vide Finance Act, 2008 to allow CBDT to prescribe rules for electronic filing of the undertaking. The format of the undertaking (Form 15CA) which is to be filed electronically and the format of the certificate of the Accountant (Form 15CB) have been notified vide Rule 37BB of the Income-tax Rules, 1962.

3. The revised procedure for furnishing information regarding remittances being made to non-residents w.e.f. 1st July, 2009 is as follows:-
(i) The person making the payment (remitter) will obtain a certificate from an accountant* (other than employee) in Form 15CB.
(ii) The remitter will then access the website to electronically upload the remittance details to the Department in Form 15CA (undertaking). The information to be furnished in Form 15CA is to be filled using the information contained in Form 15CB (certificate).
(iii) The remitter will then take a print out of this filled up Form 15CA (which will bear an acknowledgement number generated by the system) and sign it. Form 15CA (undertaking) can be signed by the person authorised to sign the return of income of the remitter or a person so authorised by him in writing.
(iv) The duly signed Form 15CA (undertaking) and Form 15CB (certificate), will be submitted in duplicate to the Reserve Bank of India / authorized dealer. The Reserve Bank of India / authorized dealer will in turn forward a copy the certificate and undertaking to the Assessing Officer concerned.
(v) A remitter who has obtained a certificate from the Assessing Officer regarding the rate at or amount on which the tax is to be deducted is not required to obtain a certificate from the Accountant in Form 15CB. However, he is required to furnish information in Form 15CA (undertaking) and submit it along with a copy of the certificate from the Assessing Officer as per the procedure mentioned from Sl.No.(i) to (iv) above.
(vi) A flow chart regarding filing of Form 15CA and Form 15CB is enclosed at Annexure -A.

4. The Directorate General of Income-tax (Systems) (www.incometaxindia.gov.in) shall specify the procedures, formats and standards for running of the scheme as well as instructions for filling up Forms 15CA and 15CB. These forms shall be available for upload and printout at www.tin-nsdl.com.

5. The Reserve Bank of India is being requested to circulate the revised procedure among all authorised dealers.

RETURN SCRUTINY MANUAL FOR SCRUTINY OF ST 3 RETURNS Circular No. 113/7/2009-ST, dated 23-4-2009

The Working Group on Central Excise and Service Tax re-engineering, constituted by the Board has prepared a Return Scrutiny Manual for Service Tax (RSMST). The said manual has been approved by the Board and a copy of the same is enclosed herewith (not printed).

2. The self-assessment facility requires a strong compliance verification system which in turn necessitates an effective return scrutiny mechanism. The RSMST proposes to bifurcate the scrutiny into two parts, preliminary scrutiny and detailed scrutiny. While the preliminary scrutiny would cover all the returns and could be done even online, detailed scrutiny would cover selected returns, identified on the basis of risk parameters, developed from the information furnished in the returns submitted by the taxpayers.

3. The preliminary scrutiny has been designed to check completeness of the information provided, timeliness, arithmetic accuracy etc. The detailed scrutiny will ensure correctness of classification, exemption availed, valuation, availment of CENVAT credit etc.

4. At the outset it is important for the field formation to understand the difference between audit and scrutiny of return. The role of the officer carrying out scrutiny of return would be limited to validating the correctness of the assessment made in the return filed by the taxpayer. The result of such validation should be communicated to audit or anti-evasion section as required for taking further action. The salient features of the manual are that it prescribes guidelines for,-

PROCEDURES REVISED ON ACCOUNTING EXCISE DUTIES
General Circular No. 4/2009-CE, dated 20-3-2009

Copy of Pr. Chief Controller of Accounts, CBEC, New Delhi's letter F. No. Coord. II/9-17/Major Head/09/249 dated 9-3-2009 regarding Major Head-wise scrolling, remittance and put-through of physical collection of Central Excise Duties and Service Tax is communicated herewith for information, guidance and necessary action.

Copy of Pr. Chief Controller of Accounts, CBEC, New Delhi's letter F. No. Coord. II/9-17/Major Head/09/249 dated 9-3-2009.
F.No. Coord.II/9-17/Major Head/09/249
Office of the
Pr. Chief Controller of Accounts
Central Board of Excise & Customs
AGCR Building, New Delhi
Dated: 9th March, 2009

To
The General Manager	The General Manager,
Reserve Bank of India,	Reserve Bank of India,
Deptt. of Govt. & Bank Accounts,	Central Accounts Section,
Central Office, 4th floor, Byculla	Additional Office Building,
Office Building,	East High Court Road,
Opp. Mumbai Central Station,	Nagpur-440 001.
Byculla, Mumbai-400 008

Major Head-wise scrolling, remittance and put-through of physical collection of Central Excise Duties and Service Tax.
Sir,
The Accounting procedure relating to Electronic Accounting system in Excise and Service Tax (EASIEST) which covers the physical collection of Central Excise and Service Tax vide para 5.2 specifies the need of the Focal Point Branch of the banks to generate the main scrolls Commissionerate-wise and Major Head-wise and send them to the concerned Pay and Accounts Office. The link cell of the banks are to settle the funds with RBI accordingly and the monthly put-through statement are also be generated Bank-wise, Commissionerate-wise and Major Head-wise by RBI, CAS, Nagpur.
Due to the bifurcation and trifurcation of Commissionerates and the introduction of multi-banking and extended multi-banking, the preparation and transmission of scrolls, DMS etc. have become very cumbersome for the banks as well as Pay and Accounts Offices with attendant problems of reconciliation between Pr. Account Office/PAO, CBEC, FPBs of banks and RBI, CAS, Nagpur.
Further, upon the operationalization of the e-PAOs (C.Excise) at Chennai and e-PAO (S.Tax) at Mumbai w.e.f. 1-8-08 under EASeR, where Commissionerate-wise scrolling by the banks have been dispensed with, the reconciliation of scrolls, DMS and the put-through statements have shown a distinct improvement.
The need for dispensing with Commissionerate-wise scrolling has been under consideration of this office for same time past. On a careful consideration of all relevant aspects, it has been decided in consultation with the Office of the Controller General of Accounts to dispense with Commissionerate-wise scrolling in the case of physical revenue of C. Excise and Service Tax by the banks. As a natural corollary, this will imply PAO-wise & major head wise remittance by the link cells of the banks and PAO-wise & major head wise preparation of put-through statements by the link cells and RBI.
The revised procedure will be effective from 1st April, 2009 and shall not affect the existing banking arrangements. However, the banks will scroll the receipts to the concerned PAO major head-wise only and the scrolls may contain receipts relating to any of the Commissionerates falling under the accounting jurisdiction of the particular PAO. These instructions would also cover the PAO (Revenue), CBEC, Kolkata, PAO (Revenue), CBEC, Mumbai (to be operational from 1-4-2009) and the e-PAOs for Central Excise and Service Tax at Chennai and Mumbai respectively.
You are requested to issue necessary instructions to the banks for implementation of the revised procedure for the physical collection of Central Excise Duties and Service Tax w.e.f. 1-4-09.
You are also requested to initiate necessary action for generation of put-through statements PAO-wise.
This issues with the approval of Pr. Chief Controller of Accounts, CBEC.

ISSUANCE OF SCNS FOR LEVY OF PENALTY IN THE CASES WHERE SERVICE TAX IS PAID SUO MOTU BY THE ASSESSEE
Letter F.No. 137/167/2006-CX.4, dated 3-10-2007





Section 73(1A) of the Finance Act, 1994 provides for conclusion of adjudication proceeding in the cases of wilful suppression/fraud/collusion if the taxpayer pays service tax liability along with interest and a penalty equal to 25% of service tax amount, within a period of one month from the date of issue of SCNs. Similarly, section 73(3) provides conclusion of adjudication proceedings in other cases on payment of service tax and interest.

2. A question has been raised as to whether the conclusion of proceedings in such cases is limited to the action taken under section 73 of the Act or all proceedings under the Finance Act, 1994, including those under sections 76,77 and 78, get concluded.

3. The issue has been examined. The intention of section 73(1A) has already been explained vide para 8(g) of the post budget instructions issued by TRU vide D.O.F. No. 334/4/2006-TRU, dated 28-2-2006, wherein it has been clarified that this sub-section provides for conclusion of adjudication proceedings in respect of person who has voluntarily deposited the service tax.

3.1 The relevant portion of section 73 is reproduced below,-
"Provided further that where such person has paid service tax in full together with interest and penalty under sub-section (1A), the proceeding in respect of such person and other person to whom notices are served under sub'-section (1) shall be deemed to be concluded."
Thus, law prescribes conclusion of proceedings against such person to whom SCN is issued under sub-section (l) of section 73. Therefore, it is not merely a conclusion under sub-section (1), but conclusion of all proceeding against such person. Similar is the position in respect of sub-section (3) of section 73.

4. Accordingly, conclusion of proceeding in terms of sub-sections (1A) and (3) of section 73 implies conclusion of entire proceedings under the Finance Act, 1994.

Status of an addition made on basis of a statement not tested by cross examination



The omission to allow cross examination merely prevents the ITO from making an addition and can be corrected by allowing the cross examination and the AO can be directed to proceed further to examine the matter afresh on the basis of cross examined statement.

ITAT, DELHI BENCH 'B': NEW DELHI

Centurion Investment & International Trading Co. Pvt. Ltd.

v.

ITO

ITA No. 85/Del/2008

May 15, 2009

RELEVANT EXTRACTS :

** ** ** ** ** **

13. We have heard the parties and considered the rival submissions. We have considered the various judgments cited by both the parties. It is a matter of record that the assessee had not been allowed the cross examination of the party whose statement has been used against him in making the assessment the addition us thus in violation of principles of natural justice. Not allowing cross examination is a defect of procedural in nature. It is to be allowed in order to make the assessment by using the principal statement, the examination in chief tested on cross examination. It is only a procedural requirement to be complied with before making the assessment under the Act in view of the decision in the cases of Pooran Mall & Sons 96 ITR 390 (SC). Not following the procedural provisions like allowing cross examination will not make an assessment null and void. At best it could be an irregularity liable to be cured and in such a case the assessment could be set aside, to be redone. An addition made does not cease to be an addition merely by reasons of want of cross examination. It will be a proceeding liable to be challenged and corrected.

14.The order of the Assessing Officer though was vitiated by an illegality which supervened, not at the initial stage of the proceedings, but during the course of it and therefore assessment cannot be annulled nor the addition can be deleted because of that illegality or irregularity; the matter requires to be set aside to be reprocessed and restart from that stage of illegality/irregularity in the light of the Supreme Court in the case of Guduthur Bros. 40 ITR 298 (SC). In this case, a penalty was levied u/s 28(1)(a) of the 1922 Act without affording a hearing to the assessee as required by sub-section (3) of section 28 of the Income-tax Act. the matter was taken up in appeal and the AAC held that the order was defective and, therefore, set aside that order and directed to refund of penalty if it had been recovered. No further direction to pass an order afresh was given. The Assessing Officer, however, issued a further notice calling upon the assessee to appear before him so that they might be given an opportunity of being heard. It was challenged before the High Court by way of writ which was dismissed in limine by the High Court holding that the contention raised by the assessee perhaps may be raised before the income-tax authorities. The matter then came up before the Supreme Court by way of SLP. The Supreme Court held that the notice issued to the assessee t show cause as to why penalty should not be imposed on them did not cease to be operative because the AAC pointed out the illegality which vitiated proceedings after it was lawfully initiated and the notice having been remained to be still disposed of. The proceedings now started can be described as during the course of assessment proceedings, because the action will relate back to the time when the first notice was issued.

24.From the discussion above it is evident that merely by reasons of want of cross examination the addition cannot be deleted. It will be an addition liable to be challenged and corrected. An omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (charging sections). Any such omission or defect may render the order made irregular depending upon the nature of the provision not complied with but certainly not void or illegal. At the worst, they are defective proceedings or irregular proceeding liable to be cured. An addition made on the basis of a statement not tested by cross examination is invalid and it is vitiated, but the invalidity is not, however, of such a nature, which goes to the root of the proceedings. It could be set aside for being re-done de novo. The CIT (A) should not have upheld the addition on the basis of such a statement.

25.The omission to allow cross examination merely prevents the ITO from making an addition and can be corrected by allowing the cross examination and the Assessing Officer can be directed to proceed further to the examine the matter afresh on the basis of cross examined statement. The power of setting aside the order of assessment, where it is illegal, is inherent in any appellate Court his order would be perfectly legal order in directing the ITO to issue notice to the assessee before making an assessment because he was not satisfied regarding the correctness of the assessee's return. The Tribunal/CIT (A) had ample jurisdiction to give directions to the ITO to comply with the requirements of law. It has inherent power to set aside illegal order of assessment and direct ITO to comply with requirements while making de novo assessment. In 1960 the Supreme Court in Guduthur Bros.' case (supra) almost in the same factual background, held that the ITO had jurisdiction to continue the proceedings from the stage at which the illegality had occurred.

Levy of penalty under section 158BFA(2) of Income-tax Act, 1961



Addition on the basis of estimate does not ipso facto supply evidence of concealment so as to justify penalty; de hors sufficient evidence penalty cannot be levied.

ITAT, CHENNAI BENCH 'A', CHENNAI

Hakeem S. A. Syed Sathar

v.

ACIT

IT (SS) A No. 113(Mds.)/2007

July 14, 2008

RELEVANT EXTRACTS :

** ** ** ** ** **

11. In the scheme of the Act, the proceedings for imposition of penalty though emanating from proceedings of assessment, are essentially independent and a separate aspect of the proceedings which closely follow the assessment proceedings. Penalty proceedings are quasi criminal. Findings given in assessment proceedings are certainly relevant and have probative value, but such findings are material alone and may not justify the imposition of penalty in a given case, because the considerations that arise in penalty proceedings are different from those that arise in assessment proceedings. The findings recorded in the assessment order constitute good evidence in the penalty proceedings but those findings cannot be regarded as conclusive for the purpose of the penalty proceedings.

12.It cannot be said that the process of imposition of penalty is automatic in the eventuality of estimated income. All the attendant circumstances of the case must be carefully scrutinized. The question whether penalty should be levied must be considered on the basis of the judicial determination. It must be proved beyond the shadow of doubt that there was actually income and further that income was not disclosed. The mere fact of addition on estimated basis, particularly when the assessment is made on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty. The degree of proof required for the imposition of penalty is quite different from and is of a much higher order than that required for the purpose of making addition on estimate basis. Besides, addition on the basis of estimate does not ipso facto supply evidence of concealment so as to justify penalty. The maxim of English Law as propounded by Justice Holroyd J prescribes: "It is better that ten guilty men should escape rather than one innocent should suffer". Finding of concealment cannot be based on estimation alone. We have considered the entire consepectus of the case. We find that in the facts of the present case the factum of concealment was not proved beyond the shadow of doubt. Additions were made solely on the basis of quotations in consultation register. No enquiry was made to find out the truth. Justice is truth in action. De hors sufficient evidence penalty cannot be levied. Therefore, in our opinion it is not a fit case for the maintenance of penalty. Accordingly we direct the Assessing Officer to delete the same.

Accounting for taxes on income - Accounting Standard 22 - Treatment of deferred tax assets (DTA) and deferred tax liabilities (DTL) for computation of capital

CIRCULAR NO.DNBS.PD/CC.NO. 142/03.05.002

9-6-2009

NFBCs were advised vide DNBS (PD) C.C. No. 124/ 03.05.002/ 2008-09 dated July 31, 2008 that in terms of Accounting Standard 22, the tax effects of timing differences are included in the tax expense in the statement of profit and loss as deferred tax assets (DTA) (subject to the consideration of prudence) or as deferred tax liabilities (DTL) in the balance sheet.

Further that the balance in DTL account will not be eligible for inclusion in Tier I or Tier II capital for capital adequacy purpose and that DTA being an intangible asset, should be deducted from Tier I Capital.

2. In this connection it is further clarified that

a)DTL created by debit to opening balance of Revenue Reserves or to Profit and Loss Account for the current year should be included under 'others' of "Other Liabilities and Provisions."

b) DTA created by credit to opening balance of Revenue Reserves or to Profit and Loss account for the current year should be included under item 'others' of "Other Assets."

c) Intangible assets and losses in the current period and those brought forward from previous periods should be deducted from Tier I capital.

d) DTA computed as under should be deducted from Tier I capital:

(i)DTA associated with accumulated losses; and

(ii)The DTA (excluding DTA associated with accumulated losses) net of DTL. Where the DTL is in excess of the DTA (excluding DTA associated with accumulated losses), the excess shall neither be adjusted against item (i) nor added to Tier I capital."

3.NBFCs shall comply with all instructions as above and also contained in the circular dated July 31, 2008 in this regard meticulously.

Eligibility of exemption under section 80-IB (10) of IT Act, 1961



If an assessee has developed a housing project, wherein the majority of the residential units has a built-up area of less than 1500 sq.ft. i.e., the limit prescribed by section 80-IB(10) and only a few residential units are exceeding the built-up area of 1500 sq. ft., there would be no justification to disallow the entire deduction under section 80-IB(10); it would be fair and reasonable to allow the deduction on proportionate basis in that case.

ITAT, NAGPUR BENCH, NAGPUR

ITO

v.

AIR Developers

ITA NO. 447/Nag/2007

May 21, 2008

RELEVANT EXTRACTS :

** ** ** ** ** **

6.5. In the case of Bengal Ambuja Housing Development Ltd. (supra), the ITAT, Kolkata Bench held as under:

"It is apparent from the perusal of section 80IB(10) that this section has been enacted with a view to provide incentive for businessmen to undertake construction of residential accommodation for smaller residential units and the deduction is intended to be restricted to the profit derived from the construction of smaller units and not from larger residential units. Though the A.O. has denied the claim of the assessee observing that larger units were also constructed by the assessee, at the same time, it is also a fact on record that the assessee had claimed deduction only on account of smaller residential units which were fulfilling all the conditions as contained in section 80IB (10) and the same has not been disputed by the A.O. also. We have also noted down the fact that even the provision as laid down in section 80IB(10) does not speak regarding such denial of deduction in case of profit from a housing complex containing both the smaller and large residential units and since the assessee has only claimed deduction on account of smaller qualifying units by fulfilling all the conditions as laid down under section 80IB(10), the denial of claim by the assessee is on account of rather restricted and narrow interpretation of provisions of clause(c) of section 80IB(10) while coming to such conclusion, we also find support from the order of the Hon 'ble Supreme Court in case of Bajaj Tempo Ltd. (supra), wherein it was held that provisions should be interpreted liberally and since in the present case also, the assessee by claiming pro-rata income on qualifying units has complied with all the provisions as contained in the said section, in our considered opinion, such claim of the assessee was rightly allowed by the Id. CIT(A) by reversing the order of A. (9)."

6.6 The above decision of the ITAT, Kolkata Bench is also upheld by the Hon'ble ITAT, Kolkata High Court in ITA No. 453 of 2006 wherein the Hon'ble High Court vide order dated 5.1.2007 held as under:

"The appeal is now taken up for hearing and after hearing the learned counsel for the parties and perusing the order passed by the Tribunal, we find that no substantial question of law is involved in this matter. Hence we dismiss the appeal.''

6.7 The ratio of the above decision of the ITAT, Kolkata Bench would be squarely applicable to the case under consideration before us because the facts are identical. Moreover, even if it is held that in view of the above two decisions of the ITAT, two views are possible with regard to interpretation of section 80IB(10). It is a settled law that the view favourable to the assessee should be adopted .Section 80IB(10) is a beneficial provision and it has been held by the Hon'ble Apex Court in the case of Bajaj Tempo Ltd. 196 ITR 188 that a beneficial provision should be interpreted liberally. If an assessee has developed a housing project, wherein the majority of the residential units has a built-up area of less than 1500 sq.ft. i.e., the limit prescribed by section 80IB(10) and only a few residential units are exceeding the built-up area of 1500 sq.ft., there would be no justification to disallow the entire deduction under section 80IB(10). It would be fair and reasonable to allow the deduction on proportionate basis i.e. on the profit derived from the construction of the residential unit which has a built-up area of less than 1500 sq.ft. i.e. the limit prescribed under section 80IB(10). In view of the above, we direct the AO that if he finds that the built-up area of some of the residential units is exceeding 1500 sq.ft., he will allow the proportionate deduction under section 80IB(10). Accordingly, the appeal of the Revenue is dismissed and cross objection of the assessee is deemed to be partly allowed as above.

Conditions precedent for reopening of a completed assessment



In a case of reopening of a completed assessment, undoubtedly, the onus lies heavy on the department and it is the bounden duty of the department under the law to confront the assessee with the evidence to be used against the assessee.

ITAT, AMRITSAR BENCH, AMRITSAR

ITO

v.

Bansi Lal

ITA NO. 333 (ASR)/2007

April 11, 2008

RELEVANT EXTRACTS :

** ** ** ** ** **

21. We have heard the parties and have perused the material on record. The learned Commissioner (Appeals) has held that the case of the Assessing Officer was based on the statement of Shri Ramesh Kumar, which was not confronted to the assessee, which was incumbent upon the department to do, since it was a case of reopening of a completed assessment. That the findings recorded by the learned Commissioner (Appeals) in this regard are purely findings of fact, the department has not been able to dispute. The statement of Shri Ramesh Kumar was never confronted to the assessee. In a case of reopening of a completed assessment, undoubtedly, the onus lies heavy on the department and it is the bounden duty of the department under the law to confront the assessee with the evidence to be used against the assessee. The assessee cannot be put to prove a negative. In reassessment proceedings, the burden is on the Revenue to establish that there had income which was escaped assessment. It has been so held in "Tin Manufacturing Co. of India vs. CIT", 222 ITR 322 (All). Not confronting the statement of Shri Ramesh Kumar to the assessee when such statement was to be used against the assessee, is in stark violation of the basic principle of natural justice, i.e., "audi alteram partem". Nobody can be condemned unheard. It is the mandatory requirement of law to afford every party full opportunity of hearing. It was on the basis of the statement of Shri Ramesh Kumar that the A.O. came to the conclusion that the sum of Rs.l lac was forfeited by the assessee. Non-confronting of the statement of Shri Ramesh Kumar to the assessee deprived the assessee of his right of rebutting it. The learned CIT(A) has categorically observed that the A.O. did not react on the issue of the confessional statement made by Shri Ramesh Kumar to assess Rs.l lac in his hand, though he was present at the time of hearing of the appeal before the learned CIT(A), nor did he offer any comment regarding the finding of the DDIT to assess the said amount of Rs.l lac in the hands of Shri Ramesh Kumar. It remains firmly established that no material has come on record that the agreement between Shri Ramesh Kumar and Shri Kharaiti Lai was cancelled. The fact remains that though the assessee continued to be the legal owner of the plot in question till 18-4-2000, when it was sold by Shri Kharaiti Lai to Shri Varinder Kumar, the assessee was beneficial owner of the plot only upto 14-2-1997, when he (the assessee) sold the plot to Shri Ramesh Kumar through power of attorney executed in favour of Shri Vijay Kumar. Transfer through power of attorney is, undoubtedly, a legally recognised mode of transfer of the property, as rightly noted by the learned CIT(A). Undisputedly, the transfer of the plot under consideration was through power of attorney, in February, 1997. That being so, it cannot, in any manner, be said that the capital gain arose to the assessee in the assessment year 2001-02. As such, we, concurring with the findings of fact recorded by the learned CIT(A) in the impugned order, hereby affirm such findings recorded for deleting the addition Rs .4,93,739/- and hold that it has rightly been concluded that this amount was not taxable in the assessment year 2001 -02 in the hands of the assessee.

Scope for reassessment on ground of allowance of excess deduction on incentives of DEPB



Even in a case where the assessment has been completed under section 143(3) of Income-tax Act, the assessment can be reopened within four years if the conditions under Explanation 2(c) to section 147 have been satisfied.

ITAT, 'B-1' BENCH, MUMBAI

ACIT

v.

Narayandas Sugnomal

ITA No. 7051/Mum/2007

May 26, 2009

RELEVANT EXTRACTS :

** ** ** ** ** **

7. We have considered the issue. The learned CIT (A) has considered that there was a change of opinion by the A.O. and he deemed to have formed an opinion at the time of original assessment on allowing 80HHC deduction on DEPB. There is nothing on record to support the opinion formed by the learned CIT(A) on this issue. The learned counsel during the present proceedings could not point out any show cause letter or clarification sought by the A.O. on the issue of DEPB income and has relied on only legal issues before us. There is no evidence that the A.O. has at least sought clarification or considered the issue of DEPB at the time of original assessment. As seen from the order under section 143(3) passed on 28.02.2003 the issue which was discussed in the order was with reference to manufacturing/processing of goods and recomputation on that basis and in that recomputation in page 10, 90% of the incentives were considered in the working. Except this mention of the incentives in the working, nowhere there was any discussion about the nature of incentives or the incentive being DPEB income. Only the A.O. considered 90% of the incentives at Rs.77,59,495/- in the working of deduction under section 80HHC (3) based on the Audit report submitted by the assessee. In view of this it cannot be said that the A.O. has considered the issue of DEPB and has decided the issue at the time of completion of original assessment. If the A.O. makes enquiry, asks for some clarifications/details/working of claims or computation one can consider that the A.O. made an enquiry and formed an opinion to accept assessee's contention. In this case there is no evidence that the A.O. had at least made any enquiry with reference to the nature of incentives, more so of DEPB. The incomes as reflected in Audit report have been considered in the revised working in the said order. In view of this we are not persuaded by the logic of the learned CIT(A) that once the assessment has been completed by the A.O. and the claim was allowed, he has deemed to have formed an opinion. If that being so the provisions of Explanation 2(c) becomes redundant. Explanation 2(c) is as under: -

"Explanation 2.-For the purposes of this section, ........

(a) ..............

(b) ..............

(c) where an assessment has been made, but-

(i) income chargeable to tax has been underassessed ; or

(ii) such income has been assessed at too low a rate ; or

(iii) such income has been made the subject of excessive relief under this Act ; or

(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed."

8.The provisions of clause (c) of Explanation 2 to Section 147 is with reference to where the assessment has been made but such income has been made the subject of excessive relief under the Act. This gives scope for reassessment even in a case where the assessment has been made. If the opinion of the learned CIT (A) has to be accepted then no assessment can be reopened under this clause because it will always becomes a change of opinion even though there is no evidence on record that the A.O. has formed an opinion. Even in a case where the assessment has been completed under section 143(3), the assessment can be reopened within four years if the conditions under Explanation 2(c) have been satisfied.

9.The only restriction in case where assessment under section 143(3) has been completed, for reopening after four years there should be failure on the part of assessee to disclose fully and truly all material facts necessary for assessment. Even in those cases Explanation 1 was considered by the Hon'ble Bombay High Court in the case of Dr. Amin's Pathology Laboratory vs. JCIT and Others 252 ITR 673 wherein the following has been considered: -

"After introduction of changes in section 147 of the Income-tax Act, 1961, with effect from April 1, 1989, the scope of reassessment has been widened. After the amendment, the only restriction put in the section is "reason to believe". The reason has been a reason of a prudent person. That reason should be fair and not necessarily due to failure of the assessee to disclose fully or partially some material facts relevant for assessment. However, where a period of four years has elapsed the proviso to section 147 of the Income-tax Act, 1961, comes into the picture. Under the said proviso, no action can be taken after four years unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Under Explanation 1 to the proviso, mere production of account books fro which material evidence could have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the proviso. Therefore, mere production of the balance-sheet, profit and loss account or account books will not necessarily amount to disclosure within the meaning of the proviso."

10.Even in a case where mere production of Balance Sheet, P & L Account or account books will not necessarily mean disclosure within the meaning of the proviso and the Hon'ble Bombay High Court has upheld the reopening of the assessment after four years in the above said case. In this particular case the facts were entirely in favour of the Revenue to hold that the A.O. has not formed any opinion at the time of original assessment and Explanation 2(c) is clearly applicable to the facts of the case. In view of this we are not in agreement with the order of the learned CIT (A) that the A.O. deemed to have formed an opinion and it is change of opinion.

12.We are also not in agreement with the above findings given by the learned CIT (A) with reference to the basis for reopening. While accepting that the A.O. has power to reopen the assessment after the aforesaid amendments, he failed to notice that the opinion expressed by the CBDT in its earlier letter was the basis for Assessing Officer's forming an opinion to reopen. In fact the Board has issued circular first and later amended the Act w.e.f. 01.04.1998 by the Taxation Laws (Amendment) Act 2005 which indicates that the issue of DEPB were very much in consideration of the Revenue and the A.O. has formed an opinion that income escaped assessment consequent to the Board's circular dated 08.09.2004 which is the basis for reopening of the assessment. There cannot be two situations where the A.O. forms an opinion on the basis of the Board's circular which can considered wrong but forms the same opinion after the amendment which can considered correct. The learned CIT(A)'s logic in holding that the A.O. can be said to have acted quite in hurry before bringing the amendment in the statute cannot be upheld, since the A.O. has formed an opinion that excess relief was granted on the basis of Board's circular and this belief get sustained by the consequent amendment to the Act and not vice-versa. Whether it is the Board's circular or subsequent amendment the A.O. has a reason to believe to consider that excess deduction on incentives of DEPB were allowed and his belief was justified by the amendment brought to the act. In view of this it has to be held that the A.O. has reason to believe that income has escaped assessment at the time of issuing notice under section 148.

Computation of profits & gains under section 44BB of IT Act, 1961



The catering charges and fuel expenses reimbursed cannot be excluded from the ‘amount’ defined in sub-section (2) of section 44BB.

HIGH COURT OF UTTARAKHAND

CIT

v.

RBF Rig Corporation

ITA NO. 71 OF 2007

MAY 22, 2009

RELEVANT EXTRACTS :

** ** ** ** ** **

2. The question of law involved in this appeal, is as under:

Whether, the ITAT has erred in law in holding that reimbursement of expenses on account of catering charges and fuel etc. to the assessee were not part of the gross receipts for the purposes of Section 44BB of the Income Tax Act, 1961?

5. Before further discussion, we think it just and proper to quote the provisions contained in Section 44BB of the Income Tax Act, 1961, which reads as under:-

“44BB. (1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assessee [being a non-resident] engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”:

Provided that this sub-section shall apply in a case where the provisions of section 42 or section 44D or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) the amounts referred to in sub-section (1) shall be the following, namely :-.4 (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India; and (b) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. [(3) Notwithstanding anything contained in sub-section (1), an assessee may claim lower profits and gains than the profits and gains specified in that sub-section, if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB, and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee.]

Explanation. –For the purposes of this section,-

(i) (i) “plant” includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business;

(ii) (ii) “mineral oil” – includes petroleum and natural gas.]

6. The above quoted section makes a special provision for computing profits and gains by the non-resident assessees engaged in the business of exploration etc. of mineral oils. Sub-Section (1) provides that in respect of such assessees notwithstanding anything contained in Section 28 to 41 and Section 43 to 43A of the Act, an assessee shall be deemed to have earned ten per cent profits on the amount mentioned in sub-section (2), received by him. The amount mentioned in sub-section (2), as quoted above, clearly shows that the amount paid to the assessee on account of provision of services and facilities in connection with the extraction or production of mineral oils, whether paid in or outside India, are to be included. The words used in the section, in our opinion, include the amount received by the assessee on account of catering charges and fuel etc. to the non-resident assessee involved in the business of oil exploration, as the catering charges do form part of ‘services and facilities’ in connection with the extraction or production of the mineral oil.

7. A Division Bench of this Court in Commissioner of Income Tax and another Vs. Halliburton Offshore Services Inc. (2008) 300 ITR 265, has held that the amount paid or received refers to all the payment to the assessee or payable to the assessee for the purposes mentioned in this section. In our opinion also the catering charges and fuel expenses reimbursed cannot be excluded from the ‘amount’ defined in sub-section (2) of Section 44BB of the Act. That being so, we are of the opinion that the ITAT and CIT(A) have erred in law in holding that the catering charges are liable to be excluded from the amount for the purpose of calculating the ten per cent deemed profit. Accordingly, the substantial question of law stands answered. 7) A Division Bench of this Court in Commissioner of Income Tax and another Vs. Halliburton Offshore Services Inc. (2008) 300 ITR 265, has held that the amount paid or received refers to all the payment to the assessee or payable to the assessee for the purposes mentioned in this section. In our opinion also the catering charges and fuel expenses reimbursed cannot be excluded from the ‘amount’ defined in sub-section (2) of Section 44BB of the Act. That being so, we are of the opinion that the ITAT and CIT(A) have erred in law in holding that the catering charges are liable to be excluded from the amount for the purpose of calculating the ten per cent deemed profit. Accordingly, the substantial question of law stands answered.

Senior Citizens Savings Scheme, 2004 - Acceptance of Form 15-G from the Nominees

Circular Ref. No. DGBA.CDD.H-10566/15.15.001/2008-09, dated 5-6-2009

As you are aware, investors under Senior Citizens Savings Scheme, 2004 (SCSS) are eligible to file Form 15-G and 15-H to claim exemption from TDS on the interest payable on the deposits under the said scheme.

2. Central Board of Direct Taxes have now clarified, vide their Office Memorandum F.No.275/36/2009-IT(B) dated May 14, 2009, that nominee of the investors of SCSS can also produce 15-G form (declaration of non-deduction of tax from the amount of interest payable) at the time of payment after the death of the depositor.

3. The contents of this circular may be brought to the notice of the designated branches of your bank for information and compliance.

POWER OF ASSESSING OFFICER TO CHANGE NATURE AND CHARACTER OF INCOME UNDER SECTION 143(1) OF IT ACT, 1961

Nature and character of income as disclosed in return of income cannot be changed to, or substituted by, another nature and character while determining tax payable on that income shown in the return, under section 143(1); the Assessing Officer's jurisdiction under section 143(1) is limited to determining tax payable or refund due on the basis of return of income and not otherwise

CITAT, DELHI BENCH 'E', NEW DELHI

Microsoft Regional Sales Corpn.

v.

ADIT

ITA NO. 991 & 992/DEL/2005

APRIL 30, 2009

RELEVANT EXTRACTS :

** ** ** ** ** **

16. On the perusal of the return of income, the statement of total income alongwith notes thereto and form no. 30 claiming refund, filed alongwith the return of income, it is clear that though the assessee had shown total income at Rs. 5,11,68,95,840, the assessee claimed its total tax liability to be Rs. Nil for the reasons given in the notes, and claimed the refund of tax that was deducted at source and deposited under section 191 of the Act aggregating to Rs. 72,67,75,771. It makes it clear that the total tax liability has been computed by the assessee at Rs. Nil in the return of income tiled by it. However, on the other hand, the Assessing Officer has taken the total income at Rs. 5,11,68,95,840 as shown by the assessee in the return of income, but as against "Nil" tax liability shown by the assessee, the Assessing Officer computed the tax liability at Rs. 76,75,34,376 and added thereto the amount of interest charged under section 234A, 234B and 234C, raising a total demand at Rs. 11,1,34,27,096. The dispute in the present case is not with regard to the amount of total income shown by the assessee in the return of income and taken by the Assessing Officer in the intimation made u/s 143(1) of the Act, but the dispute is with regard to the matter as to whether there would be any tax payable by the assessee on the aforesaid amount of total income of Rs. 5,11,68,95,840. The assessee's case as so made out in the note below to computation of income is that no tax is payable by the assessee on the aforesaid income of Rs 5,11,68,95,840. On the other hand, the Assessing Officer worked out the tax liability ft 15% on the aforesaid income of Rs. 5,11,68,95,840 while preparing the intimation u/s 143(1) of the Act. The Id. Commissioner (Appeals) has stated that the A.O. applied tax at the rate of 15 per cent as per DTAA, as so paid by the assessee under section 191 of the Act.

17. To resolve the controversy in hand, we find it necessary to refer the provisions contained m section 143(1) of the Act as effective from 01.06.1999. The sub section (1) of section 143 reads as under: -

(1) "Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142,-

(i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and

(ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee: Provided that except as otherwise provided in this sub-section, the acknowledgement of the return shall be deemed to be intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him:

Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made]. Provided also that where the return made is in respect of the income first assessable in the assessment year commencing on the 1st day of April, 1999, such intimation may be sent at any time up to the 3lsl day of March. 2002. "

18. Under sub-section 1 of section 143 effective from 01.06.1999, the A.O, is required to compute tax or interest, which is due on the basis of such return, or to grant refund wherever due, after adjustment of pre paid taxes. Section 143(1) as substituted by the Finance Act, 1999 with effect from 01.06.1999 has dispensed with the intimation permitting prima facie adjustment, which was in vogue till 31st May 1999. The intimation under section 143(1) on or after 01.06.1999 have authorized the Assessing Officer to issue refund or raise a demand strictly on the basis of return furnished by the assessee. Thus, in the present case, we have to see whether the Assessing Officer has raised a demand of tax alongwith interest due thereupon strictly on the basis of the return furnished by the assessee.

19. From the return of income and computation of income alongwith note annexed thereto, it appears to us that the total income shown by the assessee under column "20" of the return of income has been claimed as not chargeable to tax, and, accordingly under the column No. "23" of the return of income, the assessee has shown the tax payable at "Nil". Similarly, in the computation of income annexed to the return of income the tax payable has been shown at "Nil". The Assessing Officer have proceeded on the basis of amount of total income shown by the assessee under column No. "20" 'total income', and has worked out the tax payable thereupon at the rate of 15 per cent by treating the total income shown by the assessee as "Royalty" chargeable to tax as per Article 12(7) of DTAA between India and U.S.A. In this respect, we find that the scope of section 143(1), as was prevailing at the relevant point of time, permitted the Assessing Officer without requiring the presence of the assessee or production by him of any evidence in support of the return, to deterrnine tax payable or refund due on the basis of return of income filed by the assessee. The return of income filed by the assessee, for the purpose of section 143(1), would include every part of the return of income, and the whole return of income alongwith relevant note, if any, filed explaining the assessee's liability of tax payable on the amount of 'income-shown in the-retivrn of mcome, should be read and considered by the Assessing Officer while exercising his power to determine the tax payable or refund due on the basis of return of income. The Assessing Officer must, therefore, determine the tax found due on the basis of the return and not otherwise, when in the return of income, the assessee has claimed that no tax is payable on the income shown therein, as mentioned in column No. 23 of the return of income and has given the reason thereof vide a note annexed to the return filed. All the columns of the return of income alongwith the said note filed alongwith the return must be treated as a part and parcel of the return when the Assessing Officer proceeds to make an intimation under section 143(1) of the Act. Upon considering the scope of section 143(1), we are of the opinion that when the Assessing Officer proposes to differ with the disclosure made in the return and proposes to levy tax at the rate of 15 per cent by treating the amount shown as 'royalty' within the meaning of Article 12 of DTAA between India and U.S.A. as against the assessee's stand that the amount shown in the return is in the nature of business profits and not royalty based on the provisions of DTAA between India, and under Article 7 of DTAA the business profit was not chargeable to tax in India as the assessee did not have any PE in India, an opportunity of hearing to the assessee was required and, therefore, such matter can be gone into under section 143(3) serving notice under section 143(2) and not under section 143(1) of the Act. In other words, nature and character of income as disclosed in return of income cannot be changed to, or substituted by, another nature and character while determining tax payable on that income shown in the return of income, under section143(1) of the Act. The Assessing Officer's jurisdiction under section 143(1) is limited confining to determine tax payable or refund due on the basis of return of income and not otherwise. The change of character of income from one to the other is not permitted within the powers under section 143(1). This could be done only in regular assessment by issue of notice under section 143(2) of the Act.

20. The application of 15 per cent rate of tax on the amount shown in the return of income will not fall under the category of determination of tax payable on the returned income on the basis of return of income under section 143(1) when the assessee has categorically stated in the note enclosed with the return of income that the returned income is not m the nature of royalty within the meaning of Article 12(7) of DTAA between India and U.S.A. but a business profit not liable to be taxed in India in the absence of any PE in India. There may be a case where the nature of income and rate of tax chargeable thereupon is not disputed but while calculating the tax payable on the returned income there is an error or mistake which could be corrected under this clause, i.e. 143(1). In other words, while calculating the tax as per the rate on the returned income admitted by the assessee in the return of income, there is a mistake in calculation of the amount of tax committed by the assessee, which could be corrected and will fall within the scope of section 143(1) of the Act while determining tax payable on the returned income, but-whether the income returned is chargeable to tax or not, and if chargeable, there what rate of tax is to be applied, or whether the income shown in the return of income is assessable as 'royalty' or 'business profit' or under any other head within the meaning of DTAA between India and U.S.A. are not covered by section 143(1) of the Act. Further, the fact that the assessee has paid tax under section 191 of the Act cannot also to be considered to be conclusive or binding upon the assessee while detennining the tax payable on the returned income under section 143(1) inasmuch as whether the income shown by the assessee in the return of income is to be taxed as royalty or not is a matter of deliberation after considering the assessee's claim made out in a 'Note' annexed to the return of income and after examining and verifying all the facts and materials relating to the issue, and after examining the relevant provisions of DTAA between India and USA alongwith provisions of Income Tax Act and that too after providing an opportunity of being heard to the assessee. Thus, the fact that assessee has paid certain amount of tax under section 191 of the Act cannot also be a basis to create a demand by treating the returned income to be in the nature of royalty while processing the return of income under section 143(1) of the Act. Accordingly, on the facts of the present case, we hold that the Assessing Officer cannot create a demand by treating the income shown in the return of income to be in the nature of royalty within the meaning of Article 12(7) of DTAA between India and U.S.A. while acting under section 143(1) of the Act.

21. In the light of the fact that assessee has shown tax payable at "NIL" under column No. 23 of the return of income and has claimed the amount of tax already paid as refundable to the assessee under column No. 36 of the return of income, and that the assessee has also filed form No. 30 alongwith return of income claiming the refund of tax and in the light of a Note below to the computation of income enclosed with the return of income claiming that the amount or income received by the assessee and shown in the return of income cannot be classified as royalty under provisions of Article 12 of DTAA between India and USA but is to classified as business profit under Article 7 of DTAA between India and USA, and such business profit is not chargeable to tax in India in the light of the fact that assessee had no PE situated in India, we are of the considered view that the Assessing Officer is unjustified in creating the demand by determining the tax at the rate of 15 per cent treating the amount shown by tie assessee to be in the nature of royalty within the meaning of Article 12 of DTAA between India and USA while making an intimation under section 143(1) of the Act. We further hold that Assessing Officer action in creating the demand in the manner as aforesaid is beyond the scope of section 143(1) of the Act. We, therefore, cancel the intimation made by the Assessing Officer under section 143(1) of the Act and set aside the orders of both the authorities below.

ELIGIBILITY TO REBATE OF SERVICE TAX PAID ON INPUT SERVICES USED FOR EXPORT OF SERVICES

There cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate; whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible there is provision for grant of refund or as rebate; without questioning the credit taken, the eligibility to rebate cannot be questioned; input services used in connection with procurement of other input services have to be treated necessarily as input services late filing of the declaration relating to the rebate claim as per notification No. 12/2005-ST dated 19-4-2005 is only a procedural lapse and the non-fulfilment of the same cannot lead to denial of the benefit under the beneficial legislation providing for export benefits

CESTAT, PRINCIPAL BENCH, NEW DELHI

CST

v.

Convergys India Pvt. Ltd.

IService Tax Appeal No. 432-433 of 2007

May 5, 2009

RELEVANT EXTRACTS :

** ** ** ** ** **

5.2. As the issue involved mainly revolves around the

interpretation of the notification 12/2005-ST, the relevant portions of notification is reproduced below:

"2. Conditions and limitations:

(a) that the taxable service has been exported in terms of rule 3 of the said rules and payment for export of such taxable service has been received in India in convertible foreign exchange;

(b) that the duty, rebate of which has been claimed, has been paid on the inputs

; (c) that the service tax and cess, rebate of which has been claimed have been paid on the input services;

(d) the total amount of rebate of duty, service tax and cess admissible is not less than five hundred rupees;

(e) no CENVAT credit has been availed of on inputs and input services on which rebate has been claimed; and

(f) that in case, -

(i) the duty or, as the case may be, service tax and cess, rebate of which has been claimed, have not been paid; or

(ii) the taxable service, rebate for which has been claimed, has not been exported; or

(iii) CENVAT credit has been availed on inputs and input services on which rebate has been claimed, the rebate paid, if any, shall be recoverable with interest as per the provisions of section 73 and section 75 of/the Finance Act, 1994 (32 of 1994) as if no service tax and cess have been paid on such taxable service. 3. Procedure :-

3.1 Filing of declaration. - The provider of taxable service to be exported shall, prior to date of export of taxa

CBDT GOES OVERBOARD ON TDS! Timely Filing Of Income-tax Returns For FY 2008-09 Seriously Jeopardized By New Circular On Claiming Tax Credit Mukesh M. Patel

It seems that the Indian taxpayers can never breathe it easy! Just about the time when they were getting ready to file their tax returns for Assessment Year 2009-10, the Central Board of Direct Taxes (CBDT) has virtually exploded a bombshell! Almost two months after the end of FY 2008-09, CBDT has under its Circular No. 3 dated 21st May, 2009 announced that the credit for any tax deducted at source (TDS) or tax collected at source (TCS) claim in the income-tax return will be allowed only if the taxpayer quotes the relevant unique transaction number (UTN) for such claim and the said UTN matches with the UTN in the database of the Income Tax Department.

That makes a few crores of certificates evidencing TDS from salary, interest and other payments issued by tax deductors during FY 2008-09 altogether redundant and completely jeopardizes the return filing process in the cases of salary earners, investors, senior citizens and small business concerns not liable to tax audit, all of whom are due to file their tax returns by the due date of 31st July, 2009. Circular No.3 attempts to introduce denovo procedural provisions with retrospective effect, which is unprecedented in the history of TDS/TCS. It further threatens to stall the processing of the large number of pending tax refunds relating to FY 2007-08

Mandatory Quoting of UTN for credit of TDS/TCS claims

It has been directed that ITR-1 to ITR-8 shall require the quoting of the relevant UTN for every TDS or TCS claim made by an assessee and that the credit for any TDS/TCS claim will be allowed only if the assessee quotes the relevant UTN and the said UTN matches with that in the database of the Department.

In this regard it has also been noted that with a view to enabling the processing of returns relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (Assessment Year 2009-10), the following procedure will be followed:

(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction record in Financial Year 2007-08 and 2008-09 reported in the quarterly returns received by it.

(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.

(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.

(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income. In its zeal to implement something innovative, the CBDT seems to have lost sight of several practical implications of the matter as highlighted hereunder:

(i) NSDL will be required to generate UTNs for a very large number of TDS/TCS transactions for two financial years running into several crores. It is highly unpractical that this work can be completed in reasonable time and before the due date of filing the tax returns for A.Y.2009-10, i.e. 31st July, 2009.

(ii) Infact, the TDS/TCS data for the last quarter ended on 31st March, 2009 will come to be filed with the NSDL, only by the due date of filing the last quarterly return for F.Y. 2008-09, i.e. on 15th June, 2009. It is not known whether NSDL has already generated UTNs in respect of the TDS/TCS data already on record with it earlier. The data for the last quarter being substantially more voluminous in comparison to the data for the first three quarters, it would further add burden on NSDL after 15th June.

(iii) Even if NSDL is in a position to complete the generating of UTNs for all assessees, the real problem would be of communicating the same to the deductees through their respective deductors. It is a known fact that Government and Semi-Government Departments and other Public Organizations like Banks, Post Offices etc. are generally lethargic in their communications with deductees and it is apprehended that concerned deductees would find it extremely difficult to get timely information of UTNs for TDS/TCS from their respective deductors, even if the same has been conveyed to them by NSDL.

(iv) Not all deductors have E-mail and sending information of UTNs by NSDL to them through post or courier will be time consuming. Moreover, it may be too much to expect that all deductors immediately communicate to deductees their relevant UTNs. The delays arising in this process will ultimately jeopardize the timely filing of Income-tax Returns by concerned assessees, who do not receive their UTNs in time.

(v) It is very difficult to comprehend as to how NSDL will be able to create a facility for allowing independent viewing of the UTNs as mentioned in the Circular. Even the present facility of viewing credits of taxes paid by an assessee via Form 26AS through the Tax Information Network (TIN) is available, only if an assessee is registered with TIN. The registration facility involves individual authorization through the visit of TIN official and is thus time-consuming. Several practical issues such as maintaining confidentiality of TDS/TCS information, likely misuse of the same, etc. may arise, if the viewing facility is made public and not suitably monitored. It is thus highly unpractical that within the short time available before the due date of return filing, the facility for independent viewing can be effectively put in place.

(vi) It needs to be appreciated that the CBDT guidelines have come to be announced nearly two months after the end of F.Y. 2008-09 and majority of the TDS/TCS Certificates have already been issued to the concerned deductees by the respective deductors. Circular No.3 virtually attempts to introduce denovo procedural provisions with retrospective effect, which is unprecedented in the history of TDS/TCS.

(vii) Assessees are thus most unlikely to get complete information of their UTNs for claiming TDS/TCS credit in reasonable time before 31st July, 2009, being the first due date for filing their tax returns. This is bound to create grave anxiety and concern in the minds of lakhs of affected salaried tax payers, investors and senior citizens and also delay filing of their tax returns and payment of self assessment taxes, at the same time creating issues in relation to levy of penal interest under Sections 234A and 234B. Moreover, non-audit business concerns such as firms and proprietors, seeking to file timely returns with a view to avail of the benefit of claims in regard to carry forward of losses, are also likely to be seriously affected. In short, the timely return filing process for A.Y. 2009-10 is likely to be gravely endangered on account of the proposed retrospective operation of issue of UTNs for TDS/TCS credit claims

. Keeping in view the numerous practical problems and difficulties involved as highlighted hereinabove, the directions for mandatory quoting of UTNs in the Income-tax Returns for A.Y. 2009-10 should be withdrawn forthwith and assessees should be advised to file their tax returns as per the earlier provisions.

Submission of ITR V and Issues related thereto

It has been proposed under the Circular that if the return is electronically furnished under a digital signature, the tax-payer is not required to furnish the Form ITR-V with the Income-tax Department as a follow up to the electronic transmitting of data in the return. Similarly, any return which is digitally signed by the assessee and filed with an E-Return Intermediary (ERI), who, in turn, submits the return to the Income Tax Department under his digital signature, will also be deemed to have been filed under a digital signature of the assessee and no Form ITR-V is required to be submitted. In such cases, the date of electronic transmission of the data in the return shall be the date of furnishing the return.

It has been further provided that if the assessee does not use a digital signature for electronically transmitting the data, he is required to follow-up the electronic transmission of the data by submitting the Form ITR-V with the Income-tax Department as verification of the electronic filing of the return. In such a case, the date of transmitting the data electronically will be the date of furnishing the return if the Form ITR-V is furnished within thirty days after the date of transmitting the data electronically. In case, Form ITR-V, is furnished after the above mentioned period, it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within thirty days.

The Circular also states that since the Form ITR-V is bar-coded, assessee is advised not to fold the same and post it in A4 size envelope. The assessee shall furnish the Form ITR-V to the Income-tax Department by mailing it to "Income Tax Department - CPC, Post Box No - 1, Electronic City Post Office, Bangalore - 560100, Karnataka" within thirty days after the date of transmitting the data electronically. The Post Box shall deliver all the Form ITR-V to the Centralized Processing Centre (CPC) of the Income-tax Department in Bangalore. Upon receipt of the Form ITR-V, the CPC shall send an e-mail acknowledging the receipt of Form ITR-V. The e-mail shall be sent in due course to the e-mail address furnished by the tax-payers in his return. No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner.

In the above regard, the following key issues arise for earnest consideration by the CBDT:

(i) Earlier, Form ITR-V was required to be filed by an assessee with the office of his Assessing Officer, which was duly acknowledged by affixing the Department's stamp and seal on the same. The authenticity of this stamp and seal had evidentiary value, more particularly when copies of the same were required to be furnished before various authorities like Government Departments, Banks, Consular Offices etc. Under the proposed new guidelines, since ITR-V is to be sent by mail to Bangalore Electronic City Post Office, the concerned assessee would not receive any official acknowledgment for the acceptance of the same, except the e-mail communication as indicated to be sent in due course. It, therefore, needs to be provided that the ITR-V accompanied by the E-mail acceptance shall be treated as an authentic acknowledgement of the I.T. Return by all concerned agencies.

(ii) Under the earlier arrangement of filing ITR-V with his Assessing Officer, an assessee was confident of the same having been duly received and acknowledged. In the new scheme as proposed, he would have to now rely on the postal department to ensure that it reaches CPC, Bangalore both safely and within the stipulated time of 30 days. Under these circumstances, the proposed provision to treat the return filed electronically as deemed to never have been furnished, even for no fault on part of the assessee would result in grave adverse consequences such as levy of penal interest under Sections 234A and 234B, deprivation of the claim for carry forward of losses and deductions under Chapter VIA, etc.

(iii) Keeping in view the above, it needs to be specifically provided that an assessee shall not be held responsible for any default on account of a postal mishap and the deeming provisions that the return filed electronically was never furnished shall not operate prejudicially against the assessee. It also needs to be provided that in case an assessee does not receive an E-mail acknowledgement from the CPC within 30 days of his mailing the same, he shall have the option of remailing it again during the next 30 days and that he shall not be deemed to be in default in such a situation

DELAYS IN CHEQUE CLEARING - CASE NO. 82 OF 2006 BEFORE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NOTIFICATIONS NO. DPSS.CO. (CHD) NO. 873 / 03.09.01/ 2008-09, DATED 24-11-2008

As you may be aware, during August 2006, a case was filed before National Consumer Disputes Redressal Commission, New Delhi (the Commission) under the Consumer Protection Act, 1986, inviting attention to the delays in cheque clearing and, specifically, to the issue of float in local and inter-city clearing. Admitted in public interest as Case No. 82 of 2006, the complaint had named Reserve Bank of India (the Bank) and all Scheduled Commercial Banks (the banks) as respondents and sought adequate compensation by way of interest for delay in collection.

A number of affidavits were filed by the Bank and by the banks at various points of time and the case was finally disposed off by the Commission on August 27, 2008, with the Commission observing that the Bank with its wide range of powers under the Payment & Settlement Systems Act, 2007 would try to control the float, if any, arising due to delay in collection of outstation cheques. During the course of hearings, orders were passed by the Commission culminating in the final order on 'timeframe for collection of outstation cheques' which is available @ http://www.ncdrc.nic.in/CC820605.htm. We are sure action as contemplated under the orders of the Commission has already been initiated by your bank (as earlier advised, vide, our letter DPSS.CO.No.517 / 03.01.02(P) / 2008-09 dated September 22, 2008).

Many circular instructions have also been issued by the Bank, during the interregnum, on the contents of Cheque Collection Policies (CCPs) framed by banks as also regarding publicity to be given thereto in the interest of better information dissemination and service to customers. Notwithstanding the above, in the interest of better clarity as also to ensure compliance with the orders of the Commission, we reiterate the following: -

(i) Banks shall reframe their CCPs covering local and outstation cheque collection as per the timeframe prescribed by the Commission.

(ii) For local cheques credit and debit shall be given on the same day or at the most the next day of their presentation in clearing. Ideally, in respect of local clearing, banks shall permit usage of the shadow credit afforded to the customer accounts immediately after closure of relative return clearing and in any case withdrawal shall be allowed on the same day or maximum within an hour of commencement of business on the next working day, subject to usual safeguards.

(iii) Timeframe for collection of cheques drawn on state capitals / major cities / other locations to be 7/10/14 days respectively. If there is any delay in collection beyond this period, interest at the rate specified in the CCP of the bank, shall be paid. In case the rate is not specified in the CCP, the applicable rate shall be the interest rate on Fixed Deposits for the corresponding maturity. The timeframe for collection specified by the Commission shall be treated as outer limit and credit shall be afforded if the process gets completed earlier. As advised, vide, directions issued by the Bank dated October 8, 2008 (DPSS.CO.No.611 / 03.01.03 (P) /2008-09) 'banks shall not decline to accept outstation cheques deposited by its customers for collection'.

(iv) Banks shall give wide publicity to the CCP by prominently displaying salient features thereof in bold and visible letters on the notice board at its branches.

(v) A copy of the complete CCP shall be made available by the branch manager, if the customers require so. (vi) The Bank has placed on its website the link to CCPs of banks on their respective websites. Please ensure that no change in the location thereof is effected without prior intimation to this Department to enable updation of the links at our end.

The Bank shall be monitoring the directions issued by it as also those passed by the Commission for compliance. Please treat the matter as urgent and advise us the action taken within a month's time from the date of this letter

WHEN CONCEPT OF RECONSTRUCTION OF BUSINESS IS NOT APPLICABLE FOR DISALLOWING CLAIM OF DEDUCTION UNDER SECTION 80-IB OF IT ACT

The concept of reconstruction of business as contemplated by section 80-1B(2)(i) would not be attracted when a company which is already running one industrial unit sets up another industrial unit; the new industrial unit would not lose its separate and independent identity even though it has been set up by a company which is already running an industrial unit before the setting up of the new unit.

ITAT, MUMBAI BENCH 'E-1', MUMBAI

DCIT

v.

Shamrock

ITA Nos. 4297 & 4298/M/07

May 22, 2009

RELEVANT EXRTRACTS:

** ** ** ** ** ** ** ** ** ** ** **

7.4 The reconstruction of a business or an industrial undertaking must necessarily involve the concept that the original business or undertaking is not to cease functioning, and its identity is not to be lost or abandoned. The concept essentially rests on changes but the changes must be constructive and not destructive. There must be something positive about the whole matter as opposed to negative. The underlying idea of a reconstruction evidently must be - and this is brought out by the section itself - of a 'business already in existence'. There must be continuation of the activities and business of the same industrial undertaking. The undertaking must continue to carry on the same business though in some altered or varied form. If the alterations and changes are substantial, there would be little scope for describing what emerges as a reconstruction of the business. The word 'reconstruction' postulates something which is already constructed in a particular manner because where there is no construction; there cannot be any question of 'reconstruction'. Webster's Dictionary, 2nd Edition, explains the word 'reconstruction' as 'the act of constructing again'. Therefore, while considering the question whether a particular business is or is not 'reconstruction', it is first necessary to enquire what was the nature of the business which was already in existence was the nature of the business, which was already in existence, the same as the nature of business which acquired a new shape ? If the answer is in the negative, there is no scope for holding that there is any 'reconstruction' of the existing business because 'reconstruction' implies the continuation of the same business in some altered form. This alteration may assume the form of changing the manner or method of carrying on the same business; it may involve change or rationalization of the administrative set up or business organization. But when its basic nature changes, it cannot be said that the business is 'reconstructed' It is not every alternation in the mode, method or scope of the activities of a business and it is not every transfer of assets from one unit to another that will involve reconstruction. The expression is no doubt very wide but it does not take in a case of company setting up or establishing a totally independent and viable industrial unit for carrying on the same or similar business even though it might be so set up by way of expanding the already existing business The expression 'reconstruction', in the context in which it is used denotes that the original business or undertaking continues to exist without its identity being In the reconstruction of a business, as in the lost or abandoned . reconstruction of a company, there is an element of transfer of assets and of some change, however, partial or restricted it may be, of ownership of the assets. The transfer, however, need not be of all the assets. It is nonetheless imperative that there should be continuity and preservation of the old undertaking though in an altered form. The concept of reconstruction of business would not be attracted when a company which is already running one industrial unit sets up another industrial unit. The new industrial unit would not lose its separate and independent identity even though it has been set up by a company which is already running an industrial unit before the setting up of the new unit. The situation can be explained by simple example that there is one state line like "line A". If same type of another line like "B" is drawn and same put together the position will be as under:-

"Line A ________________________"

"Line B________________________"

7.5 From above we find that "line A" and "Line B" both are similar nature and style or say same type but it is to note that "Line B" has been drawn independently without disturbing or destroying or even without touching to that "line A". Under this circumstances it cannot said that "Line B" is splitting up, or the reconstruction, of a "line A" already in existence.

ASSESSABILITY OF TERM LOAN WHEN WAIVED BY BANKS UNDER ONE-TIME SETTLEMENT SCHEME

The waiver amount of term loan availed by the assessee does not partake the character of assessable income either under section 28(iv) or under section 41(1) of the Income-tax Act, 1961.

ITAT, COCHIN BENCH, COCHIN

Accelerated Freez & Drying Co. Ltd

v.

DCIT

ITA No. 971/Coch/2008

May 5, 2009

RELEVANT EXTRACTS:

** ** ** ** ** ** ** ** ** ** ** **

19. First we will marshal the facts of the present case. The assessee had availed terms loans from three banks, viz. ICICI Bank Ltd., Standard Chartered Bank Ltd. and Sumitomo Mitsui Banking Corporation (SMBC), Hong Kong. These terms loans were availed by the assessee company for the purpose of acquiring capital assets necessarily to be deployed in the manufacturing system of the assessee company. The assessee company became de-faulter in making the repayments of the installments of term loans along with interest mainly due to its bad financial position. At that point of time, may be for the reasons of recession in business and industry, such defaulted amounts were increasing with various banks. These sticky accounts were necessarily be held by the banks as Non-performing assets (NPA). The Reserve Bank of India was little anxious to watch the high increase in the amount of NPA held by various banks from time to time. Therefore, the RBI formulated a scheme to wipe out the NPA from the balance sheets of the banks through a scheme known as "One Time Settlement Scheme" (OTS). Under this scheme, bank and its constituents could enter into an agreement to settle the loan account in terms of the guidelines of the RBI so that some relief is given to the borrowers by way of waiver in the loan amount.

20. The assessee opted for OTS with the concurrence of the banks and settled the loans for ever in the previous year relevant to the assessment year under appeal. The total loans that remained payable to the banks amounted to Rs. 3486.03 lakhs. The loans were settled for ever on payment of Rs. 2450 lakhs and thereby the assessee company obtained the benefit of waiver of term loans amounting to Rs. 10,36,02,957/-. This waiver benefit obtained by the assessee bank was transferred to its general reserve account.

21. It is trite law that the nomenclature given by an assessee to a particular account in its books of accounts is not the sole test to decide the real character of that account. The Court of appeals in the case of Grafton Hotel Ltd. - 1942 (1) All ER 675-682 has observed that accountancy is a matter of taste. One assessee may be conservative because of outlook and may well decide the debt payments of Revenue account that they are in their nature proper to be debited to capital account. The Supreme Court in the case of Hoshiarpur Electric Supply Co. vs. CIT -41 ITR 608 - has observed that the assessee may credit to revenue account what should otherwise have been credited, correctly to capital account. Again the Supreme Court in the case of Punjab Distilling Industries Ltd. v. CIT -35 ITR 519 has observed that an assessee may credit an amount to capital account what should have otherwise been credited to revenue account. Therefore, it is to be seen that the treatment given to a transaction by an assessee in his books of accounts or his Profit and Loss Account is not decisive of the true nature of the transactions as held by the Supreme Court in the case of Delhi Stock Exchange Association Ltd. vs. CIT - 41 ITR 495. The Supreme Court has held in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT - 82 ITR 363 - that bad accounting effects neither in favour of the assessee nor against the Revenue. Therefore, the fact that the assessee has credited loan waiver amount in its general reserve does not influence the process of determining the exact nature of the issue.

31. There is no doubt that the term loan availed by the assessee from three banks were not in the nature of trading liability but were in the nature of capital liability. There, the waiver of loan liability was not the waiver of any trading liability. The waiver of capital liability would not become income u/s 41(1) on the ground of remission of cessation thereof.

35. In the facts and circumstances of the case, we find that the waiver amount of term loan availed by the assessee does not partake the character of assessable income either u/s 28(iv) or u/s41(1). The decision of the Apex Court in the case of T. V. Sundaram Iyengar and Sons Ltd. -222 ITR 344 - relied on by the lower authorities is distinguishable on facts. The decision relied on by the Addl. Commissioner in the case of Solid containers Ltd. vs. DCIT -308 ITR 417 - is also not applicable to the present case for the reason that the said decision does not differ from the ratio laid down in the decision of the Bombay High Court in the case of Mahindra and Manindra vs. CIT -261 ITR 501.

Regulator wants tax benefits for pension fund contributions

The Union government might consider providing tax benefits to people putting money in the New Pension Scheme (NPS), bringing it on a par with older pension programmes. "I have asked for it and expect it to come through," said D. Swarup, chairman of the Pension Fund Regulatory and Development Authority (PFRDA), referring to the pension regulator's budget wish list. The new United Progressive Alliance government expects to present the budget in the first week of July. Officials preparing the budget are inaccessible till it is presented in Parliament to ensure secrecy. PFRDA extended the scope of NPS to all citizens on 1 May. Contributions are voluntary and open even to people who are unemployed or self-employed. Earlier, NPS was restricted to employees of Union and state governments. The government would have to amend section 80CCD of the Income-tax Act, 1961, to allow for taxation benefits to NPS investors. Section 80CCD allows an employee to deduct from the total income a deposit in a pension account, subject to a ceiling of 10% of the salary. Therefore, tax is levied on a lower level of income. Being a salaried employee is essential to qualify for tax benefits. "Tax benefit under section 80CCD gets cut short to an individual employed. If you are self-employed, you are not eligible," said Vikas Vasal, executive director at consultancy firm KPMG. This affects part of the client base of NPS and also the marketability of the scheme. NPS is part of the previous UPA government's attempt to create a social securitysystem that can be accessed by all citizens. An attempt to introduce legislation to empower PFRDA failed due to opposition from the Communist parties. The current Lok Sabha is expected to debate a new pension Bill that would give PFRDA teeth and remove weaknesses in NPS. There are other taxation issues with NPS as well. Unlike competing social security schemes such as the one run by state-owned Employees Provident Fund Organisation, or schemes offered by life insurers, when an NPS client withdraws accumulated savings, it would be taxed. These schemes, all of which are long-term in nature, enjoy a tax regime described as EEE (exempt, exempt, exempt). When a client makes an annual investment, he qualifies for a tax exemption. The investment returns on the contribution are also exempt from tax. Finally, the accumulated savings is exempt from tax in the hands of the client. NPS savings, on the contrary, are taxed at the last stage. PFRDA has sought parity with competing schemes in the last stage. "I have also urged the government to give an EEE benefit," Swarup said. The uneven tax treatment to NPS is a factor that has contributed to a slow growth in the scheme in the last month, Swarup said, without giving details such as the number of pension fund accounts. - www.livemint.com