DTRTI NEWSLETTER Issue No.8/Chennai July 27, 2018
158TH INCOME TAX DAY CELEBRATIONS AT CHENNAI
Income tax was first levied in 1860 through the first Income tax Act and the authority to levy this duty
came into force on 24th July. Hence this day is celebrated as Income tax day.
Pr.CCIT Shri Sushil Khumar planting a sapling as part of 158th Income tax day celeberations in Chennai.
Visual Arts Students of Stella Maris College, Miss Chiquita Ravi, d/o. Shri Ravichandrasekar, ITO & Miss. Harsha Vardhini received prizes from the Pr.CCIT in appreciation of having painted murals decorating the walls of the renovated old auditorium “Vaigai” during the 158th Income tax day celebrations.
CONTENTS
158th Income tax day celebrations IT World this Week
Officer for the Week Topic for the week
Section for the week Judgment for the Week Learn the subject through a crossword puzzle
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IT WORLD THIS WEEK – FDDI
Foreign-Derived Tangible Income Taxes (FDII) New International Tax Provisions for 2018 and Beyond With the recently enacted tax reform a new term has been introduced into the international tax arena: foreign-derived intangible income (FDII) in USA. We’re going to spend a few minutes wrapping our heads around what this new provision is and its potential impact on taxpayers. Where GILTI income (Global intangible low-taxed income) and the corresponding deduction looks to CFC income, the FDII deduction is sort of opposite of this whereby it looks to the foreign-derived income of a US corporation in order to determine the corresponding deduction. Please note that any foreign derived intangible income is already included within the US taxable income of the corporation. So this provision is not looking to add any additional income to the return, but rather can just potentially provide a deduction based on the foreign-derived income.
The deduction is 37.5% of the foreign-derived intangible income of a domestic corporation for the tax year. (Note that this deduction will decrease to 21.875% after December 31, 2025). We won’t get into the technical computation of the deduction, but in a nutshell it ends up being a deduction of 37.5% of the computed FDII and the deduction is computed similarly to the GILTI computations as discussed in the previous issue of this Newsletter. (Issue-7 dated 20/07/2018) Part of computing the FDII involves determining the foreign derived eligible income of the corporation. Foreign derived eligible income of a taxpayer is deduction eligible income that is derived in connection with property sold to any person who is not a US person for foreign use or services provided to any person not located within the US. Foreign use is any use, consumption, or disposition which is not within the US. So, under this provision a US corporate taxpayer could receive a tax deduction for exports of property used in foreign jurisdiction or for providing services to any person, or with respect to any property, not located in the U.S.
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624
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Troubles will vanish (i.e., will be troubled) before the man who (struggles against difficulties) as a
buffalo (drawing a cart) through deep mire.
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OFFICER FOR THE WEEK
Shri A.K. SATPATHY, IRS, CCIT
PROFILE OF THE OFFICER
Shri A.K. Satpathy belongs to the 1985 batch of IRS. He is a native of Odisha. He has completed B.A. (Political Science) from Utkal University, Bhubaneswar and stood 4th in the university. He completed M.A. (Political Science) from Delhi University and stood 2nd in the university. He joined SAIL in 1980 and worked in Purchase Department, Salem Steel Plant, Tamilnadu and Rourkela Steel Plant, Odisha. He has undergone Materials Management Course at Management Training Institute, Ranchi. During his stint in Income tax Department, he has attended various training courses in NADT, DTRTI – Mumbai and Kolkata. He has attended mid-career training program at IIM, Bangalore and Maryland University, U.S.A. After traning at NADT, Nagpur, he joined the field in May 1987 at Bhubaneswar, Odisha. His initial career as ACIT/DCIT was in the state of Odisha and the major part was ADIT(Inv.), Bhubaneswar and ACIT(H.Qrs.). He also had a brief tenure as ACIT(Sambalpur) for one year. On promotion, he joined as DCIT(Appeal) in Ahmedabad in 1996 and continued in Ahmedabad till 2006 when he got his next promotion as CIT. As JCIT/ Addl. CIT, he has worked in both Company and Non-Company Ranges and also as Addl. DIT (High Court Cell and Prosecution). On promotion as CIT, he joined as CIT(A) in Hyderabad in 2006. Till 2011, he was CIT(A) and thereafter, he served as CIT(Central) till June, 2015 when he was transferred to Odisha as Pr.CIT, Cuttack. As Pr. CIT, he held additional charge of Pr.CIT, Sambalpur for around 6 months. He also held additional charge of Pr. DIT (Inv.), Odisha in addition to his substantive charge. On promotion as CCIT, he joined as CCIT-2, Chennai in February, 2018. He likes gardening & has developed roof top gardens in Bhubaneswar as well as in Hyderabad. Apart from gardening, he also likes cooking and reading books.
FIVE POSERS TO THE OFFICER
1. What are the 3 important leadership principles
you followed which contributed to your success?
Ans.
(i) I never thrust my ideas while interacting with
others at any point during my career.
(ii) I believed in democracy & collective decision
making.
(iii) Maintained equidistance between higher-ups and
subordinates and treated both with equal respect.
2. What would you say have been your greatest
accomplishment & failure & what did you learn
from them?
Ans. I have full job satisfaction & wherever I was
posted in whatever capacity, I tried to do my duty
with utmost dedication and devotion. In my entire
career, I was not after any particular post or place of
posting. I had exposure in almost all areas of
administration, assessment, Judicial, Prosecution.
With this exposure in our department, I feel that I can
work anywhere in any field. This is my great
accomplishment. Fortunately, I have not faced any
failures in my career by God’s grace.
3. What are your suggestions for developing next
generation of leadership in the department?
Ans.
(i) Treat the assessees well with a smile and they will
never mind paying taxes.
(ii) Ability to adapt to the changing circumstances
4. What should be the vision for the department
for the next 5 years?
Ans. Collection of tax should not be the only aim of the
department, but what is required is to create a tax-
friendly atmosphere which will enhance the voluntary
compliance from the taxpayer.
5. What qualities do you think will make an officer
successful in the Department?
Ans. In my view, an officer should
(i) Have the confidence on his/her subordinates and
higher-ups.
(ii) Have a good behavior towards the stakeholders of
the department – assessees, CAs, Advocates, etc. and
never give a chance to them to have a grievance or
complaint against the concerned officer.
(iii) Respect the time of others as his/ her own.
(iv) Indispensability factor in case of individuals
should be done away with.
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TOPIC FOR THE WEEK
SIMPLE STEPS TO PROTECT YOUR COMPUTER SYSTEM FROM CYBER ATTACK
1. Log into web administration interface
to change login credentials.
2. Never use default login credentials of
the router.
3. Regularly keep updating your router’s
firmware.
4. Be aware of malware with SSL (secure
sockets layer) stripping capabilities.
Session held at MSTU, Chennai for the candidates appearing for the departmental exam for
Ministerial Staff
YOUR QUERIES
The Officers and members of staff may send in their queries on technical issues to
[email protected] and the same will be answered by experts in the field of
query. The 3 best queries will be published in the next edition for the benefit of all.
.- குறள் 644
,
.
Understand the qualities (of your hearers) and (then) make your speech; for superior to it, there is neither
virtue nor wealth.
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SECTION FOR THE WEEK (S.245 C)
Application for Settlement of Cases [S. 245 C]
Any assessee against whom a case is pending
before any Income-tax Authority can apply to
the Settlement Commission in the prescribed
manner to have the case settled. The
application must be accompanied by
prescribed fee and once it is submitted it
cannot be withdrawn.
An assessee may, at any stage of a case
relating to him, make an application in
prescribed form for settlement of case. Such
application must contain
(i) a full and true disclosure of his income
which has not been disclosed before the
Assessing Officer
(ii) the manner in which such income is
derived
(iii) the additional amount of income tax
payable on such disclosed income ; and
(iv) the additional income-tax payable on
such disclosed income that (calculated as per
provision of IA) exceeds Rs.100,000.
The Finance Act 2007 has further added that
no such application shall be made unless
(i) the additional amount of income-tax
payable on the income disclosed in the
application exceeds Rs. 3 lakhs; and
(ii) such tax and the interest thereon
which would have been paid had the income
disclosed in the application been declared in
the return of income before the Assessing
Officer on the date of application, has been
paid on or before the date of making the
application and the proof of such payment is
attached with the application.
Calculation Of Addl. Income-Tax [S.245C (IA)]
The method for calculation of additional tax is
given in sub-section (IB) to (ID) of
section 245C. These provisions are
(A) Where The Income Disclosed Relates To
One Previous Year [Section 245 C (1B)]
(i) If the applicant has not furnished a return
in respect of the total income of that year;
then, tax shall be calculated on the income
disclosed in the application as if such income
were the total income.
(ii) If the applicant has furnished a return in
respect of the total income of that year, tax
shall he calculated on the aggregate of the
total income returned and the income
disclosed in the application as if such
aggregate were the total income.
(B) Where The Income Disclosed Relates To
More Than One Previous Year [Section
245C(1D)]
The income shall be considered to be the
income of each previous year and tax shall be
calculated as per aforesaid provisions in
respect of each previous year. The difference
of tax payable and tax paid in respect of each
previous year shall be calculated. The
difference in amount of each previous year
shall be aggregated and this amount shall be
called additional Income-tax.
Note: An application made before the
Settlement Commission shall not be allowed to
be withdrawn by the applicant.
The assessee shall, on the date on which he
makes an application before the Settlement
Commission, also intimate the Assessing Officer
in the prescribed manner of having made such
application to the said Commisssion.
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JUDGEMENT FOR THE WEEK
Anbuchezhian vs. ITSC, ACIT [2018] 402 ITR
471 (Mad) - First and foremost condition for
an assessee to fulfil before Settlement
Commission is to satisfy the Commission that
his disclosure was full and true and if this
basic ingredient is not satisfied, the
Commission can reject the application at this
threshold.
FACTS
The assessee was an individual carrying on
business of distribution of films produced by
third parties.
A search proceeding under section 132 was
conducted in the offices and residential
premises of the assessee in Chennai and
Madurai during which, materials were
seized/impounded as well as cash and notices
under S.153A was issued. The assessee had
admitted undisclosed income under S. 132(4).
Thereafter, he preferred an application before
the ITSC, to settle the issues. The said
application was rejected for the reason that
the assessee had reduced the quantum of
transactions as per the seized material from
Rs. 357 crores to Rs. 175 crores. Pursuant
thereto, the assessee preferred the second
settlement application.
The second application for settlement was
also rejected on the ground that he failed to
make full and true disclosure and also the
manner of earning such income, which were
the requisite conditions laid down in section
245C(1).
On writ : HELD: The first & foremost
condition for an assessee to fulfil before the
ITSC is to satisfy the Commission that his
disclosure was full and true.
The ITSC has recorded that it considered the
application filed by the assessee, the paper
books filed, the submission of assessee and
the available records. After considering the
same, the Settlement Commission pointed
out that the assessee was not able to cogently
explain any of the entries relating to his claim
on 'not done' transaction. Therefore, it is
opined that trueness and fullness of the
disclosure is lacking in the application.
The ITSC took into consideration the written
submissions filed by the assessee during the
course of hearing which contain the co-
relation statement of diary notings with
actual transaction and list of 'not done'
transaction as claimed by the assessee. The
Settlement Commission pointed out that the
assessee was unable to clarify the notings in
the diary and the quantum of transaction.
The Settlement Commission appears to have
pointed out certain deficiencies with regard
to full and true disclosure of the assessee's
income and the manner of earning the same,
including further disclosure of additional
income of Rs. 5 crores. It is recorded by the
Settlement Commission that when these
deficiencies were pointed out, the assessee
relied on seized documents.
However, on perusal of the same, the ITSC
found that the entries appearing in the seized
documents did not match with the
explanations & certain entries were pointed
out such as the entries appearing in the name
of Gnanavel, being part of the seized
material. To the specific query made to the
assessee to explain 'not done' transaction, it
was observed that he was not able to explain
and match the transactions with the entries
appearing in the paper books.
7
…
Further, the Settlement Commission
observed that the explanation of the manner
of earning the further additional disclosure of
Rs.5 crores made in the second application
did not form part of the SOF nor assessee was
able to explain about the nature of details of
the disclosure.
Further, it appears that the Settlement
Commission pointed out these deficiencies to
the assessee during the course of hearing,
who was unable to give any clarification and
therefore it came to the conclusion that there
has been no full and true disclosure. On the
above grounds, the application has been
rejected. Thus, the case on hand is not one
where the Settlement Commission brushed
aside the documents filed by the assessee.
In fact an exercise has been done by the
Settlement Commission to examine the stand
taken by the assessee, giving liberty to the
assessee to explain from the documents filed
in the paper book. It needs to be pointed out
that vital aspects, which were queried by the
Commission, the assessee was unable to
explain or clarify or match the transactions.
An argument was put forth that the ITSC
ought to have utilized the machinery
available with it to cause clarification or to
call for a report under rule 9 or to call for a
report under section 245D(3).
The application is at the stage of admission
and the assessee should satisfy the ITSC that
there has been full and true disclosure.
At that stage of the matter, the Settlement
Commission cannot be expected to or cannot
be compelled to utilize the machinery
available with it or to invoke rule 9 or section
245C of the Income tax Act.
It is for the Settlement Commission to
regulate its business. The manner in which
the Settlement Commission proceeded cannot
be stated to be either arbitrary or
unreasonable.
The Court cannot dictate the procedure that
the Settlement Commission has to follow at
the stage of Section 245D(1) unless there is a
palpable error or violation of any procedures
under the Act.
In other words, broad parameters required to
satisfy a prima facie case before a Court of
law is what is required at the stage of section
245D(1) of the Act.
The degree of proof for a prima facie case is
on higher pedestal before a judicial forum. It
is no doubt true that section 245 was inserted
into the provisions of the Income-tax Act for
an early resolution of complicated tax
disputes, where the assessee gets relief, more
particularly from penalty and prosecution.
However, to be entitled for such a remedy,
the conduct of the assessee is primordial.
The conduct of the assessee definitely leads
to the irresistible conclusion that there has
been no full or true disclosure. …
– குறள் 648
,
.
If there be those who can speak on various subjects in their proper order and in a pleasing
manner, the world would readily accept them.
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LEARN THE SUBJECT – “DIGITAL FORENSICS” THROUGH A CROSSWORD
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ACROSS: 4. The amendment to Finance Act, 2001
provisions of sub-section (22A) to S.2 was inserted to provide definition of document which included __________________ as defined under Information Technology Act 2000 and given recognition as admissible evidence at par with a document (10,6)
7. ____________ in an asymmetric crypto system, means a private key and its mathematically related public key, which are so related that the public key can verify a digital signature created by the private key (3,4)
8. ____ means a person who sends, generates, stores or transmits any electronic message or causes any electronic message to be sent, generated, stored or transmitted to any other person but does not include an intermediary (10)
10. ___________ with respect to any particular electronic message means any person who on behalf of another person receives stores or transmits that message or provides any service with respect to that message (12)
12. S.132(1)(iib) of the Act requires any person who is found to be in possession or control of any books of account/documents maintained in the form of electronic record to afford the AO the necessary facility to _________ such books of account or other documents (7)
13. ___________ Volume also known as Volume Snapshot Service, is included with Microsoft Windows and makes automated backup copies of some files and operating system components from time to time on New Technology File System based computers (6)
14. __________ is the fastest data copying tool which uses memory pre-allocation and multithreading (6)
15.Computer ___________ means computer, computer system, computer network, data, data base or software (8)
DOWN: 1. When digital device/data is encrypted
using a hashing algorithm, it results in a new number of a fixed length called the dark __________________ (7,6)
2. _______ means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3 (7,9)
3. Computer ________ means any set of computer instructions that are designed to modify, destroy, record, transmit data or program residing within a computer, computer system or computer network or by any means to usurp the normal operation of the computer, computer system, or computer network (11)
5. _________ deals with extracting information from storage media in the form of active, deleted files and data from unallocated, slack spaces (4,9)
6. ________ is any evidence presented by a person who is not a direct witness (7)
9. _____means a person in whose name the Digital Signature Certificate is issued (10)
11. For taking logical backup of Windows System, _____________ or "Robust File Copy", is a command-line directory and/or file replication command (8)
Please e-mail your answers to [email protected].
And the first correct entry will be rewarded. Answers will follow in the next issue.
Published by: Team DTRTI, Chennai