THE ARTICLED

ISSUE 14 August 2016

FROM NATIONAL INDEPENDENCE

TO FINANCIAL INDEPENDENCE ………. GST ARRIVING SHORTLY

Particular Written By Page No. Editorial CA Sanjay Dhariwal 1 Current Affairs From Our Inbox 2-6 Poem Mounika R T 6 Tax Implication on

Gifts Received Sanjana B C 7-10 Puzzles From Our Inbox 10 Unreported Decisions Niveditha S 11-15 Time Management From Our Inbox 16-17 DNS News 18 Jokes From Our Inbox 19 The Awesome Story From Our Inbox 20 Answers for the

month of July 2016 From Our Inbox 21

DNS congratulates who have cleared CA Finals

1) AMITH KUMAR

2) RAKSHITH MEHTA

3) MUKUL SRINGERI

4) SHRADDHA SOLANKI

Also those who have cleared Group I

1) RAJSHEKHAR

2) ASHWINI MALI

3) JITEN THAKKAR

4) ASHISH CHOUHAN

We wish them GOOD LUCK.

Many a times the preference to spirituality is our last preference though we agree that it should be given the 1st preference. Let this 4 months be utilized for self-purification and to improve our level of spirituality. Spirituality may virtually look to be a very easy subject but it has a lot of depth and would take long years to understand and implement true spirituality.

WISH YOU A VERY HAPPY CHATURMAS

Regards, CA Sanjay Dhariwal EDITOR – IN – CHIEF

EDITOR BOARD

- Editor-in- Chief CA Sanjay Dhariwal sanjay@dnsconsulting.net

- Editor Smruti Shah smruti@dnsconsulting.net

Coordinators

- Coordinators S. Sophia sophia@dnsconsulting.net

- Coordinators Deepak Shrimali deepaks@dnsconsulting.net

CURRENT AFFAIRS

FROM OUR INBOX

Madhav Dhekane took over as Director of ISRO Inertial Systems Unit: The ISRO Inertial Systems Unit is a research and development unit of the Indian Space Research Organisation (ISRO), and is located in Thiruvananthapuram, Kerala. IISU specialises in inertial sensors and systems in satellite technology. Jawaharlal Nehru Port becomes India’s first port to implement Logistics DataTagging of Containers: The implementation of the logistics data bank tagging of containers at Jawaharlal Nehru Port will help importers/exporters track their goods in transit through logistics data bank service. CBDT notifies Rules for calculating Fair market value of Assets: The Fair Market Value of listed companies will be computed on the basis of a formula taking into account its market capitalisation, book value of liabilities and total number of shares. World Bank approves $201.50 million for Technical Education QualityImprovement Project in India: The objective of the project is to enhance quality and equity in participating engineering education institutes and improve the efficiency of the engineering education system in focus states. RBI publishes Payment and Settlement Systems in India Vision-2018: Vision-2018 revolve around 5 Cs – coverage, convenience, confidence, convergence and cost, which can be achieved with focus on four strategic initiatives, viz., responsive regulation, robust infrastructure, effective supervision and customer centricity. Union Cabinet approves largest-ever Spectrum Auction: It will put up 700 MHz band, which is used for offering high-speed broadband services, for sale for the first time at a reserve price of 11485 crore rupees per MHz pan-India. President Pranab Mukherjee returned 3 bills for reconsideration of Manipur Legislative Assembly: The passage of the bills by the State Legislative Assembly had triggered violence leading to the death of nine people in the State. Their bodies are still being preserved by their families in protest.

Union Cabinet approved establishment of Fund of Funds for Start-ups: The 10000crore rupees corpus fund could potentially be the nucleus for catalysing 60000crore rupees of equity investment and twice as much debt investment.

Ramesh Negi appointed as acting Chief Secretary of Delhi:i. The Delhi government appointed Ramesh Negi as the acting Chief Secretary in the absence of K. K. Sharma, who will remain on leave till July 25. To fill the office the idea has been mooted by the government. ii. Negi, who is Principal Secretary in Urban Development Department and is retiring this month end, has been given the charge. iii. Negi has been specified the charge after getting the clearance of Lieutenant Governor Najeeb.

Kudankulam Nuclear Power Plant attains criticality: Once the reactor starts generating 400 MWe of power, it is likely to be connected to the grid possibly within 45 days from the date of criticality. Generation of power will be raised to 500 MWe, 750 MWe, 900 MWe and 1000 MWe in stages. Sushila Karki confirmed as Nepal's first woman Chief Justice: The Judicial Council on 10 April 2016 had recommended her for the top judicial post. However, her appointment was pending owing to delay in formation of the PHSC. She has been taking charge of the Supreme Court as the Acting Chief Justice since 14 April 2016. India, South Africa signed four agreements: The agreements were inked during the official tour of Prime Minister Narendra Modi to South Africa. Modi was on a four nations namely Mozambique, South Africa, Tanzania and Kenya. Kerala Government proposed 14.5 per cent fat tax on junk food: The proposed 14.5% tax will be imposed on pizzas, burgers, sandwiches and tacos sold through branded outlets. The tax is primarily aimed at dissuading children from eating a lot of energy dense foods. Pre-historic Megaliths study indicate Khasis lived Meghalaya since 1200 BCE: The study was performed at an excavated site near Lummawbuh village in the northern slopes of Sohpetbneng (Heaven’s Naval) peak near the NH-40.

IUCN declares Bornean Orangutan as critically endangered: As per the IUCN’s findings, the combined impacts of habitat loss, habitat degradation and illegal hunting equate to an 86% population reduction between 1973 and 2025. This finding qualifies the Bornean orangutan for listing as Critically Endangered. Rajasthan becomes first state to introduce minimum wages for part -time workers: As per the notification, it becomes mandatory to pay 50% of the prescribed a day minimum wage to a person who works for less than four hours in a day. With the notification, part time workers now come under the Minimum Wages Act 1948. Railways Ministry launches NIVARAN portal for employees' grievances redressal: The Portal is developed by CRIS, the IT arm of Indian Railways, on the basis of process designed by Establishment directorate of Railway Board which deals with staff matters. Odisha Government launches Kalinga Siksha Sathi Yojana: Kalinga Siksha Sathi Yojana aims to provide education loan up to 10 lakh rupees at 1% interest rate to students aspiring to pursue professional and technical education at higher level. India became 35th full member of Missile Technology Control Regime: India's entry into MTCR comes days after it failed to get Nuclear Supplier Group (NSG) membership due to stiff opposition from China and six other countries, namely Austria, Brazil, Ireland, Mexico, New Zealand, South Africa and Switzerland. Nepal bans citizens from working in Afghanistan, Iraq, Syria and Libya: The government has decided to suspend issuing labour permits to Nepalese nationals in four conflict-hit countries, namely Afghanistan, Iraq, Syria and Libya. East Bengal to honour Milkha Singh with Bharat Gaurav Award: Singh will be honoured with the prestigious award on the East Bengal Foundation Day (1 August 2016). Along with the award, a cheque of 2 lakh rupees will also be presented to him. Lok Sabha passes Child Labour (Prohibition and Regulation) Amendment Bill, 2016: The official amendment seeks to amend the Child Labour (Prohibition & Regulation) (CLPR) Act, 1986 and allows children below the age of 14 years to work in select non-hazardous family enterprises.

Odisha announces Rs 60 lakh special incentive for Rio Olympic qualifiers: The six sportspersons are sprinters Dutee Chand and Srabani Nanda and four hockey players are Deep Grace Ekka, Namita Toppo, Lilima Minz and Sunita Lakra. Buddha Rashmi Mani appointed as Director General of National Museum: Earlier, he had supervised the excavation work in the disputed Ramjanmabhoomi-Babri Masjid site in Ayodhya in 2003. Sanjiv Puri appointed as Chief Operating Officer of ITC Ltd: With this appointment, Puri has emerged the front-runner to succeed ITC Chairman YC Deveshwar, who will step down as Executive Chairman of ITC in February 2017. Supreme Court ordered restoration of Nabam Tuki gove rnment in Arunachal Pradesh: For this purpose, it also quashed the Kalikho Pul government that came into power on 19 February 2016 after Governor J P Rajkhowa ordered dismissal of Nabam Tuki led government of the state. Six more Indians qualify for Rio Olympics: Anirban Lahiri, Shiv Shankar Prasad Chawrasia and Aditi Ashok qualified for Rio after the crossing the mark of rank 60 in world rankings. Golf as game returned to the Olympics for the first time since 1904 St. Louis Games. 30th National Consumers Right Day observed: The day provided an opportunity to highlight the importance of the consumer movement and the need to make every consumer more aware of their rights and responsibilities. RBI extended deadline to exchange pre-2005 notes to 30 June 2016: RBI in an official statement said that the notes can be exchanged for their full value. It has also clarified that all such notes continue to remain legal tender.

Delhi Government appointed Gopal Subramanium Commission on DDCA scam: The commission will probe the alleged irregularities by the administrators of the Delhi and District Cricket Association. Rajya Sabha passed SC & ST (Prevention of Atrocities) Amendment Bill, 2015: The bill amends existing categories and adds new categories of offences with provision for establishment of exclusive special courts for trying and disposing the cases within 2 months.

International Migrants Day observed across the world: The UN General Assembly on 4 December 2000 took into account the large and increasing number of migrants in the world and proclaimed 18 December as the International Migrants Day. 2nd World Internet Conference concluded in Wuzen, China: The conference was held with theme An Interconnected World Shared and Governed by All—Building a Cyberspace Community of Shared Destiny.

Poem The Winter Morning Cold was the weather a gentle touch on my cheeks like the feather So soft and mild Soothing like the skin of the child I wrapped up inside the leather Playing the tune of "oh! my brother" I looked out and thought I was color blind Oh my god it was the white snow that didn't strike my mind You don't have to travel places to see things Though we haven't got wings And then I realize it happened to me I am sure it would happen to you...

WRITTEN BY: Mounika R T (mounika@dnsconsulting.net)

TAX IMPLICATIONS ON GIFTS RECEIVED - Written by Sanjana B C

As per Income Tax Act 1961, any gift received shall be taxed in the hands of recipient under the head of other sources and there is no taxation for the donor. Here, gift means any sum of money, movable property which is received without consideration or inadequate consideration.

Here the term properties include the following:

Land and building (immovable) Shares and securities (securities include debentures and bonds) Jewellery (jewellery includes ornaments made of gold, silver, platinum or any other precious metal whether or not worked or sewn into any wearing apparel. Precious and semi-precious stones also include in term of jewellery) Archaeological collection Drawings Sculpture Any art of work Bullion(gold and silver in their purest form) Here are some rules provided by Income Tax Act 1961 for taxation on gift whether gift is taxable or not. 56(2) (vii): Gifts received by Individual & HUF 1. Any sum of money received in any previous year, from any person or persons a. If aggregate sum of money received exceeds Rs. 50,000 other than blood relations then entire amount received will be taxable and not the amount exceeding Rs. 50,000. If aggregate sum of money received is less than or equal to Rs. 50,000, then nothing will be taxable. Tax implication- For giver, nothing will be taxable as it is not constituted as a transfer u/s 47. For receiver, if the amount received exceeds Rs. 50,000 then entire amount received shall be taxable under the head Income from other sources u/s 56(2)(vii).

For example:

If one of your friend gift you Rs. 45,000 and another friend gift you Rs. 5,000 then there is no need to pay tax, but if gift received exceeds Rs. 50,000 then entire gift received will be taxable

If one of your friend gifts you Rs. 45,000 and another friend gift you Rs. 10,000 then entire Rs. 55,000 will be taxable as per slab rates applicable to you.

2. Any immovable property received in any previous year, from any person or persons a. Without consideration

If stamp duty value of immovable property received exceeds Rs. 50,000, then entire stamp duty values of such immovable property received will be taxable and not the amount exceeding Rs. 50,000/-. If stamp duty value of such immovable property does not exceed Rs. 50,000, then nothing will be taxable. Tax implication- For donor, nothing taxable under head Capital Gains as it is not constituted as a transfer u/s 47. For receiver, stamp duty value of immovable property received taxable to tax under head income From Other Sources For example:

If you receive building as gift from one of your relative, if stamp duty value of such building is Rs. 50,000 then nothing will be taxable. If stamp duty value of building is Rs. 80,000 then entire Rs. 80,000 is chargeable to tax

b. Inadequate consideration

If the difference between stamp duty value of immovable property received and consideration paid for such immovable property exceeds Rs. 50,000, then the entire difference between stamp duty value and consideration paid is taxable and not the difference exceeding Rs. 50,000.

Tax implication- For donor, amount chargeable to tax = cost of acquisition-consideration received, under head Capital Gains

For receiver, amount chargeable to tax = stamp duty value of immovable property less consideration paid for immovable property, under head Income from other sources

For example: If you received building for Rs. 2,50,000/- where its stamp duty value is Rs.3,00,000/- then is nothing is

taxable because difference between stamp duty value and consideration paid does not exceed Rs. 50,000. But if stamp duty value is Rs. 4,00,000/- then difference of Rs. 1,50,000/- will be taxable

3. Any movable property received in any previous year, from any person or persons

a) Without consideration

If fair market value of such movable property received exceeds Rs. 50,000, then entire fair market value such be taxable

If fair market value of such movable property does not exceed Rs. 50,000, then nothing will be taxable.

Tax implication- For donor, nothing taxable under head Capital Gains as it is not constituted as a transfer u/s 47.

For receiver, fair market value of movable property taxable under head Income from Other Sources. For example:

If you receive jewellery worth Rs. 40,000 from your friend as gift, then it will be taxable. However, if you receive jewellery worth of Rs. 65,000, then entire jewellery received will be taxable.

b) Inadequate consideration

If the difference between fair market value of movable property received and consideration paid exceeds Rs. 50,000, then entire difference will be taxable.

If difference between fair market value of movable property does not exceed Rs. 50,000, then nothing will be taxable.

Tax implication-For donor, (cost of acquisition less consideration received) of movable property taxable under head Capital Gains

For receiver, (fair market value less consideration paid) of movable property taxable under head Income from Other sources

For example:

If you receive jewellery worth of Rs.1,00,000/- at Rs. 60,000/- from your friend, then nothing will be taxable because difference between fair market value and consideration is less than Rs. 50,000. But if consideration paid was Rs. 20,000 then (1,00,000-20,000) shall be taxable as difference is exceeds Rs. 50,000.

Exception: Any sum of money or property received by individual or HUF shall not be taxable if received On the occasion of the marriage of the individual Under a will or by way of inheritance In contemplation of death of the payer or donor From local authority covered under section 10(20) From any fund, foundation, university, other educational institution, medical institution, any trust or

institution referred to in section 10(23C) From a charitable institute registered under section 12AA From any relative, where relative means For Individual: Spouse of the individual Brother or sister of the individual including their spouses, Brother or sister of the spouse of the individual including their spouses, Brother or sister of either of the parents of the individual including their spouses, Any lineal ascendant or descendant of the individual including their spouse, Any lineal ascendant or descendent of the spouse of the individual including their spouses. For HUF: Any member of the family For example: If your friend or relative or any other person gifts you on your marriage then nothing will be taxable (without any limit). 56(2)(vii)(a): When a firm or closely held company receives shares of a closely held company in any previous year

a) Without consideration: If fair market value of shares received exceeds Rs. 50,000, then entire fair market value of shares received will be taxable. If fair market value of shares received does not exceed Rs. 50,000, then nothing will be taxable. Tax implication-For donor, nothing taxable under head Capital gains as it is not constituted as a transfer u/s 47 For receiver, fair market value of shares received taxable under Income from Other Sources For example: If XYZ PVT LTD receives shares of ABC PVT LTD worth Rs. 40,000 without consideration, then no amount is taxable as it does not exceed the limit of Rs. 50,000. However, if shares were worth of Rs. 75,000 then the entire amount will be taxable.

b) Inadequate consideration: If the difference between fair market value and consideration paid exceeds Rs. 50,000, then the difference will be taxable. If the difference does not exceed Rs. 50,000 then nothing will be taxable. Tax implication-For giver, sale price less cost of acquisition shall be treated as taxable under head Capital Gains. For receiver, difference between fair market value and consideration paid, is taxable under the head Income from Other Sources.

56(2)(vii)(b): If a closely held company issues shares at a price higher than fair market value to any resident person, in any previous year, then the difference between the fair market value of shares and aggregate consideration received will be taxable for the firm or closely held company.

For example:

The difference shall not be taxable

If consideration is received by venture capital undertaking from venture capital company or a venture capital fund or

If consideration is received by a class of companies notified by Central Government.

Capital Gains on Assets received/transferred as gifts IN THE HANDS OF THE PERSON GIVING GIFT If a person gives gift to another, then such gift would not be regarded as transfer and therefore no capital gains would arise in the hands of the transferor i.e. the person who is giving gift. And therefore, at the time of giving gift, no tax would be required to be paid by the person giving gift.

IN THE HANDS OF THE PERSON RECEIVING GIFT It will be taxable as per discussed above subject to exception. When they transfer the assets received in gift, The cost of acquisition in the hands of the person receiving the gift would be same as the cost of

acquisition in the hands of the person who gave the gift.

For the computation of period of holding in the hands of the person giving the gift would also be included.

- AUTHOR EMAIL ID: sanjana@dnsconsulting.net

PUZZLEs

A. 5

B. 3 C. 1 D. 7

Based on below watches, what time should the last watch show?

FROM OUR INBOX

UNREPORTED DECISIONS - Written by: Niveditha S

This article reports the few unreported decisions of high court of Karnataka with referring to previous decisions and Karnataka Value Added Tax Act, 2003.

1. No credit if revised return not filed within Time

BETWEEN: M/s. Nandi Constructions TIN: 29370707569 125, 3rd Main Jayalakshmipuram Mysuru-570012 (By its proprietor T.N.Hemanth, 53 years) …Petitioner AND: The State of Karnataka Represented by The Commissioner of Commercial Taxes Gandhinagar Bengaluru-560009 ... Respondent These petitions are filed under Section 65(1) of Karnataka Value Added Tax Act, 2003 against the judgment and order dated 16.01.2015 passed in STA Nos.660 to 663/2014 and STA Nos.664 to 671/2014 on the file of the Karnataka Appellate Tribunal at Bangalore. Brief Fact of the Case:

1. The assessee is a builder and civil works contractor, carrying on the business of construction and sale of apartments.

2. The assessee had sold some apartments, for which it had disclosed, the sale consideration, out of which the cost of the land was disclosed in the returns at 45% and consequently paid tax on the sale consideration minus the land cost.

3. The assessing authority did not accept the land cost at 45%, but instead assessed it at 40% and assessed the tax. The assessee challenged the assessment order by filing the appeals, where it claimed the land cost to be 50% of the sale Consideration, instead of 45% as had been claimed in the returns.

Proceedings of the Case:

1. The appellate authority considered the matter, and came to the conclusion that the land cost was over 50%, but the claim made in the returns filled by the assessee was only 45% for the purpose of calculation of tax.

2. Further assessee filed appeals before the tribunal claiming the land cost to be allowed at 50% of the sale consideration, the appeals have been dismissed by a common reasoned order, which is under challenge in these revision petitions.

3. The main issue to be decided by court is whether the petitioner can be granted benefit over and above that what is claimed in the returns filed for relevant tax period. The claim of petitioner in the returns filed at 45% towards land cost, which was allowed by the first appellate authority.

Decision: The division Bench of High court of Karnataka denied the benefit granted more than what was claimed by the assessee referring to the case of Infinite Builders and Developers, Bangalore, The same was denied by the court, with the following observation that the assessee never filed any revised return for the period April 2005 to March 2006 nor claimed any input credit, on the other hand only filed the nil tax liability return. The assessee did not file any revised return even after inspection, notice etc. The act provides for filing a revised return under section 35(4) of Karnataka value added tax Act 2003. If the assessee fails to avail the benefit of filling revised returns, is then it only the return which is filed, has to be considered by the assessing officer or other authorities and nothing more than claimed in returns can be granted by the authorities in favour of the assessee.

Provisions of the Section 35(4) of Karnataka Value Added tax Act, 2003 If any dealer having furnished a return under this Act, discovers any omission or incorrect statement therein, other than as a result of an inspection or receipt of any other information or evidence by the prescribed authority, (a) He shall furnish a revised return within the time prescribed for filing the return for the succeeding tax period; and (b) He shall furnish a revised return any time thereafter but within six months from the end of the relevant tax period, if so permitted by the prescribed authority.

Output Tax-Section 10 of Karnataka Value Added tax Act, 2003 (1) Output tax in relation to any registered dealer means the tax payable under this Act in respect

of any taxable sale of goods made by that dealer in the course of his business, and includes tax payable by a commission agent in respect of taxable sales of goods made on behalf of such dealer subject to issue of a prescribed declaration by such agent.

(2) Subject to input tax restrictions, input tax in relation to any registered dealer means the tax collected or payable under this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goods on his behalf subject to the manner as may be prescribed to claim input tax in such cases.

(3) The net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and shall be accounted for in accordance with the provisions of this Act.

(4) Subject to input tax restrictions, where under sub-section (3) the input tax deductible by a dealer exceeds the output tax payable by him, the excess amount shall be adjusted or refunded together with interest, as may be prescribed.

Input tax restrictions Section 11 of Karnataka Value Added tax Act, 2003 a) Input tax shall not be deducted in calculating the net tax payable, in respect of:

(1) Tax paid on purchases attributable to sale except when such goods are sold in the course of export out of the territory of India;

(2) Purchased and put to use for purposes other than for, (I) resale, or (II) manufacture or any other process of other goods for sale;

(3) Tax paid on purchase of capital goods other than those falling under clause (2) or (3) except as provided in section 12.

(4) Tax paid on purchases attributable to naphtha, liquefied petroleum gas, furnace oil, superior kerosene oil, kerosene and any other petroleum product, when used as fuel in motor vehicles, but when used as fuel in production of any goods for sale in the course of export out of the territory of India or taxable goods or captive power, input tax shall be deducted as provided in Section 14.

b) Input tax shall not be deducted by an agent purchasing or selling goods on behalf of any other person other than a non-resident principal.

c) Input tax shall not be deducted by any dealer executing a works contract,

I. in respect of the amount paid or payable to any sub-contractor as the consideration for execution of part or whole of such works contract for him, that is claimed as deduction; and

II. In respect of the amount actually expended towards labour and other like charges not involving any transfer of property in goods in connection with the execution of works contract that is claimed as deduction.

Opinion: With reference to above provisions of Karnataka Value Added Tax, 2003 and referring the decision of High court, as per Section 35(4) revise return has to be filed within the six months of relevant tax period, whereas Section 10 and 11 does not talk about the Input Claim for the revise return filed after the relevant tax period.

2. Hotelier can buy goods from interstate which are not used as stock in trade.

BETWEEN: Sri.Anantha Padmanabha Bhat, S/o Late S.Ramachandra Bhat, Aged about 67 years, Proprietor, M/s. SLV Corner, No.79/4, Vanivilas Road, Basavanagudi, Bengaluru-560 004 …PETITIONER

AND: 1. Commissioner of Commercial Taxes in Karnataka

Vanijya Terige Karyalaya, 1st Main, Gandhinagar, Bengaluru-560 009

2. Commercial Tax Officer (Audit) 3.3,

DVO-3, 2nd Floor, BMTC Bus Stand, Shanthinagar, Bengaluru-560 027 …RESPONDENTS

Brief Fact of the Case: The petitioner runs a restaurant serving vegetarian food in Bangalore and opted to pay

tax at the composite concessional rate of 4% under Composition Scheme as enacted under Section 15(1) of the Act with effect from 1.4.2015

The impugned re-assessment notice Annexure-A dated 15.6.2015 and consequent order passed vide Annexure-E dated 17.10.2015 and Annexure-F dated 20.10.2015 were based on the ground that during the course of inspection, the investigating authorities had observed that the petitioner assessee effected the purchase of goods i.e. Vitrified Tiles worth Rs.1,69,910/- and Rs.23,375/- as per e-Sugum Nos.1544436804 and 1035063610 during the tax period in question and since they were “goods in stock” there was a violation of the conditions and restrictions imposed under Rules 135 and 144 of the KVAT Rules, 2005.

The petitioner assessee was thus ineligible to continue under the Composition Scheme under Section 15(1) of the KVAT Act, 2003 and therefore liable to pay the regular rate of tax on the sales/turnover as per Section 3 of the KVAT Act, 2003.

Proceedings of the Case: The learned counsel for the petitioner submitted that, despite a representation made to the said

authority that the Vitrified Tiles were purchased from the State of Gujarat upon payment of Central State Tax, since the said goods were purchased in the course of inter-State trade and were used for laying the floor of the restaurant run by the petitioner assessee.

They could not be said to be the “Goods-In-Stock” since such vitrified tiles fixed in the floor become part of the immovable Property, and they are not dealt by assessee in the regular Course of business the prohibition against purchase of goods from outside the State and lying in stock on the date he opts for this composition scheme did not apply to the present case and the benefit of Composition Scheme could not be denied on this ground while invoking the powers of re-assessment under Section 39(1) of the KVAT Act, 2003.

On the other hand, learned counsel for the Revenue urged that, any goods purchased from outside the State and lying in stock disentitled the assessee from availing the benefit o f the Composition Scheme enacted under Section 15 (1) of the Act and since it is a concessional scheme and a concession given by the State to the assessee, the conditions for availing the same have to be strictly construed and complied with by the assessee and since the assessee in the present case apparently purchased the Vitrified Tiles from the State of Gujarat, he violated the conditions of availing the Composition Scheme and therefore the assessee was not entitled to pay the composite concessional rate of tax on the gross turnover of 4%, but on the other hand, he was liable to be re-assessed in the regular assessment proceedings and separate tax rates on goods sold were applicable.

Rule 135 of the KVAT Rules, 2005 reads thus:

“135. Conditions of scheme: A dealer opting to pay tax by way of composition under Section15 shall satisfy the following conditions:

1. He shall be a dealer registered under the Act or a dealer who has made an application for registration under the Act.

2. He shall not have any goods in stock which are brought from outside the State on the date he opts to pay tax by way of composition and shall not sell any goods brought from outside the State after such date.”

Decision: As quoted above, Rule 135 (2) of the KVAT Rules, 2005clearly talks only about goods in the stock

which clearly refers to the goods dealt by the assessee in the regular day-to-day business for which he is registered by the Department. These Rules do not intend to cover the goods purchased for construction or being material to be fixed in the building premises of the assessee like the Vitrified Tiles in the present case.

The restriction against sale of such goods which were purchased from outside the State stands complied with in the present case, as it is not the case of the Revenue that the Vitrified Tiles purchased by the assessee from the State of Gujarat in this case, were sold in the course of his business. Therefore, the question of violation of condition as specified under Rule 135(2) of the KVAT Rules, 2005 does not arise in the present case.

The respondent assessing authority has m isused his power under Section 39(1) of the KVAT Act for reassessment of the assessee in the present case on the aforesaid ground.

The Writ Petitions are accordingly allowed with costs of Rs.10,000/- to be paid by the respondent assessing authority to the assessee within a period of three months from 3rd Day of June 2016.

Section-15 of Karnataka Value Added Tax Act talks about Composition Scheme, according to (1) Any dealer other than a dealer who purchases or obtains goods from outside the India or from

outside the territory of India, shall be liable to pay tax, on his turnover in respect of goods mentioned in the schedule. And

A. Whose Turnover does not exceed an amount notified by the state government which shall not exceed fifty lakh rupees.

B. Who is a dealer executing works contract.

C. Who is an hotelier, restaurateur, caterer.

D. Who is mechanized crushing unit producing granite or any other metals.

(2) In the case of a dealer opting for composition of tax under clause (a) or (c) of sub-section (1), the turnover on which tax is leviable under sub-section (2) of section 3 i.e., (The tax shall also be levied, and paid by every registered dealer or a dealer liable to be registered, on the sale of taxable goods to him, for use in the course of his business, by a person who is not registered under this Act.) shall be deducted from the total turnover on which an amount as notified is payable under sub-section (1) by way of composition in lieu of the tax payable under the Act.

Opinion: With Reference to sec-15, the appellant is under composition Tax scheme where the appellant is not allowed to purchase from outside the state or from outside the territory of India. Whereas

Rule 135 of the KVAT Rules, 2005 states that “He shall not have any goods in stock which are brought from outside the State on the date he opts to pay tax by way of composition and shall not sell any g oods brought from outside the State after such date. “Even though the tiles brought from Gujarat were for the purpose of construction and not for Sale. But as per Section 15 he is not allowed to purchase outside the state or territory, the appellant cannot continue under composition scheme.”

- AUTHOR EMAIL ID - niveditha@dnsconsulting.net

Time managemenT

Time is a scarce commodity. Since the study time at the disposal of a student is scarce, it is valuable. The individual student should make most efficient use of available study time by being swift, punctual and regular in his study activities. He has to be always conscious of time and its sanctity.

He has to prepare a budget for allocation of time for completion of study of the various subjects together with a time schedule. He/she has to do at least two or three rounds of study and revision of the course material. He/she has to prepare brief notes while studying. He may use charts, diagrams, mini maps, tables etc. to get the concepts imprinted in the mind. It is better to use a combination of various methods of study - group discussion, use of audio- visual CDs, referring to e-learning modules etc. He/ she has to undertake some self-assessment exercises to get a glimpse of his state of preparedness in terms of knowledge as well as actually writing in exam conditions. He/ she has to maintain a study momentum throughout the study period. He/ she has to be ruthless or hard on himself/ herself; nothing is to be taken for granted; nothing is to be left to chance; no selective topics for study, no short cuts, no dark or grey areas and no compromise on reaching the required level of basic/working/expert knowledge, as the case may be.

Time Budget: The student has to prepare a time budget in a written form. He has to make a rough estimate of the total time at his disposal in terms of number of days or hours which can be spared for the project. Though the number of days is a fixed stock between the starting date of the preparation and the date of commencement of examination, the number of hours is flexible. They vary depending upon how many hours the student is able to squeeze from each day for studies and related activities.

The student has to allocate the total available time among the various subjects for which he decides to appear in the examinations. Students widely differ in their perception on the amount of time they require for preparation in each subject and they make allocative decisions accordingly. They may like to focus on some subjects which they think will fetch more marks or which are somewhat difficult to understand and remember. Of course, practical subjects need more time, since several problems and illustrations have to be repeatedly worked out to gain familiarity. Similarly, subjects perceived as relatively complex and tough deserve to be given more time and attention. It is desirable to give equitable, if not equal, attention to each subject and to allocate time accordingly, so as to prepare well in all subjects.

To be more specific, students should consider the time period between the date of commencement of studies and one or two days prior to the date of commencement of examinations as the resource of time (like finance) available to him. He should make allocations after ascertaining the time required for each subject based on following factors:

Number of pages required to be read / study per subject.

The reading speed of the student.

Number of days available for reading i.e., the time resource available.

Expected number of hours study per day.

Number of readings required.

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After ascertaining the reading time required for all the subjects, he/she may then prepare the time budget for the first reading. The total time required for every subsequent reading may be then suitably reduced as every subsequent reading will familiarize the student with the subject matter so that he can read faster.

Time Schedule: As a follow up of the time budget, it is also desirable to prepare a time schedule, so as to have on hand a tentative structure of sequence of subjects for study. There is considerable merit in scheduling the study of practical subjects for a few hours every day throughout the project period. Depending on the number of practical subjects to prepare for, the student may give continuous attention to one or two subjects for a fixed number of hours say two hours for each subject every day. This may be a better strategy than that of scheduling each practical subject for 'full time' (relatively speaking) study every day for a specific number of days at a stretch. Keeping in continuous touch with practical subjects is likely to make the student internalize its intricacies and dynamics.

The scheduling of study of theoretical subjects like Auditing, Mercantile/Corporate Laws, Strategic Management, etc. may be done at a time for a few hours every day for a specified number of days at a stretch. It is a smart idea to start with the most complex subject and try to rip through its complexity at a nearly stage rather than neglecting and relegating such a subject towards the end.

The scheduling of the study of the various subjects is to be done with provision for adequate number of revisions - one, two, three or more - for each subject, during the project period. Time for relaxation in between is desirable and should be factored.

However meticulous the student is in preparing his time budget and time schedule, he may tend to run short of time for preparing up to his satisfaction in all the subjects. Too much study matter chases too little time. A serious student always stands sits and sleeps on a razor's edge so far as the time factor is concerned; he cannot run away from it till he successfully completes the project.

Certain rules of thumb on proper time management are:

Don't waste time on matters which do not need your attention.

Whenever possible, delegate some activities to others who are willing and able to help you.

Postpone doing things, which can wait till after the examination.

Don't take more time than absolutely necessary in doing certain things.

Allocate time every hour or so for relaxation. Maybe take a walk, drink water, mild exercise, chat with friends\family members…

Time Management during Examination: Time management becomes even more important during examination hours as student needs to give the best answer in a given time framework. This is quite challenging and calls for a very intelligent strategy to handle. Reach examination hall well in time. The 15 minutes reading time should be judiciously used in making the right strategy of attempting the paper. Time should be planned in a manner that equal time is awarded for each mark. It is important that each question should be completed within the allocated time. Sometime should also be kept for revision. More than the number of hours, the intensity of use and productivity of each hour are critical elements of a student's acquisition of knowledge.

DNS NEWS BIRTHDAYS FOR THE MONTH OF August-2016

DNS FAMILY WISHES YOU A VERY “HAPPY BIRTHDAY”

PARTICULARS DATE EMAIL ID Mukul.S.H 01st August 2016 mukul@dnsconsulting.net Doreswamy 03rd August 2016 swamy@dnslawhouse.net Chaitra (Gala) 09th August 2016 chaitraparu913@gmail.com Sumedh 10th August 2016 sumedh@dnsconsulting.net Gaurav 14th August 2016 gauravkumar@dnsconsulting.net Paresh Shah 15th August 2016 paresh.1508@gmail.com Bharthi 15th August 2016 bharthi@dnsconsulting.net Divya 18th August 2016 divya@dnsconsulting.net Satyavel 20th August 2016 satyavel@dnsconsulting.net Niveditha 24th August 2016 niveditha@dnsconsulting.net Sachin Prabhu 25th August 2016 sachinprabhu@dnsconsulting.net Mukesh Jain 28th August 2016 mukesh@dnsconsulting.net Purushotham 29th August 2016 purushothama@dnsconsulting.net Gayathri 31st August 2016 gayathri@dnsconsulting.net

FESTIVALS FOR THE MONTH OF JULY 2016

DATE DAY FESTIVALS12th A ugust 2016 Friday V aralakshm i V rat15th A ugust 2016 Monday Inde pende nce Day18th A ugust 2016 Thursday Rakhi, Raksha Bandhan25th A ugust 2016 Thursday Krishna Janm ashtam i

1. NASA was getting ready to launch a very important space shuttle. The scientists and engineers checked and double checked everything to make sure that things are fine. However, on the day of the launch, something seemed to be wrong. The rocket made all sorts of noise but never took off even an inch from the ground. The engineers were puzzled because they could not figure out the problem. Finally, Manjit, a Sardar offered to help. The NASA scientists were desperate by that time and agreed to do anything. 'Tilt the rocket 45 degrees to the right,' said Manjit in a serious voice. The engineers were puzzled but did it anyway. 'Bring it back to vertical position, the Manjit added. The engineers did. 'Now start the engines,' instructed Manjit. The rocket took off and flew into space. Everybody thanked and congratulated Manjit and asked him how he knew what to do. He replied, 'It is very simple. This is what we always do with our Bajaj scooters in India.'

2. Two Sardarjis are looking at an Egyptian mummy. Sardar 1: Look, so many bandages! Must be a pukka (real) lorry accident case. Sardar 2: Aaho, lorry number is also written...BC 1760!!!

3. Museum Administrator: That's a 500-year-old statue you've broken!! Sardar: Thank God! I thought it was a new one!

4. A young Law student, having failed his Law exam, goes up to his crusty old professor, who is renowned for his razor-sharp legal mind.

Student: "Sir, do you really understand everything about this subject?" Professor: "Actually, I probably do. Otherwise I wouldn't be a professor, would I?" Student: "OK. So I'd like to ask you a question. If you can give me the correct answer, I will accept my mark as it is. If you can't give me the correct answer, however, you'll have to give me an "A" Professor: "Hmmmm, all right. So what's the question?" Student: "What is legal but not logical, logical but not legal, and neither logical nor legal?" The professor wracks his famous brain, but just can't crack the answer. Finally he gives up and changes the student's failing mark into an "A" as agreed, and the student goes away, very pleased. The professor continues to wrack his brain over the question all afternoon, but still can't get the answer. So finally he calls in a group of his brightest students and tells them he has a really, really tough question to answer: "What is legal but not logical, logical but not legal, and neither logical nor legal?" To the professor's surprise (and embarrassment), all the students immediately raise their hands. "All right" says the professor and asks his favorite student to answer. "It's quite easy, sir" says the student "You see, you are 75 years old and married to a 30 year old woman, which is legal, but not logical. Your wife has a 22 year old lover, which is logical, but not legal. And your wife's lover failed his exam but you've just given him an "A", which is neither legal, nor logical."

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This is awesome sTory

One day a construction supervisor from 6th floor of building was calling a worker working on the ground floor. Because of construction noise, the worker on ground floor did not hear his supervisor calling.

Then, to draw the attention of worker, the supervisor threw a 10 rupee note from up which fell right around in front of the worker.

The worker picked up the 10 rupee note, put it in his pocket & continued with his work.

Again to draw the attention of worker, the supervisor now threw 500 rupee note & the worker did the same, picked 500 rupee note, put it in his pocket & started doing his job.

Now to draw attention of the worker, the supervisor picked a small stone & threw on worker. The stone hit exactly the worker head. This time the worker looked up & the supervisor communicated with the worker.

This story is same as of our life. Lord from up wants to communicate with us, but we are busy doing our worldly jobs. Then God give us small gifts & we just keep it without seeing from where we got it.

Then God gives us amounts (gifts) & we are the same. Just keep the gifts without seeing from where it comes & without thanking God. We just say we are LUCKY.

Then when we are hit with a small stone, which we call problems, then we look up & we communicate with God.

So every time we get a gift, we should thank God immediately and not wait till we are hit by a small stone and then we should communicate with God….

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"What seems to us as bitter trials, are often blessings in disguise."

- Oscar Wilde

ANSWERS FOR THE MONTH OF July 2016

1. There are nine points as shown in the picture above. Can you connect them with four straight lines without lifting pen from a paper? (It might look like circles in the pictures but its points)

ANSWER How simple...

2. CROSS

Can you cut and reassemble a square so that you create a red cross of the same volume?

(A cross is made of 5 identical squares)

ANSWER

A. 12 B. 16 C. 23 D. 34 Answer: 16

Explanation: Moving clockwise, around alternate segments in the chain, one sequence decreases by 1, 2, 3 and 4 each time, while the other increases by 2, 3, 4 and 5.

A. 2 and 3 B. 8 and 1 C. 9 and 9 D. 5 and 6 Answer: 8 and 1

Explanation: Reading each row as 3 separate 2-digit numbers, the central number equals the average of the left and right hand numbers.

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Disclaimer: The information contained herein is subject to change without prior notice. Whileevery effort has been made to ensure the accuracy and Completeness ofinformation contained in this newsletter, the Editorial makes no guarantee &assumes no responsibility for any errors or omissions of information.