Friday, September 5, 2008
franchise
A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee.
Quote of the Day
Club liable to pay service tax ?
The Commissioner of Service Tax, New Delhi filed an appeal against the order of Commissioner (Appeals) setting aside the demand of service tax from Delhi Gymkhana Club Limited for the use of the club by its members as Mandap Keeper, after following the decisions of Hon'ble High Court, Kolkatta: (2008) 40 TAXCOM (Del) 636)
Saturday Club Ltd., V. Asst. Commissioner, Service Tax Cell, Calcutta 2005 -TMI - 206 - HIGH COURT CALCUTTA;
Dalhousie Institute V. Asst. Commissioner, Service Tax Cell, Calcutta 2005 -TMI - 204 - HIGH COURT CALCUTTA
The contention of the Revenue is that the respondent is a company limited by guarantee and registered under the Companies Act, 1956 and accordingly is a separate person altogether in the eye of the law. The members of the club when using the facility of the club are acting as clients of the club.
The tribunal considered the arguments and analyzed the case laws which were relied by the respondents.
In 'Saturday Club Ltd., V. Asst. Commissioner of Service Tax Cell, Calcutta (Supra) the applicant filed a writ petition before Calcutta High Court praying inter alia declaration that the petitioner club is not a mandap keeper with in the meaning of Chapter V of the Finance Act, 1994 and is not liable to pay service tax. It was contended by the applicant that:
The petitioner club is members' club but not a proprietary club;
· It is not supposed to pay service tax for using the space as mandap keeper as per requirement of the members;
· The question of giving service tax for using the club premises as mandap cannot be held to be a service or different from its usual services to the members so that service tax can be imposed.
The Calcutta High Court analyzed various judgments relied on by the applicant. In 'Harbour Division - II, Madras V. Young Men's Indian Association, Madras and others' the Supreme Court held that if a members' club even though a distinct legal entity acts as only agent for its members in the matter of supply of various preparations and articles to them no sale would be involved as the element of transfer would be completely absent. Members are joint owners of the properties. Proprietary clubs stand on a different footing. The members are not owners of or interested in the property of the club. To show the difference of characteristics between the 'members' club' and 'proprietary club' the court held that where every member is a shareholder and every shareholder is a member, then the same would be called as 'members' club'. In the members' club what is essential that the holding of the property by the agent or trustee must be holding for and on behalf of and not a holding antagonistic to the members of the club. If a club even though a distinct legal entity, is only acting as an agent for its members in the matter of supply of various preparations to them no sale would be involved as the element of transfer would be completely absent.
In 'Commissioner of Income Tax V. Darjeeling Club Ltd., 1985 (153) ITR 676 a Division Bench of Calcutta High Court held that there is a long line of decisions in which it has been held that supplies made by a club to its members or the facilities afforded by a club to its members for a price will not amount business activity of the club, even though there may be surplus of revenue over expenditure and the surplus could not be taxed as a business profit of the sales were confined to the members of the club only.
In this case the revenue contended that providing 'mandap' by a 'club' as a mandap keeper cannot be the usual course of business activities under the objects of the Memorandum of Association of the club. The club authorities are using the space as against the consideration and thereby making profit out of it which cannot be called as usual privilege to the members.
The Court held that it is true to say that there is a clear distinction between the 'member's club' and 'proprietary club'. No argument has put forward by the Department to indicate that the club is a proprietary club. Therefore if the club space is allowed to be occupied by any member or his family members or by his guest for a function by constructing a 'mandap' the club cannot be called as 'mandap keeper' because the club is allowing his own member to do so who is, by virtue of his position, principal of the club. If any outside agency is called upon to do the needful it may raise a bill along with the service tax upon the club and the club as an agent of its members, is supposed to pay the same. There should be principally existence of two sides/entities for having transaction as against consideration. In a members' club there is no question of two sides. 'Members' and 'club' both are same entity. One may be called as principal when the other may be called as agent, therefore, such transactions in between themselves cannot be recorded as service. The Court, therefore, did not find it precedent to say that members' club is liable to pay service tax in allowing its members to use its space as 'mandap'.
In 'Dalhousie Institute V. Asst. Commissioner, Service Tax cell, Calcutta (Supra) the Court observed that all the members of the club jointly own all the immoveable properties as per the definition of the term 'mandap'. The members of the club are allowed exclusively to participate in the services rendered by the club and the club fund, no third party is allowed to participate in the same. Service tax is recoverable from such 'mandap keeper' who is having different and separate legal and physical entity and, let out mandap with commercial and trading object. Hence the members have formed the club to serve themselves mutually and for this purpose the members are paying for such uses and any amount of receipt and expenditure of the club is enjoyed and/or participated and/or incurred by the members alone, not by third party. In this case the facility of the use of the premises to the members by its club cannot be termed to be letting out nor can the members of the club using the facility of any portion of the premises for any functions be termed to be a client.
The Delhi tribunal in the case after considering the findings of the Calcutta High Court, upheld the order of Commissioner (Appeals).
Monday, September 1, 2008
Liquidity Ratio
Total dollar value of cash and marketable securities divided by
current liabilities. For a bank this is the cash held by the bank as a proportion of deposits in the bank. The liquidity ratio measures the extent to which a corporation or other entity can quickly liquidate assets and cover short-term liabilities, and therefore is of interest to short-term
creditors. also called cash asset ratio or cash ratio.
Quote of the Day
Section 269SS and 269T
Applicability of provisions of Section 269SS and 269T on receipts and repayments of deposits between Firm and Partners
August 31, 2008
The assesseee, being the partnership firm, had claimed that
"in view of the fact that partners and firm are not independent of each other and the firm is not juristic person, these transactions cannot be considered as intra person but were only for the purpose of carrying on partner's own business."
But the AO did not accept this explanation and rejected the plea of the assessee.
The Assessing Officer considering it to be intra party transactions of deposit otherwise then by way of cheque or bank draft inviting the provisions of Section 266SS and 267T and considering these payments and repayments were in violation of Sections 269SS and 269T imposed penalty under Sections 271D and 271E respectively for receiving the deposit in cash and payment in cash.
Assessee has challenged the action of the AO. ITAT held that the provisions of Section 269SS and 269T are applicable to the transactions between firm and partners but waived the penalty on the ground of bonafide belief.
Honorable, high Court of Rajasthan confirmed the order of ITAT.
For full text of judgment - visit
MY BABY GIRL
STORY-OF-THE-WEEK
MY BABY GIRL
A beautiful baby girl was born to Radhika. The labour room attendants were extremely busy. Twenty one children were born in the hospital on that day. The doctors and nurses were heavily overworked.Radhika held the baby girl in her arms and caressed her soft hair. She whispered sweet nothings into her little ears. She breast fed her every two hours. The little baby would let out a little whimper and Radhika would attend to her in a jiffy. She changed her diapers and snuggled her close to herself to warm her, on this cold December night. On the third day, just before Radhika was to be discharged from hospital and sent home, she heard a commotion in the corridor of the ward. A woman was shouting, and some others were trying to quieten her.A few minutes later, a team of doctors walked into Radhika’s room. They looked tense. The senior doctor said, “Radhika, we need to do a DNA test for your baby girl and you. We need to take the samples.” Radhika was a little unnerved, “Why? What is it for?” “Err; it seems there has been a mix up. A lady has alleged that the baby girl that she had given birth to has been given to you and your baby has been given to her!”The words fell on her ears like a bombshell. She fainted. When she came back to consciousness, she could not speak a word. The DNA tests confirmed that the babies had indeed been exchanged. The doctor took the baby girl away and brought the other baby girl to her. Radhika held the new baby in her arms and cried endlessly. How much love she had showered upon the other child! All of a sudden she was told that the child did not belong to her! In a minute the child was whisked away from her arms. What a sea change her emotions had undergone. She did not love that child any more. Gone were the attachment and the affection. The realization took only an instant!This happening sets us thinking. We too, need to realize the truth about our worldly relationships. Our parents and our children are surely a part of our flesh and blood but we need to realize that the attachment is only up to the flesh and blood. Sooner or later children grow up and lead their lives independent of their parents. This is the way of the world. Each one of us came into this world alone and shall go alone too. Undue attachments tie us down. The sooner one realizes that we just need to do our duty and not get unduly entangled with emotions; the sooner one is able to free oneself from worldly attachments.
SANJAY TANDON
COMPETENT-CHANDIGARH
Wednesday, August 27, 2008
GOLDEN QUOTE
attractions.
************"LEADERS ARE THE READERS,READERS ARE THE LEADERS*************
Over-the-Counter
OTC. A security which is not traded on an exchange, usually due to an
inability to meet listing requirements. For such securities, broker/dealers
negotiate directly with one another over computer networks and by phone,
and their activities are monitored by the NASD. OTC stocks are usually very
risky since they are the stocks that are not considered large or stable
enough to trade on a major exchange. They also tend to trade infrequently,
making the bid-ask spread larger. Also, research about these stocks is more
difficult to obtain. also called unlisted.
************"LEADERS ARE THE READERS,READERS ARE THE LEADERS*************