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I have a trading business in India. Part of the business pertains to supplying excisable goods to duty free shops, which are at international airports in India. Are there are benefits available under the law?

P.K. Malhotra, Dubai

The Central Board of Excise and Customs has issued a notification in May 2013 whereby removal of any excisable goods can be done without payment of duty, provided such goods are supplied to duty free shops, which are located in the departure or arrival halls of an international airport. This is because the sale would be made from such duty free shops in foreign exchange to passengers leaving India or passengers arriving from a foreign country.

The notification has declared that such duty free shops would be deemed to be registered as warehouses under Rule 9 of the Central Excise Rules, 2002. A circular has also been issued specifying the procedure to be followed in respect of excisable goods, which are removed from a duty free shop. The procedure pertains to despatch, movement, receipt, accounting and disposal of goods, etc.

I have a commercial property in India for the past many years. The rental income, which I earn has been shown under the head Income from House Property, which has been accepted by the tax department. On selling this office space, I want to invest in a residential house, which can be used by my son who is getting married. Can I claim exemption from tax? I also have two other residential properties in my name.

D.S. Chaudhari, Doha

Capital gains are exempt under section 54 of the Income-tax Act, 1961 only where a residential property held for more than three years is sold. The law specifically grants exemption in case of roll over of capital gains from one residential property to another.

Though the income from the office space has been taxed in the past under the head Income from House Property, which is correctly done under the law, it would not mean that your office premises can be treated as residential property. This point has been emphasised in several court decisions where capital gains on sale of commercial property have been held to be not eligible for exemption under section 54, though the capital gains are reinvested in a residential house.

I came to the Gulf a year ago. I am assessed to tax in India. For one the years, assessment order was received and I had instructed my chartered accountant to file an appeal. As I was not in India at that time, he filed the appeal about two months from the date of receipt of the assessment order. The Commissioner of Appeals is proposing to reject the appeal on the ground that it was not filed within the prescribed time. Please advise.

P.L. Namboodripad, Sharjah

An appeal has to be filed within thirty days of receipt of the assessment order. However, courts have taken the view that where the delay in filing the appeal is neither deliberate nor wilful, the delay should be condoned. The Supreme Court of India has held that while deciding the issue of condonation of delay, a justice oriented approach should be adopted and the case should be decided on merits and not on mere technicalities.

It has also been held by courts that the explanation and reason for delay must be bona fide and not merely to cover up negligence of the tax payer. The delay on the part of a chartered accountant may be considered to be an acceptable reason for condonation of delay. However, this is left to the discretion of the appellate authority. Therefore, you must write to the Commissioner (Appeals) giving cogent reasons for condoning the delay.

The writer is a practising lawyer, specialising in tax and exchange management laws of India

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:9INDI
Date:Jul 14, 2013
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