CORPORATE TAX UPDATE FOR THE MONTH OF OCTOBER FORTH WEEK

Corporate tax Update for the Month of October forth week

Untitled34AINCOME TAX ACT

SECTION 2(14)

CAPITAL GAINS – CAPITAL ASSET

Agricultural land : Where assessee transferred land as his capital contribution to a firm, land being outside jurisdiction of Municipal Corporation it could not be treated as capital asset and no capital gain tax would be leviable – [2015] 61  281 (Amritsar – Trib.)

SECTION 9

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

Royalties : Remuneration paid in foreign currency by assessee-company, for services rendered outside India to a US-resident for product designing services, was not liable to be taxed in India – [2015] 62  15 (Chennai – Trib.)

SECTION 36(1)(iii)

INTEREST ON BORROWED CAPITAL

Interest free advances : Where due to restrictions imposed by Land Acquisition Act, assessee had given interest-free advances to group companies for development of land, in absence of any finding recorded by Assessing Officer that said advances were not for business purposes, matter was to be readjudicated – [2015] 62 40 (Delhi – Trib.)

SECTION 41(1)

REMISSION OR CESSATION OF TRADING LIABILITY

Outstanding liabilities : Since assessee had not adduced any material or evidence or even explanation as to why impugned amounts were not paid in normal course and outstanding for 3 to 25 years, same amounted to cessation or remission of liability under section 41(1) – [2015] 61  297 (Mumbai – Trib.)

SECTION 48

CAPITAL GAINS – COMPUTATION OF

Deductions/Interest : Where interest or borrowed capital to invest in shares, for period prior to financial year 1997-98, was claimed and allowed as revenue expenditure, it could not transform its character from financial year 1997-98 onwards to become a capital cost without any change in underlying facts, and hence, same could not be treated as cost of acquisition and/or improvement in computation of capital gains – [2015] 61  297 (Mumbai – Trib.)

SECTION 50C

CAPITAL GAINS – SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES

Valuation : Where assessee sold a plot and Assessing Officer for purpose of computing capital gains under section 50C adopted valuation of plot as per SRO records and Commissioner (Appeals) after considering objections of assessee concluded that there was no need for adopting valuation as per SRO, matter required to be sent back to Assessing Officer for de novo assessment – [2015] 62  31 (Hyderabad – Trib.)

SECTION 80-IB

DEDUCTIONS – PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKING OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKING

Housing projects : Where assessee had completed construction of its entire housing project and applied for Building use permission/completion certificate within prescribed time-limit, it would be entitled to deduction under section 80-IB(10) notwithstanding fact that it could not receive permission for its entire project – [2015] 62 38 (Gujarat)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustments – Depreciation : While computing margins of comparable companies, no adjustment for differential rate of depreciation is to be made on account of uncommon assets between assessee and comparables – [2015] 62  32 (Pune – Trib.)

SECTION 115A

FOREIGN COMPANIES – TAX ON DIVIDENDS, ROYALTY AND TECHNICAL SERVICES

Where Assessing Officer formed opinion that taxation of advertisement and distribution revenue of US company was to be governed by MAP resolution and 10 per cent of total revenue generated would be treated or business income and he completed assessment after verifying detailed reply to huge questionnaire and all supporting documents, reopening of assessment on basis of same material, taking plea of taxing total revenue at 10 per cent as per section 115A, would not be permissible – [2015] 62  120 (Delhi)

SECTION 145

METHOD OF ACCOUNTING – REJECTION OF ACCOUNTS

Gross profit rate : AO couldn’t prove suppressed production on basis of sample of electricity consumed in one hour – [2015] 62  41 (Punjab & Haryana)

SECTION 151

INCOME ESCAPING ASSESSMENT – SANCTION FOR ISSUE OF NOTICE

Sanction from Commissioner : Where notice under section 148 was issued after obtaining sanction from Commissioner instead of Joint Commissioner who is competent authority to approve issuance of notice, assessment framed consequent thereto was not valid and same was void ab initio – [2015] 61  320 (Lucknow – Trib.)

SECTION 254

APPELLATE TRIBUNAL – POWERS OF

Additional evidence : Parties to appeal cannot produce additional evidence of their own but if Tribunal so requires, same can be produced on recording of reasons by Tribunal – [2015] 61  281 (Amritsar – Trib.)

SECTION 293

BAR OF SUITS IN CIVIL COURT

Where Income-tax department appropriated amount deposited by assessee with a firm towards income-tax dues of firm, in absence of any allegation of fraud against Income-tax department, civil court had no jurisdictions to entertain recovery suit filed by assessee against Income-tax department – [2015] 62  36 (Punjab & Haryana)

COMPANIES ACT

SECTION 433

WINDING UP – CIRCUMSTANCES IN WHICH A COMPANY MAY BE WOUND UP

Where company had admitted its indebtedness to petitioner to extent of Rs. 119 lakh, company was to be directed to pay that amount with interest and on its failure to do so winding up petition would be advertised -[2015] 62  34 (Calcutta)

SECTION 468

WINDING UP – CUSTODY OF COMPANY’S PROPERTY

Sale of property of company-in-liquidation in auction without proper publicity through advertisement or fixing any reserve price for assets could not be sustained particularly when property put in auction was of much higher valuation than price at which it was sold – [2015] 62  11 (SC)

CENTRAL EXCISE ACT

SECTION 4

VALUATION UNDER CENTRAL EXCISE – TRANSACTION VALUE – RELATED PERSON

Where assessee’s entire sales are below cost owing to international market prices being very low, sales to related parties cannot be value on basis of ‘cost plus method’ and are to be valued as per best judgment principle at ‘price charged from unrelated parties’ – [2015] 62  7 (SC)

VALUATION UNDER CENTRAL EXCISE – TRANSACTION VALUE – EXCLUSION OF COST OF TRANSPORT/TRANSIT INSURANCE

Transit freight/insurance is includible in value only upto ‘place of removal’ and ‘Place of removal’ is dependent upon facts and where said place of removal was not examined by Tribunal on facts, matter was remanded back -[2015] 62  6 (SC)

CENTRAL EXCISE RULES

RULE 16

RETURN OF DUTY-PAID GOODS TO FACTORY

Credit of duty-paid returned goods can be allowed only if invoice is in name of person availing credit or invoice is endorsed in favour of assessee; credit cannot be taken on invoice in name of a third party – [2015] 62 28 (Madras)

STATUTES

DIRECT TAX LAWS

Income-tax (Fifteenth Amendment) Rules, 2015 – Amendment in Rule 11DD and omission of Form 10-I -NOTIFICATION NO.78/2015 [F.NO.142/20/2015-TPL]/SO 2791(E), DATED 12-10-2015

CORPORATE LAWS

Rule 10 of the Official Language (Use for Official Purposes of the Union) Rules, 1976 – Working Knowledge of Hindi – More than Eighty Per Cent Staff Members of Competition Appellate Tribunal under Ministry of Corporate Affairs acquired working knowledge of Hindi – NOTIFICATION NO. SO 2761(E) [NO.E-11016/1/2010-HINDI], DATED 14-5-2015

Appointment of New Executive Director of SEBI – PRESS RELEASE NO.242/2015, DATED 9-10-2015

INDIRECT TAX LAWS (ST./EX./CUS. & (CST & VAT)

Levy of Service Tax on Transportation of Passengers by Rail – COMMERCIAL CIRCULAR NO.32 OF 2015, DATED 26-5-2015

Introduction of Facility of Payment of Rebate/Refund claims amount directly to Assessee/Exporters’ Bank Account – TRDE NOTICE NO.19/2015-ST, DATED 23-6-2015

Withdrawal of order under Section 37B of Central Excise Act, 1944 on classification of Coconut Oil packed in small containers – CIRCULAR NO.1007/14/2015-CX, DATED 12-10-2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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GOVERNMENT TO UNVEIL NEW I-T TOOL TO CHECK PAN TRANSACTIONS HISTORY

GOVERNMENT TO UNVEIL NEW I-T TOOL TO CHECK PAN TRANSACTIONS HISTORY 

Untitled260Government is set to unveil an ambitious PAN activity monitoring and analysis software tool that will enable Income Tax department to check transactions history of a person country-wide and help sleuths in effective tracking of black money trail.

The digital and smart platform is called the Income Tax Business Application-Permanent Account Number (ITBA- PAN) and is currently being put to final tests by a special team of tax sleuths and business software analysts at a facility in the national capital.

The new software tool will enable the taxman to view, in a chronological order, the entire “PAN life cycle summary” or to simply say transactions history of an individual or entity where a PAN number has been quoted, in any part of the country.

The project is expected to be activated by the end of this month by the Finance Ministry and will also enable the tax department and its two intermediary organisations–NSDL and UTIITSL– to allocate a fresh PAN number and subsequently issue a new card in 48 hours flat as compared to the about 15 days time taken currently.

The operationalisation of the project assumes significance as Finance Minister Arun Jaitley had recently said that the government is at an “advanced stage in considering the requirement of furnishing PAN card details if cash transactions beyond a certain limit are undertaken.”

The department, in order to enhance its capabilities to better track large value transactions in the country, has brought the ITBA-PAN portal and has for the same has also closed down its “legacy” and the existing Assessee Information System (AIS) early this month which till now used to hold the PAN database.

The new platform, according to an official proposal accessed by PTI, will also allow the taxman to view and capture various events of an assessee like “death, liquidation, dissolution, de-merger, merger, acquisition, fake PAN or amalgamation of PAN” in a specific or general case in an event of any investigation to be carried out in a case of black money or tax evasion.

“The ambitious project will be rolled out soon and the I-T department has already migrated all the PAN data last week from the old system to the new one. With this project going operational, PAN will become a unique identifying database in the real sense all across the country,” a senior official said today.

The new tool will also allow the taxman to remotely identify duplicate or fake PANs in its system which has been troubling the tax investigators for a long time and was used by criminals to perpetrate black money operations within and outside the country.

The ITBA-PAN software will also allow a PAN holder to request for deletion or de-activation of his or her PAN and it will send an electronic and digitally signed “intimation letter” in this regard to the concerned assessee.

The soon-to-be launched platform will also allow an entity to activate a wrongly deleted or de-activated PAN number.

In order to provide better services to taxpayers, the platform will allow for a smooth computer-based transfer of an individual’s PAN number in case they are transferred or re-located from one place to the other.

PAN is a ten-digit alphanumeric number issued in form of a laminated card by the Income Tax department.

It is also a national identification number of the taxpayer which has to be mandatorily quoted on the return of income and in all correspondences with the department.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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CORPORATE TAX UPDATE FOR THE MONTH OF OCTOBER THIRD WEEK

Corporate tax Update for the Month of October third week

Untitled7AINCOME TAX ACT

SECTION 2(22)

DEEMED DIVIDEND

Loans or advances to shareholder : Where current account transactions between two group companies were business/commercial transactions, same could not be regarded as deemed dividend under section 2(22)(e) -[2015] (Delhi – Trib.)

SECTION 9

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

Where Chinese subsidiary of Indian holding company provides services in China in connection with procurement of goods by Indian company from Chinese vendors, specialized services of market research and information on new developments in China with regard to technology/product/process upgrade etc., fees received, by Chinese company is chargeable to tax in India to extent of full amount received as fees for technical services at the rate of 10% of gross amount – [2015] (AAR – New Delhi)

SECTION 10(23C)

EDUCATIONAL INSTITUTION

Furnishing of Audit Report in Form No. 10BB may be necessary for seeking approval under section 10(23C); however, mere failure to file Audit Report along with application under section 10(23C) would not result in rejection if the assessee furnishes the said report subsequently, prior to the rejection of the application – [2015] (Delhi)

SECTION 11

CHARITABLE OR RELIGIOUS TRUST – EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Application of income : Where assessee was carrying out relief work in areas affected by natural calamities but it could not produce details of expenditure on said activities, issue was to be restored to Assessing Officer to give one more opportunity to assessee to produce details – [2015] (Hyderabad – Trib.)

SECTION 40A(2)

BUSINESS DISALLOWANCE – EXCESSIVE OR UNREASONABLE PAYMENTS

Transportation and handling charges : Where Assessing Officer had merely assumed certain facts without bringing any evidence or material against assessee in respect of excessive payments of transportation and handling charges, disallowance under section 40A(2) was to be deleted – [2015] (Chandigarh – Trib.)

SECTION 40(a)(ia)

BUSINESS DISALLOWANCE – INTEREST, ETC., PAID TO RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE

Section 194C cases : Where Assessing Officer made disallowance under section 40(a)(ia) for failure of assessee to deduct tax at source out of payments made to sub-contractors, Tribunal was justified in restoring matter to Assessing Officer to verify transactions and if found to be correct, pass order accordingly – [2015] (Punjab & Haryana)

SECTION 69

UNEXPLAINED INVESTMENT

Cash deposit : Where assessee deposited cash and explained same as sale proceeds from his sole proprietorship concern, since assessee did not produce bank account details as well as sale vouchers to show that amount received was part of sale proceeds, matter was to be readjudicated – [2015] 61  99 (Chandigarh – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments : In case of assessee, rendering software development services to its AE, companies having functional difference, huge turnover and related party transactions in excess of 15 percent of revenue, could not be accepted as comparables while determining ALP – [2015] (Bangalore – Trib.)

SECTION 145

METHOD OF ACCOUNTING – ESTIMATION OF PROFIT

Net profit rate : Where Tribunal affirmed rejection of account books of assessee, but reduced net profit rate to 6 per cent, since in preceding as well as following year a net profit rate of 6.75 per cent and 5 per cent respectively was applied by Assessing Officer, there was no error in discretion exercised by Tribunal in applying net profit rate of 6 per cent – [2015] (Punjab & Haryana)

METHOD OF ACCOUNTING – REJECTION OF ACCOUNTS

Professional income : Assessing Officer could not reject books of assessee-doctor by presuming that all persons who had undergone lab tests had undergone surgery – [2015] 61 taxmann.com 353 (Chandigarh – Trib.)

Illustrations : Where assessee failed to verify genuineness of opening and closing balance of labour charges payable or furnish details called for by Assessing Officer rejection of books of account was justified – [2015] (Chandigarh – Trib.)

SECTION 153A

SEARCH AND SEIZURE – ASSESSMENT IN CASE OF

Condition precedent : Completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment – [2015] (Delhi)

SECTION 271(1)(c)

PENALTY – FOR CONCEALMENT OF INCOME

Search & Seizure : Where assessee withdrew claim for depreciation on IPR in statement during search and seizure operations undertaken on assessee but nothing incriminating was found during search which was concealed by assessees, penalty could not be levied under section 271(1)(c) merely on basis of statement during search – [2015] (Mumbai – Trib.)

COMPANIES ACT

SECTION 446

WINDING UP – SUITS STAYED ON WINDING UP ORDER

Proceedings under section 138 of the Negotiable Instruments Act, 1881 cannot be stayed by invoking power under section 446 of Companies Act, 1956 – [2015] (Kerala)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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CORPORATE TAX FREQUENTLY ASKED QUESTIONS

CORPORATE TAX FREQUENTLY ASKED QUESTIONS

29Company Law:

Query: Whether independent directors shall be included in the total number of directors for the purpose of sub-section (6) and (7) of section 152 of the Companies Act, 2013?

Answer: Section 152(6) of the Companies Act, 2013 provides that unless the Articles of Association provide for retirement by rotation of all directors at every annual general meeting, at least two-thirds of the total number of directors of a public company shall be persons whose office is liable to retirement by rotation and subsection (7) provides that one-third of such directors shall retire by rotation at each annual general meeting of the company after the first annual general meeting. Independent directors shall not be included in the total number of directors for the purpose of sub sections (6) and (7).

Pursuant to section 149 (13), the requirement of retirement by rotation pursuant to sub-sections (6) and (7) of Section 152 is not applicable to independent directors.

Direct Taxes:

Reopening of assessment – Petitioner having participated in the re-assessment proceedings in pursuant to issuance of notices u/s 143(2), the impugned orders were passed u/s 143(3) read with section 147 in accordance with law.

Liability to deduct tax at source u/s 194LA or u/s 194IA – payments of compensation for acquisition of land – income is exempted in the hands of recipients – No TDS liability.

Additional depreciation on plant and machinery – The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any.

Indirect taxes:

Management, Maintenance or Repair Service – appellant had collected an amount from the prospective buyers in respect of maintenance or repairs form residential units as also the commercial units – Amount not taxable MMR service.

Refund of CENVAT Credit under Rule 5 of CENVAT Credit Rules, 2004 – Credit cannot be denied on procedural lapses and denial of credit on the ground of incomplete address and invoices is unjustified and Appellant is eligible for credit on these invoices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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THE AUDIT WORK AND CERTIFICATION WOULD NOT COME WITHIN THE REALM OF FTS.

THE AUDIT WORK AND CERTIFICATION WOULD NOT COME WITHIN THE REALM OF FTS

Untitled213In a recent ruling, ISO Certification fee paid by Indian company to Non-Resident can’t be treated as FTS as the audit work and certification would not come within the realm of FTS. Hence, not taxable in India in the absence of PE of NR in India.

TUV Bayren (India) Ltd. V. DIT[2015] (Bombay HC)

Facts

Assessee was a certification agency which was issuing ISO certificate to its clients. The nature of work is that the assessee is approached by certain parties for issuance of this standard certificate. The process of evaluation in the form of audit of activities undertaken by the clients is carried out through the audit parties of the assessee. Based on the report of such audit party, a certificate to individual clients/applicants are issued. This is after reviewing the report and several stages of audit work which has been carried out. The certificates are issued for specific and certain period.

AO submits that the services provided are clearly technical or of consultancy in nature. It is not a simple certification agency as is projected by the assessee. It has specified clients and handles these clients cases. To enable them to obtain certification so that the products of such clients are certified to meet with the International Quality standards and hence these are covered under FTS.

Ruling

It was held that the present case is completely covered by the judgment of the same Court in the case of DIT(IT) v. NGC Network Asia LLC [2009] 313 ITR 187 (Bom.). As a result of the above discussion, none of the questions are substantial questions of law. The appeal fails and is dismissed. These are neither technical nor managerial nor consultancy services. There is no advice given but insofar as this activity is concerned, the record indicates that the audit work and certification would not come within the realm of fees for technical services. In the circumstances, there is nothing in the activities which could enable the revenue to bring them within the purview of section 9 (1)(vii) and Article 12(4) of Indo-German Double Taxation Avoidance Agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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CORPORATE TAX UPDATE FOR THE MONTH OF OCTOBER SECOND WEEK

Corporate tax Update for the Month of Second week

Untitled33INCOME TAX ACT

SECTION 2(22)

DEEMED DIVIDEND

Loans or advances to shareholder : Where current account transactions between two group companies were business/commercial transactions, same could not be regarded as deemed dividend under section 2(22)(e) -[2015] (Delhi – Trib.)

SECTION 9

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

Where Chinese subsidiary of Indian holding company provides services in China in connection with procurement of goods by Indian company from Chinese vendors, specialized services of market research and information on new developments in China with regard to technology/product/process upgrade etc., fees received, by Chinese company is chargeable to tax in India to extent of full amount received as fees for technical services at the rate of 10% of gross amount – [2015] (AAR – New Delhi)

SECTION 10(23C)

EDUCATIONAL INSTITUTION

Furnishing of Audit Report in Form No. 10BB may be necessary for seeking approval under section 10(23C); however, mere failure to file Audit Report along with application under section 10(23C) would not result in rejection if the assessee furnishes the said report subsequently, prior to the rejection of the application – [2015] (Delhi)

SECTION 11

CHARITABLE OR RELIGIOUS TRUST – EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Application of income : Where assessee was carrying out relief work in areas affected by natural calamities but it could not produce details of expenditure on said activities, issue was to be restored to Assessing Officer to give one more opportunity to assessee to produce details – [2015] (Hyderabad – Trib.)

SECTION 40A(2)

BUSINESS DISALLOWANCE – EXCESSIVE OR UNREASONABLE PAYMENTS

Transportation and handling charges : Where Assessing Officer had merely assumed certain facts without bringing any evidence or material against assessee in respect of excessive payments of transportation and handling charges, disallowance under section 40A(2) was to be deleted – [2015] (Chandigarh – Trib.)

SECTION 40(a)(ia)

BUSINESS DISALLOWANCE – INTEREST, ETC., PAID TO RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE

Section 194C cases : Where Assessing Officer made disallowance under section 40(a)(ia) for failure of assessee to deduct tax at source out of payments made to sub-contractors, Tribunal was justified in restoring matter to Assessing Officer to verify transactions and if found to be correct, pass order accordingly – [2015] (Punjab & Haryana)

SECTION 69

UNEXPLAINED INVESTMENT

Cash deposit : Where assessee deposited cash and explained same as sale proceeds from his sole proprietorship concern, since assessee did not produce bank account details as well as sale vouchers to show that amount received was part of sale proceeds, matter was to be readjudicated – [2015] 61  99 (Chandigarh – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments : In case of assessee, rendering software development services to its AE, companies having functional difference, huge turnover and related party transactions in excess of 15 percent of revenue, could not be accepted as comparables while determining ALP – [2015] (Bangalore – Trib.)

SECTION 145

METHOD OF ACCOUNTING – ESTIMATION OF PROFIT

Net profit rate : Where Tribunal affirmed rejection of account books of assessee, but reduced net profit rate to 6 per cent, since in preceding as well as following year a net profit rate of 6.75 per cent and 5 per cent respectively was applied by Assessing Officer, there was no error in discretion exercised by Tribunal in applying net profit rate of 6 per cent – [2015] (Punjab & Haryana)

METHOD OF ACCOUNTING – REJECTION OF ACCOUNTS

Professional income : Assessing Officer could not reject books of assessee-doctor by presuming that all persons who had undergone lab tests had undergone surgery – [2015] 61 taxmann.com 353 (Chandigarh – Trib.)

Illustrations : Where assessee failed to verify genuineness of opening and closing balance of labour charges payable or furnish details called for by Assessing Officer rejection of books of account was justified – [2015] (Chandigarh – Trib.)

SECTION 153A

SEARCH AND SEIZURE – ASSESSMENT IN CASE OF

Condition precedent : Completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment – [2015] (Delhi)

SECTION 271(1)(c)

PENALTY – FOR CONCEALMENT OF INCOME

Search & Seizure : Where assessee withdrew claim for depreciation on IPR in statement during search and seizure operations undertaken on assessee but nothing incriminating was found during search which was concealed by assessees, penalty could not be levied under section 271(1)(c) merely on basis of statement during search – [2015] (Mumbai – Trib.)

COMPANIES ACT

SECTION 446

WINDING UP – SUITS STAYED ON WINDING UP ORDER

Proceedings under section 138 of the Negotiable Instruments Act, 1881 cannot be stayed by invoking power under section 446 of Companies Act, 1956 – [2015] (Kerala)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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KEY TAKE ALWAYS FROM THE ROUND TABLE ON TAX REFORMS

Key Take Always From The Round Table On Tax Reforms

Untitled55Collection of taxes alone is not enough, it is also important that it is collected in a reasonable manner, without any taxpayer’s grievance. Thus, in order to achieve this objective, ‘The Round Table on Tax Reform’ was held, on October 10, 2015 at Ahmedabad. This event is the first of its kind for interactive discussion between the taxpayers, professionals and the CBDT. It was organized by the All Gujarat Federation of Tax Consultants and Gujarat Chamber of Commerce and Industry. The Revenue Secretary and CBDT Chairperson participated in the discussion. The Revenue Secretary appreciated the interactive discussion and summaries the key takeaways there from as under:

(1) The demand of revising the limits of exemption and deduction in the Income-tax Act and automatic revision thereof in accordance with CII may be considered in the next budget.

(2) The CBDT shall consider issuing the specific guidance and circular to the tax officials regarding the judgments which have been accepted by the department and against which no further appeal shall be filed.

(3) CBDT may give clear guidelines to the officers where the audit objections of the CAG have not been accepted by department.This would help in the two ways – firstly, the repetitive litigations will be stopped and secondly, there will be nofear of CVC and CAG which the officers have sometimes because they rely on the guidelines issued by the department.

(4) CBDT’s chairperson informed that 16 circulars have been issued in the recent past on certain vital issues and the department will continue this practice which can be compiled in a booklet to make it available to every tax officer.

(5) There is a need to use more mechanism of Authority of Advance Ruling (‘AAR’), Settlement Commission and Advance Pricing Agreements. It has been decided to have two more benches of AAR. The Revenue is eager to clear the back-logs of AAR and Settlement commission.Therefore, it is open to an idea of extending more benches.

(6) Time lag between the assessment and finalization of appeals is a result of too many pending cases. The CPC should process the return through due diligence to decide which return shall not be scrutinized and release the refund as early as possible. We may consider one time settlement camps or constitution of High Level Committee to decide all controversial issues. The finding of the Committee shall be accepted by the department and appeals on similar issues can be withdrawn. Removing the backlogs of past cases shall enable officers to concentrate on current assessment so that refunds can be issued in same year itself.

(7) There is need to completely reduce the interface taxpayers have with the department. Mr. Arun Jaitley, Finance Minister also suggested that why cannot we obtain all the information from the taxpayers through e-mail or through courier. A record can be maintained of what was demanded during the assessment and what was produced. Accountability can be created if information is exchanged through mails. Even filing of appeal over email to CIT(A) can be considered, wherein submissions can be made through emails.The last hearing can be done personally if assessee asks for it.

(8) Need for creating more accountability of the income-tax officers is a sensitive subject but we need to tackle this point.Wemay think about the changing of the performance appraisal system of the Assessing Officers. The weightage of revenue target may be reduced in the performance appraisal. The criteria for performance appraisal may include quality of assessment, timely disposal of cases. We may have a tracking system where any order by the AO can be tracked right up to the stage of filing of appeal with Supreme Court and we may be able to get the analysis of how many cases of AO stood the test of appeal.

(9) Complaints about the infructuous and unrealistic demands come to department very often. The accountability system may take care of the issue. A cell may be created in the office of every Principal CCIT in every state to get complaint (through uploading on the portal or through manual submission). In this system any taxpayer can make a request if the demand in his case is excessive or against the judicial pronouncements. The cell may have a Committee of Commissioners which can go through each and every complaint to decide whether benefit of doubt can be given to the AO. If AO overlooks the past judgment to raise the demands, the Committee can send the case to the Vigilance Division so that it becomes a case of punishing him for not looking at the existing judiciary position, CBDT Circulars or Directions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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CORPORATE TAX UPDATE FOR THE MONTH OF OCTOBER FIRST WEEK

Corporate tax Update for the Month of October first week

Untitled5ADIRECT TAXES:

  1. TDS liability on advertisement – There is no contract between the assessee and these two payee firms for providing any space/land/building, machinery etc. so as to fall in the realm of “rent” as stated in section 194I. Here it is a pure case of advertising contract for which TDS has rightly been deducted u/s 194C. –(Dy. Commissioner of Income-Tax, TDS-1 (1) , Mumbai Versus Group M. Media India Pvt Ltd and Vica-Versa – ITAT MUMBAI)
  1. Addition made on account of performance related pay provisions to directors and staff – ascertained liability – there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. – (DCIT, Circle-6 (2) ,MumbaiVersus M/s Credit Ana. and Res. Ltd, ITAT MUMBAI)
  1. TDS liability on advertisement – There is no contract between the assessee and these two payee firms for providing any space/land/building, machinery etc. so as to fall in the realm of “rent” as stated in section 194I. Here it is a pure case of advertising contract for which TDS has rightly been deducted u/s 194C. –(Dy. Commissioner of Income-Tax, TDS-1 (1) , Mumbai Versus Group M. Media India Pvt Ltd and Vica-Versa – ITAT MUMBAI)
  1. Addition made on account of performance related pay provisions to directors and staff – ascertained liability – there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. – (DCIT, Circle-6 (2) ,MumbaiVersus M/s Credit Ana. and Res. Ltd, ITAT MUMBAI)

 INDIRECT TAX:

  1. Amendment in notification no. 12/2012 customs dated 17.03.2012 soa s to increase the basic custom duty on ghee, butter and butter oil from the present rate of 30% to 40% up to 31stMarch 2016.
  2. Circular no. regarding service tax levy on services provided by a goods transport agency.
  1. Denial of CENVAT Credit – invoice issued in the name of head office and endorsed to the appellant’s unit – Revenue has not made out a case that the appellant had availed CENVAT Credit which is within the restriction of the ISD registration and therefore, there is no reason to deny the CENVAT Credit – (Commissioner, Central Excise & Service Tax, Vapi Versus M/s Smita Conductors Ltd. CESTAT AHMEDABAD)
  2. Denial of CENVAT Credit – whether CENVAT credit of duty paid on Trolleys, used in the assembly line of ACs, is admissible to the appellant or not – cenvat credit is admissible to the appellant. (M/s. Hitachi Life and Solution India Limited Versus Commissioner of Central Excise & S.T., Ahmedabad – CESTAT AHMEDABAD)
  1. Amendment in notification no. 12/2012 customs dated 17.03.2012 soa s to increase the basic custom duty on ghee, butter and butter oil from the present rate of 30% to 40% up to 31stMarch 2016. (click here to view)
  1. Circular no. regarding service tax levy on services provided by a goods transport agency. (click here to view)
  1. Denial of CENVAT Credit – invoice issued in the name of head office and endorsed to the appellant’s unit – Revenue has not made out a case that the appellant had availed CENVAT Credit which is within the restriction of the ISD registration and therefore, there is no reason to deny the CENVAT Credit – (Commissioner, Central Excise & Service Tax, Vapi Versus M/s Smita Conductors Ltd. CESTAT AHMEDABAD)
  1. Denial of CENVAT Credit – whether CENVAT credit of duty paid on Trolleys, used in the assembly line of ACs, is admissible to the appellant or not – cenvat credit is admissible to the appellant. (M/s. Hitachi Life and Solution India Limited Versus Commissioner of Central Excise & S.T., Ahmedabad – CESTAT AHMEDABAD)

COMPANY  LAW:

Query: With respect to section 143 (12), is it that only material frauds should be made reportable and the materiality should be left to auditors’ discretion?

Answer: Section 143(12) casts duty on the auditor to report fraud to the Central Government. Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014 states that for the purpose of sub-section (12) of section 143, in case the auditor has sufficient reason to believe that an offence involving fraud, is being or has been committed against the company by officers or employees of the company, he shall report the matter to the Central Government immediately but not later than sixty days of his knowledge.

Query: With respect to section 143 (12), is it that only material frauds should be made reportable and the materiality should be left to auditors’ discretion?

Answer: Section 143(12) casts duty on the auditor to report fraud to the Central Government. Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014 states that for the purpose of sub-section (12) of section 143, in case the auditor has sufficient reason to believe that an offence involving fraud, is being or has been committed against the company by officers or employees of the company, he shall report the matter to the Central Government immediately but not later than sixty days of his knowledge.

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