CORPORATE AND PROFESSIONAL UPDATE DECEMBER 26, 2015
INCOME TAX ACT
SECTION 9
INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA
Business income : In absence of any material on record as to whether non-resident agents appointed by assessee rendered services abroad and they had no business connection in India, question regarding assessee’s obligation of deduction of tax at source on payment of sales commission to them was to be disposed afresh –[2015] 64 253 (Chennai – Trib.)
SECTION 10(23C)
EDUCATIONAL INSTITUTIONS
Sub-clause (iiiab): Where assessee-society running educational institutions filed its return claiming exemption under section 10(23C)(iiiab) in view of fact that Government was substantially financing and interested in management of assessee, its claim for exemption was to be allowed – [2015] 64 312 (Punjab & Haryana)
SECTION 68
CASH CREDITS
In terms of section 68, assessee is liable to disclose only source(s) from where he has himself received credit and it is not burden of assessee to show source(s) of his creditor nor is it burden of assessee to prove creditworthiness of source(s) of said sub-creditors – [2015] 64 329 (Delhi)
Donations : Where assessee claiming himself to be a Sewadar of Historic Dera, deposited donations received in name of Dera in his own bank account and, moreover, he failed to prove that any charitable activity in terms of section 2(15) was ever carried out by him, authorities below were justified in making addition to his income under section 68 in respect of donations in question – [2015] 64 311 (Punjab & Haryana)
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Bright line test (BLT) is not a valid method for either determining the existence of international transaction or for the determination of ALP of such transaction – [2015] 64 328 (Delhi)
Comparables and adjustments/Adjustments-Interest : ALP of an international loan transaction, which was designated in hard currency, is to be ascertained, interest rate on rupee transactions in India is not relevant –[2015] 64 251 (Bangalore – Trib.)
Comparables and adjustments/Adjustments-Interest : In case of interest on outstanding interest from loan transactions, that was designated in hard currency, rate of interest and terms applicable in materially similar situation of delay in payment of interest to Exim Bank would apply mutatis mutandis for determining ALP –[2015] 64 251 (Bangalore – Trib.)
SECTION 92CA
TRANSFER PRICING – REFERENCE TO TPO
Where value of international transactions entered into between assessee and its AE exceeded Rs. 5 crores, Assessing Officer was required to refer matter to TPO for determining ALP – [2015] 64 252 (Madras)
SECTION 151
INCOME ESCAPING ASSESSMENT – SANCTION FOR ISSUE OF NOTICE
Recording of satisfaction : SLP dismissed against High Court’s ruling that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid – [2015] 64 313 (SC)
SECTION 153C
SEARCH AND SEIZURE – ASSESSMENT OF INCOME OF ANY OTHER PERSON
Applicability of : Even in cases where Assessing Officer of person searched and assessee who is sought to be assessed under section 153C is same, still Assessing Officer is required to record his satisfaction that assets/documents seized belong to a person (assessee) other than searched person – [2015] 64 309 (Delhi)
SECTION 269UC
PURCHASE OF IMMOVABLE PROPERTY BY CENTRAL GOVERNMENT – RESTRICTIONS ON TRANSFER OF PROPERTY
Where immunity certificate issued by department under KVSS to vendor covered impugned transaction of sale of property, non-filing of form 37-I by vendor would not entitle department to launch prosecution under sections 269UC and 276AB against her – [2015] 64 254 (Madras)
SECTION 271(1)(c)
PENALTY – FOR CONCEALMENT OF INCOME
Recording of satisfaction : Before levying penalty under section 271(1)(c), it is incumbent upon Assessing Officer to state whether penalty was being levied for concealment of income or for furnishing of inaccurate particulars of income – [2015] 64 155 (Kolkata – Trib.)
COMPETITION ACT
SECTION 3
PROHIBITION OF AGREEMENTS – ANTI-COMPETITIVE AGREEMENTS
Where evidences showed that exhibition of Tamil and Malayalam films to Informant theatre were denied at behest of OP association representing film theatres in Kerala and OP held position of strength in film industry in Kerala, conduct of OP was anti-competitive and penalty was to be imposed on it – [2015] 64 207 (CCI)
PML ACT
SECTION 45
SPECIAL COURTS – OFFENCES TO BE COGNIZABLE AND NON-BAILABLE
Where applicant was arrested for schedule offence of fraudulent remittance of foreign currency and he failed to prove money received by him was not crime money, bail could not be granted to him during period of investigation – [2015] 64 249 (Gujarat)
SERVICE TAX
SECTION 78
PENALTY – FOR EVASION OF DUTY/TAX
For computing reduced penalty of 25 per cent in section 78, ‘service tax assessed or determined under section 73(2)’ is taken, which shall include both : (a) sums paid prior to issuance of notice and appropriated in adjudication order; as well as (b) further sums confirmed as payable in adjudication order – [2015] 64 243 (Allahabad – CESTAT)
CENTRAL EXCISE ACT
SECTION 3A
CHARGE/LEVY – EXCISE DUTY BASED ON PRODUCTION CAPACITY
Since section 3A does not itself provide for levying of interest, rules 96ZO, 96ZP and 96ZQ cannot do so and none of other provisions of Act can come to aid of revenue; hence, demand for interest was set aside on merits. – [2015] 63 310 (SC)
CUSTOMS TARIFF ACT
SECTION 2
CLASSIFICATION – VIRGINIAMYCIN
Virginiamycin, a pure chemical, is classifiable as ‘Vitamin’ and cannot be classified as ‘animal feed’, as same is not imported in premix condition – [2015] 64 242 (SC)
CENTRAL EXCISE RULES
RULE 4
DUTY PAYABLE ON REMOVAL
Without giving any reason, Commissioner could not deny extension of permission to store goods without payment of duty outside factory premises, when both Range Superintendent and Division Officer found case genuine – [2015] 64 59 (Mumbai – CESTAT)
STATUTES
DIRECT TAX LAWS
Section 119 of the Income-tax Act, 1961 – Income-tax Authorities – Instructions to Subordinate Authorities – Facilitating Taxpayers’ Electronic Interface with the Department
Section 115JB of the Income-tax Act, 1961 – Minimum Alternate Tax (MAT) – Applicability of MAT on Foreign Companies for period prior To 1-4-2015 – INSTRUCTION NO.18/2015 [F.NO.153/12/2015-TPL], DATED 23-12-2015
CORPORATE LAWS
Special Deposit Scheme, 1975 – Payment of Interest for Calendar Year 2015 – CIRCULAR DGBA.GAD.NO.2023/15.01.001/2015-16, DATED 23-12-2015
Withdrawal of all old series of Banknotes issued prior to 2005
Reporting of Compliance with Indian Ownership and Control
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