corporate and professional updates november 18, 2015

CORPORATE AND PROFESSIONAL UPDATES NOVEMBER 18, 2015

Direct Tax 

Gift couldn’t be held as unexplained if made by relatives out of love/affection and they were income-tax assessee

IT : Where assessee claimed that during year his minor children had received gifts of Rs. 3.71 Lakhs from four relatives and Assessing Officer rejected gifts and added amount in income of assessee, since all ingredients of valid gifts had been proved by assessee, impugned addition was not justified, [2015] 123 (Allahabad) Radhey Shyam Bhatia v. CIT

Govt. to issue Sovereign Gold Bonds via designated post offices in Nov. 2015.

No search proceedings against client due to seizure of CA’s hard disk containing ITR data of client

IT: Delhi HC lays down principles to avoid vexatious proceedings u/s 153C against person other than person searched, [2015] 391 (Delhi) CIT v. RRJ Securities Ltd.

Indirect Tax

Credit of EC and SHEC can be used to pay service tax:

CBEC Much awaited Notification and explanation. Should have issued before 25-10-15 so that Industry could have taken benefit largely. But again

Service Tax/Excise/Customs :

An error, which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions does not amount to ‘error apparent on face of record’ and is not a rectifiable mistake, [2015] 392 (New Delhi – CESTAT) Indian Visit (P.) Ltd. v. Commissioner of Service Tax

Seeks to provide composition rate for Swachh Bharat Cess as applicable to ST under sub-rules 7,7A,7B,7C of rule 6 of STR, 1994.

Option to avail full exemption or partial exemption with CENVAT Credit –

appellant-assessees cannot be forced to pay duty as per serial No. 90 of Notification 4/2006 and they have option to pay the duty under other numbers, viz. 91 and 93- (Balkrishna Paper Mills Ltd, Laxmi Board And Paper Mills Ltd, Commissioner Of Central Excise, Thane-I Versus Commissioner Of Central Excise, Thane –I And Laxmi Board And Paper Mills Ltd, CESTAT MUMBAI).

Benefit of CENVAT credit – Credit availed on the basis of debit notes –

There is no justification for the Revenue to take a period of 4 years to issue the show-cause notice that too without verification of the documents submitted by the appellant- (Federal Mogul Tpr (India) Ltd Versus Commissioner of Central Excise, Service Tax And Customs Bangalore-II – 2015 (11) TMI 209 – CESTAT BANGALORE).

Livability of service tax – franchise service – franchisee was obliged not to open any school with any name in the existing premises/building operational area of the school.

In other words, the franchisee was free to open any school with any name in a “different premises/building operational area of the school” – no service tax is leviable under franchise service prior to 16.6.2005- (M/s Saani And Savera Educational Welfare Trust Versus Commissioner of Service Tax, Delhi, CESTAT NEW DELHI).

Advertising Agency service or sponsorship service – Import of service –

The service rendered by sports bodies abroad could possibly be covered under the head of ‘Sale of Space or Time for Advertisement and Sponsorship Services’, which became taxable with effect from 01.07.2006. However, taxable services in relation to sponsorship services specifically excluded sponsorship of sport events- (M/s. Hero Motocorp Ltd. Versus C.S.T., Delhi, CESTAT NEW DELHI).

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