CORPORATE AND PROFESSIONAL UPDATE APRIL 1, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 1, 2016

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DIRECT TAX

  • Income Tax: Fee for technical servicesWhere assessee-foreign company provided data processing support service to Indian bank and it was argued that no technical services were rendered in India whereas only processing of data was done and that too at Hong Kong and therefore, payment made by bank could not be taxed in India, since matter was remitted by co-ordinate bench of Tribunal in assessee’s own case for earlier assessment year having similar issue, matter for present assessment year had to be remanded – [2016] 67 taxmann 277 (Mumbai – Trib.
  • Income Tax: Computation ofWhere assessee did not disclose income from house property in respect of his six immovable properties, Assessing Officer could not make addition to assessee’s income merely on basis of notional rent on cost of properties without computing income in accordance with provisions of sections 22 and 23 – [2016] 67 taxmann 269 (Mumbai – Trib.)
  • Income Tax : Immovable propertyWhere assessee sold two flats during relevant year acquired out of his undisclosed income, since said amount had already been added to assessee’s income earlier in block assessment proceedings, Assessing Officer could not make addition again under section 68 in respect of sale consideration in question – [2016] 67 taxmann 269 (Mumbai – Trib.)

 INDIRECT TAX

  • Service Tax : There is no distinction between ‘providers of education’ and ‘commercial coaching or training institution’; hence, even providing of computer education online is covered with commercial coaching or training and liable to tax.
  • Excise & Customs-Unjust enrichment applies to : (a) ‘captive consumption’ of, as well as (b) ‘indirect passing on of burden of duty’, as well as (c) duty paid under protest; hence, mere payment of duty under protest on captively consumed goods does not rule out unjust enrichment 2016] 67 taxmann.com 314 (Madras)

Key Dates

  • MCA notifies CARO, 2016, applicable for FY beginning on or after April 1, 2015.

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Amendments vide Finance Bill, 2016 applicable wef. 1st April. 2016

Amendments vide Finance Bill, 2016 applicable wef. 1st April. 2016

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The Finance Bill, 2016 which was brought into by the Union Budget, 2016-17 come out with no. of amendments applicable from varied dates. Changes which were effective from the 1st day of April, stands imbibed are listed as follows:-

Change relating to Mega Exemption Notification 

Exemptions Withdrawn

  • Exemption in respect of Services provided by a senior advocate to an advocate or partnership firm of advocates withdrawn
  • Services of transport of passengers by ropeway, cable car or aerial tramway withdrawn

Exemptions Introduced

  • Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development & Entrepreneurship
  • Services provided by way of skill/vocational training by Deen Dayal Upadhyay Grameen Kaushalya Yojana training partners
  • The threshold exemption limit of consideration charged for services provided by a performing artist in folk or classical art forms of music, dance or theatre, increased from Rs 1 lakh to Rs 1.5 lakh per performance.
  • Services of life insurance business provided by way of annuity under the National Pension System (NPS) regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India
  • Services of general insurance business provided under “Niramaya” Health Insurance scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability in collaboration with private/public insurance companies.
  • Services provided by Employees’ Provident Fund Organisation (EPFO) to employees.
  • Services provided by Insurance Regulatory and Development Authority (IRDA) of India.
  • Services provided by Securities and Exchange Board of India (SEBI) set up under SEBI Act, 1992, by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market.
  • Services provided by National Centre for Cold Chain Development under Department of Agriculture, Cooperation and Farmer’s Welfare, Government of India, by way of knowledge dissemination
  • Services provided by Biotechnology Industry Research Assistance Council (BIRAC) approved biotechnology incubators to the incubatees.

Changes wrt. Reverse Charge mechanism

  • Liability to pay service tax on any service provided by Government or a local authority to business entities shall be on the service recipient.
  • Services by Mutual Fund Agents to Asset Management Co. put under reverse charge

Amendments wrt. Abatement Notification no. 26/2012-ST vide Notification no. 08/2016-ST dt. 01.03.2016

  • Construction of a complex, building, civil structure or a part thereof:- Uniform abatement @ 70% is now being prescribed, subject to fulfillment of the existing conditions.
  • Services by a tour operator:- Only two abatement rates introduced @ 90% and 70% for the purposes of booking accommodation & for other services, respectively. Definition of package Tour deleted
  • Transport of goods in a vessel:- Credit of input services could be availed now
  • Transport of Passengers, with or without accompanied belongings, by-
    – a stage carriage: Added now, earlier not existed in this abated entry
  • Services provided by a foreman of chit fund in relation to chit:- Newly inserted entry, however, earlier said entry existed which was omitted wef. 1st April, 2015; abatement @ 30% without availment of any credit
  • Services of goods transport agency in relation to transportation of used household goods:- Newly Inserted; abatement @ 60 % without allowing any credit
  • Services of goods transport agency in relation to transportation of goods other than used household goods:- Substituted for “Services of goods transport agency in relation to transportation of goods”.
  • Transport of passengers, with or without accompanied belongings by rail: CENVAT credit of input services being allowed now
  • Transport of goods in containers by rail by any person other than Indian Railways:- Newly introduced; abatement @ 60% ; Credit allowed for input services
  • Transport of Goods by Rail:- No change in Rates ; CENVAT Credit wrt. Input service now being allowed

Changes to Service tax Rules, 1994

  • Service tax liability on single premium annuity (insurance) policies is being rationalized and the effective alternate service tax rate (composition rate) now being prescribed at 1.4% of the total premium charged
  • Benefit of (a) quarterly payment of service tax being extended to OPC and HUF and (b) payment on receipt basis being extended to OPC.

Changes in CENVAT Credit Rules, 2004

  • Change in the definition of Capital Goods:- Wagons of sub heading 8606 92 of the Central Excise Tariff and equipment and appliance used in an office located within a factory are being included
  • CENVAT credit on inputs and capital goods used for pumping of water, for captive use in the factory, is being allowed
  • Capital goods having value up to Rs. ten thousand per piece are being included in the definition of inputs
  • Service by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India is being excluded from the definition of, “exempted service CENVAT Credit for radio-frequency spectrum, mines etc.
  • Provisions related to calculation of CENVAT Credit attributable to exempted services has been redrafted
  • Change in manner of distribution of CENVAT Credit by Input Service Distributor (ISD) Insertion of new Rule 7B for multiple manufacturing units to maintain a common warehouse for inputs.
  • Change in method for determining whether a particular credit has been utilized vide Rule 14(2) of CCR, 2004
  • Annual Return prescribed for manufacturer of final products or provider of output services vide Rule 9A

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 31, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 31, 2016

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DIRECT TAX

  • Income Tax: Reopening of assessment – receipt of accomadation enteries – without forming a prima facie opinion on the basis of such material that income has escaped assessment the AO can not assume valid jurisdiction to initiate proceedings and to issue notice u/s 147/148 – Notice u/s 148 quashed- (Marathon Finlease Ltd. Versus ITO, Ward – 6 (2) , New Delhi – 2016 (3) TMI 923 – ITAT DELHI).
  • Income Tax: Penalty levied u/s 271(1)(c) – excess claim of deduction u/s 35(2) – the assessee has made a bonafide legal claim which cannot be said to be fallacious or flippant and malafide – no penalty- (The D.C.I.T, Central Circle – 9 (1) , New Delhi Versus M/s SRF Limited – 2016 (3) TMI 921 – ITAT DELHI)
  • Income Tax : f notice u/s 143(2) – no notice u/w 143(2) was served upon the assessee which a mandatory conditions – impugned assessment order dated 28.12.2011 is quashed being bad in law and void ab initio- (ITO, Ward – 1, Uaar Pradesh Versus Shah Javed Saddat and Vica-Versa – 2016 (3) TMI 919 – ITAT DELHI)

 INDIRECT TAX

  • Excise & Customs : Where assessee has furnished relevant certificate from relevant authority, exemption intended for laudable object of controlling cataract blindness, cannot be denied for procedural violation viz. absence of counter-signing of such certificate. [2016] 67 taxmann.com 272 (Chennai – CESTAT)
  • Auro Lab v. Commissioner of Central Excise
  • EXCISE : The Union Budget 2016-17 has proposed to impose a 1% excise duty (without input tax credit) and 12.5 % (with input tax credit) on articles of jewellery excluding silver jewellery, other than studded with diamonds/other precious stones. A higher threshold exemption upto Rs. 6 crore of clearances in a year subject to previous year clearances not exceeding Rs. 12 crore has been extended.

Key dates 

  • Today (03.2016) is last date for filing of ITR for A.Y. 2015 – 16 without penalty and for A.Y. 2014 – 15 with penalty of Rs. 5000.
  • Today (03.2016) is last date for e-payment of service tax and excise duty for the month / quarter ending in March 2016.
  • Today (03.2016) is last date for filing of WT return in Form BB for A.Y. 2014 – 15.

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 30, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 30, 2016

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DIRECT TAX

  • Income Tax: Where assessee claimed deduction of secret commission paid to employees of different companies who had given business to assessee, since assessee had not kept any accounts as to where and to whom such commission was paid, Tribunal was justified in allowing assessee’s claim to extent of one per cent of total sales – [2016] 67 taxmann 257 (Gujarat)
  • Income Tax: TDS on sale of property u/s 194IA : CPC-TDS has enabled functionality for online correction in form 26QB (challan / statement) with effect from 29/02/2016.

INDIRECT TAX

  • SERVICE TAX : Where assessee is engaged in promoting brand of foreign holding company and receives consideration from foreign holding company, then : (a) since services are provided on principal-to-principal basis, such services cannot be regarded intermediary services; (b) their Place of Provision would be location of service recipient, viz., outside India; and (c) same would amount to export of service and not liable to service tax – [2016] 67 taxmann 324 (AAR – New Delhi)
  • DELHI VAT : Deputy Chief Minister Manish Sisodia presented a ‘zero tax budget’ Monday aimed at rationalizing Delhi’s Value Added Tax (VAT) structure. The budget implies cheaper sweets, namkeen, watches, readymade garments, shoes and school bags, even as the government continues to focus on education, health and transport sectors.
  • DELHI VAT : Education, health, and transport sectors are likely get a major allocation of funds in the Delhi Budget, which will be tabled in the assembly Monday by Deputy Chief Minister Manish Sisodia. Sisodia, who holds the finance and education portfolios, is likely to allocate 25 per cent of the total budget to the education sector
  • EXCISE : Refund claim – pre-deposit – As soon as the order appropriating such fine was set aside they became eligible to refund of the deposits made during the investigations – refund allowed with Interest- (M/s Shoreline Hotel Pvt. Ltd. Versus Commissioner of Central Excise, Mumbai-I And Vice-Versa – 2016 (3) TMI 806 – CESTAT MUMBAI)

MCA  UPDATES 

  • COMPANY LAW : Where appellants did not impugn either allotment of Rights Issue or their removal from Board of Directors at relevant time and raised such grievances only when company’s economic difficulties were over and it was on path of substantial progress, appellant’s interest in company was limited to their initial shareholding and nothing more – [2016] 67 taxmann 263 (Delhi)
  • COMPANY LAW : Where Single Judge dismissed earlier winding up petition filed by appellant with a liberty to bring fresh action in accordance with law and respondent was not prepared to deposit sum due, second winding up petition filed by appellant was not barred by res judicata and same was to be admitted – [2016] 67 taxmann 262 (Calcutta)

Key Dates

  • E-Payment of Service Tax for the month/quarter ended March: 31/03/ 2016
  • E-Payment of Excise duty for the month/quarter ended March: 31/03/ 2016
  • Last date of filing of ITR for A.Y. 2015-16 without penalty & A.Y. 2014-15 with penalty of Rs. 5000: 31/03/2016
  • Last date for filing Wealth Tax return for A.Y. 2014-15: 31/03/2016
  • Payment of balance advance income tax by all: 31/03/2016
  • Reconciliation return of statutory forms for the year 2014-15: 31/03/2016
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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 29, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 29, 2016

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DIRECT TAX

  • Income Tax: Disallowance being 1/10th Global Depository Receipts – whether the GDR is nothing but increase in the capital and expenses relating to the same is capital in nature? – Section 35D(2)(iv) categorically deals with the expenses in connection with the issue, or public subscription of shares and debentures of the Company. – grievance of the AO is ill conceived – Tri
  • Income Tax: Interest accruing on FDRs treated as income from other sources – since the assessee is not having any other source of income de horse this business undertaking which was not set up, interest income earned by the assessee till 31/03/2011 cannot be brought to tax – to be reduced from the cost of project – Tri
  • Income Tax: Reopening of assessment – receipt of accommodation entries – without forming a prima facie opinion, on the basis of such material that income has escaped assessment the AO can not assume valid jurisdiction to initiate proceedings and to issue notice u/s 147/148 – Notice u/s 148 quashed – Tri

INDIRECT TAX             

  • Service Tax: Transport of passengers on domestic routes through its helicopters – the contracts were invariably between the appellant and the charter parties who hired appellant’s helicopters for the purpose of transporting passengers. – prima facie services clearly fall within the ambit of STGU – Tri
  • Service Tax: Eligibility for refund of accumulated CENVAT credit – Rule 5 of CCR – there was no taxability of any service provided by respondent prior to registration. Accordingly, input credit was not possible to be utilized for which that was accumulated. – credits were accumulated prior to registration – No refund can be granted – Tri
  • Central Excise: SSI Exemption – Clubbing of clearance value of the proprietaryship firm with the private limited company -, it is evident from the records that there was no manufacturing activity in other units – clubbing upheld – Tri
  • Customs: Seeking conversion of free shipping bills to Drawback shipping bills – a power given by Sec 149 of the Customs Act 1962 to the officers under a statute can not be curtailed by a Circular issued by CBEC – Tri
  • VAT and Sales Tax: Adequate rebut of Legal presumption – Deemed sale drawn by the authorities under Section 46(15)(d) of the AGST Act – the authorities have failed to discharge the obligation – HC

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 28, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 28, 2016

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DIRECT TAX

  • Income Tax: Correction of statement cum challan relating to TDS on sale of property u/s 194IA – CPC-TDS has enabled functionality for online correction in form 26QB from 29/02/2016.
  • Income Tax: TDS u/s 194I – whether the tour operators/travel agents were required to deduct TDS under Section 194-I of the Act while making payments to the hotels on behalf of foreign tourists? – Held Yes – HC
  • Income Tax: Exemption u/s 13A – ITAT was justified in denying exemption to the INC under Section 13A of the Act and refusing to condone the delay that had occurred in the audit of some of the state units by holding that the ITAT was right in its conclusion that the INC failed to fulfil the three conditions envisaged under clauses (a), (b) and (c) of Section 13A of the Act – HC
  • Income Tax: Exemption u/s 13A – As long as a political party continues to avail the exemption from payment of income tax, there can be no excuse for not maintaining its account whether it has one or more state units. – no valid reasons have been given by the ITAT for overturning the reasoned and detailed orders of the AO and CIT (A). – HC
  • Income Tax: Entitlement to claim carry forward loss – delay in filing the return – when the petitioner as a litigant is entitled to claim carry forward loss, mere delay should not defeat the claim of the petitioner – CBDT should have condoned the delay of one day in filing the return by the petitioner.- HC
  • Income Tax: Minimum Alter Tax (MAT) – Forfeiture of share warrants being a capital receipt – adjustment need to be made to the disclosures made in the notes on accounts forming part of the profit and loss account of the assessee and the profits arrived after such adjustment, should be considered for the purpose of computation of book profits u/s 115JB

INDIRECT TAX          

  • Service Tax: Demand of Service tax at the rate of 6%/8% of the value of exempted goods – As per Sub-Rule (3A) of Rule 6(3), the Cenvat Credit required to be reversed is as per the formula prescribed. Here, as the appellant have reversed the entire credit availed on common input service, the demand of 6%/8% of the value of exempted goods is not sustainable.
  • Service Tax: Cenvat credit – Appellant constructed various malls and rented the same to various parties and discharge of service tax on rent received. Also availed the Cenvat Credit of input services which are used for construction and maintenance of the various malls – credit allowed – Tri
  • Central Excise: Validity of order against the dead person – once the factum of death of the sole proprietor has come to the knowledge of the learned Commissioner, the learned Commissioner should have dropped the proceedings rather than passing the impugned order.
  • Customs: Classification – Used damaged cut rails for melting (melting scrap) – to be classified under CTH 72.04 denying benefit of exemption benefit under Notification No.12/2012 or under CTH 73.02 allowing benefit – the goods are to be classified under CTH 73.02 – exemption allowed.

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 26, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 26, 2016

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DIRECT TAX

  • Income Tax: Penalty u/s 271E – Company has directly repaid the loan taken from Director to Bank – violation of section 269T – The assessee has demonstrated that under the compulsion the payment was directly credited in the bank account of the Director. Strictly it was not paid in cash – No penalty.
  • Income Tax: Non collection of TCS (tax collection at source) – main husk is a by-product and the same cannot be considered as scrap and waste as provided in the Explanation to Section 206C of the Income-tax Act.
  • Income Tax: Non collection of TCS (tax collection at source) – DOC is a by-product and it certainly cannot be categorized as scrap and waste and it has its own market value – AO has erred in categorizing DOC as scrap within the meaning of Explanation to Section 206C

INDIRECT TAX              

  • Cenvat credit – service tax paid by the sub-broker – there is no evidence to elevate such suspicion to a level to come to an inference that the higher commission (than the commission received by the appellant) was paid to sub-brokers in respect of goods other than the goods for which it received commission from its clients – credit allowed- (M/s N.R. Wires Pvt. Ltd. Versus Commissioner of Central Excise, Raipur – 2016 (3) TMI 714 – CESTAT NEW DELHI).
  • CENVAT Credit – eligibility of input services – By denying credit on all the input services it seems to appear that the appellants has not availed any input service for providing output service during the relevant period which is not possible- (M/s Conexant Systems Pvt Ltd, Hyderabad Versus Commissioner of Central Excise And Service Tax, Hyderabad-II – 2016 (3) TMI 713 – CESTAT HYDERABAD).
  • Service Tax: Liability of Service tax on TDS amount absorbed by the assessee on foreign remittance – Reverse charge – Service Tax liability needs to be discharged on amounts which have been billed by the service provider – Demand set aside.
  • Service Tax: Sharing of resources and cost / expenses with the group companies – The activities carried out by the Appellant enables the Participating Group Companies to share the common services, the best available talent and resources required for carrying out their business activities. No taxable service is provided by the appellant – No service tax liability.

DATES

  • Company e-forms revised on MCA portal w.e.f. 03.2016.Download the latest version of forms from company forms download page on the MCA portal.

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 22,2016

CORPORATE AND PROFESSIONAL UPDATE  DATED MARCH 22,2016

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DIRECT TAX

  • Income Tax: Wherever under the DTAA’s. Make available clause is found, then as there is no imparting, the payment in question is not ‘FTS’ under the Treaty and when there is no ‘FTS’ clause in the treaties, the payment falls under Article 7 of the Treaty and is business income. – Tri
  • Income tax ; TDS u/s 192 or 194J : The difference between this clause in two types of agreements itself goes to prove that doctors who are engaged on retainer ship basis are not the servants of the assessee since they are allowed to do whatever they want except joining the similar business while other doctors who are on the pay roll of the assessee are debarred from doing any other activity apart from that of the assessee- (The A.C.I.T. (TDS) , Chandigarh Versus M/s Fortis Healthcare Ltd. – 2016 (3) TMI 629 – ITAT CHANDIGARH)

INDIRECT TAX               

  • Service Tax: Exemption from service tax on construction service provided in case of religious use but not to charitable purpose – clause 13(c) of Notification No. 25/2012-ST, dated 20.6.2012 – in the absence of petitioner’s demonstration that  enactment/provision /notification  is arbitrary, discriminatory or violative of Article 14 of the Constitution of India, it cannot be declared to be un constitutional. – HC
  • Service Tax: The appellants are eligible for refund under Rule 5 of CCR read with Notfn No.12/2003 as amended on the input services i.e. Company Secretary Service, Chartered Accountant service , Security service, Legal Consultancy service, ITS service, GTA service – Tri
  • Service Tax: When the assesse is not disputing his liability for discharging the statutory obligations and has paid the entire tax alongwith the interest and 25% of the penalty and there after discharging his obligations as a tax payer, in view of the provisions of Section 73(4A) the proceeding should be deemed to have been concluded – Tri
  • Service Tax: Imposition of penalties for the period 2007-08 to 2010-11 – Sections 76 & 78 of the Finance Act, 1994 – if the show cause notices are issued after the date of amendment, penalties under Section 76 and 78 simultaneously cannot be imposed and hence setting aside the penalty under Section 76 is uninterferable – Tri
  • Service Tax: Liability of tax on extended warranty service between October 2005 and September 2010 – Mere coverage by the extended warranty scheme does not, of itself, create an intention to use the service of the dealer. – Tri
  • Central Excise: Valuation of goods sold through dealers – inclusion of the expenditure incurred by the wholesale dealers in the assessable value of the goods sold by the appellant to such wholesale dealers – Not to be included – Tri
  • Central Excise: Eligibility of quantity discount – as cash discount is something which is “known” at or prior to the clearance of the goods, being contained in the agreement of sale between the assessee and its buyers, and must therefore be deducted from the sale price in order to arrive at the value of excisable goods “at the time of removal”. – Tri
  • VAT and Sales Tax: Principles of natural justice – it was the assessee, who invited the attention of the Tribunal to the balance sheet – the Tribunal is entitled to come to its own conclusion from what was produced. It is not part of the principles of natural justice to expect the Tribunal to confront the person producing the document with what is found by the Tribunal – HC

MCA UPDATES

  • Companies Law: If contract expressly bars award of interest pendente lite, the same cannot be awarded by the Arbitrator. – the bar to award interest on delayed payment by itself will not be readily inferred as express bar to award interest pendente lite by the Arbitral Tribunal, as ouster of power of Arbitrator has to be considered on various relevant aspects – SC

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 21,2016

CORPORATE AND PROFESSIONAL UPDATE  DATED MARCH 21,2016

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DIRECT TAX

  • Income Tax: Where assessee-NBFC provided security in form of cash collateral for loans purchased by purchaser-bank but did not book said amount as its income, levy of concealment penalty was justified – [2016] 67 163 (Chennai – Trib.)
  • Income Tax: Where assessee received gifts from two persons on behalf of his daughters on occasion of their marriage, since said gifts were made by demand drafts and genuineness of same was confirmed by bank in which person making gifts had their accounts, impugned addition made under section 69A was to be set aside – [2016] 67  168 (Punjab & Haryana)
  • Income Tax: Substitution of ‘full value of consideration received’ with ‘stamp value’ in terms of section 50C, is applicable in hands of seller of property who has to compute capital gains under section 48 pursuant to transfer of a capital asset in nature of land or building or both; same cannot be extended in case of purchaser to estimate undisclosed investment – [2016] 67  166 (Kolkata – Trib.)
  • Income Tax: Where assessee, a joint venture, executing civil contract works, having received contract by Irrigation Department of State Government, assigned same to one of its constituents on back to back basis, since income from contract entered into with State Government was assessable only in hands of assessee and not in hands of sub-contractor, credit for tax deducted at source from bills of assessee was required to be given to assessee alone and same could not be denied by invoking Rule 37BA(2)(i) of Income-tax Rules, 1962, on ground that no real work was carried on by assessee – [2016] 67 224 (Andhra Pradesh)

INDIRECT TAX          

  • Service Tax: Where assessee-bank was utilizing services rendered by SWIFT essentially to transmit financial messages internationally, such services amounted to a taxable service classifiable under category of banking and other financial services and were liable to service tax – [2016] 67 162 (Mumbai – CESTAT)
  • Service Tax: Helping vehicle-buyers to avail registration with RTO under Motor Vehicle Act does not amount to Business Auxiliary or Business Support Services; hence, differential amount earned over and above actual RTO registration fees cannot be charged to service tax – [2016] 67  174 (Mumbai – CESTAT)
  • Service Tax: For appeal filed prior to 6-8-2014, if assessee’s appeal is dismissed for pre-deposit default, Tribunal may restore such appeal, if sufficient compliance is shown later; more so, when, on merits, case is prima facie in favour of assessee – [2016] 67 173 (Madras)
  • Excise Duty: Where certain percentage of expenses incurred on advertisement by dealers was reimbursed by assessee manufacturer because these advertisements indirectly helped assessee, reimbursed amount would not form part of trading transaction value
  • Excise Duty; EXPORT – WITHOUT PAYMENT OF DUTY : Having filed export applications with department, assessee cannot later claim that ‘applications were filed in anticipation of export order and goods in question were never manufactured’; assessee must show proof of export within 6 months or else, bear duty with interest and penalty – [2016] 67  171

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CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 19,2016

CORPORATE AND PROFESSIONAL UPDATE  DATED MARCH 19,2016

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DIRECT TAX

  • INCOME TAX: CBDT directs reopening assessments in claim of bogus capital gains / loss in penny investment scam by taxpayers vide letter dated 16.03.2016
  • INCOME TAX : TDS-Credit of TDS won’t be denied to a contractor even if entire work has been sub-contracted to others [2016] 67 224 (Andhra Pradesh)
  • INCOME TAX : CHARITABLE PURPOSE : Where assessee-trust conducted courses and seminars to help its members in preparation of a foreign certification course, assessee’s activity was not of education but of advancement of any other object of general public utility and involved trade, commerce or business, hence, not entitled for exemption under section 11 – [2016] 67 Taxmann 140 (Chennai – Trib.)
  • INCOME TAX : CAPITAL GAIN-TRANSFER : Where under Joint Development Agreement, builder would get 47 per cent and landowner 53 per cent of built up area and during current year landowner handed over entire land to developer, though sale deed was executed in next year, in current year itself there was transfer of capital assets for consideration being cost of 53 per cent of built up area – [2016] 67  147 (Bangalore – Trib.)

INDIRECT TAX 

  • SERVICE TAX : Helping vehicle-buyers to avail registration with RTO under Motor Vehicle Act does not amount to Business Auxiliary or Business Support Services; hence, differential amount earned over and above actual RTO registration fees cannot be charged to service tax
  • SERVICE TAX : Where assessee entered into system delivery agreement with a customer to provide for a system comprising of a complete set of various machines/equipments which were required to be installed and commissioned at site of customer and overall operation and maintenance processes shall be responsibility of customer, transaction qualified as a transfer of right to use goods and, consequently, be outside definition of service – [2016] 67 142 (AAR – New Delhi)
  • CENTRAL EXCISE : As per rule 7(4) of Central Excise Rules, 2002, interest is payable only when any amount is payable consequent to order of finalization of provisional assessment; hence, where duty is paid prior to finalization of assessment and no amount is payable consequent to finalization, interest under rule 7(4) ibid would not be attracted – [2016] 67  150 (Chennai – CESTAT).

OTHER UPDATES

  • COMPETITION ACT : Identical price quoted by respondent manufacturers for supply of AMDBS, a critical safety item required for railway coaches, did not constitute sufficient evidence of cartel formation and in absence of other plus-factors, it was not possible to record a finding that respondents had acted in violation of section 3(3)(d), read with section 3(1) – [2016] 67 146 (CAT – New Delhi)

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