corporate and professional update april 29, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 29, 2016

DIRECT TAX

• Income Tax: Fee for technical services : Where 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 of : Where 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.)
• Immovable property : Where 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.)
• IT: Expenditure incurred towards fund – allowed as deduction while computing income of the assessee co-operative bank – The Karnataka State Co-operative Apex Bank Ltd. Vs. DCIT, Cir-3(1), Bangalore (2016 (4) TMI 871 – ITAT Bangalore)
• Today (28.04.16) is last date to file DVAT- 56 (DVAT Return verification form) and DVAT-48(Return of TDS) for quarter ended March, 2016.
• IT:Deduction u/s. 54F – allowance of claim as assessee has purchased a semi-finished house and completed construction before the three years period as prescribed –  Srinivasa Rao Vs. ACIT, Cir-3(2), Hyderabad (2016 (4) TMI 867 ITAT Hyderabad)

 

• CBDT Circular regarding Commencement Of Limitation For Penalty Proceedings U/s 271D and 271E of the Income tax Act, 1961
• The CBDT has issued Circular No. 09/DV/2016 dated 26th April 2016 in which it has expressed the view, by relying on the judgement dated dated 8.7.15 of the Kerala High Court in Grihalaxmi Vision vs. ACIT that the limitation for imposition of penalty under sections 271D and 271E of the Income tax Act, 1961 does not commence at the level of the Assessing Officer (below the rank of Joint Commissioner of lncome Tax) but commences at the level of the Range authority i.e. the Joint Commissioner of Income Tax./Addl.
• Commissioner of Income Tax. The CBDT has advised Assessing Officers (below the rank of Joint Commissioner of Income) to make a reference to the Range Head regarding any violation of the provisions of section 269SS and section 269T of the Act, as the case may be, in the course of the assessment proceedings (or any other proceedings under the Act). It has directed that the Assessing Officer, (below the rank of Joint Commissioner of Income Tax) shall not issue the notice in this regard.
• The Range Head will issue the penalty notice and shall dispose/ complete the proceedings within the limitation prescribed u/s 275(1)(c) of the Act
• reduces interest rates on employee provident fund (EPF) from 8.75% to 8.7% for financial Year 2015-16.
• Family pension claim not acceptable if option to join scheme was not exercised. [Ganesh Prasad Mishra vs. Commissioner EPF Organization (Madhya Pradesh HC at Indore)].
• Excess of TDS deposited u/s. 195 eligible for interest u/s. 244A. Circular no:11/2016– IT.
• Relaxation of Know Your Customers (KYC) Norms for customs notified vide circular no. 13/2016 dated 26Th April 2016- (click here to view)
• The Contract entered for the purpose of packing loading and unloading etc. of the goods for which labour was supplied by the assessee to M/s Birla Corporation Ltd. cannot be held as Cargo Handling Service as the two conditions are not satisfied- (The Deputy Commissioner, Central Excise & Another Versus Sushil & Company – 2016 (4) TMI 987 – SUPREME COURT.
• Assessee is providing the services directly to M/s. Jet Airways (I) bPvt. Ltd. which is not on behalf of Airport Authority – it cannot be said that Airport Authority has authorized the assesse to provide the services- (Commissioner of Service Tax, Mumbai-I Versus Soft Touch Aviation – 2016 (4) TMI 986 – CESTAT MUMBAI)
• Income Tax: Addition u/s 68 – creditor from the foreign country – Even the AO has also not disputed the identity source and genuineness of share capital. We are also of the view that it is unnecessary burden upon the assessee by pressuring it to bring the creditor from the foreign country which is contrary to the facts of the case as well as evidence produced by the assessee- (M/s Vam-Hi-Fashion Garments Pvt. Ltd. Versus ACIT, Range-17, New Delhi- 2016  ITAT DELHI).
• Income Tax: Stay application – looking at the manner in which the petitioner has been dealt with by the AO in regard to its stay application it would be in the interest of justice that the application for stay filed by the petitioner be heard by another Officer different from the Assessing Officer- (Piramal Fund Management Pvt. Ltd. Versus Deputy Commissioner of Income Tax Mumbai And Others – 2016 BOMBAY HIGH COURT).
• CBDT releases e-filing vault: new facility to add higher security to e-filing accounts of taxpayers, press release dated 04-04-2016.

INDIRECT TAX

• DELHI VAT ACT, 2004 – NEW COMPOSITION SCHEME FOR RESTAURANTS AND HALWAIS : CIRCULAR NO.01 OF 2016-17 [NO.F.3(664)/POLICY/VAT/2016/106-112], DATED 27-4-2016 dealers whose annual turnover is upto Rs. 50 Lakhs and who makes sales of cooked food, snacks, sweets, savouries, juices, aerated drinks, tea and coffee etc. have an option to pay composition tax @ 5%.
• 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.
• Delhi VAT extended online return filing due date till 16/05/2016 for Q4 15-16 vide circular no: 02 dated 28th April.
• 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)
• Service Tax: Selling/supplying coffee and tea, through vending machines installed at their customer’s premises and charging consideration at a fixed rate per cup, prima facie, amounts to sale and not liable to service tax under outdoor catering
• VAT and Sales : Tax Selling/supplying coffee and tea, through vending machines installed at their customer’s premises and charging consideration at a fixed rate per cup, prima facie, amounts to sale and not liable to service tax under outdoor catering, so it will be chargeable under VAT not on see service tax.
• Service Tax: Exchange rate notified vide notification no. 47/2016 dated 04/04/2016 Cenvat Credit allowability on the inputs used in the manufacture of exempted goods or non dutiable goods – Cenvat Credit on the inputs used in the process which does not amount to manufacture is admissible- (Commissioner of Central Excise & Customs, Aurangabad Versus M/s Fine Packaging Pvt Ltd – 2016 CESTAT MUMBAI)

Key Dates

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

• Filing of DVAT return verification form for quarter ended March where return not signed with digital signature: 28/04/2016
• Return by scheduled banks branches in delhi engaged in sale of silver, gold, repossessed vehicles for quarter ending March: 28/04/2016

• Payment of TDS u/s 194IA deducted on purchase of property/TCS collected in March: 07/04/2016
• Submission of Forms received in March to IT Commissioner: 07/04/2016- Form No. 27C(TCS).
• Return of DVAT TDS for quarter ending March: 28/04/2016

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