corporate and professional update dated march 23,2016

CORPORATE AND PROFESSIONAL UPDATE  DATED MARCH 23,2016

DIRECT TAX

• Income Tax: Attachment of bank account – any action to recover taxes adopting coercive means is not permissible till the petitioner’s application for a stay under Section 220(6) of the Act is disposed of. – HC
• Income Tax: Reopening of assessment – AO has no power to review; he has the power to re-assess. But re-assessment has to be based on the fulfillment of certain pre-condition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, the review would take place – to reopen an assessment tangible material should be there – HC
• Carry forward of excess application of income over the income – Unfortunately, the details of such income and application of income in the earlier year are not available on record.
• Therefore, this Tribunal has no other choice except to presume that the income of the assessee was already allowed in the earlier year. Hence, nothing remains to carry forward. – Tri
• Income Tax: Levy of penalty u/s 272A(2)(k) – assessee could not upload the quarterly statement in respect of the tax deducted at source – in respect of those deductees whose PAN is not available with the assessee, there was a reasonable cause for the delay in uploading the quarterly statement as required under the scheme of the Income-tax Act, 1961. – Tri
• Income Tax: TDS u/s 194C – non-deduction of TDS on hamali charges paid to daily laborers employed by the assessee -Just because the payments are made through the mestri, the A.O. was not correct in coming to the conclusion that there exists a written or oral contract for the supply of labor which attracts the provisions of section 194C – Tri
• Revision u/s 263 – section 292BB of the Act can be made applicable only for assessment or reassessment proceedings and the same cannot be made applicable for revisional proceedings as contemplated u/s. 263 – when there is a jurisdictional defect, it does not become curable – Tri
• Income Tax: Transfer pricing adjustment – Berry ratio selected as a most appropriate method for determining the ALP – since the assessee had incurred abnormal expenses for specific activities conducted by the assessee for the predominant benefit of the assessee’s AEs, the decisions cited by the Ld. A.R. are rejected because in those cases only routine expenses were incurred unlike the case of the assessee – Tri

INDIRECT TAX               

• Service 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 a commission from its clients – credit allowed – Tri
• Service Tax: CENVAT Credit – eligibility of input services – By denying credit on all the input services, it seems to appear that the appellants have not availed any input service for providing output service during the relevant period, which is not possible. – Tri
• Cenvat Credit wrongly taken for the period April 2009 to November 2009 – Sometimes such unintentional mishappenings/mistakes do take place for which the appellant is not to be punished by imposing the penalties – Tri
• Central Excise: Recovery of interest on the cenvat credit wrongly taken – the appellant is liable to discharge interest liability paid subsequently under protest to the respondent. – Tri
• Central Excise: Recovery of dues pending against predecessor of the premises from the subsequent purchaser of the premises in the auction – When the appellant took over the possession of the premises in question in July 2004, the provisions of section 11 of the Act was not in force – In these circumstances, the dues paid by the appellant are refundable – Tri
• Customs: Leviability of anti-dumping duty – appellant has correctly declared the good as “Energy saving 32W 4 U shaped tubes” as it is an item of 32W, therefore it does not come under the purview of Notification No.55/2009-Cus, dated 26.05.2009 to demand anti-dumping duty and the same is not leviable. – Tri
• Customs: Platinum imported but found shortage – terms of policy even violated in so far as they have consumed platinum much in excess of the prescribed process loss prescribed under the policy. To that extent appellant has not fulfilled the conditions of the notification and has failed to account for the platinum and therefore, is liable to payment of duty on the unaccounted platinum. – Tri

MCA UPDATES

• Companies Law: The scheme of demerger of which sanction is sought appears to be only a device for the avoidance of obligation towards capital gains tax and stamp duty and also falls foul of Explanation to Section 2(19AA) of the Income Tax Act of 1961. The scheme of de-merger cannot, therefore, be sanctioned – HC

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