CORPORATE AND PROFESSIONAL UPDATE DECEMBER 12, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 12, 2015

INCOME TAX ACT

SECTION 5

ACCRUAL OF – INCOME

Income : Where interest income from security accrued in terms of books of account maintained by assessee, but same was offered to tax on actual receipt, and Tribunal passed detailed order in favour of assessee in earlier year, which it followed in current assessment year also, exercise undertaken by tribunal could not be termed as perverse – [2015] 63  166 (Bombay)

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Interest of : Where assessee invested its own funds in shares resulting in earning of dividend income exempt from tax, impugned disallowance made by Assessing Officer by invoking provisions of section 14A, read with Rule 8D was not sustainable – [2015] 63  198 (Panaji – Trib.)

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SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

100 per cent depreciation : Electrically operated vehicles including battery power or fuel cell powered vehicles are entitled to 100 per cent depreciation under Appendix I, Part-A, Item III(3)(xiii)(o) of Income-tax Rules, 1962 –[2015] 63  176 (Calcutta)

SECTION 43A

CHANGE IN FOREIGN CURRENCY, RATE OF EXCHANGE

Depreciation : Expenditure incurred to get rid of forward contracts which assessee had entered into for purpose of protecting itself from fluctuations of foreign exchange, could not come within four corners of section 43A –[2015] 63 .com 176 (Calcutta)

SECTION 44BBA

IN CASE OF NON-RESIDENTS – BUSINESS OF OPERATION OF AIR CRAFT 

Applicability of : When there is no taxable income, section 44BBA cannot be applied to bring to tax presumptive income constituting 5 per cent of gross receipts – [2015] 64  93 (Delhi)

SECTION 45

CAPITAL GAINS – CHARGEABLE AS

The question of bringing to tax under Section 45 (5) (b) of the Act the enhanced compensation received by the Assessee during the relevant previous year by furnishing bank guarantee will have to await the final decision in the appellate proceedings emanating from the order of the ADJ in the proceedings under Section 31 (2) LA Act.

Question of assessing to tax the interest received by the assessee on enhanced compensation in the same year in which the enhanced compensation is received will also have to await the final decision in the appellate proceedings. – [2015] 64 122 (Delhi)

SECTION 80QQB

DEDUCTIONS – ROYALTY INCOMES, ETC. OF AUTHORS OF CERTAIN BOOKS OTHER THAN TEXT BOOKS

Where assessee had authored a book on income tax problems in question answer form which was titled “How to Handle Income-tax problems”, since his book was on a complex issue which really needed intellect and knowledge, said book was a literary work in terms of section 80QQB; and, hence, royalty received on same would be entitled to deduction – [2015] 64  121 (Kolkata – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Selling expenses incurred for making sales are distinct from AMP expenses and, hence, should not be included in base amount for computing ALP of AMP expenses – [2015] 64 120 (Delhi – Trib.)

Comparables and adjustments/Methods – PSM : When transactions involved contributions of multiple entities and are integrated and interrelated and they cannot be separately evaluated for purpose of determining ALP of any one transaction, ‘PSM’ is ‘MAM’ – [2015] 63  304 (Delhi – Trib.)

SECTION 269SS

DEPOSITS – MODE OF TAKING/ACCEPTING

Amount received from partners : Where assessee received deposits from partners and sister concerns in cash, since there was no material whatsoever to infer that those receipts were anything other than loans or deposits, impugned penalty order passed under section 271D for violating provisions of section 269SS, was to be confirmed – [2015] 63  196 (Kerala)

SECTION 271D

PENALTY – FOR FAILURE TO COMPLY WITH SECTION 269SS

Initiation of penalty proceedings : Penalty proceedings under provisions of sections 271D and 271E are initiated not by Assessing Officer but only with issuance of notice by Joint Commissioner – [2015] 63  196 (Kerala)

SECTION 271E

PENALTY – FOR FAILURE TO COMPLY WITH SECTION 269T

Recording of satisfaction : Where pursuant to directions issued by Commissioner (Appeals), Assessing Officer passed a fresh assessment order wherein no satisfaction was recorded for initiating penalty proceedings under section 271E, impugned penalty order passed under said section deserved to be set aside – [2015] 64 .75 (SC)

COMPANIES ACT

SECTION 457

WINDING UP – POWERS OF LIQUIDATOR

Any claim with regard to Provident Fund dues can only lie before Commissioner, Provident Fund, under relevant statute, consequently, whilst other claims for any unpaid wages etc. may well be admitted by Official Liquidator, however, any claims raised directly to Official Liquiation for payment of Provident Fund dues would be an exercise in futility since it is bound to be rejected on ground that company was never obliged to pay workmen any such amounts in first place – [2015] 64  123 (Delhi)

INDIRECT TAX LAWS (ST./EX./CUS. & (CST & VAT)

Minutes of Tariff Conference held in Chandigarh on 28-10-2015 and 29-10-2015 – LETTER F.NO.96/85/2015-CX.I, DATED 7-12-2015

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