Corporate and professional update december 21, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 21, 2015

DIRECT TAXES:

IT: Where Assessing Officer received information from Enforcement Directorate that in books of assessee there were huge cash deposits which were not explained, he could not reopen assessment on basis of said information alone without even examining as to whether amount in question was reflected in return filed by assessee [2015] 64 257 (Delhi) CIT v. Indo Arab Air Services

IT: Payment of money by inflating purchases cannot be construed as loan or advance within meaning of section 2(22)(e)

IT: Where Commissioner (Appeals) held that investment in properties were made out of borrowed funds, but details of borrowed funds and its nexus for making investments were not examined, addition under section 69 could not be made [2015] 64 88 (Chennai – Trib.) ACIT v. Padmasingh Isaac

IT: Additions of Bank deposits made u/s 68 – Once it is held that the impugned deposits may represent sales collection then the question of estimation of profit would arise. – the provisions of sec. 44AF shall not have application in the facts and circumstances of the case (Shri Suharsh R Joshi Vs ITO-21(2)(4), Mumbai (ITAT Mumbai)

IT: In terms of section 68, assessee is liable to disclose only source(s) from where he has himself received credit and it is not burden of assessee to show source(s) of his creditor nor is it burden of assessee to prove creditworthiness of source(s) of said sub-creditors [2015] 64 329 (Delhi) Commissioner of Income-tax v. Shiv Dhooti Pearls & Investment Ltd.

IT: Before levying penalty under section 271(1)(c), it is incumbent upon Assessing Officer to state whether penalty was being levied for concealment of income or for furnishing of inaccurate particulars of income [2015] 64 155 (Kolkata – Trib.) IN THE ITAT KOLKATA BENCH ‘B’Chandra Prakash Bubna v. ITO

MCA: Annual Filing of Forms – Just 2 days (29 Dec & 30 Dec) left without payment of Additional Fees. Thereafter, Normal Additional Fee, effective from day 1 of delay would be applicable.

SUBSIDY: No LPG subsidy for consumers with Taxable Income of more than Rs.10 Lac.

IT: Addition under Section 68 – ITAT was fully justified in coming to the conclusion that there exists no evidence to establish that there was any re-routing of the money collected by the Respondent-Companies. None of the shareholders denied having contributed to their share capital. – No addition – CIT-VIII Vs. SVP Builders (India) Ltd. And Ors (2015 (12) TMI 1185 – Delhi High Court)

CBDT issues Draft Guidelines for Determination of Place of Effective Management (POEM) of a Company. Suggestions invited by 02 JAN 2016. – F.No.142/11/2015-TPL, dt.23 DEC 2015.

IT: Where assessee claiming himself to be a Sewadar of Historic Dera, deposited donations received in name of Dera in his own bank account and, moreover, he failed to prove that any charitable activity in terms of section 2(15) was ever carried out by him, authorities below were justified in making addition to his income under section 68 in respect of donations in question [2015] 64 311 (Punjab & Haryana) Makhan Singh v. Income-tax officer

Read our articles:  Top Taxation Relaxation to MSMS

Highlights of International Taxation

Transfer Pricing:

An adjustment with respect to transfer pricing has to be confined to transactions with Associated Enterprises and cannot be made with respect to transactions with unrelated third parties. CIT v. Thyssen Krupp (Bombay High Court)

Commission earned by a non-resident agent who carried on business of selling Indian goods outside India cannot be said have deemed to be income which has accrued and/or arisen in India.

Circular No. 23 of 1969 & Circular No.786 of 2000 were withdrawn on 22.10.2009. The withdrawal of a Circular cannot have retrospective operation. CIT v. Gujarat Reclaim & Rubber Products (Bombay High Court)

INDIRECT TAXES:

Cenvat Credit : Event management services availed by advertising agency to procure advertising space in shows, etc. organized by such event managers, is eligible for input service credit in hands of such advertising agency [2015] 64 153 (New Delhi – CESTAT) Shakun Advertising (P.) Ltd. v. Commissioner of Central Excise & Service Tax

Service Tax : For computing reduced penalty of 25 per cent in section 78, ‘service tax assessed or determined under section 73(2)’ is taken, which shall include both : (a) sums paid prior to issuance of notice and appropriated in adjudication order; as well as (b) further sums confirmed as payable in adjudication order, [2015] 64 243 (Allahabad – CESTAT)

Amit Pandey Physics Classes v. Commissioner of Central Excise & Service Tax

Service Tax : Inclusion of ‘association of persons or body of individuals, whether incorporated or not’ in meaning of word ‘person’ is constitutional.[2015] 64 204 (Punjab & Haryana) Jaswant Singh Mann v. Union of India

Excise & Customs : Domestic Milk cans are classifiable as ‘kitchen/household articles’ under Heading 73.23 and not as ‘cans’ under Heading 73.10 [2015] 64 37 (SC) Commissioner of Central Excise v. Krishna Industries

ST: Adjudicating order makes a mockery of quasi-judicial process can adversely impacting the ease of doing business environment in the country – Ahluwalia Contracts India Ltd. Vs. C.S.T., Delhi (CESTAT New Delhi)

VAT & ST: Classification – AO was of the view that in so far as Asafoetida (Hing) is concerned the tax of 4 only was being paid but the AO was of the view that it falls in the category of Packed Masala and once it is a Packed Masala it falls in the entry where levy of tax is 16 – When spices are not mixed it remains Asafoetida (Hing) only and no new product emerges – to be levied 4 – Commercial Taxes Officer Vs. Ramdev Food Products Pvt. Ltd. & Others (Rajasthan High Court)

ST: Denial of rebate claim – receipt of commission on transaction – service was received by the recipient abroad and it is partly performed in India and partly performed abroad – Refund Allowed – Enervision Services Pvt. Ltd. Vs CCEC&ST, Hyderabad-II (2015 (12) TMI 1166 – CESTAT Bangalore)

VAT & ST: Misuse of C-Forms / D-Forms – Even assuming for the sake of argument that if there is mis-utilisation of C-Forms or any of the Forms which are issued under the Act at best a dealer may invite penalties or punitive measures but sale turnover cannot be enhanced – State of Andhra Pradesh Vs. Bharat Dynamics Ltd. (2015 (12) TMI 1135 – Andhra Pradesh High Court)

Excise & Customs : Where an assessee offers cash discount for immediate payment, it is clear that interest on receivables relating to credit period offered is also inbuilt into price and therefore, assessee is entitled to deduction in respect of interest on receivables inbuilt into price [2015] 64 244 (SC) Castrol India Ltd. v. Commissioner of Central Excise

Service Tax/Excise/Customs : Where Tribunal held assessee’s contentions to be correct without assigning any reasons and, without even recording revenue’s contentions, dismissed revenue’s appeals, said order was liable to be set aside and matter remanded back for consideration afresh [2015] 64 245 (Karnataka) Commissioner of Central Excise v. GTS Alloys (P.) Ltd.

DVAT – it is only the Commissioner who can pass an order under Section 36A (8) unless and until the power of the Commissioner has been delegated under Section 68 of the said Act to the VATO. – But that has admittedly not been done. – order set aside – Yongnam Engineering & Construction (Private) Limited Versus Commissioner, Delhi Value Added Tax & Others – 2015 (12) TMI 1087 – DELHI HIGH COURT

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Read our articles: Top Taxation Relaxation to MSMS

Highlights of International Taxation