corporate and professional update december 22, 2015
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CORPORATE AND PROFESSIONAL UPDATE DECEMBER 22, 2015
INCOME TAX ACT
SECTION 9
INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA
Interest : Where assessee-company paid interest on FCCBs issued by it to bond-holders outside India, said income squarely fell under exclusion clause of sub-section (1)(v)(b) of section 9, and, consequently, it could not fall within ambit of section 5(2) – [2015] 64 114 (Ahmedabad)
SECTION 10(10D)
INSURANCE POLICY, SUM RECEIVED UNDER
Keyman Insurance Policy : Stipulations in IRDA circulars have no role to play in deciding whether premium on insurance policies paid are covered by scope of ‘keyman insurance policy’ under section 10(10D) – [2015] 64 139 (Amritsar – Trib.)
SECTION 28(i)
BUSINESS INCOME – YEAR IN WHICH TAXABLE
Advances : Where assessee-contractor was regularly showing mobilization advance received against contracts in subsequent assessment year against bills raised in that year on completion of work and revenue had not raised any objection to such treatment, mobilisation advance received in relevant year could not be treated as revenue receipt of relevant year – [2015] 63 335 (Gujarat)
SECTION 45
CAPITAL GAINS – CHARGEABLE AS
Business income v. capital gain – Share dealing : Where assessee maintained two separate accounts in respect of its dealing in mutual funds and shares, i.e., one in respect of its trading and other in respect of its investment, and there were no allegations of shifting of scrips from trading to investment or vice versa, assessee’s claim of capital gain on sale of shares held as investment was to be allowed – [2015] 64 137 (Bombay)
SECTION 68
CASH CREDIT
Gift : Where assessee did not have any close relation with alleged donors and no cogent material had been brought on record to prove their financial capacity, gifts received by assessee in his capital account could not be treated as genuine and would be added to his income under section 68 – [2015] 64 180 (Gujarat)
SECTION 80HHC
DEDUCTION – EXPORTERS
Reassessment : Where assessee claimed deduction under section 80HHC on ‘service income’ on which Assessing Officer had applied his mind at time of assessment, subsequent judgment of Apex Court would not give Assessing Officer jurisdiction to reopen assessment – [2015] 64 181 (Punjab & Haryana)
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustments/Comparables – Illustrations : Where assessee, engaged in manufacturing cassia gum powder, rendered marketing support services to its AE, company involved in high end niche market segment of financial contents and company which outsourced its ITES to third party vendors, could not be accepted as valid comparables while determining ALP – [2015] 64 135 (Ahmedabad – Trib.)
SECTION 147
INCOME ESCAPING ASSESSMENT – NON-DISCLOSURE OF PRIMARY FACTS
Information from external source : In absence of any details available on record, Assessing Officer could not initiate assessment proceedings merely on basis of information supplied by DGIT (Inv.) that assessee had made certain bogus purchases and, to said extent, income had escaped assessment – [2015] 64 179 (Gujarat.)
SECTION 153A
SEARCH AND SEIZURE – ASSESSMENT IN CASE OF
Scope of : In case of assessment made on assessee consequent to search in another case, Assessing Officer is bound to issue notice under section 153C and thereafter proceed to assess income under section 153A and if Assessing Officer had proceeded with reassessment under section 147/148 and passed assessment order under section 143(3), same would be illegal, arbitrary and without any jurisdiction – [2015] 64 159 (Visakhapatnam – Trib.)
SECTION 199
DEDUCTION OF TAX AT SOURCE – CREDIT FOR TAX DEDUCTED
Mobilisation advance : Where TDS was deducted from mobilisation advance paid to assessee-erection contractor, credit of same was to be allowed, even if no income was assessable to tax as contract was not fully executed in relevant year – [2015] 63 334 (Hyderabad – Trib.)
SECTION 222
COLLECTION OF TAX AT SOURCE – CERTIFICATE PROCEEDINGS
Auction : There is no requirement of giving opportunity of hearing to Judgment Debtor before valuation of property to be auctioned is made and its reserve price is fixed – [2015] 64 133 (Madhya Pradesh)
SECTION 234E
FEE – FOR DEFAULT IN FURNISHING STATEMENT
Intimation under section 200A : Fees under section 234E in respect of defaults in furnishing TDS statements could not be levied in course of intimation under section 200A – [2015] 63 333 (Amritsar – Trib.)
COMPETITION ACT
SECTION 4
PROHIBITION OF ABUSE OF DOMINANT POSITION
Where disputes between complainant-distributor and respondent -supplier were purely contractual in nature, allegations made by complainant in context of discontinuance of distributorship could not be treated as unfair trade practice as defined under section 36A of MRTP Act – [2015] 64 154 (CAT – New Delhi)
CONSTITUTION OF INDIA
ARTICLE 226
WRIT PETITION – SCOPE OF
Right to fair hearing and right to defence is a guaranteed right; hence, for said purpose, department must supply documents demanded by assessee, even if said documents are not relied upon in show-cause notice – [2015] 64 97 (Madras)
CENTRAL EXCISE ACT
SECTION 4
VALUATION UNDER CENTRAL EXCISE – TRANSACTION VALUE – RELATED PERSON
In case of related parties, value is determined based on sale price of buyers for same period during which goods were sold by assessee to related buyers; hence, in valuing sales for 2004-05, sale price of buyers during 2001-02 cannot be taken – [2015] 64 163 (SC)
SECTION 5A
EXEMPTIONS – CENTRAL EXCISE – DRUG FORMULATIONS
Exemption to ‘formulations’ manufactured out of ‘streptomycin’ does not mean that ‘formulations’ cannot contain any other ‘drug’; therefore, Strepto Penicillin Injection containing ‘streptomycin’ as well as ‘penicillin’ is exempt –[2015] 64 170 (SC)
SECTION 21
ARRESTS – PROCEDURE, DISPOSAL AND INQUIRY
If major shareholder of company is found actively involved in evasion of duty by company by unaccounted sales and purchases, his arrest and proceedings for confiscation and penalty against him, are valid – [2015] 64 103 (Bombay)
CST & VAT
SECTION 4 OF RAJASTHAN SALES TAX ACT, 1994
CLASSIFICATION OF GOODS – ASAFOETIDA (HING)
Where on packet of asafoetida (hing) being sold by assessee, it was printed ‘Ram Deo Super Compounded Asafoetida Ingredients: Edible Gum, Wheat Flour 30 per cent aprox’, said item would fall under Entry No. 82 of Act and was liable to tax at 4 per cent – [2015] 64 173 (Rajasthan)
CENVAT CREDIT RULES
RULE 3
CENVAT CREDIT – GENERAL
Central Excise duty equivalent to Cenvat Credit availed by original manufacturer on capital goods could not be demanded from purchaser on its sale when purchaser did not take benefit of Cenvat credit on it – [2015] 64 129 (Mumbai – CESTAT)
STATUTES
CORPORATE LAWS
Consultation paper on additional disclosure norms for retail/public issuance of Additional Tier 1 (AT1) instruments issued by banks – PRESS RELEASE, DATED 18-12-2015
Consultation paper on guidelines for public issue of units of Infrastructure Investment Trusts – PRESS RELEASE, DATED 18-12-2015
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Compensation, Rehabilitation and Resettlement and Development Plan) Rules, 2015 – NOTIFICATION NO. GSR 985(E) [F.NO.13011/01/2015-LRD], DATED 18-12-2015
Debts Recovery Appellate Tribunal, Delhi (Court Master) Recruitment Rules, 2015 – NOTIFICATION NO. GSR 957(E) [F.NO.5/3/2015-DRT], DATED 11-12-2015
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