CORPORATE AND PROFESSIONAL UPDATE DECEMBER 8, 2015

Corporate and Professional Update December 8, 2015

INCOME TAX ACT

SECTION 10A

FREE TRADE ZONE

Computation of deduction : An assessee cannot include notional interest on surplus funds as income in computation of profits and gains derived by its undertaking from export of articles or things, for purpose of claiming exemption under section 10A – [2015] 119 (Delhi)

SECTION 28(va)

BUSINESS INCOME – NON-COMPETE FEE

Clause (va) of section 28 of the Act taxes a sum received for a restrictive covenant in relation to a business, but not a profession. Compensation attributable to a negative/restrictive covenant is a capital receipt and as the same does not fall within the ambit of section 28(va), it is not taxable – [2015] 293 (Delhi – Trib.)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Once it is established that there is nexus between the expenditure and the purpose of business (which need not necessarily be the business of the assessee itself), the revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and to decide how much is reasonable expenditure having regard to the circumstances of the case – [2015] 308 (SC)

SECTION 50C

CAPITAL GAINS

Additional Evidence p: Stam duty value won’t apply if value of property adversely affected due to its usage for industrial purposes only – [2015] 139 (Hyderabad – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments : In case of assessee-company engaged in rendering software development services to its AE, companies having functional dissimilarities or having related party transactions in excess of 15 per cent of revenue, could not be accepted as comparables while determining ALP – [2015] 105 (Bangalore – Trib.)

Comparables and adjustments – CUP v. TNMM : Where earlier draft assessment order was not dealt on merits, but set aside only on ground of violation of principles of natural justice, there was nothing wrong in adopting comparables selected by TPO in earlier order by revenue in determining arm’s length price in international transaction of assessee – [2015] 117 (Madras)

SECTION 153A

SEARCH AND SEIZURE- ASSESSMENT IN CASE OF

Conditions precedent: HC sets aside block assessment as seized material was destroyed in fire that took place at revenue’s office – [2015] 137 (Delhi)

 ASSESSMENT – IN CASE OF SEARCH, ETC.

Conditions precedent : Where Authorised Officer conducted search under section 132 upon assessee and thereafter Assessing Officer framed assessment under section 143(3) read with section 153A, whereby he treated amount of gifts received by assessee from two individuals an unexplained cash credit and added same in his income, since there was nothing on record to suggest that gifts were ingenuine, impugned addition was beyond scope and ambit of an assessment envisaged under section 153A – [2015] 118 (Mumbai – Trib.)

SERVICE TAX

SECTION 65(31)

TAXABLE SERVICES – CONSULTING ENGINEER’S SERVICES

Despite contract giving break-up of price for materials as well as services separately, if contract is treated as ‘turnkey contract’/’works contract’, no service tax is payable on service portion thereof prior to 1-6-2007 – [2015] 134 (Mumbai – CESTAT)

SECTION 65(68)

TAXABLE SERVICES – MANPOWER RECRUITMENT OR SUPPLY AGENCY’S SERVICES

In case of manpower supply to shipping companies, service tax is payable under ‘manpower supply services’ on value inclusive of service charges and wages of labour – [2015] 133 (Mumbai – CESTAT)

SECTION 73

RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED – SCOPE OF SHOW-CAUSE NOTICE

Show-cause notice is foundation of demand and order-in-original and subsequent orders passed by appellate authorities under statute would be confined to show cause notice; hence, department cannot challenge order of Tribunal on grounds not mentioned in notice/adjudication order – [2015] 135 (Gujarat) 

CST & VAT

SECTION 2(29) OF KARNATAKA VALUE ADDED TAX ACT, 2003

SALE

Where assessee in terms of an agreement entered with a transport department prepared ID smart cards as desired by it and supplied them to it after lamination, since smart cards were not commodities saleable in open market, supply of smart cards to transport department could not be held as sale – [2015] 128 (Karnataka)

 SECTION 8 OF RAJASTHAN VALUE ADDED TAX ACT, 2003

EXEMPTION OF TAX

Assessee could claim input tax credit of raw material used in manufacturing of Asbestos Cement Sheets when assessee was specifically exempted from paying VAT due to exemption notification. – [2015] . 307 (SC)    

More read:

• New TDS deduction No cash transactions exceeding 1 Crore -Section 194N
• Extention of TDS/TCS statement filing Date
• TDS payment to resident contractors                                  

STATUTES

CORPORATE LAWS

Sovereign Gold Bonds, 2015-16 – Shifting of issue date thereof – CIRCULAR IDMD.CDD.NO.1157/14.04.050/2015-16, DATED 24-11-2015

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

Online submission of information in Form DP-1 – Extension of date thereof – NOTIFICATION NO.F.3(352)POLICY/VAT/2013/1062-73, DATED 23-11-2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com  or call at 9555555480