CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 18, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 18, 2016

Income Tax Act

SECTION 10A

FREE TRADE ZONE

Set off of loss : Loss suffered by assessee in an unit entitled for exemption under section 10A cannot be set off against income from any other unit not eligible for such exemption – [2016] 66 110 (Chennai – Trib.)

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Rule 8D : Where assessee earned dividend income but did not claim any expenditure towards same, rule 8D provisions being prospective in operation could not be applied during year, but since incurring of certain administrative expenses cannot be ruled out, Assessing Officer was directed to disallow 2 per cent of exempt income as expenditure towards earning that income – [2016] 66 110 (Chennai – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustments – Related Party Transactions : In case of assessee, engaged in development and delivery of domain specific software to its AE, companies having turnover in excess of Rs. 200 crore and companies having related party transactions in excess of 15 per cent, could not be accepted as comparables while determining ALP – [2016] 66 119 (Bangalore – Trib.)

Comparables and adjustments/Comparables – Illustrations : All types of software development services cannot be clubbed together for comparability analysis – [2016] 66 109 (Hyderabad – Trib.)

Comparables and adjustments/Comparables – Illustrations : Company having brand value, brand building exercise, having huge asset base including ownership of significant intangibles cannot be considered as comparable to company providing simple software development services – [2016] 66 109 (Hyderabad – Trib.)

Read our articles:  Top Taxation Relaxation to MSMS

Highlights of International Taxation

SECTION 132B

SEARCH AND SEIZURE – RETAINED ASSETS, APPLICATION OF

Period of limitation : Where assessee filed an application on 17-4-2014 for release of seized cash and Assessing Officer decided said application on 20-7-2015, action of Assessing Officer in deciding application on 20-7-2015, i.e., over one year later could not be countenanced – [2016] 66 124 (Gujarat)

SECTION 147

INCOME ESCAPING ASSESSMENT – NON-DISCLOSURE OF PRIMARY

Audit objection : Assessing Officer having completed assessment under section 143(3), could not reopen assessment under directive of audit party – [2016] 66  125 (Gujarat

SECTION 148

INCOME ESCAPING ASSESSMENT – NOTICE FOR

Validity of notice : It is only Assessing Officer, who has passed original assessment order, is empowered to exercise powers under section 147/148 to reopen that assessment – [2016] 66  126 (Delhi)

SECTION 153

ASSESSMENT – TIME – LIMIT FOR COMPLETION OF REASSESSMENT

Where during assessment of original assessee, liability of any third person is found, such third person must be heard before issuing notice on him for purpose reassessment – [2016] 66 87 (Uttarakhand)

SECTION 13

POWER TO FIX PRICES

After State of AP had been bifurcated into State of Telangana and residuary State of AP, AP State Government could not have taken into account Oil Extraction Rate of AP Oil Palm Processing Unit located in State of Telangana as basis for price fixation of Oil Palm fresh fruit bunches grown in State of AP – [2016] 66 131 (Andhra Pradesh)

Constitution Of India

ARTICLE 226

WRIT PETITION – ALTERNATIVE REMEDY

Where department raised demand of service tax on bank/financial charges paid for realization of export proceeds by SEZ unit and assessee had filed writ thereagainst, High Court dismissed writ petition in view of effective alternate remedy under provisions of service tax laws – [2016] 66 113 (Madras)

Service Tax

SECTION 78

PENALTY – FOR EVASION OF DUTY/TAX

Argument that tax was not paid due to financial hardship would destroy assessee’s case of ignorance of tax liability; hence, person pleading financial hardship as a ground for non-payment/belated-payment of tax cannot plead that he was not aware of tax liability and therefore, he would be liable to evasion penalty – [2016] 66 114 (Gujarat)

SECTION 97

EXEMPTIONS – SERVICE TAX – MANAGEMENT, ETC., OF ROADS

Repair and maintenance of roads is exempt and not liable to service tax during period prior to 1-7-2012 and even on or after said date – [2016] 66 112 (Madras)

Cst & Vat

SECTION 62 OF PUNJAB VALUE ADDED TAX ACT, 2005

APPEALS, REVISION, ETC. – FIRST APPEAL

Provisions of section 62(5) of VAT Act are directory in nature meaning thereby that First Appellate Authority in his right to hear appeal is empowered to partially or completely waive condition of pre deposit contained therein in given facts and circumstances – [2016] 66 172 (Punjab & Haryana)

Cenvat Credit Rules

Rule 2(l)

CENVAT CREDIT – INPUT SERVICE (ADVERTISEMENT SERVICE, CREDIT OF)

Where assessee, an asset management company, providing services of managing assets of a mutual fund, incurred advertisement expenses which had not been reimbursed from mutual fund, it was eligible for input service credit on such expenses – [2016] 66 129 (Chennai – CESTAT)

Statutes

CORPORATE LAWS

Submission of returns for F&A Non-Life through Business Analytics Project (BAP) Module – CIRCULAR NO.IRDA/F&A/MISC/CIR/026/2016, DATED 10-2-2016

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

Section 11C, read with Section 3, of the Central Excise Act, 1944 – Power not to recover Duty of Excise not levied or short-levied as a result of general practice – Non-Levy of Duty of Excise on Di-Calcium Phosphate (Animal Feed Grade) of Rock Phosphate origin falling under heading 2835 of first schedule to Central Excise Tariff Act, 1985 – NOTIFICATION NO.4/2016-C.E. (N.T.), DATED 12-2-2016

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