corporate and professional update february 3, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 3, 2016

INCOME TAX ACT

SECTION 2(45)

CAPITAL GAINS – CHARGEABLE AS

Business income v. Capital gains – Land dealings: Where in terms of the construction agreement, the assessee handed over a piece of land to the builder, for construction of the multi-storied building, since construction and sale of flats did not change the character of the asset and there was no material to show that assessee ever had any intention to exploit plot as a commercial venture, transaction could not be characterized as ‘an adventure in nature of trade’ – [2016] 65 136 Delhi

SECTION 32

DEPRECIATION – ADDITIONAL DEPRECIATION

Manufacturer: Production of prefabricated piles which were going to be used by the assessee in its business of piling, would form part of construction activity irrespective of the fact whether such piles were constructed at the project site or at some other place with help of machinery.

It did not involve production or manufacture of any article or thing entitling assessee to additional depreciation on said machinery – [2016] 65 140 (Mumbai – Trib.)

SECTION 44BB

NON-RESIDENTS – MINERAL OIL, BUSINESS OF PROSPECTING /EXPLORATION OF

Where applicant enters into a contract with RIL for providing ‘Floating Production storage and offloading (FPSO) facilities, in view of the fact that in terms of ‘Change Order’ certain amendments were carried out such as fabrication and installation of new living quarters onboard and mobilizing and commissioning team of the applicant, since both original contract and amendments therein by way of ‘Change Order’ are inextricably linked with extraction, processing, production, storing & offloading of crude oil and natural gas for which RIL had floated tender, entire consideration received by the applicant in terms of the original contract as well as ‘Charge Order’ is taxable in India under section 44BB – [2016] 65 244 (AAR – New Delhi)

 

SECTION 56

INCOME FROM OTHER SOURCES – CHARGEABLE AS

Interest: Where assessee, engaged in construction activities, deposited its surplus funds in FDRs, interest earned thereon was to be taxed as ‘income from other sources – [2016] 65 139 (Lucknow – Trib.)

SECTION 147

INCOME ESCAPING ASSESSMENT – NON-DISCLOSURE OF PRIMARY FACTS

Section 143 v. Section 147: Requirements of section 147 cannot be dispensed with when an assessment made under section 143(1) is sought to be reopened – [2016] 65  17 (Delhi)

SECTION 148

INCOME ESCAPING ASSESSMENT

Notice For Service of Merely because assessee participated in proceedings pursuant to notice under section 148, it would not obviate the mandatory requirement of Assessing Officer to issue assessee a notice under section 143(2) before finalizing order of reassessment – [2016] 65 137 (Delhi)

SECTION 276D

OFFENCE AND PROSECUTION – FAILURE TO PRODUCE ACCOUNTS AND DOCUMENTS

Stay of prosecution proceedings: Pendency of appellate proceedings has no bearing on initiation of prosecution under Act – [2016] 65 138 (Delhi)

CENTRAL EXCISE ACT

SECTION 2(f)

MANUFACTURE – GENERAL MEANING

Cabling/twisting together of Aluminium wires/wire rods along with steel wire to form ‘plaited wire bands’ would amount to manufacture because plaited wire bands, etc. have a different name, character, and use and are classifiable separately – [2016] 65 131 (Kolkata – CESTAT)

SECTION 11A

RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED – REVENUE NEUTRALITY

In case of inter-unit transfer of goods, where transferee unit can take credit of duty paid by assessee-transferor, the department cannot allege suppression of facts with intent to evade duty and, therefore, an extended period of limitation cannot be invoked – [2016] 65  129 (Ahmedabad – CESTAT)

SECTION 35D

APPEALS-PROCEDURE-APPELLATE TRIBUNAL-ADJUDICATION ORDER DROPPED DEMAND

If assessee-company is being wound up, Revenue’s appeal before Tribunal would stand abatement as per provisions of rule 22 of CESTAT (Procedure) Rules, 1982, unless an application is made by or against liquidator/receiver for the continuance of proceedings – [2016] 65  132 (Ahmedabad – CESTAT)

CENVAT CREDIT RULES

RULE 3

CENVAT CREDIT – GENERAL

In case of an assessee being manufacturer cum service provider, credit of input services may be taken directly in ER-1 returns instead of taking it first in ST-3 and then, transferring to ER-3 return – [2016] 65  128 (Ahmedabad – CESTAT)

RULE 11

CENVAT CREDIT – REVERSAL AND LAPSING OF CREDIT WHEN EXEMPTION CLAIMED

If the assessee has not lapsed/reversed credit under rule 11 of CENVAT Credit Rules, 2004 on opting for exemption, then, for violation of CENVAT Credit Rules, action may be taken under CENVAT Credit Rules, but, exemption itself cannot be denied – [2016] 65 130 (Ahmedabad – CESTAT)

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

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