corporate and professional update february 8, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 8, 2016

INCOME TAX ACT

SECTION 10B

EXPORT-ORIENTED UNDERTAKING

Computation of deduction: Interest on FDRs which were under lien with Bank for facilitating letter of credit and bank guarantee facilities would qualify for deduction under section 10B – [2016] 65  287 (Delhi)

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Rule 8D: Disallowance made under section 14A, read with rule 8D, towards interest expenditure would not be tenable where Assessing Officer failed to establish a nexus between interest-bearing funds and investment made – [2016] 65  295 (Karnataka)

SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

Deferred tax liability: Where deferred tax liability was never an item of expenditure in profit and loss account, its addition was liable to be deleted – [2016] 65 289 (Kolkata – Trib.)

SECTION 115JB

MINIMUM ALTERNATE TAX

Tea business: 40 percent of the profit of the tea business will be the book profit of tea company for calculation of minimum alternate tax – [2016] 65  289 (Kolkata – Trib.)

Provision for gratuity: Where the provision of gratuity was based on the report of the actuarial valuation, its addition was liable to be deleted – [2016] 65  289 (Kolkata – Trib.)

Section 80HHC deduction: For determining book profits, net profits shown in the profit and loss account had to be reduced by the number of profits eligible for deduction under section 80HHC and not by the amount of deduction under section 80HHC – [2016] 65  289 (Kolkata – Trib.)

SECTION 153

ASSESSMENT-TIME-LIMIT FOR COMPLETION OF ASSESSMENT 

Limitation for purpose of section 153 would start from the end of the assessment year in which notice under section 148 is served upon assessee and not from the end of the assessment year in which such notice is issued – [2016] 65 293 (Bombay)

SECTION 194C

DEDUCTION OF TDS – CONTRACTOR/SUBCONTRACTOR, PAYMENT TO

Transport contracts: Assessee would be liable to deduct tax at source under section 194C on payments made as transportation charges to intermediate parties who arranged actual transporters from open market for carriage of goods by transport for the assessee, even if there was no written contract between the assessee and intermediary party – [2016] 65  294 (Mumbai – Trib.)

SECTION 275

PENALTY – BAR OF LIMITATION FOR IMPOSITION

Pending assessment: Where appeal of the assessee against addition made in assessment was pending before Tribunal, an order imposing penalty under section 271(1)(c) was premature – [2016] 65  293 (Bombay)

CENVAT CREDIT RULES

RULE 2(l)

CENVAT CREDIT – INPUT SERVICE

Advertisement and Sales Promotion: Where principally agreement is to appoint agent/stockist for storing and selling goods of the assessee, such stockist would be ‘commission agent’ and not ‘sales promotion agent’; hence, commission so paid to him is ineligible for credit. – [2016] 65  283 (Gujarat)

RULE 6

CENVAT CREDIT – EXEMPTED AND DUTIABLE GOODS OR EXEMPTED AND TAXABLE SERVICES, OBLIGATION OF ASSESSEE

Where assessee had cleared cenvated packing materials under bond under CT-2 certificates to Export Processing Godown (EPG) for packing of export goods, no credit reversal was warranted thereon under rule 3 or rule 6 – [2016] 65 286 (Chennai – CESTAT)

STATUTES

CORPORATE LAWS

Revision in Position Limits for Agricultural Commodities –CIRCULAR NO.CDMRD/DMP/ CIR/32/2016, DATED 29-1-2016

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

Rajasthan Value Added Tax (Amendment) Rules, 2016 – Amendment in Rules 14, 16, 22A, 33 and Form VAT-01 and Substitution of Rules 12, 13, 25 & 77 – NOTIFICATION NO.F.12(79)FD/TAX/ 2014-111, DATED 8-1-2016

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.

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