CORPORATE AND PROFESSIONAL UPDATE JANUARY 16, 2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 16, 2016

INCOME TAX ACT

SECTION 24

INCOME FROM HOUSE PROPERTY – DEDUCTION

Interest : Where assessee undertook to pay loan of financial institutions as a condition for acquiring its mortgaged property, interest paid on such loan would be deductible under section 24(1)v(i) against rental income from said property – [2016]  72 (Punjab & Haryana)

SECTION 68

CASH CREDIT

Share application money : Mere fact that some of investors in share capital of assessee-company had a common address was not a valid basis to doubt their identity or genuineness, nor fact that shares of assessee were subsequently sold at a reduced price was germane to question of genuineness of investment in share capital of assessee – [2016]  71 (Delhi)

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Highlights of International Taxation

SECTION 73

LOSSES – IN SPECULATION BUSINESS

Futures and options transaction : Where assessee during year earned dividend income and interest income and it claimed set off of loss arising out of trading in Futures and Options/derivatives against other income, assessee’s case would fall within purview of exception carved out in Explanation to section 73 and, therefore, it was entitled to set off of loss against other income – [2016]  62 (Delhi – Trib.)

SECTION 69

UNEXPLAINED INVESTMENTS

Vehicles : Where consideration for imported vehicle and its initial duty had been paid by one ‘S’, it could not be concluded that assessee had made unexplained investment in purchase of same vehicle – [2016]  69 (Delhi)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustment – AMP expenses : Where for determining ALP of AMP functions performed by assessee, AMP functions performed by external comparables, were neither submitted by assessee before Assessing Officer/TPO nor examined by TPO, matter should be readjudicated afresh – [2016]  74 (Delhi – Trib.)

Comparables and adjustments/Adjustments :Since agency and distribution services rendered by assessee to its AE were functionally different and even risk assumed in both services were different, benchmarking of these functions was to be done separately for determining ALP – [2016]  75 (Delhi – Trib.)

SECTION 271C

PENALTY – FOR FAILURE TO DEDUCT TAX AT SOURCE

Reasonable cause : Where view adopted by assessee based upon certificate of CA that engineering services availed by it were not technical services, was one of possible views, there was reasonable cause as envisaged under section 273B for not deducting tax at source by assessee and, thus, penalty under section 271C was not to be imposed – [2016] 68 (Mumbai – Trib.)

 

SECTION 48

CONTRAVENTION BY COMPANIES

Where appellant had resigned from office of Executive Committee of Chemist and Druggists association and he did not have any knowledge about decision taken to restrain sale of drugs/medicines below Maximum Retail Price (MRP) etc., penalty could not be imposed upon appellant holding him guilty of anti-competitive conduct with help of section 48 – [2016]  70 (CAT – New Delhi)

CENTRAL EXCISE ACT

SECTION 11B

REFUND – PERIOD OF LIMITATION

‘Mistaken payment’ of service tax in excess of actually payable amount amounts to ‘deposit’ and time-limit of section 11B would not apply to refund thereof – [2016]  57 (Ahmedabad – CESTAT)

SECTION 11BB

INTEREST – ON DELAYED REFUNDS

If refund is sanctioned on 2-6-2008 by credit to Consumer Welfare fund but, subsequently on order of Tribunal, it is paid to assessee on 10-3-2010, then, interest on belated refunds is payable only upto date of sanction viz. 2-6-2008 – [2016]  56 (Ahmedabad – CESTAT)

CST & VAT

SECTION 2 (c) OF THE UTTAR PRADESH TRADE TAX ACT, 1948

DEALER

Where assessee entered into a contract with a club for supply of cooked food to its members and club allowed assessee to use its infrastructure and further club received sale consideration from customers and entered same in account books and after deducting 12 per cent commission made balance payment to assessee, assessee was a dealer and liable to pay tax on amount received from club – [2016]  55 (Uttarakhand)

CENVAT CREDIT RULES

RULE 5

CENVAT CREDIT

Round of  in case of service exporters, quarterly refund claim of cenvat credit under rule 5 of the CENVAT Credit Rules, 2004 must be filed within 1 year from date of export invoice – [2016]  58 (Ahmedabad – CESTAT)

CENTRAL EXCISE RULES, 2002

RULE 18

DUTY OF EXCISE

Where assessee had exported goods so manufactured by it after payment of duty and filed rebate applications in incorrect format, which were returned by Adjudicating Authority and thereupon assessee represented rebate applications in correct format, these applications would relate back to original date of filing of rebate applications – [2016]  54 (Gujarat)

STATUTES

DIRECT TAX LAWS

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evation with Foreign Countries – Belarus – Amendment in Notification No. GSR 392(E) [No.10646 (F.No.501/7/92-F.T.D.)], Dated 17-7-1998 –  NOTIFICATION NO.2/2016 [F.NO.501/07/1999-FTD-I], DATED 13-1-2016

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

Furnishing of an online quarterly return of purchases made by All Government Entities having their offices functioning within National Capital Territory of Delhi –NOTIFICATION NO.F3(619) /POLICY/VAT /20 16 /      1291 -1304, DATED 12-1-2016

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