CORPORATE AND PROFESSIONAL UPDATE JUNE 18, 2016

Professional Update For the Day:

8-Tips-Biz-Name

DIRECT TAX:


Income Tax : The initiation of the proceedings u/s 153C in the absence of recording of the satisfaction by the AO of the person searched was held to be invalid and accordingly the assessment framed u/s 153C of the Act is quashed – Bhawna Bhalla Vs. ACIT, CC-21, New Delhi & DCIT, CC-21, New Delhi Vs. Bhawna Bhall

Income Tax: Disallowance made under sec. 14A has to be added back to book profit to compute MAT Haldia Petrochemicals Ltd. v. Joint Commissioner of Income-tax,Range- 12, 3, Kolkata [2016] 70 taxmann.com 70 (Kolkata – Trib.)

Income Tax: TDS not deductible on web hosting and marketing services procured from US based entity. [DCIT vs. M/s Matrimony.Com Pvt. Ltd. (ITAT Chennai)].

Income Tax: TDS –  15G/15H declarations for the period from 01 OCT 2015 to 31 MAR 2016 to be submitted through e-filing portal by 30 JUN 2016 – Notification No.9/2016.

Income Tax: Interest awarded under Land Acquisition Act forms part of compensation; not liable to sec. 194A TDS Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat [2016] 70 taxmann.com 45 (Gujarat)

Income Tax : Mere TP addition doesn’t justify levy of penalty if assessee had applied incorrect TP method in good faith Mitsui Prime Advanced Composites India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle- 6 (1), New Delhi [2016] 70 taxmann.com  123 (Delhi – Trib.)

Income Tax: Penalty will be levied u/s 271C for assessee’s failure to withhold TDS u/s 194A on interest paid to its sister concerns. Kerala HC opined that the only way assessee could take the benefit of Sec. 273B was by establishing that there was “reasonable cause” justifying its failure to comply with Sec. 194A. Kerala High Court

Income Tax: Penalty U/s 271(1)(c) shall not be imposed if assessing officer at the time of initiation of penalty proceedings has not specified whether penalty is initiated for the inaccurate particulars of income or concealment of income.(DCIT Vs. M/s Grass Field Farms & Resorts P. Ltd.) ITAT Jaipur

Income Tax: TDS not deductible on web hosting & marketing services procured from US based entity via {DCIT vs. M/s Matrimony.Com Pvt. Ltd. (ITAT Chennai) }

Income Tax: ITAT directs TPO to recalculate additions by considering only international transactions instead of total sales Federal Mogul Automotive Products (India) Ltd. v. Deputy Commissioner of Income-tax, Circle-11 (1), New Delhi [2016] 70 taxmann.com 121 (Delhi – Trib.)

Income Tax : Works contract services used for maintenance of office equipment are eligible input services Red Hat India (P.) Ltd. v. Principal Commissioner, Service Tax, Commissionerate, Pune [2016] 70 taxmann.com 132 (Mumbai – CESTAT)

Utility for Income Declaration Scheme, 2016 released by CBDT :  Central Government vide its notification no. 33/2016 dt. 19th May, 2016 has specified The Income Declaration Scheme Rules, 2016. Utility regarding these forms are now available on Income Tax website. Income Tax: Sec. 246A doesn’t allow filing of appeal before CIT(A) against order passed by AO under Sec. 195(2) Deputy Commissioner of Income-tax (International Taxation)-4(2), Mumbai v. Abu Dhabi Ship Building PJSC [2016] 70 taxmann.com 224 (Mumbai – Trib.)

Income Tax Assessee gets enduring benefit from the rights acquired in films and serials and they do not expire on the date of first telecast as contemplated by the assessee – The rights are intangible assets within the meaning of Explanation (iii) to Section 32 and do not fall within the purview of Section 37(1). The assessee is entitled to claim depreciation on same. (Eenadu Television Private Limited. Vs. ACIT, Hyderabad) ITAT Hyderabad

Income Tax: Where assessee, an Indian company, received dividend from a Brazilian company, since assessee was a resident company of India within meaning of article 23 paragraph 3 of DTAA and, Brazilian company had already paid tax on its profits in excess of rate prescribed in paragraph 2 of article 10 of DTAA before distribution of dividend income, such dividend would be exempt from tax in India – [2016] 70 taxmann.com 22 (Kolkata – Trib.)

Income Tax: Section 147 could not be availed of for purpose of correcting a mistake in assessment order; Assessing Officer could not sit in appeal over decision of his predecessor Assessing Officer, who had examined claim and allowed claim of deduction under section 54EC by taking plea that assessee was eligible for lesser amount – [2016] 70 taxmann.com 72 (Gujarat)

Income Tax : Official Assignee need not go before the CBDT for waiver of interest payable under Income-tax assessments. The Insolvency Court itself can consider the question of waiver of interest in terms of the power conferred under section 7 of the Presidency Town Insolvency Act and in the light of the provisions of the Income-tax Act – [2016] 70 taxmann.com 182 (Madras)

Utility for Income Declaration Scheme, 2016 released by CBDT :  Central Government vide its notification no. 33/2016 dt. 19th May, 2016 has specified The Income Declaration Scheme Rules, 2016. Utility regarding these forms are now available on Income Tax website.

Income Tax: Sec. 246A doesn’t allow filing of appeal before CIT(A) against order passed by AO under Sec. 195(2) Deputy Commissioner of Income-tax (International Taxation)-4(2), Mumbai v. Abu Dhabi Ship Building PJSC [2016] 70 taxmann.com 224 (Mumbai – Trib.)

Income Tax Assessee gets enduring benefit from the rights acquired in films and serials and they do not expire on the date of first telecast as contemplated by the assessee – The rights are intangible assets within the meaning of Explanation (iii) to Section 32 and do not fall within the purview of Section 37(1). The assessee is entitled to claim depreciation on same. (Eenadu Television Private Limited. Vs. ACIT, Hyderabad) ITAT Hyderabad

Income Tax: AO of searched person has to record satisfaction even if he is also the AO of other person under sec. 153C  Narsi Creations v. Deputy Commissioner of Income-tax, Central Circle-12, New Delhi
[2016] 70 taxmann.com 156 (Delhi – Trib.)

Income Tax: Revenue couldn’t treat taxpayer as BPO if same was categorized as KPO in earlier year on basis of same agreement
SNL Financial (India) (P.) Ltd. v. Deputy Commissioner of Income-tax, Cir.8, Ahmedabad [2016] 70 taxmann.com 146 (Ahmedabad – Trib.)

Income Tax :  Co. outsourcing significant part of its operations can’t be a comparable for a Co. rendering IT enabled services American Express India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 1(1), New Delhi [2016] 70 taxmann.com 82 (Delhi – Trib.)  Registration u/s 12AA cannot be denied on town Planning Activities continuing from earlier years [ITO vs. Moradabad Development Authority (ITAT Delhi)].

INDIRECT TAX:


Service tax & custom : CBEC has issued a circular for speedy disbursal of pending refund claims of exporters of service under rule 5 of the CENVAT Credit Rules, 2004 vide Circular No. 195/05/2016- Service Tax dated 15th June ,2016.This scheme is applicable only to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on the date of the issue of the circular dated 10-11-2015

CBEC has issued a single window project for simplification of procedure in SWIFT for clearance of consignment related to drugs & Cosmetics reg. vide Circular No. 28/2016- CUS- dated 14th June, 2016

Excise  : Whether there will be Eligibility of Cenvat credit of services at their retail outlets from where sales are affected. In the given case No sales are affected at the factory gate but duty is paid at the time of clearance. It was held that since the goods are not sold at the factory gate but are sold at the retail outlets, therefore, by virtue of the express provisions of Section 4(3) (c)(iii) of the Central Excise Act, 1944 the place of removal in the case of appellant will be the retail outlet. Hence cenvat credit will be eligible.( M/s Sports And Leisure Apparel Ltd. Versus Commissioner of Customs, Central Excise And Service Tax-Noida)- 2016 (6) TMI 468- CESTAT ALLAHABAD

Vat : Delhi value added tax has launched “Good Dealer Reward Scheme” Vide order instruction No. F.3 (632)/Policy/VAT/2015/PF/363- 69 dated 10.06.2016. The objective of the scheme is to acknowledge the efforts of better performing dealers so as to further encourage them to continue their efforts for better tax compliance and also to set examples for other dealers.

Central Excise: SSI Exemption – use of Brand/Trade mark or others – as long as assignment stands the assessee using the brand name is eligible for the benefit of SSI exemption notification – Tri

Excise  : CBEC has amend the notification No. 214/86 – central excise dated 25.03.1986 vide notification No. 24/2016 dated 14.06.2016 and further it amends the notification No. 67-95- Central Excise – dated 16.03.1995 vide Notification No. 25/2016 dated 14.06.2016.In this notification they have substituted the word “ Free Trade Zone” with “Special Economic Zone”

Central Excise: Levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more – reg. Circular No. 1031/19/2016-CX Dated 14th of June, 2016 F. No. 332/5/2016-TRU Dated 14th of June, 2016

Service tax : No interest can be demanded on time-barred payment of service tax  commissioner of Central Excise, Bhopal v. Western Coal Fields Ltd.[2016] 70  taxmann.com 133 (New Delhi – CESTAT)

Service tax : CESTAT grants refund of excess service tax paid on ‘brokerage’ towards stock-broker services, pursuant to subsequent downward adjustment thereof through credit notes to clients. It Rejected the Revenue’s stand that principle of unjust enrichment applicable to present case since issuance of credit notes not sufficient to establish that tax burden had not been passed onto recipients of service. CESTAT Mumbai

Custom : Seeks to extend the levy of anti-dumping duty on imports of Pentaerythritol, originating in, or exported from the People’s Republic of China, for a period of one year

Service tax & custom : CBEC has issued a circular for speedy disbursal of pending refund claims of exporters of service under rule 5 of the CENVAT Credit Rules, 2004 vide Circular No. 195/05/2016- Service Tax dated 15th June ,2016.This scheme is applicable only to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on the date of the issue of the circular dated 10-11-2015

CBEC has issued a single window project for simplification of procedure in SWIFT for clearance of consignment related to drugs & Cosmetics reg. vide Circular No. 28/2016- CUS- dated 14th June, 2016

OTHER UPDATES


Changes in form 2, 3, 4 & 11 vide Limited Liability Partnership (Second Amendment) Rules 2016

ICAI: 30 SEP 2016 is the last date for payment of Membership & Certificate of Practice (CoP) Fee for FY 2016-17.

Threshold limit of PF withdrawal for deduction of tax, raised to Rs. 50,000 from Rs. 30.000 with effect from 1st June, 2016 vide Finance Act, 2016.

Net realizable of stock to be taken as value it would fetch on actual sale in future. [ITO vs. M/s. Mahendra Traders (ITAT Kolkata)].

A month after India redrew its tax agreement with Mauritius, the government has constituted a working group to examine the “consequential issues” arising out of the changes. Sebi : The Securities and Exchange Board of India (Sebi) has issued a consultation paper on financial disclosures to be made by the newly-introduced Infrastructure Investment Trusts (InvITs). Comments have been invited by June 28. It has proposed that annual disclosure to stock exchanges be on a quarterly basis, not half-yearly as suggested earlier.

Rbi : The country has a lot of “unmet demands” for bank loans and a lot of gap is still to be filled in the banking space, Reserve Bank of India Deputy Governor Harun Rashid Khan has said. “We have a lot of unmet demands (for bank loans still a lot of gaps to be filled,” Khan said in reply to a question on the central bank’s plan to issue more licences for setting up new banks.

Sebi : The Securities and Exchange Board of India (Sebi) has issued a consultation paper on financial disclosures to be made by the newly-introduced Infrastructure Investment Trusts (InvITs). Comments have been invited by June 28. It has proposed that annual disclosure to stock exchanges be on a quarterly basis, not half-yearly as suggested earlier.

KEY DATES


Payment of ESI for the month of May- 16-06-2016

E-Payment of DVAT & CST tax for the month of May -16-06-2016

Payment of ESI for the month of May- 21-06-2016

E-Payment of DVAT & CST tax for the month of May -21-06-2016

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