Professional Update For the Day:

Untitled15ADirect Tax:

IT : Merely because creditor could not be traced on date when verification was made, is not a ground to conclude that there was cessation of liability in terms of section 41(1) because cessation of liability has to be cessation in law, of debt to be paid by assessee to creditor[2016] 69  257 (Karnataka) Commissioner of Income-tax v. Alvares & Thomas

Transmission charges for electricity won’t attract TDS under sec. 194J[2016] 69  252 (Karnataka) Commissioner of Income-tax v. Gulbarga Electricity Supply Co. Ltd.

IT: TDS – the payment paid by the assessee to scheduled banks for opening letters of credit was in the nature of interest u/s 2(28A) – but since the amount had been paid to scheduled banks no tax was required to be deducted at source u/s 194A – No disallowance u/s 40(a)(ia) – M/s Vardhman Chemtech Pvt. Ltd. Vs. ACIT, Chandigarh (ITAT Chandigarh)

IT: Revision u/s 263 – the disallowances u/s 14A and u/s 36(1)(iii) of the Act were the matters before the CIT(A) – the same does not come under the jurisdiction of the CIT u/s 263 – M/s Deepak International Ltd. Vs. JCIT, Cir-V, Ludhiana (ITAT Chandigarh)

Bogus purchase and sale of shares: Law explained as to on whom the onus is to show that the purchase and sale of shares are bogus and the circumstances required to be proved by the AOArvind Asmal Mehta vs. ITO (ITAT Mumbai)

S.143(1)/ 147: Entire law on the reopening of s. 143(1) assessments in the light of Zuari Estate Development 373 ITR 661 (SC) explained Indu Lata Rangwala vs. DCIT (Delhi High Court)

Indirect Tax:

ST: Recovery of interest – Section 73B of the Finance Act 1994 – Collected Service tax from the transporters when no service tax was payable and not deposited to the Government – later amount was deposited with the government – Demand of interest set aside – M/s Chhattisgarh State Co-operative Marketing Federation Ltd. Vs. CCE&ST, Raipur (CESTAT New Delhi)

SC : Absent cargo loading / unloading, mere labour supply at customer’s packing-plant not ‘CHS’ [TS-197-SC-2016-ST]

CESTAT : Upholds input credit reversal on exempt goods; Duty-payment cannot render them ‘dutiable’ [TS-196-CESTAT- 2016-EXC]

Service Tax : Services received from foreign intermediary in connection with raising of External Commercial Borrowings (ECB) is liable to service tax under ‘Banking and Other Financial Services’ under reverse charge in hands of Indian service recipient[2016] 69  266 (Mumbai – CESTAT) Gitanjali Gems Ltd. v. Commissioner of Service Tax

Cenvat Credit : Payment of cenvat-reversal under rule 6 of CENVAT Credit Rules, 2004 is in nature of ‘other tax’ and is, therefore, not includible in ‘transaction value’ of exempted goods, even if reversal amount is recovered from buyers

Cenvat Credit : When assessee is paying specified percent cenvat-reversal on value of ‘exempted HDPE pipes’ used for manufacturing ‘exempted sprinkler system’, they are not required to pay cenvat-reversal on value of ‘exempted sprinkler system'[2016] 69  265 (New Delhi – CESTAT) Commissioner of Central Excise, Indore v. Kriti Industries (India) Ltd.

SC: 9 Judge bench to decide entry tax validity; Hearings to commence July 18 [TS-200-SC-2016-NT]

Cenvat Credit : If Modvat credit could not be used by assessee due to restriction imposed by department, balance lying in Modvat account must be allowed as credit in Cenvat account[2016] 69  216 (Patna)Commissioner of Central Excise v. Bata India Ltd.

Deputation of employees and sharing of cost on actual basis with group Cos. doesn’t amount to rendering of service[2016] 69  198 (Mumbai – CESTAT) Franco Indian Pharmaceutical (P.) Ltd. v. Commissioner of Service-Tax

VAT & ST: Validity of law – rate of tax – interstate movement of goods – The law validly enacted by a State Legislature cannot be challenged on the ground that it defies logic and common sense – M/s Schwing Stetter (India) Pvt. Ltd. Vs. CCT (Madras High Court)

Company Law:

Query: Is Director Identification Number (DIN) mandatory for filing Form FTE with ROC?

Answer:  No, DIN is not mandatory for Managing Director or Director of the Company for filing Form FTE to strike off the name of Company under the Fast Track Exit mode Scheme. Details of Managing Director or Director can be filled up for inserting Permanent Account Number (PAN) or Passport Number instead of DIN.

Query: Whether a partner would be able to transfer his ‘economic rights’?

Answer: A partner’s economic rights (i.e. rights of a partner to a share of the profits and losses of the LLP and to receive distribution at the time of winding up) in the LLP shall be transferable. However, such a transfer shall not by itself cause the partner’s disassociation or a dissolution and winding up of the LLP.

However, such transfer shall not entitle the transferee or assignee to participate in the management or conduct of the LLP’s activities. Therefore, the transferee would not be deemed to be a ‘partner’ of the LLP just because a partner has transferred him the ‘economic rights’. For becoming a partner of LLP, the manner specified in the LLP Agreement or the provisions of the Act would have to be followed.

Other Update : 

ICAI: Committee on Economic, Commercial Laws & WTO (CECL&WTO) is organizing a Live Webcast on “Identifying Common FEMA Contraventions” on Friday, 27 May 2016 at 4-6PM. Link at

Key Dates:

Issue of TDS/TCS certificates for March quarter by all deductors/collectors: 30.05.2016

Due date for e-filing of form no. 61 for Q4 extended to 31st October, 2016 from 30th April, 2016. CBDT Circular no. 14/2016 dated 18/05/16.

 “When you judge another, you do not define them, you define yourself.”

Don’t find fault, find a remedy.  -Henry Ford

We look forward for your valuable comments.





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