Corporate and professional update january 03, 2016
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CORPORATE AND PROFESSIONAL UPDATE JANUARY 03, 2016
INCOME TAX ACT
SECTION 9
INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA
Permanent establishment : Where assessee’s branch office, which was considered as assessee’s PE in India, was compensated at arm’s length for performing services in respect of direct sales made by assessee in India, no part of assessee’s profit could be taxed in India as profit attributable to Indian PE.
SECTION 36(1)(ii)
BONUS OR COMMISSION
Director’s Commission: When directors of assessee company had given services and in recognition thereof, there was payment of commission to them, it could not be questioned merely on basis of speculation by revenue that same was to avoid payment of dividend tax and, consequently, impugned disallowance made under section 36(1)(ii) deserved to be deleted.
SECTION 37(1)
BUSINESS EXPENDITURE
Revision: Where Assessing Officer granted deduction on account of lease rentals to assessee in pursuance of directions of DRP, but Commissioner revised said order without recording as to how assessment order was erroneous, revision was unjustified
SECTION 44BB
NON-RESIDENTS – BUSINESS FOR PROSPECTING / EXPLORATION, MINERAL OIL, ETC.
Conditions precedent : If Assessing Officer finds that assessee had a PE in India during relevant period and that contract entered into by assessee with contractor were effectively connected with assessee’s PE in India, then income of assessee would be computed under section 44B(1)
SECTION 80P
DEDUCTIONS – INCOME OF CO-OPERATIVE SOCIETIES
Co-operative bank : In event of dispute as to primary object or principal business of co-operative society referred to in clauses (cciv), (ccv) and (ccvi) of section 56 of Banking Regulation Act, determination thereof by RBI shall be final before revenue authorities can term said society as a co-operative bank for purpose of section 80P
SECTION 90
DOUBLE TAXATION RELIEF – WHERE AGREEMENT EXISTS
Overseas taxes paid by assessee abroad were not eligible for relief under section 90
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustments/Adjustment –General : Where in transfer pricing proceedings, Assessing Officer as well as Commissioner (Appeals) failed to apply their mind to TP report filed by assessee, or to any other material or information or document furnished, impugned addition made to assessee’s ALP merely on basis of proposal made by TPO was not sustainable
SECTION 154
RECTIFICATION OF MISTAKE – APPARENT FROM RECORDS
Limitation: Once an order is amended to give effect to appellate order, period of limitation under section 154 would commence from amended order and not from original order
SECTION 194A
DEDUCTION OF TAX AT SOURCE – INTEREST OTHER THAN INTEREST ON SECURITIES
Revision : Where Assessing Officer held that assessee-employees’ thrift fund was not liable to deduct TDS under section 194A(3)(v) while making interest payment to its member, since said order merged with order of Commissioner (Appeals) and moreover, said view was one of possible views, same could not be set aside in revision
SARFAESI ACT
SECTION 13
ENFORCEMENT OF SECURITY INTEREST
Where efficacious statutory remedy of appeal under section 17 was available to appellant-purchaser of property, against notice under section 13(4) and he had already availed same, instant writ petition before High Court against order of Chief Judicial Magistrate appointing receiver to take possession of property in question under section 14 would not be maintainable
MAHARASHTRA MUNICIPAL CORPORATION ACT
SECTION 2(25)
GOODS
Where appellant was conducting business of providing pre-printed meal vouchers, i.e., Sodexo Meal Vouchers, to its customers, said vouchers were not goods within meaning of section 2(15) of Maharashtra Municipal Corporation Act and, therefore, not liable for either octroi or local body tax
CONSTITUTION OF INDIA
ARTICLE 226
WRIT PETITION – ALTERNATIVE REMEDY
Where adjudication order has been passed without giving reasons, same violates principles of natural justice and, therefore, same can be set aside in writ jurisdiction despite alternate appeal remedy
SERVICE TAX
SECTION 67
VALUATION OF TAXABLE SERVICES – GENERAL
Service tax is payable on gross consideration without setting off receivables/payables in respect of other transactions
EXPORT OF SERVICES RULES
RULE 3
EXPORT – COURIER SERVICES
Activity of collection/delivery of export/import consignments booked by other Indian/foreign courier agencies, also amounts to courier services, as it also involves time-sensitive transport of document/things; it cannot be classified as Business Support Services. Where such delivery/collection is performed in India, courier services cannot be regarded as exported, even if consideration is received in foreign currency
CENVAT EXCISE RULES
RULE 26
PENALTY – ON PERSONS DEALING WITH GOODS LIABLE TO CONFISCATION
Issuance of false certificate by a Chartered Accountant in relation to huge cash found with manufacturer, may attract penalty for money laundering or giving false evidence; however, same cannot attract penalty under rule 26 or 27 of Central Excise Rules, 2002
CENVAT CREDIT RULES
RULE 6
CENVAT CREDIT – EXEMPTED AND DUTIABLE GOODS OR EXEMPTED AND TAXABLE SERVICES, OBLIGATION OF ASSESSEE
There is no bar for making as per prescribed percentage payment on value of exempted services for prior period where it may not be feasible to segregate quantum of input services pertaining to dutiable & exempted services
STATUTES
DIRECT TAX LAWS
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 – Declarations and Payments made under said Act
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