Corporate and professional update january 03, 2016

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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