income tax update 14 november 2015

INCOME TAX UPDATE 14 NOVEMBER 2015

INCOME TAX ACT

SECTION 11

CHARITABLE OR RELIGIOUS TRUST – EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Application of income : Where in support of its claim for exemption under section 11, assessee brought on record grant sanctioned letter of Ministry of Commerce and Industry showing that said amount of grant had to be spent outside India for some specific purposes such as trade fairs etc., matter was to be remanded back for reconsideration of assessee’s claim – [2015]  288 (Chennai – Trib.)

Accumulated income : Assessee is entitled to flat deduction without any condition or formality of filing Form No. 10, if income is accumulated or set apart for application of objects of trust in India, to extent to which income so accumulated or set apart does not exceed 15 per cent of income – [2015]  297 (Chennai – Trib.)

SECTION 12AA

CHARITABLE OR RELIGIOUS TRUST – REGISTRATION PROCEDURE

Application of section 13 : Where assessee-society applied for registration under section 12AA, since Commissioner did not question about charitable character of objects nor could he prove that activities of assessee were in genuine, impugned order denying registration to assessee-society was to be set aside – [2015]  299 (Chandigarh – Trib.)

SECTION 41(1)

REMISSION OR CESSATION OF TRADING LIABILITY

Cessation of liability : Where AO made addition under section 41(1) in respect of amount payable by assessee to a creditor, since there was no act of remission or cessation of said liability, mere fact that liability was more than seven years old, could not be a ground to make impugned addition – [2015] 62  286 (Bangalore – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Comparables – Illustrations: For a company rendering marketing support services for mineral processing equipment, a company providing agency service in metals and fertilizers or trading in chemical or engaged in air ticketing and selling holiday package or publishing newspaper, could not be comparable; company having more than 15 per cent related party transactions could also not be accepted as comparable – [2015] 306 (Delhi – Trib.)

SECTION 145

METHOD OF ACCOUNTING – SYSTEM OF ACCOUNTING

Cash system of accounting : Where in terms of agreements, which enabled assessee company to demand additional finance charges was only an enabling provision and recovery of same was not certain, same was taxable on cash receipts basis and not on accrual basis – [2015]  298 (Madras)

SECTION 250

– PROCEDURE OF COMMISSIONER (APPEALS)

Additional evidence : Even if additional evidence produced by assessee are in nature of clinching evidence leaving no further room for any doubt or controversy, Commissioner (Appeals) is under statutory obligation to put additional material/evidence taken on record by him to Assessing Officer – [2015]  302 (Kerala)

COMPANIES ACT

SECTION 433

WINDING UP – CIRCUMSTANCES IN WHICH COMPANY MAY BE WOUND UP

Since respondents at time of winding proceedings had made false statements which constituted an offence of giving false evidence, Registrar was directed to file complaints under section 340 of Code of Criminal Procedure, 1973, read with sections 191, 193 and 209 of the Indian Penal Code 1860 Indian Penal Code – [2015]  301 (Andhra Pradesh and Telangana)

SERVICE TAX

SECTION 86

APPEALS – RECTIFICATION OF MISTAKES/REVIEW – APPELLATE TRIBUNAL

Where a matter is referred to Third Member for resolution of difference of opinion, both Judicial Member and Technical Member must have given their findings on said issues; if Member (Judicial) has not given his findings thereon, same results into rectifiable mistake – [2015]  98 (Mumbai – CESTAT)

CENVAT CREDIT RULES

RULE 9

CENVAT CREDIT – DOCUMENTS ON WHICH CREDIT MAY BE TAKEN

For period up to 15-6-2005, when rules did not prescribe any document for taking credit of GTA services, TR-6 challans has to be considered as a proper document evidencing payment of tax; hence, credit taken on basis of TR-6 challans was valid. – [2015]  296 (Madras)

STATUTES

DIRECT TAX LAWS

Section 80P of the Income-tax Act, 1961 – Deduction – Income of Co-Operative Societies – Interest from Non-SLR Securities of Banks – CIRCULAR NO.18/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 2-11-2015

 CORPORATE LAWS

Special Investigation Team (SIT) calls for, among others, greater Vigilance by Law Enforcement and Intelligence Agencies in cases of persons holding directorship in more than 20 Companies – PRESS RELEASE, DATED 3-11-2015

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