Corporate & Professional Updates for 27 Oct 2015

PROFESSIONAL UPDATE FOR 27th OCTOBER 2015

INCOME TAX ACT

SECTION 5

INCOME – ACCRUAL OF

Interim award : Interim award received by assessee pursuant to order of High Court is not liable to tax in year of receipt but in year when final award is passed by High Court – [2015] 174 (Karnataka)

SECTION 35

SCIENTIFIC RESEARCH EXPENDITURE

Sub-section (2AB) : In case of allowance of weighted deduction, provision of section 35(2AB) nowhere suggests or implies that machinery is required to be installed and commissioned before expiry of relevant previous year –[2015] 124 (Karnataka)

SECTION 40(a)(ia)

BUSINESS DISALLOWANCE – INTEREST, ETC., PAID TO A RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE

When to deposit tax : Provisions of section 40(a)(ia) would not be applicable where assessee paid architect’s fee before end of accounting year – [2015] 169 (Chennai – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustments – Others : Where assessee had entered into a long-term contract with its AE for procuring copper concentrates for life time of mines, price paid to its AE should be compared with comparable having similar features – [2015] 181 (Mumbai – Trib.)

Comparables and adjustments – Adjustments/Corporate guarantee fee : Rate of 0.50 per cent charged by assessee for giving corporate guarantee to its AE was appropriate – [2015] 62 181 (Mumbai – Trib.)

In Comparables and adjustments/Comparables – Illustrations : A manufacturer of tractor cannot be considered as comparable with manufacturer of harvester combine, simply because both machines fall in overall category of ‘Agricultural equipments’ – [2015] 173 (Delhi – Trib.)

Comparables and adjustments/Adjustments – Capacity adjustment : Under TNMM, first step in granting capacity utilization adjustment is to ascertain percentage of capacity utilization by assessee and comparables and then to give effect (positive or negative) to differences in percentage of capacity utilization of assessee vis-à-vis comparables, one by one, in operating profit of comparables by adjusting their respective operating costs – [2015] 173 (Delhi – Trib.)

SECTION 115JA

MINIMUM ALTERNATE TAX

Computation of book profits : ‘Lease equalization charges’ is not in nature of a reserve and, therefore, same cannot be added back while computing book profits as per Explanation under section 115JA(2) – [2015] 128 (Karnataka)

Reassessment : Where information regarding assessee’s claim of enhanced depreciation in view of re-estimation of written down value of its assets over remaining useful life was with Assessing Officer at time of passing assessment order, reopening of assessment beyond four years from relevant assessment year on ground that claim of additional depreciation had reduced book profit under section 115JB was without jurisdiction – [2015] 129 (Bombay)

SECTION 145

METHOD OF ACCOUNTING – ESTIMATION OF INCOME/ADDITIONS TO INCOME

Revision : Where issues in respect of set off of unabsorbed losses fall in gross profit rate and depreciation had been examined by Assessing Officer in detail at assessment stage, jurisdiction under section 263 would not be invoked – [2015] 69 (Chandigarh – Trib.)

SECTION 194C

DEDUCTION OF TAX AT SOURCE – CONTRACTORS/SUB-CONTRACTORS, PAYMENTS TO

Freight : Where assessee could not adduce any evidence that C & F agent deducted tax at source while making payment to carrier so as to prove that amount which was paid by assessee to C & F agent represented reimbursement of freight paid by C & F agent on behalf of assessee to airlines, provisions of section 194C were applicable – [2015] 168 (Panaji – Trib.)

COMPANIES ACT

SECTION 397

OPPRESSION AND MISMANAGEMENT

Where petitioners exited from company fifteen years back, filing petition by invoking jurisdiction of Bench under section 397/398, by alleging purported acts of oppression and mismanagement appeared to be a mala fide intention and was an abuse of process of law – [2015] 55 (CLB – Chennai)

 

NEGOTIABLE INSTRUMENTS ACT

SECTION 138

DISHONOUR OF CHEQUE FOR INSUFFICIENCY ETC. OF FUNDS IN ACCOUNT

Where in a complaint under section 138 evidence had already been concluded before trial Court and there was specific averment in complaint that on representation of petitioner and other co-accused MOU was signed, mere fact that cheque issued by accused and MOU signed by accused did not bear signature of petitioner made out no case for quashing of complaint and summoning order against petitioner – [2015] 176 (Punjab & Haryana)

CENTRAL EXCISE ACT

SECTION 37B

CIRCULARS/INSTRUCTIONS TO DEPARTMENTAL OFFICERS

Where Tribunal had merely followed its earlier judgment, which was approved by Supreme Court and accepted by CBEC Circular of 2001, filing of appeal by revenue against said Tribunal order in year 2006 was a total mindless exercise and abuse of process of law; hence, appeal was dismissed – [2015] 156 (SC)

CENTRAL EXCISE TARIFF ACT

SECTION 2

CLASSIFICATION – CALCINED CHINA CLAY

Calcined China Clay, which is also known as Kaolin Clay, is classifiable under Heading 2505.10 ‘Kaolin clays, whether or not calcined’ and not under heading 3824.90 “Other products of chemical or allied industries” – [2015] 157 (SC)

STATUTES

DIRECT TAX LAWS

Income-tax (Seventeenth Amendment) Rules, 2015 – Amendment in Rule 2F – NOTIFICATION NO.84/2015 [F.NO.133/43/2015-TPL], DATED 20-10-2015

CORPORATE LAWS

Risk Management for Regional Commodity Derivatives Exchanges – CIRCULAR NO.CDMRD/DRMP/2/2015, DATED 21-10-2015

Annual Return on Foreign Liabilities and Assets (FLA Return) – Reporting by Limited Liability Partnerships – A.P. (DIR SERIES 2015-16) CIRCULAR NO.22, DATED 21-10-2015

Gold Monetization Scheme, 2015 – MASTER DIRECTION DBR.IBD.No.45/23.67.003/2015-16, DATED 22-10-2015

Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 – NOTIFICATION NO. GSR 792(E) [F.NO.11033/3/2015-CA-II], DATED 20-10-2015

INDIRECT TAX LAWS (ST./EX./CUS. &(CST & VAT)

Section 66B of the Finance Act, 1994 – Charge of service tax on or after Finance Act, 2012 – Mega Exemption Notifications – Amendment in Notification No.25/2012-STs, Dated 20-6-2012 – NOTIFICATION NO.20/2015-ST, DATED 21-10-2015

Submission of information online in Form DP-1 – Amendment in notification No.F.3(352)/Policy/VAT/2013/818-829, dated 30-9-2015 – NOTIFICATION NO.F.3(352)POLICY/VAT/2013/929-40, DATED 21-10-2015

Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com  or call at 9555555480

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