CORPORATE AND PROFESSIONAL UPDATE APRIL 17, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 17, 2016
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Direct Tax:

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

Royalty : Where on date of agreement entered by assessee, US company, with Indian company for providing data transmission service was in knowledge of Assessing Officer to invoke section 44D still he assessed receipt as royalties under section 9(1)(vi) at rate of 15 per cent, reopening of assessment to tax said receipt at rate of 20 per cent under section 44D was not sustainable – [2016] 68 taxmann.com 51 (Delhi – Trib.)

Very important case, in the pretext of Last Date Fiascos

NSDL releases e-TDS/TCS RPU version 1.5 from FY 2007-08 onwards on 13/04/2016.

SECTION 44BB

NON-RESIDENTS – MINERAL OIL, BUSINESS FOR PROSPECTING/EXPLORATION ETC., IN CASE

Business income : Where assessee, a Norway based company, earned revenue from contract of providing crew on vessel, since entire payments were intricately linked to services rendered in India, assessee was not justified in not offering a part of revenue to tax in India on ground that when ship was beyond 200 nautical miles from Indian shoreline, it could not be presumed to be located in India – [2016] 68 taxmann.com 135 (Delhi – Trib.)

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustment – Method of computation : Where Assessing Officer considered both TNMM and also CPM and Commissioner (Appeals) decided case only under TNMM, inevitable conclusion would be that TNMM was accepted by authorities below as most appropriate method – [2016] 68 taxmann.com62 (Delhi – Trib.)

Comparables and adjustments/Adjustments/CUP/TNMM : Where purchaser, manufacturer as well as intermediary are all AEs and components purchased which constituted 86 per cent of total raw material is imported from intermediary not from manufacturer, job of TPO extends to critically evaluating materials and onus is clearly on assessee to offer a convincing and reasonable explanation – [2016] 68 taxmann.com 55 (Delhi)

Comparables and adjustments/Adjustment – Capacity/utilization : Where adjustments on account of under-utilization of capacity and difference in depreciation are factors which are likely to materially affect price or cost charged or paid, or profit arising from, such transactions in open market, Assessing Officer/TPO should allow adjustments on account of under-utilisation of capacity and also difference in depreciation method adopted by assessee and comparable companies – [2016] 68 taxmann.com 50 (Hyderabad – Trib.)

SECTION 94A

TRANSFER PRICING – TRANSACTIONS WITH PERSONS LOCATED IN NOTIFIED JURISDICTIONAL AREA

India and Cyprus entered into an agreement to avoid double taxation of income and prevention of fiscal evasion since December 1994. The impugned section 94-A (1) was notified by India, as there was no information flow from Cyprus. Petitioners filed nine petitions, challenging legality of section 94-A(1), on ground that it conferred sweeping powers upon the central government to specify any country as a notified jurisdictional area in relation to transactions entered into by any assessee, irrespective of whether such country is one, with whom a bilateral treaty has already been entered into. – [2016] 68 taxmann.com 182 (Madras)

IT : Where delay of a day in filing return was only due to technical snags of website of department on last date of filing return, such delay was to be condoned; claim of carry forward of losses could not be denied[2016] 68 taxmann.com 93 (Madras)

Regen Infrastructure & Services (P.) Ltd. v. Central Board of Direct Taxes, New Delhi* Section 139, read with section 80, of the Income-tax Act, 1961 – Return of income (Condonation of delay in filing return) – Assessment year 2010-11 – Assessee filed its return of income late by a day – Assessee’s claim of carry forward loss was not granted by department – Assessee approached CBDT and sought for condonation of delay in filing of return and explained that due to last hour rush on last day of filing of return, there were technical snags in website of department and, thus, return could not be uploaded; it could only be uploaded in midnight and, hence, date of filing had been reckoned by department as next day – CBDT rejected petitioner’s contention – Whether since petitioner had not gained anything from delay and had satisfactorily explained reason for delay in filing return, CBDT should have condoned delay of one day in filing return by assessee; mere delay should not defeat claim of assessee – Held, yes [ Para 7] [In favour of assessee]

Sum paid to witness in famous ‘Best Bakery case’ for turning hostile wasn’t unexplained payment
IT :
Where, during proceedings before Supreme Court in famous ‘Best Bakery case’, a VCD was found in which assessee was alleged to have paid money to a witness for becoming hostile and, consequently, Assessing Officer treated said amount as unexplained payment made by assessee on basis of said VCD but did not corroborate said transaction by any other evidence, action of Assessing Officer was not justified [2016] 68 taxmann.com 198 (Ahmedabad – Trib.) Mahendrabhai B. Shrivastav v. Income-tax Officer

Indirect Tax:

SERVICE TAX

SECTION 65(19) : Where under multi-level marketing concept of principal, a distributor earned monthly income in three ways – (a) difference between his purchase price and sale price as his profit margin; (b) commission received depending upon volume of purchases of Amway products; and (c) monthly commission based on volume of sale made by second level distributors, only tast category would be covered by business auxiliary service – [2016] 68taxmann.com 60 (New Delhi – CESTAT)

CBEC exempts service-tax on registration services provided by Govt. For detailed notification, send text message to my number

CBEC issues instructions for discharging of quasi-judicial functions by its officials April 14, 2016 DECISION OF CESTAT FINAL ORDER NO.40344/2016 IN CASE OF COMMISSIONER OF CUSTOMS (IMPORT) V. DO BEST INFOWAY INSTRUCTION F.NO.390/CESTAT/24/2016-JC, DATED 13-4-2016

CENVAT CREDIT RULES

RULE 3 : CENVAT CREDIT – ALLOWANCE

Where assessee, a manufacturer of sugar and molasses in its factory located in remote area, constructed dormitory within factory for stay of technicians/engineers as same may be called as and when if there was a fault in plant or machinery, it was entitled to take cenvat credit on construction services of dormitory – [2016] 68taxmann.com 47 (New Delhi – CESTAT)

CENTRAL EXCISE ACT

CLASSIFICATION – MEDICAMENT: There is distinction between house mark and product mark; a monograph on ‘ayurvedic medicine’, which only identifies manufacturer would not make such medicine a ‘patent or proprietary medicine’ and therefore, said medicine continues to be exempt from duty – [2016] 68 taxmann.com 54 (New Delhi – CESTAT)

INTEREST – ON DELAYED REFUNDS  : There is no provision for payment of interest on ‘delayed payment of interest on refunds’ in Customs/Central Excise/Service Tax law or rules made thereunder and grant of interest by High Courts under its discretionary writ jurisdiction cannot be relied upon by Tribunal to grant similar interest – [2016] 68 taxmann.com 137 (New Delhi – CESTAT)

CENTRAL EXCISE RULES

ASSESSMENT – CENTRAL EXCISE – PROVISIONAL ASSESSMENT : Upon finalization of provisional assessments, assessee is entitled for adjustment of excess paid duty/tax with short-paid duty/tax during period of provisional assessments – [2016] 68 taxmann.com 136 (Bangalore – CESTAT)

COMPETITION ACT

PROHIBITION OF AGREEMENTS – ANTI-COMPETITIVE AGREEMENTS

SECTION 3 : Where OP-drug manufacturer and Distributors Association refused to supply medicines to informant stockist, imposed condition on informant not to seller or supply products out side area allotted to it and appointed new distributor to its detriment, conduct of OP would be anti-competitive – [2016] 68 taxmann.com 63 (CCI)

KEY DATES:

  • Payment of ESI of March for ESI: 21/04/2016
  • Payment of MVAT and WCT TDS for March for MVAT: 21/04/2016
  • MVAT return for March (10 days extra for e-returns): 21/04/2016

“समय  सीमा  पर  काम  ख़तम  कर  लेना  काफी  नहीं  है, मैं  समय  सीमा  से  पहले  काम  ख़तम  होने  की  अपेक्षा  करता  हूँ|” ~धीरूभाई अंबानी

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