INCOME TAX ACT UPDATE ON NOV 17, 2015
INCOME TAX ACT UPDATE ON NOV 17, 2015
INCOME TAX ACT
SECTION 9
INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA
Liaison Office of foreign MNC established in India for sourcing goods for exports to its overseas customers as per their requirements will not be treated as PE under the DTAA merely because it engages in activities necessary for purchase such as identifying a competent manufacturer, negotiating a competitive price, helping in choosing material to be used, ensuring compliance with quality of the material and getting material tested to ensure quality. Nor will the LO lose tax exemption under Explanation 1(b) to section 9(1)(i) which is available to non-residents purchasing goods in India for the purposes of export – [2015] 240 (Karnataka)
SECTION 32
DEPRECIATION – UNABSORBED DEPRECIATION
Where once amount realized by assessee by sale of building, plant and machinery was treated as income arising out of profits and gains from business by virtue of sub-section (2) of section 41 notwithstanding fact that assessee was not carrying on any business during relevant assessment year, provision contained in sub-section (2) of section 32 would become applicable and, consequently, set-off had to be given for unabsorbed depreciation allowances of previous year brought forward in terms of said provision – [2015] 239 (Karnataka)
SECTION 40(a)(ia)
BUSINESS DISALLOWANCE – INTEREST, ETC., PAID TO A RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE
Reassessment : No reassessment due to TDS default on royalty payment if its details were available at assessment stage – [2015] 16 (Calcutta)
SECTION 69A
UNEXPLAINED MONEYS
Jewellery : In terms of section 69A, assessee would be treated in possession of jewellery, from date of opening of locker, i.e., when jewellery was found and seized by revenue, and would be added to his income accordingly –[2015] 51 (Bombay)
SECTION 80-IB
DEDUCTIONS – PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS
Housing Project : Where certain amount was received for booking flat in house project developed by assessee and assessee did not have any other business activity during year under consideration, Assessing Officer was not justified in holding that said amount was income from other sources and deduction was to be allowed under section 80-IB(10) on said sum – [2015] 132 (Ahmedabad – Trib.)
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustment/Adjustment-Reimbursement : Where assessee was not incurring any expenditure in respect of services claimed to be received from AE, assessee’s claim that it was outsourcing services was acceptable and no transfer pricing adjustment was called for – [2015] 57 (Jaipur – Trib.)
SECTION 158BD
BLOCK ASSESSMENT IN SEARCH CASES – UNDISCLOSED INCOME OF ANY OTHER PERSON
Period of limitation : Where assessee, was issued with notice under section 158BD in respect of assessment of other persons, in a year after completion of assessment, notice could not be held to be a valid notice as same was to be issued immediately.
SECTION 164
TRUST/TRUSTEES – CHARGE OF TAX WHERE SHARES OF BENEFICIARIES UNKNOWN
Others : Where assessee-trust claimed that pursuant to provisions of sections 61 to 63 income earned by it had been included in returns of income of beneficiaries of trust and offered to tax directly by them and, therefore, effective income taxable in its hands was to be considered as nil, Assessing Officer was wrong in concluding that assessee and beneficiaries constituted an association of persons and assessing assessee as an association of persons – [2015] 86 (Bangalore – Trib.)
SECTION 195
DEDUCTION OF TAX AT SOURCE – PAYMENT TO NON-RESIDENT
Advertisement charges : Advertisement payment made to resident company is covered under section 194C and not section 195C – [2015] 57 (Jaipur – Trib.)
SECTION 269SS
DEPOSITS – MODE OF TAKING/ACCEPTING
Illustrations : Where assessee accepted and repaid loan exceeding Rs. 20,000 in cash from/to money lender repeatedly, even when transaction took place in a major city and offered no explanation regarding urgency or compulsion, levy of penalty was in consonance with law – [2015] 72 (Madras)
SECTION 271(1)(c)
PENALTY – FOR CONCEALMENT OF INCOME
Disallowance of claim, effect of : Where assessee furnished all information relating to increase in share capital in regular proceedings, levy of concealment penalty was unjustified – [2015] 122 (Delhi – Trib.)
COMPANIES ACT
SECTION 111
TRANSFER OF SHARES – POWER TO REFUSE REGISTRATION AND APPEAL AGAINST REFUSAL
Where respondent group had furnished succession certificate as well as transfer deed executed in their favour, they were clearly entitled to have rectification made by getting shares registered in their favour – [2015] 241 (SC)
SECTION 446
WINDING UP – SUITS STAYED ON WINDING UP ORDER
Where allegations of cheating and fraud had been levelled against partners of company, regarding which FIR had been registered in Delhi, Delhi Court had summoned accused and Magistrate at Delhi had taken cognizance of matter, petitioners could not have approached a different High Court for quashing of complaint – [2015] 127 (Punjab & Haryana)
COMPETITION ACT
SECTION 3
PROHIBITION OF AGREEMENTS – ANTI-COMPETITIVE AGREEMENTS
Where appellant alleged that respondent No. 1 along with two other bidders had indulged in cartelization and was guilty of bid rigging, however, he did not produce any document to prima facie prove that all three entities were owned by one person or same family, Commission rightly observed that no case for ordering an investigation into allegations contained in complaint was made out – [2015] 54 (CAT – New Delhi)
SECTION 53B
APPELLATE TRIBUNAL – APPEAL TO
Where no reasonable explanation had been given by appellant for condoning delay in filing appeal, there was absolutely no justification for exercise of power by Tribunal under proviso to section 53B(2) – [2015] 54 (CAT – New Delhi)
SERVICE TAX
SECTION 86
APPEALS – BY DEPARTMENT ON REVIEW OF ORDERS – APPELLATE TRIBUNAL
Tribunal cannot examine validity of review order, beyond factum as to whether or not a decision has been taken by a Committee of Commissioners/Chief Commissioners to institute appeal; if decision has been taken, Tribunal cannot examine why and how was said decision taken, as such a review is an administrative act – [2015] 118 (Delhi)
CENTRAL EXCISE ACT
SECTION 2(f)
MANUFACTURE – GENERAL MEANING
Mere cutting of lengthy conveyor belt into smaller sizes would not amount to manufacture; more so, as revenue failed to show that as a result of said cutting, it was transformed into a new product which was a marketable product – [2015] 119 (SC)
SECTION 11A
RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED
Scope of Show-cause notice : Merely because fraudulent availment of exemption/bond is of great magnitude and is admitted does not mean that recovery can be made at any time; recovery can be made within 5 years from relevant date and there is no provision to consider ‘date of knowledge of department’ as relevant date –[2015] 121 (Bombay)
CUSTOMS ACT
SECTION 28
RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED
Scope of Show-cause Notice : Mere passing reference to a section in show-cause notice, without any supporting omissions or commissions by assessee supporting invocation of said section, cannot validate demand under said section – [2015] 47 (Madras)
CST & VAT
SECTION 17 OF THE WEST BENGAL SALES TAX ACT, 1994
CLASSIFICATION OF GOODS
Hexidine and Hexigel : Products ‘Hexidine’ and ‘Hexigel’ were drugs and medicines falling under Entry No. 24(iv) of Part A of Schedule IV of West Bengal Sales Tax Act, 1994 – [2015] 45 (WBTT)
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