CORPORATE AND PROFESSIONAL UPDATE JANUARY 27, 2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 27, 2016

INCOME TAX ACT

SECTION 2(47)

CAPITAL GAINS – TRANSFER

Immovable property : Where agreement to sale was entered in 2001 and part consideration was received and later sale deed was executed in April 2003, transfer of property could be said to have taken place in 2001 –[2016] 65 142 (Allahabad)

SECTION 4

INCOME – CHARGEABLE AS

Compensation : Compensation paid to assessee, a journalist, by a foreign publisher upon termination of contract for performance of authorship/professional services for a continuous period of 23 years, was to be regarded as capital receipt not liable to tax – [2016] 65 153 (Delhi)

SECTION- 12AA

CHARITABLE OR RELIGIOUS TRUST – REGISTRATION PROCEDURE

Cancellation of : Commissioner is empowered to cancel registration granted to a society under section 12A from assessment year 2011-12 onwards, he cannot assume such power for earlier assessment years -[2016]65 239 (Chandigarh -Trip.)

SECTION 55

CAPITAL GAINS – COST OF ACQUISITION

Trademark : Where assessee, during assessment year 1996-97, in terms of a settlement agreement entered into between it and an international company ‘S’, had transferred its trademark to ‘S’ for certain consideration, transfer of trademark was liable to tax under section 55(2)(a) only from 1-4-2002 and not in assessment year in question-[2016] 65 253(Karnataka)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustments – Administrative expenses : Where in support of genuineness of payments of administrative/corporate charges made to AE, assessee brought on record some additional evidence in course of appellate proceedings, matter was to be remanded back for disposal afresh in light of evidence so produced – [2016] 65 264 (Delhi – Trib.)

Comparables and adjustments/Comparables – General : In case of assessee rendering BPO services to its AE, companies having functional difference, failing to satisfy employee cost filter and company in whose case extraordinary event of amalgamation took place, could not be accepted as valid comparables while determining ALP. -[2016] 65 258 (Bangalore)

SECTION 201

DEDUCTION OF TAX AT SOURCE – CONSEQUENCE OF FAILURE TO DEDUCT OR PAY

Assessee-in-default : Where recipient, to whom assessee-bank paid interest without deducting tax at source, had shown such interest income in its return of income but had not paid tax thereon claiming same to be exempt, assessee could not be treated as assessee-in-default – [2016] 65 219 (Panaji – Trib.)

SECTION 245C

SETTLEMENT COMMISSION – APPLICATION FOR SETTLEMENT OF CASES

Validity of : Where assessee had not paid self assessment tax in return of income under sections 153A and 143(2), application for settlement was not valid – [2016] 65 263 (Madhya Pradesh)

COMPANIES ACT

 SECTION 456

WINDING UP – CUSTODY OF COMPANY’S PROPERTY

Powers under Companies Act cannot be wielded by Company Judge to interfere with proceedings by a secured creditor who has opted to stay outside winding up process to realize its secured interests as per provisions of SARFAESI Act – [2015] 64 394 (SC)

SECTION 167 OF COMPANIES ACT, 2013

DIRECTOR – VACATION OF OFFICE BY

Section 167(3) cannot be interpreted as entitling each and every promoter of a company, upon contingencies mentioned therein having occurred, to appoint a Director; appointment has to be made by following procedure elsewhere provided in statute for appointment of a Director – [2016] 65  252 (Delhi)

SERVICE TAX

SECTION 65(12)

TAXABLE SERVICES – BANKING AND OTHER FINANCIAL SERVICES

Processing fee paid to foreign banks for arranging External Commercial Borrowings, is liable to service tax under reverse charge under Banking and other Financial Services – [2016] 65 203 (Chennai – CESTAT)

SECTION 65B(44)

SERVICE – EXCLUSION OF SERVICES PROVIDED BY AN EMPLOYEE TO EMPLOYER

Perquisite extended by employer by way of car provided for personal and official use to employees, against payment equal to cost incurred by employer, does not amount to service under section 65B(44)(b), as it is in course of employment and therefore, excluded from scope of service – [2016] 65 259 (AAR – New Delhi)

CENTRAL EXCISE ACT

SECTION 3A

CHARGE/LEVY – EXCISE DUTY BASED ON PRODUCTION CAPACITY

In case of production capacity based duty, intimation of temporary stoppage of production may be sent via Fax and abatement for non-production cannot be denied on ground that Fax report is not clear – [2016] 65 262 (New Delhi – CESTAT)

SECTION 4A

VALUATION UNDER CENTRAL EXCISE – RETAIL SALE PRICE/MRP BASED

In case of promo packs where excess quantity is supplied in same pack, duty is payable based on MRP declared and department cannot seek to re-determine MRP pro rata based on quantity when assessee has not recovered anything beyond price charged – [2016] 65 261 (Kolkata – CESTAT)

SECTION 11

LEVY AND COLLECTION OF DUTY – RECOVERY OF SUMS DUE TO GOVERNMENT

Excise dues couldn’t be recovered from buyer if he hadn’t purchased a property from tax defaulter – [2016] 65 256 (Mumbai – CESTAT)

CENVAT CREDIT RULES

RULE 2(l) 

CENVAT CREDIT – INPUT SERVICE – GARDENING SERVICE

When assessee-manufacturer of cement was required to plant trees to prevent pollution in its factory area and paid service tax for such maintenance, it was entitled to input service credit – [2016] 65 257 (Chennai – CESTAT)

STATUTES

DIRECT TAX LAWS

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – Resolution of more than 100 Cases of Transfer Pricing disputes with USA under Mutual Agreement Procedure (MAP) – PRESS RELEASE, DATED 28-1-2016

CORPORATE LAWS

FEM (Foreign Currency Accounts by A Person Resident in India) Regulations, 2015 – NOTIFICATION [NO.FEMA 10(R)/2015-RB]/GSR 96(E), DATED 21-1-2016

FEM (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015 – NOTIFICATION [NO.FEMA 7(R)/2015-RB]/GSR 95(E), DATED 21-1-2016

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