CORPORATE AND PROFESSIONAL UPDATE DATED 28 JANUARY
Table of Contents
CORPORATE AND PROFESSIONAL UPDATE DATED 28 JANUARY
INCOME TAX ACT
SECTION 9
INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA
Treaty Shopping : SLP granted against High Court’s ruling that where shares of Indian company were listed, income arising from any future transfer of those shares would itself be exempt by virtue of section 10(38) and, hence, no treaty shopping to be alleged on transfer of shareholding in it by company of one foreign country to its 100 per cent subsidiary company of another foreign country – [2015] 64 337 (SC)
Business income : Where assessee purchased goods from its AE which did not have any PE in India, payments made for said off-shore sales was not liable to tax in India requiring deduction of tax at source – [2015] 64 338 (Delhi – Trib.)
Purchase from AE : Article 24 read with Article 9 of Indo Japan DTAA prohibits deletion of enhancement of income due to making of transactions at ALP, but permits deletion of enhancement of income due to disallowance under section 40(a)(i) of Income-tax Act – [2015] 64 338 (Delhi – Trib.)
SECTION 12A
CHARITABLE OR RELIGIOUS TRUST – REGISTRATION OF
Proviso : As long as objects a society were charitable in nature in years earlier to year in which registration under section 12AA was granted, and no adverse findings were given with regard to existence of assessee-society for charitable purposes benefit of exemption under section 11 was to be given – [2015] 64 330 (Kolkata – Trib.)
SECTION 36(1)(iii)
INTEREST ON BORROWED CAPITAL
Interest free loans : Where capital of assessee was more than interest free short-term advances given to relatives/friends and Assessing Officer was not able to prove nexus between interest bearing loans having been diverted to interest free loans, no part of interest paid on loans could be disallowed – [2015] 64 358 (Rajasthan)
SECTION 40A(3)
BUSINESS DISALLOWANCE – CASH PAYMENTS EXCEEDING PRESCRIBED LIMITS
Refunds of : Where in respect of refund of fees by assessee coaching institute in cash, additions were reduced by both appellate authorities after considering various materials, same was not to be interfered – [2015] 64 358 (Rajasthan)
SECTION 80-IAB
DEDUCTIONS – PROFIT AND GAINS BY AN UNDERTAKING OR ENTERPRISES ENGAGED IN DEVELOPMENT OF SPECIAL ECONOMIC ZONE
Condition precedent : Where assessee claimed deduction under section 80-IAB but failed to maintain separate books of account for eligible units, Assessing Officer shall compute deduction on reasonable basis – [2015] 64 331 (Hyderabad – Trib.)
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustments : Where assessee earned commission from its AE for co-ordinating buyers and sellers in capacity of agent, TPO could not make addition to assessee’s income by adjusting financial result of said service segment and thereupon comparing it with trading segment – [2015] 64 338 (Delhi – Trib.)
SECTION 148
INCOME ESCAPING ASSESSMENT – ISSUE OF NOTICE FOR
Issue of fresh notice : Where Assessing Officer initiated reassessment proceedings by issuing a notice under section 148, said proceedings should have been completed within time stipulated and till such time there was no occasion to initiate fresh reassessment proceedings by issuing another notice under section 148 – [2015] 64 334 (Delhi)
SECTION 194A
DEDUCTIONS OF TAX AT SOURCE – INTEREST OTHER THAN INTEREST ON SECURITIES
Nodal agencies : Where assessee infrastructure corporation acted as a Nodal Agency for loan taken by Government organisations from other Government organisations, if payee had taken amount of interest received by it in computing its income and paid tax thereon, assessee would have no TDS obligation – [2015] 64 331 (Hyderabad – Trib.)
SECTION 2(15)
CHARITABLE PURPOSE
Object of general public utility : Where assessee-trust having object to improve and spread language, was publishing newspaper following commercial activity, it could not be considered as charitable activity – [2016] 65 taxmann 186 (Chennai – Trib.).
SECTION 41(1)
REMISSION OR CESSATION OF TRADING LIABILITY
Applicability of : Where assessee, engaged in trading of shares, purchased certain shares but same could not be transferred in its name due to some dispute and accordingly payment towards said shares was also not made, in spite of lapse of 12-13 years, there being nothing to suggest that there was remission or cessation of said liability during previous year, no addition could be made under section 41(1) on account of cessation of said liability.
SECTION 56
INCOME FROM OTHER SOURCES – CHARGEABLE AS
Interest : Where assessee, a landowner, received interest under section 28 of Land Acquisition Act, 1894, said interest was taxable under section 56 as income from other sources in year of receipt.
SECTION 69
UNACCOUNTED INVESTMENTS
Unaccounted sales : Where Assessing Officer noticing shortage of closing stock of shares by 500 shares, added amount of said shares as unaccounted sales, in view of fact that such shortage was on account of transaction of purchase of certain shares in last month of year out of which there was short delivery of 500 shares at year end, addition was not justified.
SECTION 193
DEDUCTION OF TAX AT SOURCE – INTEREST ON SECURITIES
Sick companies, in case of : Where assessee had been declared a sick company and it merely debited interest on debentures in its books to comply with requirements of Companies Act, there was no liability to deduct tax at source in terms of section 193.
SECTION 271(1)(c)
PENALTY – FOR CONCEALMENT OF INCOME
Ad hoc disallowance of expenditure : No penalty on NR as he genuinely believed that foreign income wasn’t taxable in India when it was exempt abroad.
SECTION 272A
PENALTY – FOR FAILURE TO ANSWER QUESTIONS, SIGN STATEMENTS, ETC.
Reasonable cause : Where assessee came to know about requirement of filing quarterly statements in Form No. 27EQ only after survey was conducted on its business premises and thereupon assessee immediately deposited TCS along with interest, impugned penalty order passed by revenue authorities under section 271A(2)(k) was to be set aside.
CENTRAL EXCISE ACT
SECTION 5A
EXEMPTIONS – CENTRAL EXCISE – AREA-BASED EXEMPTIONS
Where basic excise duty is eligible for refund under area-based exemption notification 56/2002-CE, then, even if education cesses are not specifically mentioned in notification, said cesses are also eligible for exemption/refund.
SECTION 6
REGISTRATION – CENTRAL EXCISE
Registration cannot be denied to subsequent owner merely because of pending excise dues of previous owner. Further, for purpose of mere registration, it is not necessary that manufacturing unit should be fully operational.
CENTRAL EXCISE TARIFF ACT
SECTION 2
CLASSIFICATION – PRINTED GAY WRAPPERS
‘Printed Gay Wrappers’ used for packing cigarettes is a product of printing industry under Heading 4901.90 of Excise Tariff and is therefore, eligible for benefit of NIL rate of duty.
CENVAT CREDIT RULES
RULE 2(l)
Catering services for employees are ineligible for credit up to extent of amount recovered from employees further, services for Dussera festival celebration are ineligible for credit, being unconnected with business.
STATUTES
CORPORATE LAWS
Provision of safe deposit locker facility by NBFCs – CIRCULAR DNBR (PD).CC.NO.072/03.10.001/2015-16, DATED 28-1-2016 Frequently Asked Questions on SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 –PRESS RELEASE, DATED 29-1-2016
CENTRAL EXCISE ACT
SECTION 5A
EXEMPTIONS – CENTRAL EXCISE – GENERAL
If ‘excise exemption’ is conditional upon ‘customs exemption’, conditions specific to customs exemption and meant for compliance by importers, cannot be forced upon domestic manufacturers; hence, excise exemption cannot be denied to domestic manufacturers for ‘not complying conditions specific to importers’ – [2015] 64 317 (Bombay)
STATUTES
DIRECT TAX LAWS
Guidance Note on Implementation of Reporting Requirements under Rules 114F to 114H of Income- tax Rules, 1962 – PRESS RELEASE, DATED 31-12-2015
CORPORATE LAWS
Consultation paper for Guidelines for public issue of units of Real Estate Investment Trusts – PRESS RELEASE, DATED 2-1-2016
FEM (Export and Import of Currency) Regulations, 2015 – NOTIFICATION NO.FEMA 6(R)/RB-2015 [F.NO.1/31/EM-2015]/GSR 1004(E), DATED 29-12-2015
FEM (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2015 – NOTIFICATION NO.FEMA 9(R)/2015-RB [F.NO.1/31/EM-2015]/GSR 1005(E), DATED 29-12-2015
Arbitration and Conciliation (Amendment) Act, 2015 [NO.3 OF 2016] – PRESS RELEASE, DATED 2-1-2016
Payment of Bonus (Amendment) Act, 2015 [NO.6 OF 2016] – PRESS RELEASE, DATED 2-1-2016
FEM (Insurance) Regulations, 2015 – NOTIFICATION NO.12(R)/2015-RB [F.NO.1/31/EM-2015]/GSR 1007(E), DATED 29-12-2015
Atomic Energy (Amendment) Act, 2015 [NO.5 OF 2016] – PRESS RELEASE, DATED 2-1-2016
Definition of Currency – Supersession of Notification No.FEMA 15/2000-RB, dated 3-5-2000 – NOTIFICATION NO.FEMA 15(R)/2015-RB [F.NO.1/31/EM-2015]/GSR 1008(E), DATED 29-12-2015
Post Office (Postal Orders/Money Orders) – Supersession of Notification No.FEMA 18/2000-RB, Dated 3-5-2000 – NOTIFICATION NO.FEMA 18(R)/2015-RB [F.NO.1/31/EM-2015]/GSR 1009(E), DATED 29-12-2015
Scheduled Castes and The Scheduled Tribes (Prevention Of Atrocities) Amendment Act, 2015 [NO.1 OF 2016] –PRESS RELEASE, DATED 2-1-2016
Juvenile Justice (Care and Protection of Children) Act, 2015 [2 OF 2016] – PRESS RELEASE, DATED 2-1-2016
Commercial Courts, Commercial Division and Commercial Appellate Division Of High Courts Act, 2015 [NO.4 OF 2016] – PRESS RELEASE, DATED 2-1-2016
INDIRECT TAX LAWS (ST.EX.CUS. & (CST & VAT))
Submission of Form DP-1 by all dealers latest by 31-1-2016 – NOTIFICATION NO.F.3(352)POLICY/VAT/2013/1201-21, DATED 31-12-20155
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@caindelhiindia.com or call at 011-233 433 33
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact : info@caindelhiindia.com or call at 011-233 43 333
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