CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 10, 2016
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Table of Contents
CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 10, 2016
DIRECT TAX
- Recovery of demand – attachment of account whereas the appeal was pending – AO refused to grant stay – non deduction of TDS – attachment vacated – CIT(A) of hear the appeal as early as possible – HC
- Computation of MAT credit – Assessee has relied on the ITR–6 format to arrive at the total liability as well as the MAT credit calculations and paid tax accordingly. In our view, the assessee had followed the procedure properly and the Assessing Officer had made the calculations applying his own interpretation or relied on the programme, we are not sure whether it is programme hitch or the interpretation of Assessing Officer was not in line with the calculations proposed in ITR-6. Therefore, we delete the addition made.
- The monetary limit of 10 lakhs for filing appeals before the ITAT would apply equally to cross objections under section 253(4) of the Act. Cross objections below this monetary limit, already filed, should be pursued for dismissal as withdrawn/not pressed.
- U/s 245 of Income Tax Act 1961 revised timeline for verification of arrear of demand – In case no response is received from the AO within thirty days. CPC would issue the refund without any adjustment. The responsibility of, non-adjustment of refund against outstanding arrears, if any, would lie with the Assessing Officer.
- The grant of tenancy rights by the assessee trust and the premium of 51.00 lakhs received in lieu thereof from the tenants is a capital asset in the hands of the assessee and is therefore liable for capital gains and is not advance rent exigible to tax under the head income from house property.
- Disallowance of interest on borrowed capital u/s 24(b) – whether property should be let out for claiming deduction of interest? – the assessee’s claim has no tenability as neither property is self-occupied nor its reasonable rental ALV is offered for tax and at the same time a claim of deduction of interest is made.
- Set off of business loss against interest income taxable under the head income from other sources – as the assessee has not carried out any business activity during the year under appeal, then there remains no possibility of set off of business loss against interest income taxable under the head income from other sources.
- Capital gain – conversion of the partnership firm into company – the conditions laid down under section 47(xiii) of the Act have been fulfilled in this case. Therefore, no capital gain is chargeable under the provisions of section 45(4) of the Act
- Disallowance u/s 14A – if at all any indirect expenses is to be attributable, then same has to be estimated having regard to the accounts and nature of expenditure incurred by the assessee. The blanket application of Rule 8D(iii) that is 0.5% of the average investment may not be acquired to do so because it is not commensurate with the nature of activity of investment carried out and the expenses debited by the assessee which is mostly for its business activities
- Income Tax: Addition u/s 68 – merely because the bank statement an ITR of the lender were not submitted, in spite of submitting balance sheet and profit and loss account of the company, confirmation stating its PAN and also transactions are through account payee cheques and in absence of any inquiry, we are of the view that no addition can be made in the hands of the assessee
- Income Tax: Penalty u/s 271C – non deduction of tds u/s 194LA – there was no mala fide intention on the part of the assessee for non-deduction of TDS since it had recovered the TDS from the concerned as soon as the violation of law was brought into assessee’s notice
- Income Tax: Agricultural lands in terms of Sec 2(14) – Though the circumstance that the land is classified as Agricultural in the revenue records and the Village Panchayats President, Navallur, has certified that the land is away from municipality, other circumstances proves otherwise – Held as not an agriculture land
- Income Tax: The assessee had a dividend income (income from other sources). Thus the assessee fell within the purview of the exception carved out in the explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1).
- Income Tax: Addition made on inflation of purchases of raw material u/s. 69 – CIT(A) has wrongly relied on the input output consumption ratio – addition deleted.
- Income Tax: Income-tax (5th Amendment) Rules, 2016) – Rules in respect of fund manager regime under section 9A of the Income-tax Act, 1961 – Notification
INDIRECT TAX
- Service Tax: Validity of Tribunal’s order waiving the penalty – the question of applicability of section 80 w.e.f. 14-5-2015 has not been examined by the Tribunal at all. There is rather no reference to Section 80 of the Finance Act, 1994. As the Tribunal’s order is cryptic and the reasons are wholly unsatisfactory, needs to be quashed and set aside – HC
- Central Excise: Differential duty demand – demand arose on account of the fact that the appellant cleared the goods from its depot at a price higher than the price at which the duty was paid at the time of clearance from the factory – demand confirmed
- Central Excise: SSI Exemption – The notification as amended was very clear and unambiguous. In the era of self assessment, it is the responsibility of the assessee to correctly determine the duty as per law. It is seen that the appellant failed to do so in this case
- Central Excise: Denial of Cenvat credit on capital goods – stock taking was done by way of eye estimation – the allegation of shortage of raw materials, does not stand. – demand set aside
- Central Excise: Refund claim – duty liability subsequent to clearance of their products – unjust enrichment – when duty is paid after clearance of goods, on insistence of anti-evasion branch, burden of duty is not passed on to the customers – refund allowed
- Central Excise: Differential duty – as the appellant was clearing the goods on payment of duty and subsequently on their own revised the price and discharged the differential duty there seems to be no violation of any provisions – Demand on interest confirmed – But, no penalty be levied
- Central Excise: MRP based valuation – removal of goods without packing – It is not the packaging that determines the applicability of mandate of affixing the ‘retail sale price’ but the product itself. Consequences of non-conforming packaging are not escapement from the mandate but the enforcement of penal detriment – appellant is eligible for the abatement
- Central Excise: The duty can be demanded from a manufacturer of the goods as it is a factum record that the impugned goods have been fabricated on job work basis by the contractors, therefore, as per the Central Excise provision, the appellant cannot be the manufacturer of the said goods.
- Customs: Rejection of refund claim – Period of limitation – Once the appellant has been given acknowledgement unless until this held to be fake or forged, the said acknowledgement has to be accepted as proof of filing the refund claim.
- Service Tax:The demand of service tax along with interest is confirmed under the category of “Transport of Export Cargo” as there was no exemption of service tax on the said service from 16.06.2005 to 23.06.2005
- Central Excise:Cenvat Credit denied of service tax paid on club membership of Association – the expenses incurred on the membership of the business club is an “input service” and appellant can legally take Cenvat Credit of the expenses incurred on the membership of the club
- Central Excise:Jute mattings manufactured – whether are floor coverings or not ? – Notification No. 29/95-CE dt 16/3/1995 benefit claimed – as per this meaning the mattings can also be used & understood as floor coverings. The argument taken by the Revenue that floor coverings of jute should be exclusively used for floor covering is not supported by as such specific mention in the exemption notification
- Central Excise:Rejection of refund claim – export of goods – in appellants case the ARE 2 for export has to be filed within 24 hours of clearance and as such, there is no scope for prior verification of the goods by the officers. The cleared goods have been exported and all the relevant customs clearance documents have been filed. – Refund allowed
- Central Excise:Rejection of refund claim – export of goods – in appellants case the ARE 2 for export has to be filed within 24 hours of clearance and as such, there is no scope for prior verification of the goods by the officers. The cleared goods have been exported and all the relevant customs clearance documents have been filed. – Refund allowed
KEY DATES
- Return for non SSI assessee for February: 10/03/2016
- Return for EOUs for February: 10/03/2016
- Return by units paying duty > 1 Crore (CENVAT+PLA) for Feb: 10/03/2016
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