India Financial Consultancy

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 11, 2016

DIRECT TAX

• Income Tax: Qualification for exemption u/s 10(5) – LTC paid to the employees involving foreign travel – TDS on the payment of LTC to the employees – Revenue has rightly held the assessee to be in default, as the assessee has not deducted TDS intentionally on the reimbursement of expenditure incurred on LTC/LFC.
• Income Tax: TDS u/s 195 – the assessee can not be said to have paid the consideration for use of or the right to use copyright but has simply purchased the copyrighted work embedded in the CD- ROM which can be said to be sale of ‘good’ by the owner. The consideration paid by the assessee thus as per the clauses of DTAA can not be said to be royalty
• Income Tax: Non service of notice u/s 143(2) – Apparently, the notice was sent on the wrong address as the assessee has categorically given his address in the relevant return of income – Presumption can only be raised against the assessee for service of notice u/s 143(2) when the notice was sent on the correct address.
• Income Tax: Rejection of books of accounts – denial of natural justice – Assessing Officer has not provided sufficient opportunity of being heard to the assessee rather rejected the books of accounts arbitrarily and declared the bills filed by the assessee as bogus unilaterally. – Matter remanded back –
• Income Tax: Revision u/s 263 – AO has to consider the provisions applicable under Rule 8D effective from assessment year 2008-09. But the AO made disallowance by following Co-ordinate Bench decision for earlier assessment year. It is apparent from facts and circumstances the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue – Revision proceedings are correct
• Income Tax: Penalty u/s 271(1)(c) – the money has been appropriated by ICICI Bank after collection and the assessee has claimed the deficiency in realization as Bad debts. The income of 2% was not considered in profit and loss account by assessee. – The explanations given by the assessee cannot be considered as bonafide and assessee tried to conceal the income by misrepresenting the case – penalty confirmed
• Income Tax: Eligibility of deduction u/s 80IC on freezing charges – freezing charges earned by the assessee is an integral part of the processing of vegetables and therefore is eligible for deduction u/s 80IC of the Act
• Income Tax: Capital gains – calculation of number of trees – The evidence filed by the assessee in terms of certificate of Tehsildar or that of a retired IAS officer is of no evidentiary value, specially in the presence of Jamabandi, which is an actual proof of land holding and cultivation thereon.

INDIRECT TAX

• Service Tax: ST-3 return form amended to insert the columns related to Swachh Bharat Cess – Service Tax (Second Amendment) Rules, 2016 – Notification
• Central Excise: Extended period of limitation – When the material facts are disclosed, a particular classification followed by the appellant will not make a case for suppression – the appeal in so far as it relates to extended period is allowed.
• Central Excise: SSI Exemption – Manufacture and clearing dutiable goods with the brand name or trade name of another person – for denial of exemption the brand name or trade name has a wider connotation, registration being not mandatory
• Central Excise: Demand of duty for clearance of waste and scrap – the transparency in the appellant’s dispatch of waste and scrap and receiving the granules back cannot be questioned only on the ground that the Notification 214/86-CE is not applicable to waste and scrap.
• Central Excise: Liability to pay the excise duty – consignee does not sent the certificate of re-warehousing within the period of 90 days – department cannot ask the appellant to pay the duty as the department cannot recover the duty twice for the same consignment and moreover as per the sub-clause (3) of Rule 20 it is the responsibility of the buyer to pay the duty
• Customs: Valuation – as the Supply Agreement is consistent with the Technology Transfer Agreement, and the supplier had the right to terminate the supplies in case of non-payment of royalties, the payment of royalty is a condition of sale and includible in the assessable value
• Customs: Invokation of Rule 9(1)(c) – Royalty and Technical know-how fee paid on domestic sale – Whether includible or not in the value of goods imported – Held that: Not to be included
• Customs: Contravention of provisions of Regulation 13(e) and 13(o) of CHA Licensing Regulation, 2004. – CHA has not even claimed that it had ever verified the existence of the importer at the given address which means the appellant has failed to fulfil the requirement of Regulation 13(o) ibid. – Action against CHA sustained
• Customs: Entitlement – Benefit of Notification No. 12/2012-Cus, – beyond doubt that ‘bulk drugs’ are also ‘drugs’ – benefit of exemption allowed

OTHER UPDATES

• EPS: The Union Govt. after exempting EPF, considering a proposal to make it mandatory for Employer to route most of its saving to Employee Pension Scheme (EPS) a move for creating pensioned society.

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