CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 9, 2016 DIRECT TAX TDS u/s 194J or 194C – payments made to various TV channels – section 194J is attracted to the facts of the instant case. Merely because in earlier years this issue was not examined and the assessee’s contention got accepted without verification, cannot give license …
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Where assessee had benchmarked its international transactions on TNMM basis and TPO had neither disputed assessee’s claim that TNMM was most appropriate method, nor comparables selected by assessee, it was not open for TPO to reject benchmarking done by assessee and make adhoc ALP additions in value of international transactions – [2016] 16 (Mumbai – Trib.)
Comparables & adjustments/Comparables–Illustrations:Comparab le can be rejected on ground that it has exceptionally high profit margins as compared to assessee – [2016] 296 (Bangalore – Trib.)
Comparables and adjustments/Others : Where TPO benchmarked international transaction by using CUP method and DRP upheld this action of TPO, by following its findings and decision in assessee’s case for preceding assessment year, in view of fact that in preceding year, on similar facts, matter was remitted back to DRP by co-coordinating bench of Tribunal, matter for current assessment year also was to be remitted back to DRP for fresh adjudication – [2016] 325 (Mumbai – Trib.)
SECTION 148
INCOME ESCAPING ASSESSMENT – ISSUE OF NOTICE FOR
Recording of reasons : In case of notice issued under section 148 in respect of transfer pricing issue, recording of reasons for issuing reopening notice had to be on basis of Assessing Officer’s reasons and TPO’s reasons on merits much after issue of reopening notice did not have any bearing on serving reasons recorded upon party i.e. assessee whose assessment was being sought to be reopened – [2016] 335 (Bombay)
SECTION 271(1)(c)
PENALTY – FOR CONCEALMENT OF INCOME
Where notice was issued under section 274 proposing to levy penalty under section 271(1)(b) whereas order was passed under section 271(1)(c), it clearly indicated that there was no application of mind by Assessing Officer while issuing notice and, thus, impugned penalty order was to be set aside – [2016] 334 (Karnataka)
SECTION 77A
SHARES – POWER OF COMPANY TO PURCHASE ITS OWN SECURITIES
In law, petitioner is entitled to buy back its own shares by means of a scheme under section 391 read with sections 100 – 104 of the Companies Act, 1956 , scheme cannot be said to be a colourable device to evade income tax, it is a legally permissible procedure which petitioner is entitled to follow to buy back its shares –[2016] 1 (Bombay)
SECTION 1
CONSTITUTIONAL VALIDITY
Where Provisions of impugned Sardar Sarovar Narmada Nigam Limited (Conferment of Power to Redeem Bonds) Act, 2008 are irreconcilable with Central legislation occupying field, impugned Act is constitutionally invalid – [2016] 297 (Gujarat) (more…)
INCOME TAX ACT
SECTION 2(47)
CAPITAL GAINS – TRANSFER
Sale of partnership business as going concern to company : Sale of business of assessee-firm as a going concern to company for consideration of paid up share capital does not amount to transfer liable to tax as capital gains – [2016]
SECTION 10(10C)
VOLUNTARY RETIREMENT PAYMENTS
Where assessee’s appeal before Tribunal against denial of exemption under section 10(10C) was filed after delay of 1737 days, keeping in view fact that assessee would be otherwise entitled to benefit of deduction under section 10(10C) as per CBDT Instruction and keeping in mind circumstances in which appeal of assessee was filed belatedly, delay in filing appeal was to be condoned – [2016]
SECTION 28(i)
BUSINESS INCOME – CHARGEABLE AS
Business income v. Capital gains – Dealing in Land : Where an individual engaged in manufacture and sale of pharmaceutical products and, also earned income from sale of undivided share of land and construction of flats on said land, income would be treated as business income – [2016]
SECTION 69C
UNEXPLAINED EXPENDITURE
Construction of flats : Where Assessing Officer had no case that assessee had received any excess consideration from flat buyers, nor was it case of any flat buyers that something more was realized from them, no addition on account of unexplained expenditure could be made – [2016]
SECTION 80-IA
DEDUCTIONS – PROFITS AND GAINS FROM INFRASTRUCTURE UNDERTAKINGS
Condition precedent/Setting off losses : Where loss of eligible business undertaking was already absorbed against other income of business enterprises, assessee was entitled to claim deduction under section 80-IA –[2016]
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustments/Adjustment – General : When audited financial statements were available in public domain, computation of ALP based on interim and unaudited financial statements could not be accepted – [2016]
CENTRAL EXCISE ACT
SECTION 11A
RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED – CLANDESTINE REMOVAL OF EXCISABLE GOODS
Charge of clandestine removal without payment of duty cannot be sustained merely based on stock shortages/excesses found on test-check basis by statutory auditors. – [2016]
CUSTOMS TARIFF ACT
SECTION 3
CHARGE/LEVY – ADDITIONAL DUTY OF CUSTOMS/SPECIAL CVD
Even if special CVD on imports was paid using balance lying in DEPB scrips, same is refundable “in cash” on resale of goods; Circulars denying/restricting refund of Special CVD in such cases are ultra vires Notification No. 102/2007-Cus. and are void. – [2016]
CENVAT CREDIT RULES
RULE 2(l)
CENVAT CREDIT – INPUT SERVICE – GENERAL
Works contract services availed for minor repairs of premises as well as equipments, etc., are eligible for input service credit to exporter of ‘software services’ – [2016] (more…)
CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 7, 2016 6% Tax on online advertisement / Google Tax Vide Finance bill 2016 FM has proposed to levy 6% of the amount of consideration for specified services received or receivable by a non-resident not having permanent establishment (‘PE’) in India, from a resident in India who carries out business …
INCOME TAX ACT
SECTION 36(1)(iii)
INTEREST ON BORROWED CAPITAL
Expansion of business : Where assessee paid interest on borrowed capital which was used for acquisition of windmill for extension of existing business of generation of electricity through windmill, interest could not be allowed till capital asset acquired by assessee was put to use – [2016]
SECTION 36(1)(v)
GRATUITY FUND, CONTRIBUTIONS TOWARDS AN APPROVED
Approval of Commissioner : Where assessee paid amount towards Employees Group Gratuity Fund to LIC and application made by assessee was still pending before Commissioner for approval and assessee had no control over Fund created by LIC for benefit of its employees, disallowance under section 36(1)(v) was not be made – [2016]
SECTION 40(a)(ia)
BUSINESS DISALLOWANCE – INTEREST, ETC., PAID TO A RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE
Form 15H : Where assessee credited interest in recipient account without deducting TDS at time of payment, in view of filing of Form 15H by recipient there was no requirement for deduction of tax and, accordingly, disallowance under section 40(a)(ia) was not justified – [2016]
SECTION 54F
CAPITAL GAINS – EXEMPTION OF, IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE
Utilization of capital gains : Where assessee purchased a vacant site but couldn’t complete construction of house within prescribed period of three years to avail exemption from capital gain, whole of capital gain was liable to be taxed in previous year in which period of three years expired from date of sale of original asset –[2016]
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustments/Adjustments-Others : Where TPO made addition to assessee’s ALP in respect of purchase of equipment from AE, since cost certificates provided by AE certified that said equipment was sold on cost to cost basis, impugned addition was to be set aside – [2016]
SECTION 194LA
DEDUCTION OF TAX AT SOURCE – COMPENSATION FOR ACQUISITION OF PROPERTY
Conditions precedent : Where payment for purchase of immovable property was made before introduction of section 194LA mandating TDS on such payment, sale certificate presented for registration after introduction of section 194LA was required to be registered without proof of TDS – [2016]
SECTION 222
COLLECTION OF TAX AT SOURCE – CERTIFICATE PROCEEDINGS
Application to set aside sale : Where in tax recovery proceeding, subsequent to auction, respondent debtors deposited a major portion of amount specified in proclamation of sale within prescribed period for setting aside sale instead of depositing entire amount as specified in rule 60 of Second Schedule to IT Act, 1961, within prescribed period but deposited thereafter, sale could not be set aside – [2016]
SECTION 244A
REFUNDS – INTEREST ON
Rectification of mistakes : Interest allowed to assessee under section 244A(1)(b) on refund of excess payment on self assessment of tax could not be withdrawn under section 154 as Explanation to section 244A(1)(b) does not bar payment of interest upon refund of excess payment on self assessment – [2016]
REVISION – OF ORDERS PREJUDICIAL TO INTEREST OF REVENUE
Consideration of issues, effect of : Where Assessing Officer examined an issue, Commissioner could not assume jurisdiction on same issue by stating that Assessing Officer had conducted inadequate enquiry or there was a lack of enquiry – [2016]
COMPANIES ACT
SECTION 7
INCORPORATION OF COMPANY
Section 35 debars raising of any objection relating to incorporation of company after issuance of certificate of incorporation by ROC – [2016]
NEGOTIABLE INSTRUMENTS ACT, 1881
SECTION 138
DISHONOUR OF CHEQUE FOR INSUFFICIENCY ETC., OF FUNDS IN ACCOUNT
For maintaining prosecution against a partner under section 141, arraigning of partnership firm as an accused is imperative – [2016] (more…)
CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 3, 2016 DIRECT TAX IT: Transfer pricing adjustment – the unusual features which remained unexplained by the assessee influenced the TPO and the AO to resort to transfer pricing adjustment and determine ALP by adopting the CUP method for the procurements from Sumitomo Japan – Denso India Ltd. Vs. CIT (2016 …
Salaries were not reflected in the profit and loss account – if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law a deduction must be allowed by the Income Tax Officer the assessee will lose the right of claiming or will be debarred from being allowed that deduction – HC – Income Tax- ANZ Grindlays Bank (Now Standard Chartered Grindlays Bank Ltd.) Versus Deputy Commissioner of Income Tax And Others – 2016 (3) TMI 56 – DELHI HIGH COURT
Transfer pricing adjustment – the unusual features which remained unexplained by the assessee influenced the TPO and the AO to resort to transfer pricing adjustment and determine ALP by adopting the CUP method for the procurements from Sumitomo Japan. – HC – Income Tax- Denso India Limited Versus Commissioner of Income Tax – 2016 (3) TMI 55 – DELHI HIGH COURT
Jurisdiction of AO in search cases cannot be challenged after one month of notice.This amendment will take effect from 1st June, 2016
Validity of Show cause notice issued to 3rd respondent – Period of limitation – Since only a show cause notice has been issued and final order in response thereto is yet to be passed all the contentions raised herein can be effectively gone into by the 3rd respondent on consideration of the reply to the show-cause notice – HC – Customs- M/s Hero Exports, Ludhiana Versus Union of India And Others – 2016 (3) TMI 38 – PUNJAB & HARYANA HIGH COURT
Rejection of refund claim under Section 27 of the Customs Act 1962 – Mercedes Benz Car imported and cleared on assessment and payment of duty – claiming fulfilment of assessment order made under Bill of Entry – Tri – Customs- Sri Ganapathi Sachchidananda, Avadhoota Datta Peetham Versus CC, Chennai – 2016 (3) TMI 34 – CESTAT CHENNAI notification and relying on Board s circular not relevant as there was non-challenge of
Digital Signature is now mandatory w.e.f. 4th Quarter of FY 2015-2016 for dealers having turnover above Rs. 50 lakhs. It means all the returns and other correspondences should be filed with D-VAT department via digital signature only.
Extension to 31.03.16 of last date to file DP-1 under DVAT (online submission of Dealer profile). Notification dated 01.03.2016.
Power of CG to impose transitional product specific safeguard duty on imports from the People’s Republic of China, to omit section 8C of the Customs Tariff Act as the provision which was inserted for a period of ten years has lapsed. Clause 137, Omission of section 8C – THE FINANCE BILL, 2016
Amendment of section 71 of Customs Act, 1962: Goods not to be taken out of warehouse except as provided by this Act, to substitute the word “re-exportation” with the word “export”.
Amendment of section 73 of Customs Act, 1962: Cancellation and return of warehousing bond , to insert the word “transferred or” after the words “exported or”.
Insertion of new section 73A of Customs Act, 1962: Custody and removal of warehoused goods, to provide for the custody and removal of warehoused goods.
MCA has recently invited comments on the draft rules w.r.t. Revival and Rehabilitation of Sick Companies related provisions under the Companies Act, 2013 vide Notification dated 02/03/2016.(Click here to view)
First comes thought, then organization of that thought into ideas and plans, then transformation of those plans into reality. The beginning, as you will observe, is in your imagination. (more…)
The Finance Bill, 2016 presented by the Finance Minister, Mr. Arun Jaitely on 29th February, 2016 has brought with it a whole new set of changes in the indirect taxes. The basic purview taken by the government behind rationalizing the transformations is to bring the current taxing provisions in line with the proposed plan of Goods and Service Tax.
Below is List of major proposed and fallout amendments in the Service Tax:
Changes in the Finance Act, 1994 that get incorporated on enactment of the Finance Bill, 2016
CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 29, 2016 THE UNENDING SAGA OF ERRONEOUS APPLICABILITY OF DIVIDEND DISTRIBUTION TAX FINALLY ENDS: During the past quarters, the provisions of law regarding buy-back of shares since introduction of dividend distribution tax (‘DDT’) under section 115Q of the Act w.e.f. 01.04.2003 till 31.05.2013 are being interpreted in a conflicting …