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 …
CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 28, 2016 CRATE RENTALS RECOVERED BY BEVERAGE MANUFACTURERS LIABLE TO VAT AND NOT SERVICE TAX In the case of Hindustan Coca Cola Beverages (P.) Ltd. v. Commissioner of Service Tax, Delhi (2016) (New Delhi – CESTAT), The New Delhi CESTAT has held that such crate rentals would be liable to …
CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 27, 2016 Direct Tax: The validity of assessment – if a matter falls u/s. 153(2A) of the Act i.e. if the Tribunal has set aside or canceled the assessment then the fresh order by the AO of assessment shall be passed within the period as prescribed u/s. 153(2A) – Tri …
SECTION 12A
CHARITABLE OR RELIGIOUS TRUST – REGISTRATION OF
Cancellation of : Where assessee-educational trust undertook only one activity of running of school out of 21 objects for charitable purposes and it was charging reasonable fees from students and it also gave a concession to poor and deserving students, registration of trust under section 12AA was to be granted – [2016]
SECTION 40(a)(i)
BUSINESS DISALLOWANCE – INTEREST, ETC., PAYABLE OUTSIDE INDIA
Commission payments to the nonresident agents are not taxable in India, as the agents are remaining outside, services are rendered abroad and payments are also made abroad. The services rendered by the non-resident agent could at best be called as a service for completion of the export commitment and would not fall within the definition of “fees for technical services” and, therefore, section 9 was not applicable and, consequently, section 195 did not come into play. Therefore, the disallowance made by the Assessing Officer u/s 40(a)(i) towards export commission paid by the assessee to the non-resident was rightly deleted by the Tribunal. In GE India Technology’s case, it was held by SC that the tax deducted at source obligations under Section 195 (1) of the Act arises, only if the payment is chargeable to tax in the hands of the non-resident recipient. When the transaction does not attract the provisions of Section 9 of the Act, then there is no question of applying Explanation 4 to Section 9 of the Act. Consequently, the ratio of SC decision in G.E. India Technology’s case would apply notwithstanding insertion of Explanation 4 to Section 9 (1) (i) of the Act with corresponding introduction of Explanation 2 to Section 195 (1) of the Act, both by the Finance Act, 2012, with retrospective effect from 01.04.1962 – [2016] 66 taxmann 321 (Madras)
SECTION 74
LOSSES UNDER HEAD CAPITAL GAINS
Setting off deemed short term capital gain : Where deemed short term capital gain arose on account of sale of depreciable assets that was held for a period to which long term capital gain would apply, assessee would be entitled to claim setting off said gain against brought forward long term capital losses and unabsorbed depreciation – [2016] 66 taxmann 330 (Bombay)
SECTION 92C
TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Comparables and adjustments/TNMM v. CUP : Where on assessee becoming agent of parent shipping company, erstwhile agent was appointed as sub-agent of assessee, price agreement between assessee and its sub-agent could not be used as internal CUP for determining ALP – [2016](Mumbai – Trib.)
Comparables and adjustments/Comparables – Illustrations : In case of assessee, providing investment advisory and support services to its AE, companies engaged in handling of IPOs and carrying on activity of managing directly or indirectly investments mutual funds, venture capital fund, could not be accepted as valid comparables while determining ALP – [2016] (Delhi – Trib.)
SECTION 132A
SEARCH & SEIZURE – REQUISITION OF BOOKS OF ACCOUNT, ETC.
Reassessment : Accounts which were duly verified during regular assessment of assessee could not be reappreciated merely because further a search was conducted in premises of assessee as same would amount to reopening of concluded assessment – [2016] 66 taxmann 264 (Karnataka)
SECTION 194C
DEDUCTION OF TAX AT SOURCE – CONTRACTORS/SUB-CONTRACTORS, PAYMENTS TO
Transportation charges : Where assessee-company, engaged in business of cargo handling, made payments for transportation of goods to transporter which also supplied containers, since use of containers was only incidental to transporting of cargo, assessee was justified in deducting tax at source under sec. 194C from payments in question – [2016] (Rajkot – Trib.)
SECTION 445
WINDING UP – COPY OF WINDING UP ORDER TO BE FILED WITH REGISTRAR
Contract of Company (in liquidation) with its employees comes to an end on passing of winding up order –[2016] (Bombay) (more…)