Friday, 18 May 2018

Govt. notifies creation of apex National Authority for administering all trade remedial measures

Govt. notifies creation of ‘Directorate General of Trade Remedies’ (DGTR) as the apex National Authority for administering all trade remedial measures including anti-dumping, countervailing duties and safeguard measures; Accordingly, DGTR will bring Directorate General of Anti-dumping and Allied Duties (DGAD), Directorate General of Safeguards (DGS) and Safeguards (QR) functions of DGFT into its fold by merging them into one single national entity; It will also provide trade defence support to domestic industry and exporters in dealing with increasing instances of trade remedy investigations instituted against them by other countries; DGTR has been approved with a sanctioned strength of 112 posts : Ministry of Commerce Press Release 

Imp Case law


Mangammal @ Thulasi vs. T.B. Raju (Supreme Court)

Hindu Succession Act, 1956 (HUF Law): U/s 29-A of the TN Amendment, only daughters of a coparcener who were not married at the time of commencement of the amendment of 1989 are is entitled to claim partition in the Hindu Joint Family Property. Married daughters are not coparceners are are not entitled to institute suit for partition and separate possession (Danamma @ Suman Surpur Vs. Amar 2018 (1) Scale 657 distinguished)   

CIT(A) Cannot Dismiss Non E-Filed Appeals + Imp SC Verdict On HUF Law


Mangammal @ Thulasi vs. T.B. Raju (Supreme Court)

Hindu Succession Act, 1956 (HUF Law): U/s 29-A of the TN Amendment, only daughters of a coparcener who were not married at the time of commencement of the amendment of 1989 are is entitled to claim partition in the Hindu Joint Family Property. Married daughters are not coparceners are are not entitled to institute suit for partition and separate possession (Danamma @ Suman Surpur Vs. Amar 2018 (1) Scale 657 distinguished)    

Dismisses assessee’s SLP ; FD-interest assessable as business income ineligible for Sec 80IC deduction

SC dismisses assessee’s SLP against Uttarakhand HC decison denying Sec.80-IC deduction on interest earned on fixed deposit with bank for AY 2009-10 as it is not 'dervied from' eligible business; HC had observed that the Legislature has chosen to employ the word ‘derived’ in sec.80-IC as distinguished from ‘attributable to’; HC remarked that “Had the Legislature used the words “attributable to”, then it would have a much wider effect and it may have encompassed within itself, the income, which is the subject matter of controversy before us.” ; HC further affirmed AO’s order holding that interest income qualifies as business income u/s. 28 but no deduction can be allowed u/s 80-IC:SC 

ITAT : Pre-2016, AO can't curtail R&D unit's weighted deduction u/s 35(2AB) citing DSIR-approved expenditure

Pune ITAT rejects Revenue’s plea for AY 2009-10 that deduction with respect to Research & Development (R&D) expenditure u/s 35(2AB) is restricted only to the extent of approval granted by Department of Industrial and Scientific Research (DSIR) in form No.3CL; ITAT​ clarifies that prior to amendment of IT (Tenth Amendment) Rules, 2016, DSIR had no power to quantify expenditure and highlights that issue under consideration relates to pre-amended provisions; ITAT notes that with effect from July 1, 2016 form no 3CL was amended  and certification of expenditure was inserted; ITAT rules that once agreement between the ​R&D facility and the prescribed authority is executed under which recognition is given to the facility, role of AO is to look into and allow the expenditure incurred on in-house R&D facility as weighted deduction u/s 35(2AB)​; ITAT thus allows weighted deduction for R&D facility's entire expenditure u/s 35(2AB) ​:ITAT 

HC : No delay condonation where exporter knowingly approached wrong forum over 'rebate' dispute

HC refuses to interfere with order of Revisional Authority who dismissed revision application / petition filed by assessee 8 years after CESTAT rejected appeal relating to rebate of excise duty for lack of jurisdiction; Notes that assessee had preferred an appeal before CESTAT despite knowing well that it should approach Revisional Authority u/s 35EE of Central Excise Act in matter relating to excise duty rebate; Dispute had arisen over entitlement to rebate in view of amendment to Notification No. 43/2001-CE (NT) and clarification issued by CBEC with respect to applicability of Explanation that goods should be effected under Rule 19 of Central Excise Rules; While assessee contended that it was entitled to rebate since goods had been cleared from factory prior to amendment to Notification No. 43/2001-CE (NT), Revisional Authority observed that delay of 8 years was neither a bona fide mistake nor a sufficient cause which prevented the assessee from filing the application / petition in time; Resultantly, HC dismisses writ petition while refraining from issuing any direction to Authority who had considered all facts objectively  : Rajasthan HC

AAR : Liquidated damages from contractor towards delay in deliverables, liable to 18% GST


Maharashtra AAR rules that GST is applicable on ‘liquidated damages’ chargeable upon the contractor once delay in deliverables is established, in relation to operation & maintenance activities and construction of new power plants or renovation of old plants; Rejects applicant’s contention that these damages being towards deficiency in services, amount to reduction in value of supply and same should not be considered as separate service covered by the term “Obligation to tolerate an act or a situation”; Perusing the agreement between the applicant and BHEL for erection & commissioning of main plant package, AAR observes that contract price and liquidated damages are two separate aspects / events, deduction of one from the other is a mere facilitation towards settlement of accounts; Stating that recovery of liquidated damages is an independent activity and consideration for the work done remains unaltered, AAR observes “For the Taxman, what would matter is the value for the work done. And once this valuation is properly done and tax liability thereon discharged, whether this value is paid partially or not paid at all would not be a concern from the taxation perspective but a matter between contracting parties..”; Resultantly, holds that empowerment to levy liquidated damages is for reason that there has been delay and the same would be tolerated but for a price or damages, hence, the income of the applicant would be for a ‘supply of service’ in terms of clause (e) of Para 5 of Schedule II; Such supply i.e. levy of liquidated damages, would be covered under Heading 9997 i.e. “Other services” under Notification No. 11/2017-Central Tax / State Tax (Rate) exigible to GST at 18%; Further clarifies that liability to pay tax on services shall arise at the time of supply, if the contractor fails to achieve trial operation within specified time period which falls under GST regime, then levy of liquidated damages would attract GST : Maharashtra AAR
The order was passed by Shri. B. V. Borhade and Shri. Pankaj Kumar.
Mr. S. S. Gupta, Mr. Karan Awtani, and Mr. Ashutosh Shukla appeared on behalf of the applicant.

UN Model Convention 2017 introduces anti-abuse rules, new FTS article; Incorporates BEPS language

United Nation releases 2017 update of the Model Double Taxation Convention between Developed and Developing Countries;  The UN Model Convention introduces new article 12A on 'fees for technical services' (the article which is absent in OECD's convention); The 2017 update also incorporates some of the language of the BEPS project; The  2017 UN Model Convention  introduces a new general anti-abuse rule in article 29(9); A note released by the UN Committee states that "[the new rule] together with the specific anti-abuse rules included in tax treaties, is intended to prevent transactions and arrangements from being granted treaty benefits in circumstances where granting such benefits would be contrary to the object and purpose of the Model Convention";  Article 4 is modified to include a new tie-breaker rule for determining the treaty residence of dual-resident persons other than individuals and  Article 5 is modified to prevent the avoidance of permanent establishment status; The 2017 Model was released during the 16th session of The Committee of Experts on International Cooperation in Tax Matters of United Nations held this week at New York