Friday, 26 April 2013

Whether when assessee originally a sub-contractor, but becomes direct party to pact, cannot claim benefit of deduction u/s 80IA, merely because they have not developed entire project - NO: ITAT


THE issue before the Bench is - Whether when the assessee originally a sub-contractor, but subsequently becomes a direct party to the main agreement in its own right, directly responsible for the work done and dealing with the Government on behalf of the developer, cannot claim the benefit of deduction u/s 80IA, merely because they have not developed the entire project. And the answer goes in favour of the assessee.
Facts of the case
The assessee has undertaken the work on Back to Back Agreement concept under sub contract from Patel Engineering Company Limited (PEC) vide Sub-Contract Agreement for construction of Tunnel which supplies the water form River Koyna and makes it available to Power House. The

Whether Education Cess paid by assessee can be treated as revenue expenditure - NO, it is a part of tax liability: ITAT


THE questions before the Bench are - Whether for invoking the provisions of section 14A read with rule 8D a proximate connection between the expenditure incurred and income earned is sine-qua-non; Whether burden of proving the proximate nexus between the exempt income and expenditure incurred is on Revenue; Whether any disallowance under section 14A can be made without proving the proximate nexus; Whether expenses which are not directly related to the exempt income can be disallowed merely because rule 8D permits to do so; Whether for invoking the provisions of rule 8D the “satisfaction” of the AO about the inaccuracy of accounts and also to correctness of expenses suo-motto disallowed is a condition precedent; Whether Revenue can sit in the arm chair of a businessmen and decide what expense is necessary; Whether once it is proved that an expense is bonafide and has been incurred wholly and exclusively for the purpose of business any disallowance can be made by checking the necessity of the expense; Whether necessity behind an expense is an alien if the expense is incurred in the interest of business; Whether any disallowance under section 40(a)(ia) can be made on account of payment of commission to foreign residents and Whether education cess is revenue expense. And the verdict partly goes in favour of the assessee.
Facts of the case

Highlights of Annual Supplement to Foreign Trade Policy 2009-14




The Government of India has announced several measures in Foreign Trade Policy (‘FTP’) for FY 2013-14.  Few of the measures have been notified through Notifications effective from April 18, 2013.  However, the complete text of the FTP and Handbook of Procedure is yet to be released.  These measures aim to achieve the following key objectives:    

S. 271(1)(c): Consistent losses show mistake/ absence of intention to evade taxes


Amruta Organics Pvt. Ltd vs. DCIT (ITAT Pune)



The assessee filed a return declaring a loss of Rs. 16 lakhs in which it had made a wrong claim of depreciation. The AO disallowed the claim and levied 100% penalty which was upheld by the CIT(A). Before the Tribunal, the assessee claimed that its’ Directors were technical persons not knowing the intricate provisions of the Act but were dependent on the advice of professionals for preparing income tax returns. It claimed that it had committed a bona fide mistake and that there was no intention to evade taxes. HELD by the Tribunal upholding the plea:

Transfer Pricing: If more than one price is determined by the most appropriate method, the ALP has to be the arithmetical mean of such prices


CIT vs. Mentor Graphics (Noida) Pvt. Ltd (Delhi High Court)



The assessee was engaged in providing “software development support services” by which it developed software upon the instructions of its parent associated enterprise (IKOS Systems Inc). The entire software developed by the assessee was used by the parent AE captively for integrating the same with other software components developed by it. The assessee adopted the TNMM and claimed that its transactions were at ALP. The TPO rejected the assessee’s comparables on general grounds and selected his own comparables and used figures for a subsequent year. He determined the ALP at a much higher figure and made an adjustment. On appeal by the assessee, the Tribunal held that the criteria adopted by the TPO for searching comparables was not correct. It held that the TPO was wrong in selecting his own comparables without first rejecting the assessee’s comparables. It also held that where one of the prices determined by the most appropriate method is less than the price as indicated by the assessee, that may be selected and there would be no need to adopt the process of taking the arithmetical mean of all the prices arrived at through the employment of the most appropriate method. On appeal by the department to the High Court, HELD:

Reimbursement of expenses cannot be treated as fees for technical services


In this case Payment was made for reimbursement of the permission granted to the assessee for using trade mark ‘Wool, New Zealand’. Such payment cannot be said to be fee fortechnical services. Even otherwise also, in the light of the detailed discussions made in paragraph nos. 13, 14 and 15 of this order, such reimbursement of expenses are not subject to TDS. Accordingly, no disallowance iswarranted. The addition of Rs. 2,88,135/- is deleted.
ITAT ALLAHABAD BENCH
Obeetee (P.) Ltd.
v.
Additional Commissioner of Income-tax
IT APPEAL NO. 249 (All.) OF 2011
[ASSESSMENT YEAR 2005-06]
Date of Pronouncement – 23.11.2012
ORDER

Tuesday, 23 April 2013

ST-3 Return for October 12 to March 13- Date extended to 31/08/2013

The date of filing of ST-3 return for the period October, 12 to March, 13 has been extended from 25/04/2013 to 31/08/2013. The relevant Order is appended below. Further, the date of filing of ST-3 return for the period July, 12 to September, 12 is not further extended (last date is 30/04/2013)


S. 147/148: Reopening of assessment due to revenue audit’s compulsion is void

Vijay Rameshbhai Gupta vs. ACIT (Gujarat High Court)



The AO passed a s. 143(3) assessment order in which he allowed the assessee’s claim for business expenses. The Revenue Audit raised an objection that as the assessee’s business had ceased, the income had to assessed as “other sources” and the expenditure disallowed. The AO replied to the Audit stating that the objection was not correct and that the assessment order was correct. The Revenue Audit thereafter wrote to the CIT that the AO’s stand was not correct. Based on this, the AO issued a s. 148 notice (within 4 years from the end of the AY) to reopen the assessment and disallow the expenditure. The assessee challenged the reopening on the basis that the AO was compelled by the audit party to re-open the assessment though he was of the belief that no income had escaped assessment. HELD by the High Court upholding the plea:

Whether any TDS obligation arises on interest payable on ECB when same has been exempted by CBDT - NO: ITAT

THE issues before the Bench are - Whether expenditure originally shown as Capital Work in Progress can be later claimed as revenue expenditure for income tax purposes upon commencement of the commercial production; Whether any question of TDS liability on interest payable on External Commercial Borrowing can arise, although when the same has been specifically exempted by CBDT u/s 10(15)(iv)(c); Whether when the deployment of the funds borrowed has been already verified by the Department at the time of granting the exemption,

How to Download Form 16 Part A from TDSCPC website

Dear Friends, the Income Tax Department (New Portal i.e. TRACES) had made compulsory to download Form No. 16 (Part-A) (TDS Certificate for Salaried Employee) from TRACES (New Website of TDS) for Assessment Year 2013-14 by its new circular 4/2013 dated 17.04.2012 for TDS Deductor on or after 01.04.2012. Download request for Form No. 16 for a particular Fin. Year can be submitted only after Form 24Q statement for Q4 for the selected Fin. Year is filed by deductor and processed by TDS CPC.

Part A of Form 16 to be generated from TRACES portal & Part B Manually

SECTION 203 OF THE INCOME-TAX ACT, 1961, READ WITH RULE 31 OF THE INCOME-TAX RULES, 1962 – DEDUCTION AT SOURCE – CERTIFICATE FOR TAX DEDUCTED – ISSUANCE OF CERTIFICATE FOR TAX DEDUCTED AT SOURCE IN FORM NO.16
CIRCULAR NO. 4/2013 [F.NO.275/34/2011-IT(B)], DATED 17-4-2013
1. Section 203 of the Income-tax Act 1961 (the Act) read with the Rule 31 of the Income-tax Rules 1962 (the Rules) stipulates furnishing of certificate of tax deduction at source (TDS) by the deductor to the deductee specifying therein the prescribed particulars such as amount of TDS, valid permanent account number (PAN) of the deductee, tax deduction and collection account number (TAN) of the

Monday, 22 April 2013

Transfer Pricing: Even business advances have to be benchmarked on Libor ALP

Aurionpro Solutions Ltd vs. ACIT (ITAT Mumbai)







The assessee, an Indian company, gave loans of Rs. 15.65 crores to its AEs in USA, Singapore and Bahrain. It claimed that the said loans were “working capital advances” given for commercial consideration to secure business and that no interest was recoverable on it. The TPO applied the CUP

Same Income cannot be taxed both in the hand of Individual & HUF based on AIR Information

It is noticed that the ancestral property was received by two brothers and the same was divided by two brothers by entering into an agreement between the two brothers. The assessee sold his share and shown the capital gain in the hands of HUF capacity. Whatever, the interest was received on sale consideration etc., the same was offered for taxation in his HUF capacity. The return was filed with the department, copy of the same is placed at page 70A along with computation of income as well as balance sheet. The same has been accepted by the department. Therefore, I hold that once the capital gain shown on sale amount of the property and interest income in the hands of HUF, then the same cannot be assessed again in the hands of the individual. This fact was brought to the knowledge of the AO and CIT(A), however, the same was not considered for the reason know to them. Since the

Sunday, 21 April 2013

Tax Planning with deductions under section 80C of the Income-tax Act

taxThis article would enable us to understand us ways of tax planning with deductions under section 80C of the Income Tax Act.
Introduction – Before the introduction of section 80c by the Finance Act 2005, section 88 was there to provide exemption to investors. There was no flat deduction of Rs 100000 u/s 88 as rebate of 20% was provided on the amount of investments. For example if someone had invested Rs 50000, he used to get Rs 10000 as tax rebate under section 88. In the earlier section 88 the overall limit of investment was Rs 60000 and an additional Rs 10000 for power, telecom and infra sector.
However exemption limit is enhanced to Rs 100000.Section 80c deduction limit is flat for all and no distinction is made between assessee falling into different tax slabs. This section has become one of the most powerful and the most popular section in the entire Income Tax Act 1961, mainly because the eligible assesses under section 80c are Individual tax payer and HUFs.
What are the eligible instruments?

RBI notifies new interest rates on PPF, SCSS – Effective from April 1, 2013


rbi_monetory_policy_commitee_debtRBI notifies new interest rates on PPF, SCSS – Effective from April 1, 2013. The Reserve Bank of India (RBI) notified 0.1 percent reduction each in interest rates on Public Provident Fund (PPF) and Senior Citizen Savings Scheme (SCSS) to be effective from fiscal beginning April 1, 2013. The rate of interest on PPF has been lowered from 8.8 percent to 8.7 per cent with effect from April 1, 2013, RBI said in a notification.
The rate of interest on 5-year SCSS has been reduced to 9.2 percent from 9.3 percent for entire 2013-14 fiscal, it said. RBI said the new rates will come into force from April 1, 2013 following government’s memorandum on March 25, 2013 which advised rate of interest on various small savings schemes for the financial year 2013-14. RBI said banks should bring this content to the notice of their branches operating PPF and SCSS accounts. It also said the new rates should also be displayed on the notice boards of their branches for information of the PPF and SCSS subscribers.
Following the government’s decision earlier this week, millions of small savers and PPF account holders will earn less on their post office savings schemes. However, government kept unchanged rates on savings on deposit schemes and on fixed deposit of up to one year run by post offices at 4 percent and 8.2 percent respectively. Further, post office Monthly Income Schemes (MIS) of 5-year maturity will earn an interest of 8.4 per cent. The National Savings Certificates (NSC) having maturity of five and 10 years will attract 8.5 percent and 8.8 percent interest respectively, down 0.10 percent each. Revision in interest rates follows a decision taken by government last year to link small savings returns with market rate. The decision is in line with the recommendations of Shyamala Gopinath Committee, which had suggested that returns should be in sync with market rates determined by the returns offered by other securities.
Source : http://www.moneycontrol.com

Friday, 19 April 2013

BUILDER ALSO LIABLE TO PAY TAX ON THE DIFFERENCE IF THE STAMP DUTY VALUATION IS HIGHER THAN THE ACTUAL SALE CONSIDERATION


So far, section 50C (which provides for taxability of property on the basis of higher of Stamp duty valuation or the actual sale consideration) is applicable only when the capital asset is sold. It don’t have any application if the assets sold is not a capital assets i.e., it is not applicable when the stock in trade is sold by the tax payer. In short, Section 50C is not applicable to the builder since in most of the cases the assets/property is the part of stock in trade and resultantly the profit on sale of assets was taxable on the basis of actual sale consideration and not taxable on the basis of Stamp Duty Valuation of the property.

To bring land or building or both held as business assets within the scope of stamp duty value based taxation, the Finance Bill-2013 has proposes to incorporate a new section 43AC in the Income Tax Act-1961. As a result of proposed insertion of Section 43AC, even the immoveable property forming the part of stock in trade would be taxable on the basis of Stamp Duty Valuation or Actual sale price, whichever is higher.

Foreign Contribution and its regulations

What is foreign contribution?
Foreign Contribution and its regulations as regulated by of FCRA, 2010, “foreign contribution” means the donation, FCRAdelivery or transfer made by any FCRA foreign source, -
(i) of any article, not being an article given to a person* as a gift for his personal use, if the market value, in India, of such article, on the date of such gift is not more than such sum** as may be

Whether when assessee is engaged in shipping business, receipts like recruitment fees and visa processing fees can also be treated as part of shipping income subject to tonnage tax - YES: ITAT

THE issues before the Bench are - Whether recruitment fees received can be treated as a part of the shipping income subject to Tonnage Tax as per Chapter XII-G - Whether there is any scope for addition of the same separately by treating such fees as income not incidental for computing shipping income under Tonnage Tax Scheme - Whether when an assessee receives miscellaneous income on account of VISA processing fees, charges for seaman book and had claimed adhoc expenses in respect thereof, the same can be allowed by the assessing authority. And the verdict partly goes in favour of the assessee.
Facts of the case
A

S. 195: If DTAA is silent, no obligation to deduct surcharge & education cess

ITO vs. M. Far Hotels Ltd (ITAT Cochin)



The assessee made a remittance of management fee and interest to a resident of France. The AO held that in deducting TDS thereon u/s 195, the assessee ought to have deducted surcharge and education cess. The assessee claimed that as the India-France DTAA was silent about inclusion of surcharge & education cess, it was under no obligation to do so. HELD by the Tribunal upholding the assessee’s plea:

Thursday, 18 April 2013

S. 80-IA(5): Loss of eligible unit, even if set-off against non-eligible profits, has to be aggregated & carried forward for set-off against future eligible profits



Hercules Hoists Limited vs. ACIT (ITAT Mumbai)






The assessee set up two windmills, the income from which was eligible for deduction u/s 80IA. The assessee suffered a loss in the said Wind Mills and claimed a set-off of the same against its other income. The AO and the CIT(A) rejected the claim by relying on Gold Mine Shares 113 ITD 209 (SB) (Ahd) where it was held that in view of s. 80-IA(5), the loss suffered by the eligible unit cannot be set off against the profits of other units / other business in the initial year of assessment or subsequent years of eligible years of assessments. The Tribunal had to consider the following legal issues: (i) what is the “initial assessment year“?, (ii) whether the loss/ depreciation from the eligible unit is entitled to be set-off against the other income?, (iii) whether the said loss/ depreciation of the eligible unit is, after set-off against the other income, still required to be notionally carried forward for set-off against the future profits of the eligible unit? HELD by the Tribunal:

TIEA - India & Argentina

NOTIFICATION NO. 22/2013 [F.NO. 504/3/2010-FTD-II]/SO 824(E), DATED 22-3-2013
Whereas, an Agreement between the Government of the Republic of India and the Government of the Argentine Republic for the exchange of information and assistance in collection with respect to taxes was signed at Argentina on the 21st day of November, 2011 (hereinafter referred to as the Agreement);
And whereas, the date of entry into force of the Agreement is the 28th day of January, 2013, being the date of the later of the notifications of completion of the procedures as required by the respective laws for entry into force of the Agreement, in accordance with paragraph 2 of Article 13 of the Agreement;

Wednesday, 17 April 2013

Income-tax department must make return scrutiny guidelines public

Joginder Pal Gulati vs. OSD – CPIO (Delhi High Court)






The Petitioner, an advocate, filed an application with the CBDT under s. 6 of the Right to Information Act, 2005 seeking information pertaining to cases excluded from scrutiny, where the disclosure was made during survey. He also sought information qua the scrutiny guidelines for the financial year 2009-10. The Department opposed the disclosure of the scrutiny guidelines on the ground that it would prejudice the “economic interest” of the Country and enable assessees to “configure” their return to avoid scrutiny. The refusal to supply the information was upheld by the CIC. The Petitioner filed a Writ Petition to challenge the order of the CIC. HELD by the High Court reversing the CIC:

Appointment and qualification of Directors under the New companies Bill 2012

New Companies Bill has been passed by the Lok Sabha in 18th December, 2012 and the Companies Bill, 2012 (the Bill) has directorsintroduced many amendments in the Companies Act,1956. The Bill when approved by the President of India would be known as the Companies Act 2013, which would replace the existing Companies Act, 1956.
One of the important aspects of the Company law is provision relating to Appointment and qualification of Directors under the New companies Bill 2012 as all companies are run by the

Whether expenditure incurred on borrowed funds for financing purchase and sell of shares on behalf of others can be disallowed, even if income earned from brokerage has been taxed: ITAT

THE issue before the Tribunal is - Whether the expenditure incurred by the assessee on borrowed funds for financing in respect to purchase and sell of shares on behalf of others cannot be allowed, although the income earned from brokerage has been taxed. And the answer goes against the Revenue.
Facts of the case
The assessee has borrowed huge funds from banks and also in the form of inter Corporate deposits etc. The AO has referred the matter to special audit u/s 142(2A), to study issue of utilization of the borrowed funds. The AO passed his order placing reliance on the findings of the Special Auditor, in which it was observed that the interest incurred by the assessee was in excess of the brokerage income. The Auditor also observed that the assessee had carried out huge volume of trade on which no brokerage has been charged, and thus he concluded that there was no commercial sense involved in the transactions of the assessee. The AO agreed with

Whether an assessee can claim depreciation on machinaries installed at dealer's site for purpose of providing after sales service - YES: ITAT

THE questions before the Bench are - Whether an assessee can claim depreciation on the machinaries installed at the dealer's site for the purpose of providing after sales service; Whether security amount collected from customers can be excluded from the cost of assets for the purpose of calculating depreciation; Whether advances given for the purposes of acquisition of capital assets can be claimed as ‘bad debt’, when these are written off; Whether losses in the running of business can be said to be of capital nature and Whether when any income is exempt u/s. 10, the same has to be mandatorily excluded from the purview of computation of total income under different sections. And the verdict partly goes in favour of the assessee.
Facts of the case

Tuesday, 16 April 2013

S. 80-IA(5): Absorbed losses pre “initial assessment year” need not be set off

M/s. Shevie Exports vs. JCIT (ITAT Mumbai)







The assessee set up a Wind Mill and commenced operations on 29.09.2006 (AY 2007-08). In that year the assessee suffered a loss of Rs. 3.5 crores on account of depreciation and interest which was set-off against the other income. In AY 2008-09, the assessee earned profit of Rs. 7 lakhs from the Wind Mill and claimed 100% deduction u/s 80-IA by treating AY 2008-09 as the “initial assessment year”. The AO allowed the claim. However the CIT, relying on Goldmine Shares 302 ITR (AT) 208 (SB) (Ahd) & Hyderabad Chemical Supplies 137 TTJ 732 (Hyd), revised the order u/s 263 on the ground that as u/s 80-IA(5), the eligible unit was deemed to be the “only source of income”, the earlier years’ losses of the unit had to be set-off against the profits before allowing s. 80-IA deduction. On appeal by the assessee, HELD reversing the CIT:

Controversies In Assessment: Income-tax Dept Publication


 

The Income-tax department has released a publication titled “A Step Ahead – A compilation on contentious issues in assessments”. The publication is authored by top-notch senior IRS officers who have a good grasp on the theoretical and practical aspects of making an assessment. It identifies 19 important provisions in the Act which are the subject matter of most additions and disallowances and explains them thoroughly. The provisions of the Act have been explained in a simple and easy to understand manner and a reference has been made to the prevailing controversies and most of the latest important judgements. The book uses an objective approach and advises Assessing Officers on the facts that they have to focus on in order to make a sustainable assessment.

The publication provides invaluable guidance to the department officials as well to the tax professionals and taxpayers. It will also provide to be a valuable referencer of all the important judgements on the point.

Tax on service provided by way of erection of pandal or shamiana


Circular No. 168/3 /2013 - ST
F. No. 356/2/2013-TRU
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Tax Research Unit
*****
North Block,
New Delhi, 15th April, 2013
To,
Chief Commissioners of Central Excise and Customs (All),
Director General (Service Tax), Director General(Systems), Director General (Central Excise Intelligence), Director General (Audit),
Commissioners of Service Tax (All), Commissioners of Central Excise (All), Commissioners of Central Excise and Customs (All)

Comparision between Companies Act, 1956 & 2012


In this article, we would discuss about Comparative Analysis – Companies Bill 2012 & 1956 Act. Please read on
    Companies Bill 2012...
  • Definition of ‘key managerial personnel’ in clause 2(51) amended – ‘Whole-time director’ has been included in the definition of the term ‘key managerial personnel’. Also definition originally provided that CFO will be KMP “if the Board of Directors appoints him”. The words “if the Board of Directors appoints him” created needless confusion and are omitted.
  • Inclusive limb of the definition of “Paid up share capital” or “capital credit as paid-up” in clause 2(64) amended to omit the words “of money” since intention of the inclusive limb is to cover bonus shares and no money is received against bonus shares.

Whether registration u/s 12A can be denied to an educational institute merely because it has not filled EWS quota seats with adequate numbers


THE issues before the Bench are - Whether registration u/s 12A can be denied to an educational institute merely because it has not filled the EWS quota seats with adequate numbers; Whether any fault in the activities of the assessee can be alleged where, despite the advertisement of school, appropriate number of EWS students were not admitted for reasons beyond the control of assessee and Whether Director of Exemption can deny exemption when the Directorate of education, the monitoring authority, could not find any fault with the activities of the assessee which are admittedly imparting of education. And the verdict goes in favour of the assessee.
Facts of the case

Significant Ruling by Chandigarh Bench of the Tribunal on marketing intangibles

 


In an important ruling in the case of Glaxo SmithKline Consumer Healthcare (“GSK India”), the Chandigarh Bench of the Income Tax Appellate Tribunal (‘Tribunal’) has laid out important principles in relation to transfer pricing adjustments on marketing intangibles following the guidelines laid down by the SB in the case of LG India.

India Signs New DTAA with MALTA

An Agreement (DTAA) and Protocol Signed Between India and Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income
The Double Taxation Avoidance Agreement (DTAA) and the Protocol between the Republic of India and Malta for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income is in force since 8th February, 1995. Both India and Malta have renegotiated the Agreement to bring in line with international standards, change in domestic laws and changed economic scenario.
On 08th April, 2013, India and Malta had signed the new DTAA at Valetta, Malta. The Double Taxation Avoidance Agreement (DTAA) was signed by the Smt. Preneet Kaur, Minister of State for External Affairs of India and Dr. George Vella, Foreign Minister of Malta. Once the DTAA enters into force, it will stimulate the flow of capital, technology and personnel between both the countries and will further strengthen the economic relationship. It also provides tax stability and reduces any obstacles in providing mutual cooperation between India and Malta.

Monday, 15 April 2013

S. 220(6): Demand should be stayed if strong prima facie case made out. Demand on covered issues cannot be recovered by adjustment of refunds

HDFC Bank Limited vs. ACIT (Bombay High Court)







The AO passed an assessment order u/s 143(3) and raised a demand of Rs. 1719 crores. In response to the assessee’s stay application, the AO accepted that demand of Rs. 1370 crores had to be kept in abeyance as they were covered in favour of the assessee by appellate orders for earlier years. However, he still held that the said demand had to be adjusted against refunds of Rs. 560 crores determined for earlier years. He demanded that the balance demand of Rs. 377 crores on the other issues be paid by the assessee. The assessee filed a Writ Petition to challenge the adjustment of refunds against the demand on covered issues and the non-grant of stay on the other issues. HELD by the High Court:

Accounting For Lease: Operating and Capital Lease

 

In a lease arrangement, the owner-lessor agrees to rent an asset (machinery, equipment, land, or building) to the tenant-lessee for a set number of periods at a fixed rental fee per period. Leases can be broadly classified as either operating leases or capital leases. If the lease agreement transfers a material ownership interest from the lessor to the lessee, it is a capital lease. If not, it is an operating lease. Material ownership interests, operating leases, capital leases, and sales-leaseback arrangements are the subjects of this chapter and will be discussed in detail in the following pages.

New Forms for filing appeal under Customs, Excise & Service tax laws w.e.f. 1-6-2013

Please note that the Central Government has amended the Customs (Appeals) Rules, 1982 [the Customs (Appeals) Rules] vide Notification No. 37/2013-Customs (N.T.) dated April 10, 2013. These rules may be called the Customs (Appeals) (Amendment) Rules, 2013 [the Customs Amendment Rules] which will come into force from June 1, 2013. The Customs Amendment Rules has made changes in Rule 7 of the Customs (Appeals) Rules and now new Rule 7 reads as under:
“7. Form of appeal or application to the Appellate Tribunal.
(1) An appeal under sub-section (2) of section 129A or an application under sub-section (4) of section 129D of the Act to the Appellate Tribunal shall be made in Form No. C.A.- 5.

FAQ on Service Tax Voluntary Compliance Encouragement Scheme, 2013

Please note the FAQ on Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES), which is introduced by Finance Bill 2013. We have prepared and summarized frequently asked question(s) in this regard for ease of understanding:
Query -What is VCES?
Reply- VCES is a new amnesty scheme introduced vide Chapter VI of the Finance Bill, 2013 (the Finance Bill), to encourage voluntary compliance by defaulter of Service Tax under Chapter V of the

Sunday, 14 April 2013

. 2(22)(e) Deemed Dividend: Share application money is not “loan or advance”

DCIT vs. Vikas Oberoi (ITAT Mumbai)





The assessee was a beneficial shareholder of two companies named Kingston Properties P Ltd. (KPPL), New Dimensions Consultants P Ltd (NDCPL) & R. S. Estate Developers P Ltd (RSEDPL). NDCPL & RESEDPL advanced various sums of money to KPPL towards “share application money”. However, some of the advances were returned by KPPL while some were adjusted towards allotment of shares. The AO held that the transaction was a “colourable device” and a “loan and advance” which fell within the ambit of s. 2(22)(e). The said “loan and advance” was assessed as “deemed dividend” in the hands of the assessee – beneficial shareholder – following Universal Medicare 324 ITR 264 (Bom). The CIT(A) reversed the AO. On appeal by the department to the Tribunal HELD dismissing the appeal:

Jakir Hossain Mondal (Calcutta High Court)

CIT vs. Md.




The assessee incurred expenditure of Rs. 31 lakhs on freight but did not deduct TDS thereon u/s 194C. The AO held that as there was a failure to deduct TDS, the expenditure could not be allowed as a deduction u/s 40(a)(ia). However, the CIT(A) allowed the claim on the ground that the freight charge was a part of the price of the goods and there was no contract between the assessee and the transporter. On appeal by the department, the Tribunal dismissed the appeal by relying on the Special Bench verdict in Merilyn Shipping 146 TTJ 1 (Viz) (SB) where it was held (by a majority) that s. 40(a)(ia) had no application to amounts that were already “paid” during the year but it was confined to amounts remaining “payable” as at the end of the year. On further appeal by the department, HELD reversing the Tribunal:

S. 32(1)(ii): Non-Compete Fee not eligible for depreciation or amortisation

Gujarat Glass Private Limited vs. ACIT (ITAT Mumbai)






The assessee acquired the business of manufacture of glass from Piramal Enterprises Ltd. It also entered into a non-compete agreement with Piramal Enterprises whereby it agreed to pay Rs. 18 crores for the seller agreeing not to carry on a competing business for a period of 18 years. The assessee claimed the said payment as a revenue deduction and in the alternate as a depreciable asset. The AO rejected both claims. The CIT(A) held that though the non-compete fee was not a depreciable asset, the amount paid for it was entitled to be amortized over the period of the agreement. The assessee filed an appeal before the Tribunal challenging the non-grant of depreciation

Friday, 12 April 2013

Advertisement charges paid to Google & Yahoo is not chargeable to tax in India

ITO vs. Right Florists Pvt Ltd (ITAT Kolkata)







The assessee, a florist, paid a sum of Rs. 30.44 lakhs to Google Ireland Ltd and Yahoo USA for online advertising. The AO held that the assessee ought to have deducted TDS and that as there was a failure, the expenditure was not allowable u/s 40(a)(i). This was deleted by the CIT(A) on the ground that Google and Yahoo did not have a PE in India. On appeal by the department to the Tribunal, HELD dismissing the appeal:


Due date for ST return - July to Sept 2012 extended to 30th April, 2013

The relevant Order is appended below.

 
 

F.No.137/99/2011-Service Tax
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
***
New Delhi, dated the 12th April, 2013
Order No.02/2013-Service Tax
In exercise of the powers conferred by sub-rule(4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st July 2012 to 30th September 2012, from 15th April, 2013 to 30th April, 2013.
The circumstances of a special nature, which have given rise to this extension of time, are as follows:
“Assessees have represented about difficulties in filing returns. While this aspect is being attended to, there should not be any delay and inconvenience to the assessees.”
Himani Bhayana
Under Secretary (Service Tax)
Central Board of Excise and Customs

Annual General Meeting can be held on Sunday

As per new circular of MCA vide letter no. 8/5(1669/65-pr dated 21-1-1963,
Annual General Meeting can be held on Sunday in certain cases

Case 1: Can an adjourned Annual General Meeting can be held on Sunday.

As per circular no 8/16(1)/61-pr, there is no contravention of sec. 166(2) if
the adjourned AGM comes to be accidentally held on a public holiday.
 

Whether for purpose of exemption u/s 10(23), collection of donation from students by educational body amounts to profit, and thus, calls for rejection of exemption application - YES: HC

THE issue before the Bench is - Whether for the purpose of exemption u/s 10(23), collection of donation from students by educational body amounts to profit, and thus, calls for rejection of exemption application. And the verdict goes against the assessee.
Facts of the case
Assessee is an educational society. It has filed the present writ petition against the order of the CCIT rejecting its application for exemption under Section 10(23C) (vi). It was submitted by the assessee's counsel that the CCIT having considered all relevant material documents such as the memorandum of bylaws of the Society and the rules and regulations attached thereto, in addition to, the books of accounts for the three years preceding the application, though observed that there was no monetary profits in the activity of imparting education, nevertheless, rejected the application on an unjustifiable ground that the collection of donations from pupils would amount to an act for the purpose of profit and therefore it did not fulfill the objectives mentioned in Section 10(23C)(vi).

Assessee eligible for benefit u/s 801A even if only part of Infrastructural Project work is executed by it

The view of the Larger Bench that the assessee had to be directly engaged in developing, maintaining and operating the facility and that there had to be a complete development of the facility and not just a part of it is contrary to the law laid down in ABG Heavy Industries 322 ITR 323 (Bom). The High Court held that The assessee did not have to develop the entire project in order to qualify for a deduction under s. 80-IA. The Parliament did not legislate a condition impossible of compliance.
In the case of ABG Heavy Industries (supra), the assessee therein had not developed the entire port but was only the supplier of cranes at the loading and unloading terminal at the said JNPT port. Thus assessee was not required to execute the entire project as observed by the Third Member. Another significant word used here is “owned”, which indicates that the infrastructure facility should be owned by a company so as to be entitled to deduction under this section. The work done by the

Thursday, 11 April 2013

S. 80-IA(4): Larger Bench verdict in B. T. Patil vs. ACIT 32 DTR 1 is not good law

.T. Patil & Sons Belgaum Constructions Pvt. Ltd vs. ACIT (ITAT Pune)




The assessee, a civil contractor, claimed deduction u/s 80-IA (4) in respect of the profits from infrastructure projects executed by it. The lower authorities rejected the claim on the ground that the assessee was a mere contractor and not a developer. Before the Tribunal, the Members of the Division Bench dissented and so the issue was first referred to a Third Member and then to a Larger Bench of three Members. The Larger Bench (32 DTR 1) rejected the assessee’s claim on the ground

Free Download e-TDS Return Software (TIN-NSDL) Ver. 3.6 & New Key Features.

TIN-NSDL has released Free e-TDS Return Software version 3.6 to make e-TDS Return from Fin. Year 2010-11 to onwards before a few days ago. This software is free download. Latest TDS Software (FVU) for Quarterly Returns e-TDS / e-TCS returns prepared for Asstt. Year 2013-14 & onwards (i.e. Forms 24Q, 26Q, 27Q and 27EQ) can be validated using this utility.

 
The e-TDS/TCS FVU setup file (e-TDS/TCS FVU.exe) comprises of three files namely:
  • TDS FVU Readme.rtf: This file contains instructions for setup of the e-TDS FVU.
  • e-TDS FVU Setup.exe: This is a setup program for installation of FVU.
  • These files are in an executable zip file. These files are required for installing the e-TDS/TCS FVU.
FVU for quarterly e-TDS/TCS statement pertaining to FY 2010-11 onwards
FVU for quarterly e-TDS/TCS statement up to FY 2009-10
Instructions for extracting the files are given in:

Whether when assessee fails to e-file TDS return for lack of verified PAN numbers although TDS deducted was deposited in time, such delay warrants penalty u/s 272(2)(k) - NO: ITAT

THE issue before the bench is - Whether when assessee fails to e-file TDS return for lack of verified PAN numbers although TDS deducted was deposited in time, such delay warrants penalty u/s 272(2)(k). And the verdict goes in favour of assessee.
Facts of the case
Assessee is a Nationalised Bank. In compliance to the show cause notice issued by the ACIT(TDS), the assessee sumbitted that it was a rural branch and TDS filing was done through the branch at Balasore, which was a distant place from the branch. TDS was deposited on due date. But, due to lack of adequate staff in comparison to the volume of business, sometimes delay

Exposure Draft : Limited revisions to Accounting Standard 20: Earnings per Share

Exposure Draft
Limited revisions to Accounting Standard 20:
Earnings per Share
The following is the Exposure Draft of the limited revisions to Accounting Standard (AS) 20, Earnings Per Share. The limited revisions are proposed primarily to address the conceptual lacuna in arriving at earnings for computing EPS. Section 78 of the Companies Act, 1956 allows various adjustments in the securities premium account, which are inconsistent with the Accounting Standards. For example, adjustments of preliminary expenses against securities premium is not in accordance with AS 26, Intangible Assets. Also, adjustments are made against securities premium and other reserves under various Court Schemes which are in deviation from the Accounting Standards. The proposed amendment will ensure that earnings are computed in accordance with Accounting Standards for EPS purposes.
The Board invites comments on any aspect of this Exposure Draft. Comments are most helpful if they contain a clear rationale and, where app licable, provide a suggestion for alternative wording.
Comments should be submitted in writing to the Secretary, Accounting Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi – 110 002, so as to be received not later than – May 10, 2013. Comments can also be sent by e-mail at edcommentsasb@ icai.org or asb@ icai.org or asb@ icai.in.
Paragraph 11 is amended. New text is underlined.
11. For the purpose of calculating basic earnings per share, the net profit or loss for the period attributable to equity shareholders should be the net profit or loss for the period after
(i) deducting preference dividends and any attributable tax thereto for the period; and
(ii) adjusting the amount in respect of an item of income or expense which is debited or credited to share premium account/reserves, that is otherwise required to be recognised in the statement of profit and loss in accordance with Accounting Standards.

Wednesday, 10 April 2013

ThyssenKrupp Industries India Pvt. Ltd vs. ACIT (ITAT Mumbai)

 


Transfer Pricing: Automatic RBI approval means transaction is at Arms Length Price



The ITAT had two consider two legal issues in the context of transfer pricing (i) whether if a royalty agreement falls within the ‘automatic approval scheme’ and is approved/ deemed to be approved by the RBI, the royalty can be treated to be at arms’ length just because it is approved/ deemed approved and (ii) what are the parameters to be applied while applying “Internal TNMM”. HELD by the Tribunal:

TDS/TCS/ITR Annual Return e-Filing Easy Steps for Asstt. Year 2013-14



Taxpayee wants easy and time save procedure to file annual return of TDS, TDS or ITR. In this regard we would like to share some easy steps to e-file annual return for assessment year 2013-14. This job is completed within 10-15 minutes. E-filing of Annual Return taxpayee are well know about its process, but a few steps are very important to e-filing of Annual Return of TDS/TCS/ITR Return.
STEP 1
Go to the new website of income tax i.e. https://incometaxindiaefiling.gov.in, register yourself (if taxpayee are not registered, not avail this facility) by PAN number and other details in order to set your login and password.

ICAI Guidance note on TP Report

ICAI has recently released the Guidance Note on Report Under Section 92E of the Income Tax Act, 1961 (Transfer Pricing). The law relating to transfer pricing is dynamic and the members of the Institute are getting acquainted with the practical implications of the provisions and rules relating to Transfer pricing.
The Finance Act, 2012 has made significant changes such as Definition of International Transaction,Advance Pricing Agreement (APA), Amendments relating to Penalties, etc.
The members of our profession are required to examine the information and documentation so maintained and expresses an opinion thereof in Form No.3CEB as to the compliance of the legal requirements. The report also requires opinion to be expressed about the truth and correctness of the particulars given in the annexure to Form No. 3CEB.
Guidance has been given with regard to how the Chartered Accountant should exercise due diligence while verifying international transactions in view of the increased scope of the definition of International Transactions.
For your benefit, the complete text of the Guidance Note along with its Appendices is available on ICAI website at URL: http://220.227.161.86/29526citax19183a.pdf
Complete text of the Guidance Note and its annexures can be downloaded free of cost from this URL.
The published (Book) 2013 Guidance Note is also available for sale at the Regional Council/ Branches.
Source- ICAI

Tuesday, 9 April 2013

Complete procedure to check Online EPF (Employee Provident Fund Account) Balance & FAQs.

Employee provident fund organization website(EPFO) has been provided online services to the EPF account holder. The employees provident fund deduct by the Employee as fixed amount from his monhtly salary and contribute to provident fund and employer needs to do it the same in the Employee's EPF Account.


Whether when sum held as FDs is in relation to share capital infused by non-resident parent for acquisition of land for setting up steel plant by its subsidiary, such income is to be treated as income from other sources - NO: ITAT

THE issue before the Bench is - Whether when the sum held as FDs is in relation to share capital infused by the non-resident parent for acquisition of land for setting up a steel plant by its subsidiary, such income is to be treated as income from other sources. And the verdict goes against the Revenue.
Facts of the case
Assessee, an Indian Company is a wholly owned subsidiary of POSCO, Korea of POSCO Group, of international repute. POSCO Group had specialized knowledge in steel making and were desirous to have a Port based Steel plant in the state of Orissa, India. POSCO– India Private Limited is a company formed to undertake a Greenfield project for setting up an Integrated Steel Plant in Orissa. POSCO, Korea entered into a MOU with the Govt. of Orissa to set up a 12 million Ton p.a (MTPA) Integrated Steel Plant with a captive port with handling capacity of 30-35 MTPA and captive mines of 20 MTPA capacity. The estimated Project Cost is around USD 11739

Whether when assessee had not filed any objections to valuation report at proceedings stage or in remand proceedings before assessing authority, objection to the same can be filed before Tribunal for first time - NO: ITAT

THE issues before the Bench are - Whether when the assessee had not filed any objections to the valuation report at the proceedings stage or in the remand proceedings before the assessing authority, the objection on the same can be filed before the Tribunal and Whether when the assessee has not produced any evidence for payment of brokerage, the deduction for the same can be allowed while computing sales consideration. And the verdict goes against the assessee.
Facts of the case
Assessee is an individual. Its assessment had been reopened u/s. 147 on the basis that the

FAQ on Re-issue of Income Tax Refund

This Article deals with FAQ related to non receipt of Income tax Return due to Change in Address, Bank Details, Home Locked, Wrongs details of bank in ITR etc. In these cases assessee can request for re-issue of Income Tax Refund and procedure for the same is given below.
I have e-Filed my Income Tax Return but not received my refund till now.
Answer: If you have not received refund till date, it could be due to the following reasons:
1. Your Income Tax Return has not been processed yet. Once the return is processed you may receive a Refund (if determined). To check the status of your e-Filed IT Return, LOGIN and GO TO ‘My Account’ → ‘My Returns/Forms’.
2. Your Income Tax Return has been processed but no refund is determined.

Monday, 8 April 2013

Transfer Pricing: ALP should be determined on segment-wise profits & not at an entity level. Adjustment cannot be made to the entire entity turnover/ profits






The assessee entered into several international transactions with its AE and claimed that there were at arm’s length on the basis of a segment-wise TNMM analysis for each of them. The TPO rejected the claim on the ground that the segment-wise accounts were not audited. He adopted an entity method approach for purposes of determining the ALP. However, while rejecting the segmental analysis undertaken by the assessee, the TPO accepted 4 segments of the assessee’s operations and identified

How to verify online your PAN ?

To enable eligible Entities verify Permanent Account Numbers (PANs), Income Tax Department (ITD) has authorized NSDL e-Governance Infrastructure Limited (NSDL) to launch an online PAN verification service for verification of PANs by authorized entities.
 

 

Latest procedure to download Form 16/16A in bulk quantity by Ver. 1.2L.

It is recommended that deductors finding difficulty in generating From 16 / 16A PDF on account of large number (around 1000) of TDS certificates (Form 16 / 16A) are advised to download PDF Converter Utility V1.2L again

Deductor can download TDS Certificate (Form 16 (Part A) and Form 16A) from TRACES. The file will be provided in text format and will contain certificate details for all requested PANs. Text file is password protected and password will be ''.

 
Deductor will have to convert the text file into PDF using TRACES PDF Generation Utility. This utility will convert the text file into individual PDFs for each PAN. The same utility can be used to convert text file for Form 16 / 16A.

TDS Deductor is not treated as Assessee in default if Deductee has paid the Tax


It may be noted that Section 156 has been amended so as to incorporate the following proviso only:

“Provided that where any sum is determined to be payable by the assessee or by the Deductor under sub- section (1) of section 143 or sub-section (1) of section 200A, the intimation under those section shall be deemed to be a notice of demand for the purpose of this section.”
The insertion of the proviso has served only one purpose – that is, of treating the intimation itself as a notice of demand. Forgetting the amendment/proviso, the first part of the section itself empowers the Assessing Officer to issue a notice of demand where any interest, tax, penalty etc is due from the assessee and it has nothing to do with the amendment. In short, even though the Intimation may not be treated as Notice of demand for the purpose of section 156, there is nothing to bar the Assessing Officer from issuing the Demand Notice u/s 156.

How tp update contact details in TAN Registration

  • Update of TAN registration details is allowed on successful logging to TAN account.
  • For updating the TAN registration details click on “Update Profile”.
  • Under ‘update profile’ user can update demographic and contact details including e-mail ID (s)
  • On successful update of TAN registration details, an alert e-mail is sent intimating updates have been successfully processed at TIN.
  • Subsequent of e-mail ID (s) update (if any), the same should be verified, for TAN account to be active.
  • Update of e-mail ID (s)
    • On update of e-mail ID, an e-mail containing the link is sent at updated e-mail ID for verification of the updated e-mail ID.
    • Click on the link and provide TAN and TAN registration no.
    • On successful validation of TAN and TAN registration no., e-mail ID will be considered as verified.
    • If all the verified e-mail ID’s are updated, then the TAN account will be deactivated, i.e., user will not be allowed to request for any file. However, user will be allowed to update the profile on login to TAN account, in case incorrect e-mail was updated.
    • If the TAN account is deactivated on account of update of e-mail ID, then the same can be activated by clicking the link received at the updated e-mail ID and verification of TAN and TAN registration no.
  • Update of mobile no.
    • On update of mobile no.,
      • An SMS containing six character verification code is sent at the updated mobile no. and
      • An e-mail containing link for verification of mobile no., is sent at registered e-mail ID (s)
    • Click on the link and provide TAN, TAN registration no. and six character verification code (received by SMS) for verifying the updated mobile no.
  • Sunday, 7 April 2013

    Taxation on various financial instruments. Explained in 5 points.

    Tax in india


    There are various financial instruments that people invest in today. Each of these financial instruments offer different returns on the capital amount invested. Accordingly it is important to note that the taxability of the return/gains on financial instruments differ from one another.

    Whether tax exemption granted by State for promoting capital investments in multiplex units, can be to be treated as revenue in nature, merely because assessee has received funds after commencement - NO: HC

    THE issues before the Bench are - Whether tax exemption granted by the State Governments under a specified scheme for promoting capital investments in the multiplex units, can be considered as revenue in nature, merely because the assessee has received the funds after commencement of its operations and Whether provision of gratuity liability of a company is required to added back to its book profit u/s 115JB, although the provision for gratuity is made on the basis of actuarial calculations. And the answers go in favour of the assessee.
    Facts of the case
    Tax exemption grant from State Government - capital or revenue receipt

    Online Income Tax Forms

    We are providing below the list of 30 Income tax Forms which can filed online on the Income tax E-Filing website namely https://incometaxindiaefiling.gov.in/e-Filing/ . These Forms includes Tax Audit Reports, transfer Pricing Audit Reports, MAT Computation Report, Special Audit Reports , Audit Reports which are required to be submitted to claim exemption or deductions under the Income tax Act, 1961 etc. Some of these forms may be submitted in offline mode , while some can be submitted in online mode.
    Please Note:

    Friday, 5 April 2013

    ITAT Explains Transfer Pricing Law On Loan Transactions At Low Interest

    Transfer Pricing: ALP of loan transaction has to be determined as per CUP & LIBOR



    The assessee, an Indian company, gave a loan of $ 10,50,000 to its USA based Associated Enterprise (AE) at 4% rate of interest. The TPO adopted the Indian company as the tested party and held that the comparable rates for benchmarking the interest had to be selected from the Indian domain and the rate that the assessee would have earned by giving loans in the Indian market had to be taken as the ALP. It was also held that an addition to the interest rate had to be made for the risk factor. The interest rate was determined at 17.25%. On objection by the assessee, the DRP held that the ALP had to be taken at the PLR of RBI being 13.25%. On appeal by the assessee to the Tribunal, HELD reversing the TPO & DRP:

    No Revival Of PSU Litigation After COD Rejection: Cabinet Secretariat

     


    The Cabinet Secretariat has issued an important Office Memorandum dated 04.02.2013 pointing out that after the disbanding (pursuant to the judgement of the Supreme Court in Electronics Corporation vs. UOI 332 ITR 58(SC)) of the Committee on Disputes (“COD”) set up to give clearance for litigation between Govt. Departments and PSUs, an attempt had been made by some Govt. Depts/ PSUs to revive the litigation even where the COD had earlier rejected clearance. The Cabinet Committee has now directed that cases where the COD had earlier rejected clearance for litigation should NOT be revived. It has also threatened that violations will be viewed seriously and may attract disciplinary action

    Tax Saving Tips Other than 80C

    It's that time of the year again when one needs to begin calculating their tax liabilities. However, before you do so, remember to analyze the various sections of tax deductions under the Income Tax Act as tax planning does not end with Section 80C. (Calculate your tax liability here)

    80D:
    Tax deduction under section 80D qualifies for mediclaim policies. The premium, which is paid for medical insurance policy for self and family members to protect them from sudden medical expenses, comes under this section. The maximum amount allowed for exemption annually for self, spouse and dependent parents/children is Rs. 15,000. In case of a senior citizen, the maximum amount extends up to Rs. 20,000. If you are paying the premium for your parents (whether dependent or not), you can claim an additional maximum deduction of Rs. 15,000.

    Vacancy allowance- Use caution



     


    In an advocate’s case in Vivek Jain v. Assistant Commissioner of Income-tax (2011) 337ITR74 the Assessing Officer computed the annual let out value (ALV) of a vacant house under section 23(1)(a) , on the basis of rent received in the earlier years. In this case property was not let out during the accounting year and in the earlier year also the property was let out only for a period of 15 days . The annual value was thus estimated at Rs. 1,44,000. In this case the Tribunal as well as the AP High Court held that clause (c) of s.22(1) was not inserted to take out from its ambit properties held by the owner for self-occupation inasmuch as section 23(2)(a) provides for such an eventuality. It is only to mitigate the hardship faced by an assessee, and as clause (b) does not deal with the contingency where the property is let and, because of vacancy, the actual rent received or receivable by the owner is less than the sum referred to in clause (a), was clause (c) inserted. In cases where the property has not been let out at all, during the previous year under consideration, there is no question of any vacancy allowance being provided thereto under section 23(1)(c) of the Act.

    Whether retrospective amendment can be applied only to cases whose assessment or appellate proceedings are still pending - NO: Delhi HC

    THE issues before the Bench are - Whether when the Supreme Court pointed out the inadequacy of the existing clause (c) of Section 115JB to cover a provision for the diminution in the value of any asset, the legislatative action to plug the lacuna by inserting clause (i) which permitted an upward adjustment of the book profit by the provision made for diminution in the value of any asset with retrospective operation, is unconstitutional; Whether the principle that fiscal benefits specifically provided under the Income Tax Act to foster growth in a sector, cannot be revoked retrospectively, be compared with the provisions of Minimum Alternate Tax; Whether retrospective amendment can be applied only to cases whose assessment or appellate proceedings are still pending and Whether a completed assessment, if reopened on genuine

    Thursday, 4 April 2013

    Transfer Pricing: No notional interest addition for delayed payments by AE

    Evonik Degussa India P. Ltd vs. ACIT (ITAT Mumbai)






    The assessee raised invoices on its Associated Enterprise (AE) and gave 30 days credit for payment. As there was delay by the AE in making payment beyond the stipulated credit period, the TPO held that the assessee ought to have charged interest at the rate of 1% per month. A notional addition towards the said interest was made. This was upheld by the DRP. On appeal by the assessee to the Tribunal, HELD reversing the AO & DRP:



    The assessee has no borrowings and so there is no interest liability. Even if the payments have been made by the AE beyond the normal credit period, there is no interest cost to the assessee. Moreover, there is no such agreement whereby interest is to be charged on such a delayed payment. The assessee does the billing on a quarterly basis and accordingly, the payment is being received. Therefore, the delay is not wholly on account of late payment by the AEs only. Moreover, the T.P. adjustment cannot be made on hypothetical and notional basis until and unless there is some material on record that there has been under charging of real income. Consequently, an addition an account of notional interest relating to alleged delayed payment in collection of receivables from the A.Es is uncalled for



    See also Nimbus Communication 139 TTJ 214 (Mum) & Patni 141 TTJ 190 (Pune) where the issue is discussed in detail. Contrast with Logix Micro 136 TTJ 366 (Bang)

    How to Rectify Errors in PAN CARD

    If the pan applicant having PAN card with an error viz. Change in Applicant Name, Change in Father's Name, Change in Date of Birth or any other (Spelling Mistake) etc. in this condition PAN Applicant have to make an application in “Request for New PAN Card or/and Changes or Correction in PAN data” and have to attach the documents in support of your submission. The form can be downloaded from the websites of UTI Technology Services Ltd (UTITSL), National Securities Depository Ltd (NSDL), or the I-T department [www.utitsl.co.in, www.tin-nsdl.com or www.incometaxindia.gov.in]. You can tick in tick in the father’s name box on the left margin of the form. You have to attach color stamp-sized photographs on the form. The form can be submitted at PAN application centers of UTITSL and NSDL, the addresses of which are available at the above mentioned website

    Rates of Gold and Silver as on 31.03.2013

    We needs rates of Gold and Silver for Wealth Tax Valuation Purposes as on 31.03.2013 to correctly value gold and silver as on 31.03.2013 but since no trading was taken place in Gold and Silver on 31.03.2013 so we will take the rate of last trading day (30.03.2013) of Financial Year 2012-2013 as the rate on 31.03.2013.
    Year end closing rates of Gold and Silver
    Closing rates of Gold 24 Carat 995 as on March 30, 2013 – INR 29,610
    Closing rates of silver as on March 30, 2013 – INR 54,030

    CBDT issues circulars on Rangachary committee recommendations

    The Central Board of Direct Taxes (“CBDT”) has recently issued two Circulars on certain transfer pricing (“TP”) issues. These Circulars are based on the Rangachary Committee recommendations which were presented on September 14, 2012.


    The Circulars deal with the following aspects: