Friday, 29 November 2013

India Taxes- Due Date Alert for the month December 2013



Sr No
Due Date
Related to
Compliance to be made
1
05.12.2013
 
Service Tax
Payment of Service Tax for the Month of November 2013
2
07.12.2013
 
TDS/TCS
(Income Tax)
·        Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of November 2013.
 
·        Deposit TDS from Salaries  deducted during the month of November 2013
 
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of November 2013, if any
 
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of November 2013, if any
3
15.12.2013
 
Income Tax
Payment of Third installment of advance tax (75%) for corporate
4
20.12.2013
 
VAT
Payment of VAT & filing of monthly return for the month of November 2013
5
20.12.2013
 
STPI
Filing of Softex Form for the month ended November 2013

Whether doctrine of 'source of source' and 'origin of origin' can be applied universally - NO, not without reference to factual matrix: Delhi HC

THE issues before the Bench are - Whether it is the duty of Revenue to adduce evidence to show from what source, income is derived; Whether submission of PAN is a sufficient compliance of proving genuineness of an assessee; Whether the doctrine of "source of source" and "origin of origin" can be applied universally and Whether creditworthiness of an assessee can be proved by mere issue of a cheque or by furnishing a copy of statement of bank account. And the verdict goes in favour of Revenue.
Facts of the case

Issue of Default Demand for e-TDS/TCS return 24Q4 by TRACES.

Quarterly statement of deduction of tax under sub section (3) of section 200 of the Income tax Act, 1961 in respect of Salary for the quarter ended June/September/December/March i.e. 24Q1, 24Q2, 24Q3 and 24Q4. Every person, being a person responsible for deducting tax under Chapter XVII-B shall, in accordance with the provisions of sub-section (3) of section 200, deliver or cause to be delivered to the prescribed income-tax authority or to the person authorized by such authority, quarterly statement which is in Form No. 24Q in respect of deduction of tax at source under sub-sections (1) and (1A) of section 192.

ITAT Explains Law For Determining Trademark Royalty ALP

Cadbury India Ltd vs. ACIT (ITAT Mumbai)
Transfer Pricing: ALP of royalty for trademark usage and technical know-how fee can be determined as per TNMM. Approval of RBI & Govt. means payment is as at arms length

Amount received by partner on his retirement is not chargeable to tax as capital gains

CIT vs. Riyaz A. Sheikh (Bombay High Court)
 
The assessee, a partner in a firm, received Rs. 66 lakhs over and above his capital contribution on his retirement from the firm. The assessee claimed that the said sum was a capital receipt not chargeable to tax. However, the AO held

ITAT Upset At Roughneck Recovery Measures Of AO


Maharashtra Housing & Area Development Authority vs. ADIT (ITAT Mumbai)
AO’s action of recovering outstanding taxes without affording reasonable time to take remedial steps is a misuse of powers and a gross violation of the directions laid down by the Courts. AO has to refund the taxes recovered

S. 37(1): Expenditure on acquiring master copy of software subject to obsolescence is deductible as revenue expenditure

Oracle India Pvt. Ltd vs. CIT (Delhi High Court)
 
The assessee entered into a license agreement with Oracle Corp under which it acquired a non-exclusive & non-assignable right to duplicate software products which were owned by Oracle Corp and to sub-license the same to parties in India. The assessee paid recurring royalty of 30% for the said right. In addition to the royalty, the assessee periodically paid an amount towards “expenditure on i

Payments for software license is not royalty: Delhi High Court

 
The Delhi High Court has delivered an important ruling in the case of Infrasoft Ltd (“the taxpayer”), holding that payments to a non-resident for software licenses are not in the nature of royalty, and hence, would be liable to tax in India only if the non-resident has a Permanent Establishment (“PE”) in India.

Thursday, 28 November 2013

Free Download Latest e-Tds/TCS Return "RPU" and "FVU" utility for Asstt. Year 2014-15

These utilities have been developed by NSDL for small deductors/collectors and returns exceeding 20,000 deductee records should not be prepared using this utility. NSDL does not warrant any accuracy of the output file generated using any of these utilities. All users are advised to use latest FVU and check the format level correctness of the file before submitting the same to TIN-FC. In case FVU reports any error in the file, then the users are advised to rectify the same. Further, deductors/collectors are advised to ensure that the e-TDS/TCS returns are filed before the last date

How to Renewal or Updation of Digital Signature Certificate (DSC) ?

When Digital Signature Certificate of organization expires or organization want to change the DSC, then organization is required to put up a request for renewal or updation of DSC with NSDL. The following documents are requisite for renewal / updation of Digital Signature Certificate (DSC):

Whether when Indian subsidiary turns its business losses into profit with financial aid coming from parent, such payment is to be treated as capital subsidy - YES: High Court

THE issues before the Bench are - Whether when the Indian subsidiary turns its business losses into profit with the financial subsidy coming from the parent, such payment is to be treated as capital subsidy; Whether in case assessee is obliged to utilize subsidy for repayment of term loan undertaken for setting up new units or expansion of existing business, it is capital in nature and Whether assistance granted in the early phase of setting up of a business concern, can be considered as an aid of capital nature. And the verdict goes against the assessee.
Facts of the case

Amount received by partner on his retirement is not chargeable to tax as capital gains

CIT vs. Riyaz A. Sheikh (Bombay High Court)
 
The assessee, a partner in a firm, received Rs. 66 lakhs over and above his capital contribution on his retirement from the firm. The assessee claimed that the said sum was a capital receipt not chargeable to tax. However, the AO held that the retirement had resulted in a relinquishment of his pre-existing rights in the partnership firm and, therefore, the same was in the nature of capital gain on transfer of

Wednesday, 27 November 2013

Conditions for Claim of Deduction of Interest on Housing Loan under section 24(b) for Asstt. Year 2014-15

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:

Whether when assessee purchases shares at a price lower than quoted market price, there is any provision in I-T Act to tax the deemed difference between the two - NO: Delhi HC

THE issue before the Bench is - Whether when the assessee purchases shares at a price lower than the quoted market price, there is any provision in the I-T Act to tax the deemed difference between the two. And the ruling partly goes against Revenue.
Facts of the case

Whether legal heir is automatically deemed to be assessee upon death of original assessee

THE issues before the Bench are - Whether penalty can be levied on the deceased assessee, when the legal heir was never brought on record; Whether the penalty can be levied on legal heirs when inaccurate return of income was filed by the deceased during his life time and Whether the LR is automatically deemed to be the assessee upon the death of the original assessee. And the verdict goes in favour of the assessee.
Facts of the case

High Court allows depreciation on non-compete fees

 
The High Court of Madras (‘HC’) in the case of M/s Pentasoft Technologies Ltd v. DCIT [1]has held that non-compete fee paid by taxpayer, as a part of bundle of other intangible rights obtained on purchase of a business division, is eligible for depreciation under section 32of the Income-tax Act, 1961 (‘the Act’).

Delhi High Court reiterates distinction between copyright right and copyrighted article in respect of software transactions

Tax Alert which summarizes a recent decision of the Delhi High Court (HC) in the case of Infrasoft Ltd.(Taxpayer). The issue addressed was whether consideration received by the Taxpayer for grant of license for use of customized software is “royalty” within the meaning of India-US Double Taxation Avoidance Agreement (DTAA). The HC held that the license granted by the Taxpayer is limited to those necessary to enable the licensee to operate the program. Hence, there is no transfer of copyright or right to use the copyright, but is a case of mere transfer of a copyrighted article. Copyright or right to use copyright is distinguishable from sale consideration paid for “copyrighted” article. The consideration is for purchase of goods and is not royalty under the DTAA.

S. 9(1)(vi)/ Article 12: Equipment rental is taxable as “royalty” even if payer does not have control. The retrospective insertion of Explanation 5 to s. 9(1)(vi) is purely clarificatory

Poompuhar Shipping Corporation Ltd vs. ITO (Madras High Court)
 
The High Court had to consider the following issues in the context of a bare-boat charter of a shipping vessel from a foreign party, the income whereof was held assessable as “royalty” u/s 9(1)(vi) & Article 12 in the hands of the foreign party: (i) whether the expression ‘use or right to use‘ in clause (iva) of Explanation 2 to s. 9(1)(vi) & Article 12 of the DTAA requires that there should be a “transfer of effective control for use” in favour of the lessee?, (ii) what is

Tuesday, 26 November 2013

Non-exclusive & non-transferable license to use customized software not taxable as “royalty” under Article 12 of India-USA DTAA

DIT vs. Infrasoft Ltd (Delhi High Court)
 
The assessee, a USA company, set up a branch office in India for the supply of software called “MX”. The software was customized for the requirements of the customer (not “shrink wrap”). The Indian branch imported the software package in the form of floppy disks or CDs and delivered it to the customer. It also installed the software and trained the customers. The AO & CIT(A) held that the software was a “copyright” and the income from its license was assessable as “royalty” under Article 12 of the India-USA DTAA. On appeal by the assessee,

ITAT duty-bound to deal with all judgements cited during hearing of appeal

Dattani& Co vs. ITO (Gujarat High Court)
 
The assessee filed an appeal against an addition for alleged bogus purchases/sales which was dismissed by the Tribunal. The assessee filed an appeal before the High Court claiming that he had relied on the judgement in

Whether provisions of deemed dividend extend to related parties also - NO: HC

THE question before the Bench is - Whether the provisions of deemed dividend extend to related parties also. And the answer is NO.
Facts of the case

Assessee, a company, had filed ROI declaring a total income of Rs.9,88,598/-. During the search at the office of M/s. Goa Golf Club Pvt. Ltd., from the ledger extract, it was found that M/s. Goa Golf Club Pvt. Ltd., advanced loan to M/s. Brito Amusement Pvt.Ltd. It was further noted that Dr. William Britto and Mrs. Muriel Britto, were the share holders of M/s. Goa Golf Club Pvt. Ltd.,, holding 75% and 25% shareholding therein. It was further found that the said

notificati​on - reduction of threshold limit for mandatory e-payment of service tax to Rupees One lakh from ten lakh

Government of India
Ministry of Finance
(Department of Revenue)
NOTIFICATION NO
16/2013 - ST., Dated: November 22, 2013
In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 ( 32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-
1. (1) These rules may be called the Service Tax Third ( Amendment) Rules, 2013.
(2) They shall come into force on the 1 st day of January, 2014.
2. In the Service Tax Rules, 1994 , in rule 6, in sub-rule (2), in the proviso, for the words "rupees ten lakh" , the words "rupees one lakh" shall be substituted.
F.No : 137/116/2012- Service Tax

circular - The Service Tax Voluntary Compliance Encouragem​ent Scheme - reg.

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Tax Research Unit
North Block, New Delhi
CIRCULAR NO
174/9/2013-ST., Dated: November 25, 2013
To,
Chief Commissioners of Central Excise and Customs (All),
Director General (Service Tax), 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).
Madam/Sir,
Sub: The Service Tax Voluntary Compliance Encouragement Scheme - reg.
The Service Tax Voluntary Compliance Encouragement Scheme (VCES) has come into effect f

Issue related to Commercial training and coaching services

Facts:
The Appellants provided "Commercial Training & Coaching Services" and composed and furnished course materials relevant to the coaching to its students. Relying upon Notification NO.12/2003-ST dated 20-06-2003 granting exemption to the value of goods or materials sold, the Appellants separately raised an invoice of the materials sold and did not charge service tax on the same.

Friday, 22 November 2013

Whether interest paid on delayed payment of Custom duty is in nature of duty only and such payment is allowable deduction - YES: ITAT

THE issues before the Bench are - Whether expenses other than the one related to maintaining of the corporate identity of the company can be allowed when the assessee had closed down the business; Whether interest paid on delayed payment of Custom duty is in the nature of duty only and such payment is allowable and Whether any expenditure incurred in relation to a new project which is ultimately abandoned, is to be construed as capital in nature. And the verdict goes against the assessee.
Facts of the case

Business Support Service vs. Renting of immovable property service - serious triable issue - complete waiver of pre-deposit.


2013 (31) STR 270 (Born) Welspun Syntex ltd vs. Commissioner of Central Excise and Custom
Facts:
Appellant entered into a conducting agreement for use of its plant, machinery & equipments by the other company for consideration. The department contended that tax was leviable on the same under "support services of business or commerce". The Appellant contended that the said activity became taxable with effect from 01-06-2007 under the category of "Renting of Immovable Property Service" and discharged.
Held:
The Hon. High Court allowing the appeal held that the appellant made out prima facie case on merits raising a serious triable issue and hence it is eligible for complete waiver of pre-deposit.

The Ministry of Corporate Affairs issues clarification on Section 372A of the Companies Act, 1956


The Companies Bill 2012 which received President’s assent on August 29, 2013 was published in the Official Gazette of India on August 30, 2013 and thereby became the Companies Act, 2013 (“the Act”). The Ministry of Company Affairs (“MCA”) vide their subsequent notification appointed September 12, 2013[1](“the Notification”) as the date of bringing into effect 98 Sections of the Act. Amongst other Sections, the Notification brought into effect Section 185 of Act which dealt with loan to directors, etc and the corresponding Section 295 of the Companies Act, 1956 (“the 1956 Act”) ceased to have effect[2]from September 12, 2013.
Post the coming into effect of 98 Sections of the Act, certain doubts were raised regarding the applicability of Section 372A of the 1956 Act given the provisions of the Section 185 of the Act and non‑enactment of Section 186 of the Act. The MCA vide its circular dated November 19, 2013[3]has clarified that Section 372A of the 1956 Act dealing with inter-corporate loans and investments, which inter aliaexempts grant of loan/investments by a holding companies to their wholly owned subsidiaries, shall continue in force until Section 186 (dealing with inter-corporate loans and investments) of the Act is notified.

Thursday, 21 November 2013

Whether when Revenue finds incriminating materials during Survey Operation and also a Search & Seizure, the Survey materials have to be dealth with independently - YES: HC

THE issue before the Bench is - Whether when the Revenue finds incriminating materials during Survey Operation and also a Search & Seizure, the Survey materials have to be dealth with independently. And the answer goes against the assessee.
Facts of the case

Madras HC rules on depreciation of non-compete fee paid

 
This tax alert summarizes a recent ruling of the Madras High Court in the case of Pentasoft Technologies Ltd. (Taxpayer) on the issue of availability of depreciation on non-compete fee. Considering the facts of the case, the HC held that non-compete fee paid to the transferor under a composite agreement, inter alia, involved transfer of trade names, trademarks, service marks, patents, copyrights, confidential information, computer programs and all other intangible property rights of software, together with associated goodwill (specified intellectual property rights (IPRs)) of the identified business division and, hence, is eligible for depreciation under the ITL. Furthermore, the HC held that the non-compete clause in the composite agreement should be read as a supporting clause strengthening the transfer of specified IPRs of the business transferred under the agreement.
Admissibility of depreciation on payment towards non-compete fee is a contentious issue. In this case, the Taxpayer paid non-compete fee to the transferor under the composite agreement for restraining him from entering into similar business for ten years. The HC granted depreciation on non-compete fee by treating it as strengthening or supporting the primary transfer of various IPRs rather than giving rise to an independent commercial right by itself.

Madras High Court rules payment for dedicated bandwidth is royalty

 
This tax alert summarizes a recent decision of the Madras High Court (HC) in the case of Verizon Communications Singapore Pte. Ltd. (Taxpayer). The issue was whether the payment made by the Indian customers to the Taxpayer for providing bandwidth/telecom services by way of International Private Lease Circuit is taxable as “royalty”. The HC confirmed the Tribunal’s ruling and held that such payments amount to “royalty” both under the Indian Tax Laws (ITL) and the Double Taxation Avoidance Agreement between India and Singapore.
The issue of whether the payment for bandwidth services is royalty has been a subject matter of tax controversy in India. The ITL was amended in 2012 to clarify with retrospective effect to expand the scope of royalty taxation. This decision of the Madras HC has opined that in view of this amendment, the earlier decisions in favor of taxpayers no longer hold good. In arriving at its conclusion, the HC held that it is difficult to accept the case of the Taxpayer that the nature of transaction is only that of service and that the transaction does not involve use of equipment. Further, the HC has held that even if the payment is not considered as equipment royalty, it should be taxable as process royalty, with no DTAA relief available.
One may recall that the Delhi HC in the case of Nokia Networks OY had observed that the retroactive amendments to the definition of “royalty” cannot be read into a DTAA.

Sec 10 A Circular

SECTION 10A, READ WITH SECTIONS 10AA & 10B OF THE INCOME-TAX ACT, 1961 - FREE TRADE ZONE - DIRECT TAX BENEFITS - CLARIFICATION ON ISSUES RELATING TO EXPORT OF COMPUTER SOFTWARE


INSTRUCTION NO. 17/2013 [F.NO.178/84/2012-ITA.I], DATED 19-11-2013


A clarificatory Circular No. 01/2013, dated 17-1-2013 (hereinafter referred to as 'Circular') was issued by CBDT to address various contentious issues leading to tax disputes in cases of entities engaged in export of computer software which are availing tax-benefits under sections 10A, 10AA and 10B of the Income-tax Act, 1961.

2. Instances have been reported where the Assessing Officers are not following the clarifications so issued and are taking a divergent view even in cases where the clarifications are directly applicable.

3. The undersigned is directed to convey that the field authorities are advised to follow the contents of Circular in letter and spirit. It is also advised that further appeals should not be filed in cases where orders were passed prior to issue of Circular but the issues giving rise to the disputes have been clarified by the Circular.



Handling charges collected from the buyers of cotton waste towards packing and bundling - Prima facie not taxable as cargo handling service

The applicant sends cotton for conversion into cotton yarn to their job worker. During such processing cotton waste is generated. The applicant sends packing material for collecting such waste which is collected and packed and bundled and kept by the job workers for sale as per instruction of the applicant. The company charges some consideration from the buyers of such waste billing it as "handling charges". Revenue was of the view that this activity was chargeable as "Cargo Handling Service" and on adjudication and after first appeal, a total tax amount is confirmed against the applicant.
Held:
It was held that the activity is done for appellant's own benefit and it is done within the factory, is out of the purview of Cargo Handling Service. Therefore, this appeal is admitted without any pre-deposit
 
M/s KG DENIM LTD Vs CCES -2013-TIOL-1656-CESTAT-MAD.

Wednesday, 20 November 2013

Service Tax Case Law Update - October 2013


 

1.1  Malabar Gold Pvt. Ltd. vs. CTO. Kozhikode 2013 (32) STR 3 (Ker.)

 

The appellant in this case trading in jewellery under its Trade Mark “Malabar Gold”. They have received Royalty from franchisees for use of Trade Mark and Service Tax paid on it under category of Franchise Service. Under the agreement, the franchisee was licensed to use Trade Mark and transfer of its use was not to exclusion of the appellant, who retained right to transfer it to others also. The appellant having other franchisees with same type of agreement with other also. The agreements

Whether when assessee makes capital gains on sale of property, there is any bar u/s 158BB(4) to claim deduction of carried forward losses pertaining to house property - NO: HC

THE issue before the Bench is - Whether when the assessee makes capital gains on sale of property, there is any bar u/s 158BB(4) to claim deduction of carried forward losses pertaining to house property. And the answer goes in favour of the assessee.
Facts of the case

The assessee and his wife were partners of a firm known as M/s.Century Complex at Manjeri. There was a search of the premises of the appellant. The firm had filed its returns of income for

Failure to comply with the criterion necessary to represent the matter before the Tribunal, in time, renders appeal liable for dismissal

Paresh S. Shah vs. ITO (ITAT Mumbai)
 
The assessee filed an appeal before the Tribunal but repeatedly sought adjournments. He also did not file a letter of authority authorizing his CAs to appear in the appeal. The Tribunal dismissed the appeal on the ground that the assessee is not interested in pursuing the appeal. Thereafter, the assessee filed a Miscellaneous Application seeking restoration of the appeal. The Tribunal

Clarification with regard to applicability of provision of Section 372A of the Companies Act, 1956.

Consequent to notification of Sec 185 of Companies Act 2013 (dealing with loans to directors) and which is corresponding to Section 295 of the Companies Act, 1956, MCA has received several representations. Section 186 of the Companies Act, 2013 is yet to be notified. MCA has now clarified that Sec 372A of the Companies Act 1956 (dealing with inter-corporate loans) continues to remain in force till Sec 186 of Companies Act 2013 is notified. Text of the Notification is as follows :-

General Circular 18/2013,

Dated: 19/11/2013

No. 17/202/2013-CL-V

Sub: – Clarification with regard to applicability of provision of Section 372A of the Companies Act, 1956.

Sir,

This Ministry has received number of representations consequent upon notifying Section 185 of the

Sale was found genuine when enquiries from stock exchange directly –Denial of exemption on the ground that purchaser was engaged in the fraudulent billing activities was not justified .



Assessee-HUF derived long-term capital gain from sale of shares of two companies and such capital

gains was claimed as exempt under section 10(38). During the assessment proceedings the assessee

filed all the details. The AO being highly suspicious, enquired from BSE regarding genuineness of

purchases of these shares through M/s Vijay Bhagwan Das and BSE vide letter dt. 16

th April, 2010

Tuesday, 19 November 2013

Accrual of Income from employment could not be taxed in India

Society formed with an object to provide accommodation and facilities for marriages and other auspicious functions to members of a particular community - cannot be regarded as society formed with charitable purpose

The assessee a society, registered under the Tamil Nadu Societies Registration Act, 1975, filed an

application for registration u/s. 12AA. The DIT(Exemptions) observed that the assessee-society was

formed to benefit only a particular community and did not fall within the purview of section 2(15).

Conducting coaching classes and campus placements for a fee by the Institute of Chartered Accountants of India cannot be held as business



The assessee institute was constituted under the ICAI Act, to regulate the profession of Chartered

Accountants in India. Its activities included imparting education in the field of accountancy and

conducting coaching classes. Assessee also charged fees for holding interviews with respect to

What is Provision (under IFRS) and What is the Feature?

What is provision? IFRS, the IAS 37 to be exact, defines provision as a liability of uncertain timing or amount. It means that, under the standard, those liabilities for which amount or timing of expenditure is uncertain, are deemed to be provisions. While liability, in the same standard, is defined as: present obligation as a result of past events settlement and is expected to result in an outflow of resources—or payment, in practically manner.
The key principle, on the standard clearly mandates that, a provision should be recognized only when there is a liability (see the above definition about liability.)
If you’re around for quiet long in the accounting field, you may have found that so many reserves in

Sale Value of Carbon Credit is Capital Receipt

Carbon credit (CC):
A CC is defined as the unit related to reduction of one tones of CO2 (carbon dioxide) emission from the baseline of the project activity. Under International Emissions Trading (IET), countries can trade in the international CC market to cover their shortfall in allowances. Those countries which have surplus can sell the countries who have capped emission commitments under the Kyoto Protocol.

OECD holds public consultation on BEPS-related reporting and transfer pricing issues

 
On 12-13 November 2013, the Organisation for Economic Cooperation and Development (OECD) held a public consultation on several ongoing projects that are related to its Action Plan on Base Erosion and Profit Shifting (BEPS). The two-day meeting was led by OECD Working Party 6, which is the subsidiary group responsible for the OECD’s work on transfer pricing, including the development of the OECD’s Transfer Pricing Guidelines. The meeting focused first on the proposal for a common template for country-by-country reporting of high-level information to tax authorities and the proposal for a common two-tier approach to transfer pricing documentation. The discussion then turned to an in-depth discussion of transfer pricing aspects of intangibles. These are projects that the OECD has targeted in the BEPS Action Plan for completion by September 2014. The meeting concluded with a discussion of other transfer pricing projects that are contemplated under the BEPS Action Plan. These other projects are expected to be the focus of the OECD’s work on transfer pricing through 2015.

Monday, 18 November 2013

Whether Sec 54EC benefits are available to assessee if it invests short-term capital gains on transfer of long-term depreciable assets - YES: HC

THE issues before the Bench are - Whether Sec 54EC benefits are available to the assessee if it invests short-term capital gains on transfer of long-term depreciable assets and Whether such benefit is available to the assessee in case computation of capital gains is done either under Sections 48 and 49 or under Section 50. And the verdict goes against the Revenue.
Facts of the case

New Rule for HRD Deductions for Asstt. Year 2014-15

Deduction of HRA is main tool for getting deduction from Salary for salaried person. Earlier generally, employee get this deduction on submission of Rent Receipt paid by him to his/her employee. But now CBDT has made mandatory to provide PAN number of his/her landlord to whom he / she has paid rent in excess of Rs. 1,00,000.00 (one lac) per annum to his / her employee. In case non availability of PAN with Land Lord, a declaration to this effect from the landlord alongwith the name and address of property should be filed by the employee.

Saturday, 16 November 2013

US Tax Rates

US Individual Income Tax Rates
U.S. individual income tax rates are progressive up to 35%, but limited to a maximum of 15% for certain 2010 capital gains (see above). The applicable tax rate will depend on the amount of taxable income and the return filing status of the taxpayer. Present law provides for higher rates (to include a top rate of 39.6%) for income received in taxable years beginning after 2010.
 
 
 
US citizens and other resident individuals are subject to the same tax rules. Taxes are assessed on worldwide income reduced by certain adjustments, deductions and exemptions. Non-resident individuals are generally subject to tax on their income from US sources. Certain credits are available to reduce the tax computed.

6 Financial Ratios You Should Watch Closely In The Crisis

There are certain financial ratios you need to watch closely during a—global or company—crisis. What ratios? You asked.

Among many items in a company’s assets, cash is the most sensitive one to even a small crisis. Cash is the blood of company’s operation—basically no business will run smoothly if there is no enough cash available for its operation. Therefore, watching the cash availability is super important for any of us in the financial and accounting department.

PAN card is mandatory for any Income Tax Payments.

Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department.

A typical PAN is AABPS1205E.

Permanent Account Number is a ten-digit number. Five of the ten are English alphabets. The fourth letter signifies the status of the account holder.

Thursday, 14 November 2013

Whether provisions of Sec 133(6) vest powers in AO to indulge in fishing information of general nature and there is no need for assessee to cooperate only if there is assessment pending - YES: SC

THE issues before the Bench are - Whether provisions of Sec 133(6) vest powers in Assessing Officers to indulge in fishing information of general nature and there is no need for assessee to cooperate only if there is any assessment proceeding pending; Whether power to gather information u/s 133(6) applies to specific areas only; Whether issue of notice for collecting information u/s 133(6), without the approval of Commissioner is valid and Whether enquiry of general nature can also be made by issuing such a notice. And the verdict favours the Revenue.
Facts of the case

S. 234B: A non-resident assessee which does not admit income chargeable to tax must be inferred to have induced the Indian payer not to deduct TDS and so it is liable for advance-tax interest

DIT vs. Alcatel Lucent USA Inc (Delhi High Court)
 
The assessee, a USA company, supplied telecom equipments to customers in India. It claimed that it did not have a PE in India and that the income was not chargeable to tax. The AO rejected the claim and attributed 2.5% of the sale proceeds of the hardware as profit attributable to the PE in India. He also levied interest u/s 234B for failure to pay advance-tax. Before the CIT(A), the assessee accepted that the income was chargeable to tax but argued, relying on Jacabs Civil Incorporated 330 ITR 578 (Del), that as it was a foreign company and the income was liable for TDS, it was not liable to pay advance-tax. The CIT(A) and Tribunal accepted the assessee’s contention. On appeal by the department to the High Court, HELD allowing the appeal:
(i) There is a distinction between a case where the assessee admits that it has income chargeable to tax in India but does not pay advance tax on the basis that the Indian payer ought to have deducted tax at source u/s 195. In such a case (as was the fact situation in Jacabs), the assessee is entitled to take credit for the tax which was “deductible” by the Indian payer while computing its advance tax liability even though no tax was in fact deducted. However, in a case where the assessee does not admit any income in the return, this benefit is not available. An inference or presumption can be drawn that the assessee had represented to its Indian telecom dealers not to deduct tax from the remittances made to it even though there is no positive or direct evidence to that effect;
(ii) The argument that the Indian parties should have discharged their TDS obligations u/s 195 despite the presumed request of the assessee is one of convenience or despair and not acceptable because in a practical view of the matter, the Indian payers could not have resisted the assessee’s request given future business prospects and the need to keep the assessee in good humour;
(iii) Also, having denied its tax liability and leading the Indian payers to believe that no tax was deductible it is inequitable& unfair on the assessee’s part to shift the responsibility to the Indian payers & expect them to deduct tax from the remittances. The assessee must take responsibility for its volte face. Once liability to tax is accepted, all consequences follow; they cannot be avoided;
(iv) Also, applying equitable principles, as the assessee deprived the revenue of the advance tax, it must pay compensation by way of interest.
(Clarified that Mitsubishi Corporation, which was decided along with Jacabs, was also a case like that of the assessee and that it was mistakenly given relief)
Consider the impact of this verdict on Daimler Benz A.G 108 ITR 961 (Bom)(FB), Sedco Forex 264 ITR 320 (Utt), NGC Network 313 ITR 186 (Bom) & Madras Fertilisers 149 ITR 703 (Mad) where non-residents were held not liable to pay s. 234B interest on the basis that tax is “deductible” at source u/s 195 without any qualification

CBDT Issues SOP For Handling E-filed Returns With Unpaid S. A. Tax

Further to the letter dated 22.10.2013 regarding the processing of 1.46 lakh defective returns submitted for AY 2013-14 where the self-assessment tax is unpaid, the Directorate of Income-tax (Systems) has issued a letter dated 13.11.2013 setting out a detailed Standard Operating Procedure (SOP) for handling such E-filed Returns where self assessment tax is not paid.

 DIT (E) letter dt. 13.11.2013 setting out SOP for defective E-returns with unpaid S.A. tax

 

S. 45(4) does not apply if the retiring partner takes only money

CIT vs. M/s Dynamic Enterprises (Karnataka High Court – Full Bench)
 
The assessee partnership firm was constituted on 09.01.1985 with Anurag Jain and Nirmal Kumar Dugar as its partners. On 13.04.1987, Nirmal Kumar Dugar retired from partnership and L.P. Jain entered the partnership and contributed capital for purchase of land to construct a housing complex. The assessee-firm purchased land for a consideration of Rs.2.5 lakhs. Another reconstitution took

Wednesday, 13 November 2013

when payment of ST has been accepted by department without dispute, department cannot take a stand that no Input services were received by the appellant

 
S H KELKAR & CO PVT LTD Vs CCE, (Mumbai – CESTAT) (2013-TIOL-1684-CESTAT-MUM)
Facts of case:
The appellant, M/s. S.H.Kelkar & Co. Pvt. Ltd., Mumbai, are manufactures of fragrances and aroma chemicals. It appears that the appellant availed service tax credit on Intellectual Property

Whether sum forfeited due to cancellation of contract in excess of agreed liquidated damages for making good of loss of business opportunity amounts to revenue receipt

THE issues before the Bench are - Whether the amount forfeited pursuant to cancellation of contract in excess of agreed liquidated damages, for making good loss of business opportunity amounts to capital receipt; Whether valuation of closing stock of bulk drugs can be brought down to Nil, although the opening stock was valued at Rs 12 crores, when in between the bulk drugs manufacturing unit was sold off and the leftover stock was merely expired drugs having no resale value in the market; Whether amount received by the assessee on a condition not to carry on the competitive business is in the nature of capital receipt; Whether there is any provision to substitute the consideration received with the fair market value of asset sold for computation of capital gains; Whether when assessee has sold shares of its loss making group

S. 133(6): AO empowered to launch fishing and roving enquiry with a view to detect tax evasion

 
The ITO issued a issued a notice u/s 133(6) to the assessee-bank u/s 133(6) of the Act calling for general information regarding details of all persons who have made cash transactions and time deposits of Rs. 1,00,000/- and above for the period of three years between 01.04.2005 and 31.03.2008. The assessee claimed that s. 133(6) does not empower the ITO to conduct a roving or fishing enquiry into the affairs of the assessee or regarding the deposits made by its customers. It was also contended that the AO can only seek “case specific” or “area specific” information u/s 133(6). The High Court dismissed the Writ Petition. On appeal by the assessee to the Supreme Court HELD dismissing the appeal:

Tuesday, 12 November 2013

How to file Income Tax e-Return without Password?

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https://taxofindia.wordpress.com/2015/11/30/how-to-file-income-tax-e-return-without-password/



How to check e-TDS Challan Status Query ?

TDSCPC.GOV.IN has also provided a facility to check the Challan Status Query vide which it can be checked that has there any challan not claimed by deductor in the particular Financial Year or not. This function is helpful to resolve the default notice issued by Income Tax Department.

Fee and Penalty regarding furnishing TDS Return.

Fee for default in furnishing statements (Section 234E):

If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source on or after 1.07.2012 he shall be liable to pay, by way of fee a sum of Rs. 200 for every day during which the failure continues.

ST- Judgment on Place of Provision of Service Rules, 2012

Place of Provision of Service Rules, 2012 - Place of provision is location of service receiver
M/s. Tandus Flooring India Pvt. LTD. vs. the Commission of Service Tax, Bangalore (2013 –TIOL – 03-ARA)
Facts:
The applicant, an Indian company (wholly-owned subsidiary of a Singapore company) with the objective of strengthening and enhancing sales ofthe Products of Tandus USA and Tandus China to its Indian customers against consideration receivable in freely convertible foreign exchange, agreed to provide services of marketing and promotion of products to

Whether when assessee gives prizes, wholly in kind, as part of its sales promotion scheme, any TDS obligation arises u/s 194B - NO: HC

THE issues before the Bench are - Whether when the assessee gives prizes wholly in kind as part of its sales promotion schemes, any TDS obligation arises u/s 194B and Whether any responsibility is cast u/s 194B on the assessee before it releases the prizes to winners. And the answers go against the Revenue.
Facts of the case

CBDT notifies Cyprus for lack of effective exchange of information

 
Through a notification[1]dated November 1, 2013, Central Board of Direct Taxes (‘CBDT’), the apex administrative body for tax administration in India, has notified Cyprus as a notified jurisdictional area (‘NJA’) under Section 94A of the Income tax Act, 1961 (the ‘Act’) for lack of effective exchange of information. While the Double Taxation Avoidance Agreement (‘DTAA’) between India and Cyprus, executed in 1994, provides that both countries would exchange information as is necessary for carrying out the provisions of the DTAA or those of the domestic laws of each country for the prevention of fraud or evasion of taxes, the genesis of this notification seems to be non-cooperation from authorities in Cyprus on requests from India.

DTAA Benefits to Denmark Partners

in the case of M/s A.P. Moller (Taxpayer), a fiscally transparent partnership established under Danish law. One of the issues before the Tribunal was the eligibility of the fiscally transparent entity for benefits of the India-Denmark Double Taxation Avoidance Agreement (Danish DTAA). According to the Tribunal, once the income of a partnership is taxed in Denmark, irrespective of the fact that the same is taxed in the hands of the