Friday, 28 February 2014

CSR RULES NOTIFIED.

Sub : Section 135 (Corporate Social Responsibility) of the Companies Act 2013, Schedule VII of the said Act and the Rules thereon have been notified by MCA and made applicable from 01.04.2014.

We would like to inform you that the provisions of Section 135 (Corporate Social Responsibility) of the Companies Act, 2013, Schedule VII of the said Act and the Rules thereon have been notified by the Ministry of Corporate Affairs (MCA) and are made applicable from 1
st April, 2014.
The related following documents have been uploaded on ICAI website under the Link "Documents under the Companies Act 2013” as well as "ICAI Knowledge Gateway” for your reference and kind information please.


  1. Notification for applicability of the provisions of the Section 135
  2. Notification for amendment of Schedule VII and
  3. Companies (Corporate Social Responsibility Policy) Rules, 2014

Whether when assessee has responded to Sec 158BC notice & participated in proceedings, can later challenge jurisdiction of block assessment merely because search warrant was not issued in his name - NO: HC

THE issues before the Bench are - Whether the assessment made based on the materials seized in the course of the search operation of two other persons sharing the same premises with the assessee, can be considered as assessment made u/s 158BD of the Income Tax Act; Whether when the assessee has responded to the notice issued u/s 158BC, filed its return and participated in the assessment proceedings, can later challenge the jurisdiction of the block assessment merely because the search warrant u/s 132 was not issued in his name; Whether reference to Section 143(3) notice read with proceedings u/s 158BC does not make the

Entire law on taxability of “composite” contracts for supply of offshore & onshore supply & services under Act & DTAA explained

POSCO Engineering & Construction Co Ltd vs. ADIT (ITAT Delhi)

(i) The first question which requires to be decided is whether it is a case of composite contract? In our considered opinion, the AO was initially not correct in holding that the contract was a composite one devoid of any bifurcation towards onshore and offshore supplies and services, which stand was subsequently altered to the correct position. We, therefore, hold that it is

Expenditure on foreign education of employee (son of director) is deductible if there is business nexus

Kostub Investment Ltd vs. CIT (Delhi High Court)

Whilst there may be some grain of truth that there might be a tendency in business concerns to claim deductions under Section 37, and foist personal expenditure, such a tendency itself cannot result in an unspoken bias against claims for funding higher education abroad of the employees of the concern.

High Court alarmed at shoddy record-keeping by dept and allegations of tampering. S. 147 reopening quashed

BBC World News Limited vs. ADIT (Delhi High Court)

We have examined the original record but did not find the proceedings or order sheets relating to original proceedings on record. This is a serious lapse, and it is apparent that the proceeding sheets in the respondents‟ custody and charge, have been removed. The record belongs to the respondents and was in their custody and charge. It was/is their duty and obligation to maintain the

High Court irked at abuse of law to settle personal vendetta between top-level IRS officers

Pradyot K. Misra vs. ACIT (Delhi High Court)

The respondents have to act in accordance with law and not under any pressure. The AO, being a responsible officer should not be party or pressurised by someone to personal vendetta. Being statutory officers they have to act independently and in accordance with law

S. 234E: High Court grants interim stay on enforcement of notices for levy of fee for failure to file TDS statement

Adithya Bizorp Solutions India Pvt. Ltd vs. UOI (Karnataka High Court)

S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The constitutional validity of s. 234E has been challenged in the Karnataka High Court. Vide an interim order dated 19.02.2014 the High Court held as

Thursday, 27 February 2014

How is an NRI’s foreign salary taxed?

Many non-resident Indians (NRIs) want to keep their earnings in India, though they may be earning abroad. In case of an NRI, only income accruing in India or received in India or deemed to accrue in India is taxable in India, unlike in the case of a resident, whose worldwide income is taxable in India. Therefore, for an NRI who earns abroad, it is very important to ensure that her salary is not received directly in India, so that it is

Form 15CA and Form 15CB – old AND new changes


The CBDT has issued Twelfth Amendment Rules on August 5, 2013 vide Notification No. 58/2013 whereby it amended Rule 37BB and prescribed new Forms 15CA and 15CB. However, within a couple of weeks, the CBDT issued one more amendment to Rule 37BB in suppression of earlier notification (amendment rules).

No requirementf form 15 cb/ca for transfer of gifts from relatives to NRI


As per the latest amendment in the provisions of income tax act, 1961, 15CA/CB is applicable only if a person is responsible for paying to a non-resident, any interest or salary or any other sum chargeable to tax. Also no CA Certificate is required in Form 15CB and no furnishing of Form 15CA to the Income Tax

Whether when CIT(A) has given detailed findings about project bieng 'foreign' in nature, Sec 80HHB benefits can be diallowed by a mere cryptic order passed by Tribunal - NO: HC

THE issues before the Bench are - Whether when the CIT(A) has given detailed findings about the project bieng 'foreign' in nature, Sec 80HHB benefits can be diallowed by a mere cryptic order passed by the Tribunal and Whether such project work can be categorised as a mere repair and maintenance work. And the verdict favours the assessee.
Facts of the case

Whether Sec 10A benefits are available in case a partnership firm gets converted into a company with partners becoming shareholders and dissolution of firm involves no transfer of assets - YES: HC

issue before the Bench is - Whether Sec 10A benefits are available in case a partnership firm gets converted into a company with partners becoming shareholders and dissolution of firm involves no transfer of assets. And the verdict favours the assessee.
Facts of the case
The assessee is engaged in the business of exporting software having its Unit at Software Technology Park. The assessee-Company had filed return of income claiming 100% exemption

S. 254(2A): The Tribunal has no power to extend stay of demand beyond 365 days even if the assessee is not at fault. If dept seeks an adjournment, ITAT may either refuse it or dept should undertake not to recover the demand

CIT vs. Maruti Suzuki (India) Limited (Delhi High Court)

(i) In view of the third proviso to s. 254(2A) of the Act substituted by Finance Act, 2008 with effect from 1st October, 2008, the Tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay

S. 80-IB(10): Limit on extent of commercial area imposed by clause (d) of s. 80IB (10) inserted w.e.f. 1.4.2005 does not apply to projects approved before that date

ITO vs. M/s Yash Developers (ITAT Mumbai)

In the assessee’s own case for the same project relating to AYs 2005-06 and 2006-07, which falls after the insertion of clause (d) to s. 80IB(10), the Tribunal held that the assessee is eligible for deduction u/s 80IB(10) in respect of the housing project. Not only this, in Manan Corporation 214 Taxmann 373 (Guj) it was held that the condition of limiting commercial

Transfer Pricing provisions do not apply if the AE is assessed in India & there is no chance of shifting of profits outside India or erosion of tax base

IJM (India) Infrastructure Ltd vs. ACIT (ITAT Hyderabad)

(iv) The object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India as is brought out by Morgan Stanley 292 ITR 416 (SC) & Circular No. 14 to the Finance Act 2001. In the present case, there is no possibility of shifting of profits outside India or erosion of country’s tax base because the PE profits of the AE are assessable to tax in India. Therefore, the transactions with the AEs are outside the purview of the transfer pricing regulations

Tuesday, 25 February 2014

Few points on Service Tax- Place of Provision.



01.  This rule means for import & export of services and service provider functioning from multiple location without centralized registration.
02.  Export are not taxable and import are taxable.
03.  Location can be determined – in case of centralized registration – office which is registered and in other case- usual place of service provider.
04.  In case of telecommunication service- the address of the service receiver.
05. 

S. 147: Even s. 143(1) Intimation cannot be reopened in the absence of new information

Mohan Gupta (HUF) vs. CIT (Delhi High Court)

The reassessment is not on the basis of new information or facts that have come to the fore now, but rather, a re-appreciation or review of the facts that were provided along with the original return filed by the assesse. The record

S. 10A/ 10B: Interest income out of surplus funds in Banks and sister concerns & EEFC account is eligible for exemption

CIT vs. Motorola India Electronics (P) Ltd (Karnataka High Court)

Though s. 10(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software, sub-section (4) explains what is the profit derived from export of articles as mentioned in Subsection (1). Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the

Undue delay in passing order causes prejudice & results in loss of confidence in the judicial body. Such a delayed order has to be set aside

Emco Ltd vs. UOI (Bombay High Court)

In view of the above, it is very clear that the authorities under the Act are obliged to dispose of proceedings before them as expeditiously as possible after the conclusion of the hearing. This alone would ensure that all the submissions made by a party are considered in the order passed and ensure that the litigant also has a satisfaction of noting that all his submissions have

Entire law on what constitutes a “Permanent Establishment” and “Business Connection”explained

In Re Booz & Company (Australia) Pvt. Ltd (AAR)

As regards a “permanent establishment”, various factors have to be taken into account to decide a Fixed place PE which inter alia includes a right of disposal over the premises. No strait jacket formula applicable to all cases can be laid down. Generally the establishment must belong to the Employer and involve an element of ownership, management and authority over the establishment. In other words the taxpayer must have the element of ownership,

Distinction between “hire purchase transactions” and “loan transactions” explained

CIT vs. Commercial Motors Finance Ltd (Allahabad High Court)

The vehicles were registered in the name of the respective customers. However, in the registration certificate a remark in terms of agreement was to be recorded to the effect that vehicle is held by the registered owner under a hire purchase agreement with the assessee. A “Sale Letter” was executed,

Status of application for status of PAN and TAN by Interactive Voice Response (IVR)

NSDL-TIN has started a new application for status of PAN and TAN which is known as Interactive Voice Response (IVR). IVR is new application for knowing the status of your PAN/ TAN application which is now available at TIN call centre (TCC) in Hindi/English language. You may call on 020- 27218080 to check the status of your application.

Whether mere filing of application for settlement adversely affects powers of Assessing Officer in any manner - NO: HC

THE issues before the Bench are - Whether mere filing of an application for settlement would adversely affect the powers of the Assessing Officer in any manner; Whether the SETCOM is allowed to review its own order and Whether the remedy provided under section 245C, as a machinery provision for effecting settlement of tax disputes, is only in the nature of a option open to the assessee who desired to settle his tax matters. And the matter goes against the assessee.

Monday, 24 February 2014

Few points on Service Tax- Point of Taxation Rules 2011 (POT).


 Point of taxation means the point in time when a service is deemed to have been provided. The point of taxation enables determination of the rate of tax, value of taxable service, rate of exchange and due date for payment of service tax. Payment of service tax, since its inception in the year 1994, had been linked with the receipt of consideration of the services. However, Point of Taxation Rules, 2011 introduced with effect from 01.04.2011, have brought a paradigm shift in the point of taxation of services.

What is Deficit financing?

Deficit financing is that, which, if used responsibly, can lead an economy to prosperity; however, if used thoughtlessly, can do the opposite. It is the tool suggested years ago by known economist John Keynes, and used today throughout the world by various finance ministers of different economies in their budgets.
Let us begin our understanding of this important tool by knowing its meaning. It is a practice by which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds (the printing of new currency notes and making of coins). As highlighted earlier, the

Whether if no materials are found during Search, AO is duty bound to go by original assessment and cannot made any additions u/s 153A - YES: ITAT

THE issues before the Bench are - Whether if no materials are found during the Search, the AO is duty bound to reiterate the original assessment and cannot made any additions u/s 153A and Whether the statement recorded at the time of search which was retracted by the assessee and documents which are already the part of books of account can be considered as incriminating documents for making assessment under section 153A. And the verdict goes against the Revenue.
Facts of the case

How To Use The RTI Act For Maximum Benefit In Income-Tax Matters

RTI & Professionals


Citizens in general and professionals alike in the financial fields are more often than not stuck in a major traffic jam of bureaucrats, red tapism, ‘babudom’, corrupt officials, unconcerned staff, rude misbehaviour, etc. There is almost no way to wade through this. There are a lot of tiny issues that are present in the government departments which are so deeply imbibed into their system that they are almost synonymous with the department in itself. The common man too has this fixed negative notion towards these departments but has never tried to change it since he thinks that his individual effort would go entirely futile and that a mass movement is required to extract this absorbed venom from the veins of our democracy. October 2005 was the lucky time when the Government came up with the anti-venom, the Right to Information Act.


Sunday, 23 February 2014

Few points on Service Tax- Valuation Rules.



01.  Where the consideration is only money, then gross amount charged.
02.  In case where consideration is not or partly for money, then the monetary value of service.
03.  In case value not ascertainable, then in the prescribed manner.
04.  Electricity provide free of cost to service provider is not a consideration. Refer, Inox Air Products Limited.
05.  Rate of exchange of rate of service tax – when the taxable services has been provide or agreed to be provided.
06.  Forex Profit / loss is not taxable for service tax.
0

Packaged Commodity Rules for Indian Importer




Important points.
01.   Provided that if a commodity specified in the Third Schedule is packed in a size other than that prescribed in that Schedule, a declaration that 'Not a standard pack size under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977' or 'non standard size under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977' shall be made prominently on the label of such package.'. 

How to get your products through customs without delays or paying extra?


Recently I had shared some on-site experiences regarding the import of goods to India, and the customs related problems that you might face while shipping your products from Europe to India. Having overcome many difficulties related to Indian imports, I would like to share a few good practices with you.
More details, the better:
When it comes to complying with the Indian Rules and Regulations for labeling, there is one statement that is

MRP-based Scheme for Packaged Software: Govt opens Pandora's Box

IN a quiet move, the Government has brought the entire packaged software industry under the MRP based central excise levy scheme by issuing Notifications bearing Nos 30/2010-CE and 53/2010-Service Tax, both dated December 21, 2010. In terms of Notification No 30/2010-CE, an abatement of 15% has been given on the MRP of the packaged software, based on which, central excise duty will have to be paid by the manufacturer and CVD to be paid by the importer. Consequently, in terms of Notification No. 53/2010-ST, no service tax shall be payable on the license value in terms of clause (v) of Section 65(105)(zzzze) of the Finance Act, 2010.
These Notifications have major ramifications for the packaged software industry and this article is a quick attempt to understand some of these.....

Saturday, 22 February 2014

Important CPC (TDS) reminder for Payment of outstanding Default amount

The Centralized Processing Cell (TDS) takes pride in automating for the first time, the Default identification process in respect of TDS statements submitted. CPC (TDS) has always highlighted the need for correct and complete reporting of data in the TDS statements and has therefore, implemented processes to enforce compliance.

With the above functionality made available by TRACES, intimations have been sent to the deductors, wherever applicable, through SMS and e-mail services and through Registered/ Speed Post. Further, TRACES has also provisioned for easy access to this information by way of display in Deductor’s Dashboard and by availability of electronic copies of Justification Reports for the defaults generated with respect to relevant TDS

AAR on constitution of a permanent establishment on provision of technical personnel to an Indian affiliate


This Tax Alert summarizes a recent decision of the Authority for Advance Rulings (AAR) in the case of Booz & Co. Group (Group entities) on the issue of whether provision of technical and professional employees to the Indian affiliate company (ICo) results in a permanent establishment (PE) of the relevant Group entities in India. The AAR, having regard to the interdependency amongst the Group entities and the nature of services rendered, held that a PE exists for the Group entities in India.
In this decision, the AAR has referred to many decisions on how the courts in India have looked at deputation of employees and technical personnel in the context of constitution of a PE. However, it is unclear as to how these observations were applied by the AAR

Transfer Pricing: Adjustment to profit margin for “capacity underutilization” can be made. In choosing comparables, there cannot be a cherry picking for deciding parameters of rejection. All comparables must face the same test

DCIT vs. Panasonic AVC Networks India Co Ltd (ITAT Delhi)

Under Rule 10B (1)(e)(ii), an adjustment to the net profit margin has to be made for “capacity underutilization”. Capacity underutilization by enterprises is an important factor affecting net profit margin in the open market because

Transfer Pricing: TPO cannot sit in judgement on commercial expediency. RBI approval means the payment is at ALP. If overall TNMM analysis done, royalty cannot be analyzed separately


The TPO is not entitled to sit on judgment on the business and commercial expediency of the assessee in paying royalty to its’parent company as per the provisions of the Act as laid down clearly by the Delhi High Court in EKL Appliances 345 ITR 241. It is also noted that various Tribunals such as DCIT vs. Sona Okegawa Precision Forgings (ITA No. 5386/Del/2010), Hero Motocorp (ITA No 5130/Del/2010), ThyssenKrupp Industries (ITA No 6460/Mum/2012),Abhishek Auto Industries (ITA No 1433/Del/2009) have taken a view that RBI approval of the Royalty rates itself implies that the payments are at Arm’s Length and hence no further adjustment needs to be made viewed from this angle too. Furthermore, we are of the opinion that once TNMM has been applied to the assessee company’s transaction, it covers under its ambit the Royalty transactions in question too and hence separate analysis and consequent deletion of the Royalty payments by the TPO seems erroneous. We draw support from Cadbury India (ITA No 7408/Mum/2010 and ITA No.7641/Mum/2010 wherein the ITAT upheld the use of TNMM for Royalty

Transfer Pricing: No bar on reliance of private database u/R 10D(3). Nuances of the CUP Method under Rule 10B(1)(a)(i) explained

Tilda Riceland Pvt Ltd vs. ACIT (ITAT Delhi)

(i) Rule 10 D(3) is only illustrative in nature and merely describes the information required to be maintained by the assessee under section 92D “shall be supported by authentic documents, which may include the following …”. The logic employed by the Transfer Pricing Officer that since databases compiled by private entities is not included in rule 10D (3), such databases cannot be relied upon by the assessee is clearly fallacious inasmuch as an item not being included in illustrative list of required documents does not take outside the ambit of ‘acceptable document’ for the required purposes. In any event, all that Tips Software does is to collect the data, compile the same in easy to refer format and make it available to the end-user of such data online. The data is public data maintained by the customs department at various ports. It was also open to the TPO to, if he had any doubts, call for further information from this database supplier and examine authenticity of the data so furnished. His summary rejection of the data as unreliable on a technical ground is not tenable in law

Transfer Pricing: Unaudited segmental accounts can be relied upon for comparing profitability of controlled transactions with uncontrolled transactions. While size is relevant in entity level comparison, it is not relevant in transaction level comparison within the same entity

Lummus Technology Heat Transfer BV vs. DCIT (ITAT Delhi)

(i) In applying the Transactional Net Margin Method (TNMM) under Rule 10B(1)(e) it is not necessary that the net profit computations, in the case of internal comparables (i.e. assessee’s transactions with independent enterprise), have to be based on the audited books of accounts or the books of accounts regularly maintained by the assessee. All that is necessary for the purpose of

Rejection of stay application by ITAT on the ground that “the financial position of the assessee is very sound”and “government also needs liquid funds to manage its day to day affairs” & without discussing prima facie case is in disregard of law laid down in KEC International 251 ITR 158 (Bom)

Deloitte Consulting India Pvt.Ltd vs. ACIT (Bombay High Court)

The assessee filed a revised return in which it withdrew a claim for deduction of Rs.5.86 crore paid to its AE. The assessee claimed s. 10A deduction on the enhanced income. The AO held that the revised return was filed to get over s. 92-C(4) and the proviso thereto which provides that no deduction u/s 10-A

Important CPC (TDS) Communication forsubmitting Correction Statements



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011/2014


Date of communication : 22/02/2014

The Centralized Processing Cell (TDS), in its constant endeavour to keep our stakeholders informed and educated, feels glad to remind important facts related to submitting Correction Statements. Following are some useful information to adhere before submitting Corrections, with special reference to C3 & C9:


Friday, 21 February 2014

No S. 14A/ Rule 8D disallowance if primary object of investment is to hold controlling stake in group concern and not to earn tax-free income

Garware Wall Ropes Ltd vs. ACIT (ITAT Mumbai)

We find merit and substance in the contention of the assessee that no expenditure had been incurred by the assessee for earning the exempt income on this point because the investment has been made by the assessee in the group concern and not in the shares of any un-related party. Therefore, the primary object of investment is holding controlling stake in the group concern and not earning any income out of investment. Further the investment were

S. 10 (23C): An institution which regularly makes more than 10% – 15% surplus is existing for profit & is not eligible for exemption

Visvesvaraya Technological University vs. ACIT (Karnataka High Court)

In our opinion, “Surplus” cannot be more than 10% – 15% so as to meet contingencies or unforeseen expenditure. If an University or an educational institution under the guise of “surplus” start making huge profit, in our opinion, it would cease to exist for net making profit and in that event would

S. 254: Tribunal is not required to consider pleadings, material etc to which its pointed attention is not drawn

Dholadhar Investment Pvt. Ltd vs. CIT (Delhi High Court)

It is true, as held by the Supreme Court in a long line of cases that the Tribunal is duty-bound to consider all the grounds, the evidence produced and consider the contentions of the parties before it and all other material brought to its notice in a judicial spirit and should not feel incommoded by technicalities: The duty is limited to the points raised before it. It would be

S. 147: Assessee is not entitled to challenge validity of reopening on a ground not stated in objections to AO

CROWN Consultants Pvt. Ltd. vs. CIT (Bombay High Court)

Just as the revenue cannot improve upon its case for reopening before the Court and but must stand or fall by the reasons recorded for reopening the assessment, the same test would be applicable in case of an assessee i.e. it must stand or fall by its objection to the grounds for reopening of

Process to Submit Form 15CA Online / Offline (Single/Bulk Upload)

Income Tax Department has mandated form 15CA to be submitted for Remittance outside India. Form 15CA can be submitted in any of the following mode :-
1. Submission of Form 15CA Online (Single Upload) – In this Mode remitter can submit the form Online by logging into https://incometaxindiaefiling.gov.in/ . In this mode at a time only one form 15CA can be uploaded. Bulk submission is not possible in online submission of form 15CA.
2. Submission of Form 15CA Online (Single Upload/ Bulk upload) – In this mode remitter can

Updated Utility Form 15CA released by Income Tax

Tax deductor and collector holding valid TAN can register and use the TAN based credentials to file Form 15CA but to fill form 15CA if no tax is been deducted it is still not mandatory for remitter to have TAN.
Link To Register on Income Tax E-Filing Website
https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html
Link to Download Revised updated utility of Form 15CA
https://incometaxindiaefiling.gov.in/eFiling/Portal/DownloadUtil/FORM_UTILITY/1.0/FORM_UTILITY_PR4.zip

Interim Budget 2014 passed in Lok Sabha

Lok Sabha on Wednesday 19.02.2014 passed the Interim Budget for the financial year 2014-15 without any significant discussion. Finance Minister P Chidambaram introduced the Appropriation Bill and the

Whether a cricketer who plays for India, is also a professional actor if he acts in TV Commercials and is entitled to Sec 80RR benefits - YES: ITAT

THE issues before the Bench are - Whether the awards received by the assessee are exempt from income tax as he is not a professional cricketer but playing under the aegis of BCCI which decides the payments to be made to the players; Whether assessee is entitled for expenditure incurred by him for sports accessories, dress, equipment, coaching, training, travel & stay and Whether the assessee is entitled for deduction u/s 80RR considering that even though he is a cricketer, the income for acting in T.V. / print media is received by him as a professional actor. And the verdict partly goes in favour of the assessee.
Facts of the case

Thursday, 20 February 2014

Save Tax on Capital Gain.

Tax on Long Term Capital Gain (LTCG) on sale of any residential house property can be saved (U/s 54 of the Income Tax Act-1961) if the LTCG is invested within a prescribed time for purchase/ construction of a house property. The exemption u/s 54 would be available even if the taxpayer already owns another residential house property (i.e., exemption would be admissible even if second house property is purchased). Another option to save LTCG tax could be by investing the amount of LTCG within a period of 6 months

Procedure of payment of TDS Demand

As per the records of Centralized Processing Cell (TDS), the TDS Statement(s) for some of the quarters have not been submitted within the prescribed due date.

Income Tax - No time limit for initiation of penalty proceedings

THE CAG in its report laid in Parliament on 18.02.2014 observed,
Section 275 of the Act prescribes certain time limits for completion of penalty proceedings to ensure that proceedings do not drag on indefinitely. However, the Act is silent on any time limit for initiation of penalties. Manual of Procedure (Vol-II) only prescribes that if the competent authority during the course of a proceeding under the Act is satisfied that the person is guilty of contravening the relevant statutory provisions, the penalty initiation should be carried out along with the assessment order. The initiation of penalty proceedings starts with issue of notice under section 274 of the Act .

Whether when Revenue does not find any corroborative evidence during Search, any addition strictly made on basis of unretracted statement recorded u/s 132(4) is legally sustainable - YES: HC

THE issues before the Bench are - Whether depreciation in case of a rented building can be claimed as business expenditure u/s 32; Whether voluntary disclosure of an assessee made u/s 132(4) can be rejected in case, revenue has not filed any corroborative evidence against it; Whether the income assessed under Chapter 14B can be included in the regular assessment of any previous year included in the block period; Whether penalty can be imposed under Section 271 (c) where undisclosed income is determined under Chapter 14B and Whether the possibility of penalty can be a reason to require that it can be treated as undisclosed income only when the claim is found to be made deliberately. And the verdict goes against the assessee.

Whether when Co had no income from main business of money lending but had earned interest and dividend by investing in shares, loan advanced to its MD is to be construed as deemed dividend in hand of MD - YES: HC

THE issue before the Bench is - Whether when the company had no income from its main business of money lending but had earned interest and dividend by investing in shares, the loan advanced to its MD is to be construed as deemed dividend in the hands of the MD. And the answer goes against the assessee.

ANALYSIS OF SECTION 273A FOR WAIVER/REDUCING OF INTEREST AND PENALTY



The power of the Revenue with regards to waiver or reduction of penalty and interest has been laid down in Section 273A of Income Tax Act, 1961.
Certain specific clauses needs to be considered by the Revenue before exercising power as mentioned in Section 273A, which are as follows:

RENTING OF IMMOVABLE PROPERTY BY JOINT OWNERS


Renting of immovable commercial property is a declared service which had fallen in the ambit of Service Tax from 1st June, 2007. Renting is defined in Section 65B(41) of the Finance Act, 1994 as follows:
‘”renting” means allowing, permitting or granting access, entry occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property;’
Renting of property can be done in different ways:

SERVICE TAX ON SHARING WORK



Business groups across the globe are looking to reduce costs incurred by entering into cost sharing arrangements wherein common services like advertising, security, human resources etc. are shared between subsidiaries/group companies. Under this type of arrangement, common and joint services are procured by the parent company for the entire group with the understanding that the costs incurred for the other group companies will be allocated on cost-to-cost basis or with a mark-up i.e. with a profit motive.

Wednesday, 19 February 2014

Know status of your PAN/ TAN on Phone

Interactive Voice Response (IVR) for knowing the status of your PAN/ TAN application is now available at TIN call centre (TCC) in Hindi/English language. You may call on 020- 27218080 to check the status of your application

CBDT has issued a circular regarding Clarification regarding scope of Additional Income Tax on Distributed Income u/s.115R of IT Act

.

This circular states as under:
Section 115R of the Income-Tax Act, 1961 ('Act') provides for levy of additional income-tax on distributed income to unit holders (hereinafter referred to as 'additional inocme-tax').

Whether when Co had no income from main business of money lending but had earned interest and dividend by investing in shares, loan advanced to its MD is to be construed as deemed dividend in hand of MD - YES: HC

THE issue before the Bench is - Whether when the company had no income from its main business of money lending but had earned interest and dividend by investing in shares, the loan advanced to its MD is to be construed as deemed dividend in the hands of the MD. And the answer goes against the assessee.
Facts of the case
The assessee is an individual. In respect of AY 2003-2004, proceedings were initiated by issuing

Whether additions are warranted when there is substantial increase in consumption of electricity but without corresponding increase in production and also no mention of work-in-progress in books - YES: HC

THE issues before the Bench are - Whether additions are warranted when there is a substantial increase in consumption of electricity but without corresponding increase in production and also no mention of work-in-progress in books; Whether merely providing an explanation that Electricity Board would issue bills for minimum contracted units, whether they were consumed or not, can constitute sufficient evidence for showing the discrepancy between the power consumption and actual production and Whether the books of accounts can be rejected when in addition to the huge discrepancy between the productivity compared with the electricity consumption, the assessee has also not recorded the work in progress in its books of accounts. And the verdict goes against the assessee.

Follow up communication for payment of outstanding Demand related with Short Payment

Date of communication : 17/02/2014


Dear Deductor,

As per the records of Centralized Processing Cell (TDS), there are Short Payment defaults in the TDS Statement(s) submitted for the quarter(s).

Intimation u/s 200A of the Income Tax Act, 1961 intimating an outstanding demand for the relevant quarters towards Short Payment, have already been sent by CPC (TDS) on Registered email address and by post, at the address, as mentioned in the relevant TDS Statement.

CPC (TDS) Follow up communication for payment of outstanding Demand related with Short Payment

Date of communication : 17/02/2014


Dear Deductor,

As per the records of Centralized Processing Cell (TDS), there are Short Payment defaults in the TDS Statement(s) submitted for the quarter(s).

Intimation u/s 200A of the Income Tax Act, 1961 intimating an outstanding demand for the relevant quarters towards Short Payment, have already been sent by CPC (TDS) on Registered email address and by post, at the address, as mentioned in the relevant TDS Statement.

Key highlights of the Interim Budget 2014-15



Direct Tax.
01.  No Change in Tax rate.
02.  Tax Holiday to power sector come to an end.
03.  No Concession of 15% rate on dividend received from foreign companies.
04.  New approach on tax benefits for funding scientific research.
05.  DTC to be put for public discussion.

Service Tax
01.   No Change in rate of 12%.
02.   Paddy & Rice now have same meaning.

03.   Stem cell preservation now comes under health services.

CBDT clarifies disallowance of expenditure relatable to exempt income warranted even when no exempt income is actually earned

CBDT release a Tax Alert which summarizes a recent Circular No. 5/2014 dated 11 February 2014 (circular), issued by the Central Board of Direct Taxes (CBDT), clarifying that expense disallowance for exempt income is warranted even if, in a particular tax year, no exempt income is actually earned.

Friday, 14 February 2014

CBDT Circular On Payment Of Dividend Distribution Tax By Mutual Funds


The CBDT has issued Circular No. 6 of 2014 dated 11.02.2014 in which the issue as to whether mutual funds/specified companies are required to pay additional income-tax under sub-section(2) to section 115R of the Act not only on income distributed by way of dividend but also on payments made at the

Design & Engineering drawings are in the nature of “plant” and consideration thereof is not assessable as “fees for technical services” if delivered outside India

DIT vs. Nisso Lwai Corporation, Japan (Andhra Pradesh High Court)

The assessee company provided design and engineering services, manufacture, delivery, technical assistance through supervision of erection and commissioning etc., to establish compressor house-I for RINL. The payments were made by RINL separately for each of the services/equipments provided/supplied by the assessee. It, inter alia, included payment made towards supply of design and engineering drawings. The assessee company

Salary income accrues at the place where the services are rendered and not where the appointment letter is received. If salary, after accrual abroad, is brought into India, it is not taxable on receipt basis. S. 6(5) which deals with residential status is redundant

Arvind Singh Chauhan vs. ITO (ITAT Agra)

The next objection of the Assessing Officer is that the money was received in India, since, beyond any dispute or controversy, the salary cheques were credited to the assessee’s account with HSBC, Mumbai. So far as this aspect of the matter is concerned, the law is trite that ‘receipt’ of income, for this purpose, refers to the first occasion when assessee gets the money in his own

S. 195 TDS obligation depends on law prevailing on date of payment and is not affected by retrospective amendment. No s. 40(a)(i) disallowance can be made if that law did not require TDS to be deducted

DCIT vs. Virola International (ITAT Agra)

In accordance with the law laid down in Ishikawajma-Harima Heavy Industries, which was good law at the time of the remittance, unless the services are rendered in India, the same cannot be brought to tax as ‘fees for technical services’ u/s 9. Though the law was amended retrospectively, so far as tax withholding liability is concerned, it depends on the law as it existed at the point of time when payments, from which taxes ought to have been

Thursday, 13 February 2014

HAPPY VALENTINE DAY


Important Amemdment in AS-11

Insertion of new paragraph 46 in AS 11, The Effects of Changes in Foreign Exchange Rates, issued by The Institute of Chartered Accountants of India, for their applicability to entities other than companies
1. The Ministry of Corporate Affairs, Government of India, inserted paragraph 46 by notification dated 31st March, 2009 which was subsequently modified in 2011 by notification dated May 11, 2011 and notification dated 29th December, 2011 and paragraph 46A in AS 11, inserted by

Whether when assessee, engaged in exports, outsources preparation of food items and does not supply any controlled raw materials to its jobworkers, it can even then claim Sec 10B benefits - NO: HC

THE issue before the Bench is - Whether when the assessee, engaged in exports, outsources the preparation of food items and does not supply any controlled raw materials to its jobworkers, it can even then claim Sec 10B benefits. And the verdict goes against the assessee.
Facts of the case
The assessee company is engaged in the business of manufacturing and exporting of food items

CBDT Circular On Application Of Section 14A And Rule 8D



The CBDT has issued Circular No. 5 of 2014 dated 11.02.2014 in which the issue as to whether disallowance under section 14A and Rule 8D can be made in cases where the corresponding exempt income has not been earned during the financial year has been considered in great detail.

http://www.itatonline.org/info/?dl_id=1474

Wednesday, 12 February 2014

Highlights of the Interim Railway Budget- 2014

Presenting the Interim Railway Budget for 2014-15, Railway Minister Mallikarjun Kharge on Wednesday announced a slew of measures for improving the services of Indian Railways.

Here are the highlights of the Interim Railway Budget 2014-15:
Achievements/Initiatives

New income tax section 32AC incentive for installtion of plant and machinery




In order to encourage In order to encourage substantial investment in plant or machinery, a new section 32AC has been inserted in the Income-tax Act to provide that where an assessee, being a company,—

(a) is engaged in the business of manufacture of an article or thing; and

Penalty deleted on reasonable cause for Non-availability of PAN - IT

Income Tax Department has declared good news for Taxpayee who are payable tax and those who have not own PAN till filing TDS or Income Tax Return i.e. penalty is deleted. In this regard Income Tax Department has decided that Non-availability of PAN of payee-customer was a reasonable cause for belated filing of TDS return; penalty deleted. Before this on non-submission of PAN, Tax is to be deducted @ higher of prescribed rate or 20%. as per the recent amendments W.e.f 01/04/2010.



Whether when assessee enters into agreement for transporting employees of Research Institute and hires vehicles on rent to fulfil obligations, any TDS liability u/s 194C arises on payments made in this regard - NO: HC

THE issue before the Bench is - Whether when the assessee enters into agreement for transporting employees and guests of a Research Institute and hires certain vehicles on rent to fulfil its obligations, any TDS liability u/s 194C arises on payments made in this regard. And the answer goes against the Revenue.
Facts of the case
The assessee concern had undertaken a contract of transporting the employees of Institute of Plasma Research by supplying vehicles for the purpose. In the course of executing the contract,

Tuesday, 11 February 2014

Whether when municipal authorities collect licence fees for putting up hoardings either on municipal land or private land, such receipt is to be treated as business income as per provisions of Sec 28 - NO: HC

THE issue before the Bench is - Whether when municipal authorities collect licence fees for putting up hoardings either on municipal land or private land, such receipt is to be treated as business income as per provisions of Sec 28. And the answer goes against the Revenue.
Facts of the case

The
assessee is a Municipal Corporation. For the assessment year 2005-06, the return was not filed by the Corporation. A notice under section 142(1) of the Incometax Act, 1961 for filing the

Service tax Notificate No.03/2014.

Government of India
Ministry of Finance
(Department of Revenue)
***
Notification No. 03/2014-Service Tax
New Delhi, 3rd February, 2014
G.S.R….(E).- Whereas, the Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), under section 66 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as ‘the Finance Act’), on services provided by an authorised person or sub-broker to the member of a recognised association or a registered association, in relation to a forward contract, and that such services were liable to service tax under the Finance Act, which was not being levied according to the said practice during the period commencing from the 10th day of September 2004 and ending

Exchange Rate effective from 07/02/2014

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, PART-II, SECTION 3, SUB-SECTION (ii), EXTRAORDINARY]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
Notification No.9/2014-Customs (N.T.)
DATED THE 6th February, 2014
17 Magha, 1935(SAKA)
S.O. (E). – In exercise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), and in super session of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.3/2014-CUSTOMS (N.T.), dated the 16th January, 2014 vide number S.O.118 (E), dated the 16th January, 2014, except as respects things done or