Monday, 31 March 2014

India Taxes- Due Date Alert for the month April 2014



No
Due Date
Related to
Compliance to be made




1
30.4.2014

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 March 2014.
·        Deposit TDS from Salaries  deducted during the month of March 2014
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of March 2014, if any
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of March 2014, if any
2
20.4.2014

VAT
Payment of VAT & filing of monthly return for the month of March 2014
3
20.4.2014

STPI
Filing of Softex Form for the month ended March 2014
4
25.04.2014
Service Tax
Filing of Service tax from October  to March  2014

Few Points on Permanent Establishment.




Ø  The taxability of any entity depends on its residential status in India. The Indian Income Tax Act provides thata resident taxpayer is subject to tax in India with respect to its global income. Even if a company does not have a presence in India, but may potentially have some kind of activity or is present through an unincorporated structure like liaison or branch office, the notion of a business connection will assume significance. And, if income is derived from such a business connection in India, it will be liable to pay tax on "such part of the income as is reasonably attributable to the operations carried out in India." If transactions between a non-resident entity and the PE is at arm's length from the inception, no profits can be attributed to a PE from its work done on behalf of the non-resident entity.

Indian decision on the constitution of a permanent establishment under India-US tax treaty



The High Court (HC) of India delivered its decision on 5 February 2014 in the case of CIT v. eFunds IT Solution Inc. and eFunds Corporation (ITA 735&736/Del/2011) on the constitution of a subsidiary permanent establishment (PE) and ruled that a PE cannot be determined primarily on the basis that there is a close association between the parent and the subsidiary in performing core functions, assets required by the

FAQ on Mediclaim deduction under section 80D



1.    Why is deduction u/s 80D allowed?
The deduction is allowed for

1. buying medical insurance , popularly known as Mediclaim policy.
2. Keeping in effect a medical insurance already bought.

Changing contours of permanent establishment

In the context of taxation of business profits in India, the concept of permanent establishment (PE) has been of intense debate and interpretation. Over a period of time, the concept of PE has undergone significant evolution, due to several developments such as tax commentaries and judicial rulings. It would be interesting to look at and analyse the trend of some recent rulings.
E-commerce
Gone are the days when MNCs were required to invest in setting-up physical presence to further their

The Law On Deductibility Of H. O. Expenses Of A Permanent Establishment

Business presence of a foreign entity in India creating a business connection attracts tax on the profits earned by such presence to the extent they are attributable to operations carried out in India (Section 9 of the Income tax Act, 1961). Where such business presence constitutes a permanent establishment (PE) of a foreign entity, then even the relevant Double Taxation Avoidance Agreement (‘DTAA’ or ‘tax treaty’) recognizes the right of the PE state (India) to tax the profits attributable to the PE

In general, as regards tax treaties entered into by India, the provisions relating to taxation of business profits (Article 7 of the tax treaty) provide that in computing the profits of a PE, there shall be allowed as deduction, expenses which are incurred for the purposes of the business of the PE, whether incurred in India or elsewhere.


Tax and permanent establishment

The Delhi Tribunal has described the method to arrive at an appropriate profit, which is attributable to the permanent establishment when transfer pricing methods fail to compute reasonable profit.
The recent decision of the Delhi Income Tax Appellate Tribunal in the case of Convergys Customer Management is significant as it deals with attribution of profits to Permanent Establishments (PE). It is important to foreign entities procuring services from India through PEs. The taxpayer, a foreign company, was providing customer management services by utilising its advanced information system capabilities, human

Sunday, 30 March 2014

Few Points on TDS on International Payments.


Ø  In case foreign entity have PE in India, then income to be computed under business head and tax rate will be 40%.  

Ø  In case there is no PE, then refer DTAA between India and that country and obtain the rate as per article of DTAA.

Calculating Withholding Taxes in India

Withholding taxes are a government’s way of making sure that the proper taxes are paid on an item by way of either withholding or deducting the relevant tax amount from an individual’s or an enterprise’s income. They are of particular note to international companies doing business with India yet without a presence there, as some services provided to Indian customers can be subject to withholding tax. They may also impact on foreign subsidiaries of international companies in inter-company agreements.

Taxation On Income Of Foreign Universities Imparting Educational Courses In India

We have entered into a new era of education, wherein instead of students heading abroad for pursuing their dream courses, Foreign Universities are offering such courses in India. Every set of change or evolution is not complete without its unique set of complications. One such complication in respect Foreign Educational Institutions entering into collaboration with Indian Educational Institutions and providing education to Indian students by way of Distance Learning or Full time course, is in respect of taxation on income earned by such Foreign University. The present article highlights various aspects of such taxation of the aforesaid remittance income.

TDS on Reimbursement of Expenses to Non Resident



TDS on Reimbursement of Expenses to Non Resident
To elucidate the concept, considered the following cases from TDS deduction perspective u/s 195 of the Income Tax Act:-

Should you deduct TDS on payments made to foreign professionals or consultants?


In this write-up, we will discuss the provisions and tax implications which get attracted when payment is made by an Indian company to a foreign company and foreign individual, as they receives
Idividuals, firms or company based in US .

TDS Deduction from payments made to Non-Resident foreign shipping Companies



TDS Deduction from payments made to Non-Resident foreign shipping Companies:
If the Payments are made to an agent of a Foreign(Non-Resident) Shipping Liner. Tds need not be deducted on the following category of expenses:
  1. Ocean Freight
  2. Terminal Handling Charges
  3. Demurrage Charges
  4. Any other amount of Similar Nature (Like Addl.Ocean Freight/Addl.Demurrage/Addl.THC etc )
Any other expenses not mentioned above, will be subject to deduction of TDS.
Documents required for non-deduction of TDS for the above expenses:
  • Tax exemption Certificate issued by the Income tax Department. Name of the Principal (Foreign Shipping Liner) and Name of the Agent (Indian Agent of the Foreign Shipping Liner) should be mentioned in the Tax exemption Certificate. If the names of the Principal and Agent not mentioned in the Tax Exemption Certificate, Self Declaration Letter can be obtained from the Principal/Agent in the Letter Paper along with the Tax Exemption Certificate. This Certificate is valid only for the Period mentioned in the Certificate. Usually, the maximum period of the Certificate will be one year only. So we need to collect every year from the Party.
  • Name of the Principal (Foreign Shipping Liner) and Name of the Agent (Indian Agent of the Foreign Shipping Liner) should be verified for each transactions with the relevant BL Copies.
Note:
The above stated provisions will not applicable to any Indian shipping Liner.
Reference:
  • Sec.172 of the Income tax Act 1961 – Shipping business of Non-Resident
  • Income tax Circular 723 dated 19.09.1995

Rate of TDS of Payment of Interest to Non Resident under Section 195 of Income Tax Act

Rate of TDS on payment of interest or other sum chargeable to Income Tax to non resident or foreign company not being company has to deduct income-tax thereon at the rates in force. Person has to deduct the TDS at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode. Where any interest or other sum as aforesaid is credited to any account, whether called “Interest payable account” or “Suspense account” or by any other name, in the books of account of the person liable to pay such income then also person has to deposit the TDS on such amount. Following payment to non resident are not covered under section 195 of Income Tax Act.

TDS on Foreign Commission


In the present article, attempt is made to evaluate TDS implication u/s 195 of theIncome Tax Act on commission charges paid by Indian exporters to foreign agentfor their services availed outside India.In this article analysis is done from three angles to arrive at the conclusion:-1.Circulars issued by CBDT2.Precedent Case laws on foreign commission.3.Position in Double Taxation avoidance agreement

Rights in Raid

DREADING A SEARCH: KNOW YOUR RIGHTS

For the revenue intelligence agencies, search is a powerful instrument to gather evidence against tax evaders. In fact, given the magnitude of tax evasion in the country, searches are conducted almost everyday by one or the other investigative or preventive set-ups. Though the tax laws have given immense power to these agencies it has, at the same time, given certain rights to tax-payers to safeguard their interests. The modalities and rules to conduct search under various tax laws like Central Excise, Customs, NDPS and

TDS Payment to Foreign Consultant

TDS applicability to foreign consultant who renders service outside India and does not have PE in India.

·
  1. As per the recent amendment in section 9 of Income tax act 1961proposed by finance bill 2010, as passed by Loksabha on 29th April 2010;all payments made to a nonresident outside India shall be taxable in India regardless of the fact that whether the services have been rendered in India or not.

Friday, 28 March 2014

NO MORE EXCEL UTILITY FOR INCOME TAX RETURN

Today while  filing income tax return after a long gap find that there is no more income tax excel ITR forms are available on the website.  Further  portal also not accepting old excel version.

Now there is java Utility version is available . However same is very simple to use.


Whether when close relative of assessee has been working with him for several years, huge payment of commission in particular year can be construed as subterfuge to reduce tax liablity - YES: HC

THE issues before the Bench are - Whether when a close relative of the assessee has been working with him for several years, the huge payment of commission in a particular year can be construed as a subterfuge to reduce tax liablity of the assessee and Whether "nephew" can be considered as a relative as per the provisions of section 2(41). And the verdict goes against the assessee.

Whether any loss made on last date of accounting year on account of derivative contract outstanding is allowable as business loss as per provisions of Sec 37(1) - YES: ITAT

THE issues before the Bench are - Whether any loss made on the last date of the accounting year on account of derivative contract outstanding is allowable as per provisions of Sec 37(1); Whether assessee is entitled to adjust the actual cost of imported assets acquired in foreign currency on account of fluctuation in the rate of exchange at each of the relevant balance sheet dates, pending actual payment of the liability u/s 43A and Whether losses arising out of “Mark to Market” transaction can be considered as ascertained losses and allowable as a business expenditure. And the verdict goes in favour of the assessee.

Delhi Tribunal rules on Service PE trigger on account of deputation and principles for examining “effectively connected” with PE


This Tax Alert summarizes a recent ruling of the Delhi Income Tax Appellate Tribunal (Tribunal) in the case of JC Bamford Excavators Ltd. (Taxpayer) on the tax implications arising from grant of use of intellectual property rights (IPRs) and provision of services of personnel by the Taxpayer to a wholly-owned Indian subsidiary, under the India-UK Double Taxation Avoidance Agreement (DTAA), as well as the Indian Tax Laws (ITL).
The Tribunal held that consideration for grant of use of IPRs was taxable as royalty in India. It was held that activities of inspection and testing by employees of the Taxpayer were undertaken to ensure that quality of the licensed products adhered to the

Thursday, 27 March 2014

Few Points on Transfer pricing.




Ø   Jurisdictional requirement for applicability of TP provisions to be established, if raised by a taxpayer, before considering the issue of valuation. Vodafone India Services Pvt. Ltd. Vs. Union of India (through the secretary, Ministry of Finance), Addl. Commissioner of Income tax Transfer Pricing –II(6), Dy. Commissioner of Income tax, Circle 3 (3) (writ petition no. 1877 of 2013)

General Understanding on Transfer Pricing

Transfer Pricing
Transfer pricing involves a range of activities from setting, analysis, documentation to adjustment of charges made between related parties for goods, services, or use of property (including intangible property). Inter company transactions across borders are growing rapidly and are becoming much more complex. This has led to the rise of transfer pricing regulations as governments seek to stem the flow of taxation revenue overseas, making the issue of great importance for multinational corporations.

Transfer Pricing Scrutiny On Intra-Group Share Subscriptions - What Does The Future Hold For Shell?

To what extent can transfer pricing provisions be attracted to cross-border investments in Indian subsidiaries? Can the issuance of shares at a price lower than market price be grounds for a transfer pricing adjustment? This question (amongst other hotly debated Indian tax issues, such as those relating to retrospective Indian tax on indirect transfers) is beginning to assume growing prominence on account of the recent high profile transfer pricing adjustment of over Rs. 150 billion on a Shell group entity in India. Reports

Taxation of Hawala Transaction Under Vat


Hawala dealers are registered dealers. These dealers do not carry on business, but they provide false bills signed by them. They issue ‘C’ forms and other required documents for their petty benefits. Such dealers, not only show that the goods mentioned in such bills are resold by them but also they do not bother about the facts that they are being liable to pay the tax by providing bogus bills or ‘C’ forms. It would be appropriate to say that sale of BOGUS bills and ‘C’ forms is their only business.

Transfer pricing audits slap notional interest

India Inc is increasingly finding a notional interest slapped on it where outstanding payments are due from related parties, such as overseas group companies, against supply of goods or services.

Tax authorities admit that the quantum of such adjustments in ongoing transfer pricing audits, on a pan-India level, could run into several hundred crores of rupees.

If such payments are outstanding beyond the credit period, which is either laid down in the agreements between the parties or according to the industry benchmark, transfer pricing officers (TPOs) tend to make a notional interest adjustment to the income of the Indian company, which is the supplier. Thus, tax has to be paid on the enhanced income. While levying notional interest was commonplace in instances of loans given to related parties, tax experts are increasingly seeing its application in trade transactions

NRI setting up business in India? Watch out for transfer pricing



Over the past decade, India has become a big opportunity for global entrepreneurs looking to grow a successful business. The liberalization, booming middle class, and growing jobs and salaries have made India an attractive destination. At the same time, setting up a business in India means navigating through the various tax and legal complexities. And one of the major tax laws that needs to be kept in mind is the one on transfer pricing.

Wednesday, 26 March 2014

FEW POINTS ON SECTION 80-IA.


Ø  Assessment order allowing section 80-IA cannot be change by retrospective amendment. Ref. Katira Constructions Limited v UOI ( 31 Taxmann.com 250).

Ø   Receipt of various subsidies is having direct nexus with 80-IA undertaking and hence eligible for deduction.  Meghalaya Steels Limited – Guwahati HC.

Whether booking rights or right to purchase apartment is also a transferable capital asset - YES: Delhi HC

THE issues before the Bench are - Whether booking rights or rights to purchase the apartment or rights to obtain title to the apartment are also capital assets that is transferable; Whether the booking rights to a property sold can accrue to the assessee on the date of application for allotment/confirmation of allotment; Whether in case there is no intention of the builder of the property to convey any rights to the assessee, it can be assumed that "booking rights" emanated from the confirmation letter given by the said builder and Whether in such case the date of execution of the agreement to sell by the assessee to a subsequent buyer would be considered as the date of transfer of "Booking Rights". And the verdict goes against the assessee.
Facts of the case

Strictures passed regarding poor quality of orders of the ITAT. Government urged to ensure that only competent persons are appointed Members of the ITAT

CIT Vs. Ram Singh (Rajasthan High Court

The department filed an appeal in the High Court contending that the Tribunal had disposed off the appeals filed before it (relating to rejection of books of account u/s 145 and estimation of gross profit) without giving any reasons. HELD by the High Court:
(i) We find the judgments of the ITAT being the stereo typed, non-speaking, unreasoned, arbitrary and whimsical;

New Company Act effective from April 1, 2014

Today 196 sections of companies act 2013 includind sub clause of earlier notified sections & 6 schedules have been notified and its effective from April 1, 2014.


Taxation of NRI's


Who is a resident of India?

A person who meets either of the following Basic conditions is considered a resident:
    1. The person should have been in India for 182 days or more during the previous year
      OR
    2. Should have been in India for 60 days or more during the previous year.
AND
He/she should have never left the country for the four preceding years.
Exceptions

Interest u/s 234C for deferment in payment of advance tax

Any income earned by an assessee during the financial year is taxable immediately in the following assessment year. Individual are liable to pay Advance Tax on estimated income, during a FY if the amount of income tax payable on such estimated income after deducting TDS exceeds ten thousand rupees or more. But in case of any such default Interest u/s 234B and 234C gets attracted.
Interest u/s 234C is attracted for deferment of advance tax beyond the due dates i.e. non-payment of advance tax or payment of underestimated installments of advance tax. Now, let us understand the computation of Interest u/s 234C in case of a

Whether when assessee is into warehousing business, income earned as rental, interest on FDs and loans given to staff is also eligible for exemption u/s 10(29) - NO: Madras HC

: THE issues before the Bench are - Whether income earned by the assessee not the one derived from the letting of godowns for the stated purpose of storage, processing or facilitating of marketing of commodities and having no direct nexus to the activities, is eligible for exemption under Section 10(29) of the Act; Whether income incidental to the storage, processing or facilitating of marketing of commodities would qualify for exemption under the provisions of the Income Tax Act and Whether income from house property, from bank receipts, income on loans and advances made to the members of the staff, interest on bank deposits, dividend income, supervision charges, fumigation service charges, weigh bridge receipt, income from sale of tender forms and interest collected on belated refund of advances would be eligible for exemption under Section 10(29). And the verdict goes against the assessee.
Facts fo the case

Monday, 24 March 2014

Few Points on Section 14A disallowance.

Ø  Even if rule 8D isn’t applicable, AO can still disallow proportionate exp. under sec. 14A   

Ø   Expenses Incurred for earning those Income which is exempted under any provision of Income Tax Act. Under Income Tax Act those expenses are allowed to deduct from Income from them Taxable Income Earned otherwise no deduction is allowed from Income. If assesse considered those expenses which are incurred on earning exempted Income then assessing officer have right to add back those expenses. These expenses are disallowable under Sec 14A of Income Tax Act. Under Sec 14A only those expenses are disallowed which are directly related to the exempted Income, Indirect expenses are not disallowed under this section.

Deduction U/S. 54F On Investment In More Than One Flat - Case Studies

Fact situation
An assessee has sold his Landed Property (Non-agricultural Land) and wants to purchase two nos. of House Property. Can he claim any exemption in the following situations-
Situation - 1, He already owns a residential house at the time of transfer of the above landed property and he wants to purchase two residential house.
Situation- 2, He does not have any residential house at the time of transfer of the above landed property and he wants to purchase two residential house.
Situation-3, His father & he jointly owned a residential house at the time of transfer of the above landed property and wants to purchase two residential house.

AO CANNOT MAKE ALP ADJUSTMENT OF ITS OWN.

The provisions of TP regulations applicable for computing income from international transactions having regard to ALP. If the TPO suggests that the operating profit declared by an assessee is compatible to ALP norms, the operation of all those provisions come to an end. AO can not make any other adjustment towards

AUDIT REPORTS UNDER THE INCOME-TAX ACT


SectionRuleFor WhomIn Form No.
12A(b)17BPublic charitable or religious Trusts or Institutions whose income exceeds Rs. 50,000 before exemption.10B
33ABA(2)5ADAssessees claiming deduction in respect of Deposits under Site Restoration Fund Account/Scheme.3AD
35D(4)6ABAssessees other than Cos. or Co-op. Societies claiming amortisation of certain preliminary expenses.3AE
35E(6)–do–Assessees other than Cos. or Co-op. Societies claiming deduction for expenditure on prospecting etc. of certain minerals.

Expenditure on expansion of business, treated as revenue expenditure

.

The assessee gave a dual treatment of expenditure on expansion of business – Capital Expenditure in the books of accounts but revenue expenditure for filing income tax return. As the expenditure was for expansion of existing business, the Commissioner of Income Tax allowed the same as revenue expenditure for claiming deduction against tax.

Income Tax Offices to be open on last three days of March 2014

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
NEW DELHI
OFFICE MEMORANDUM
Dated: March 20, 2014
Sub: Highlights of the Video Conference held on 20.03.2014-reg-
1. In order to achieve the target, a further net collection of Rs. 50,204 crore is required. An analysis with

Whether when power tariff incentive received by assessee from State Govt goes towards reducing electricity bill, same is to be treated as revenue receipt - YES: HC

THE issues before the Bench are - Whether when the power tariff incentive received by the assessee from the State Govt goes towards reducing the electricity bill, the same is to be treated as revenue receipt and Whether scrap sales should be included in the total turnover for the purpose of computing deduction u/s 80HHC. And the verdict partly goes in favour of Revenue.
Facts of the case

RBI Circular Export Data Processing and Monitoring System (EDPMS

RBI has released a circular (Ref: RBI/2013-14/481 A.P. (DIR Series) Circular No.101) dated February 14, 2014 on the captioned subject.
As of now, AD banks are submitting the various returns like XOS (export outstanding statements), ENC (Export Bills Negotiated / sent for collection) for acknowledgement of receipt of Export documents, Sch.3 to 6 (realization of export proceeds), EBW (write-off of export bills), ETX (extension of realization of export bills) relating to Export transaction under FEMA to RBI. These various returns are being managed on a different solo application or manually.

Sunday, 23 March 2014

E TDS RETURN DATE EXTENDED FOR GOVERNMENT DEPARTMENT

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
CIRCULAR NO
07/2014, Dated: March 04, 2014
All Chief Commissioners of Income-tax All Directors General of Income-tax
Sub: Ex-post facto extension of due date for filing TDS/TCS statements for FYs 2012-13 and 2013-14 – regarding
The Central Board of Direct Taxes ('the Board') has received several petitions from deductors/collectors, being an office of the Government ('Government deductors'), regarding

Few Points on R&D Circular issued by CBDT.


Ø  The CBDT has issued a Press Release dated Nil stating that Circular No.2/2013 dated 26.03.2013 (Circular on application of profit split method) has been rescinded and that Circular No. 3 dated 26.03.2013 (Circular on conditions relevant to identify Development Centres engaged in contract R&D services with insignificant risk) has been amended and reissued with a view to clear all ambiguities in the matter.

Ø  Pursuant thereto Circular No. 05 /2013 [F. No. 500/139/2012-FTD-I], dated 29.06.2013 has been issued to withdraw Circular No.2/2013 dated 26.03.2013 and Circular No. 6 dated 29.06.2013 has been issued in place of Circular No. 3 dated 26.03.2013. In the new Circular No. 6 dated 29.06.2013, the CBDT has laid down guidelines for identifying Development Centres as a contract R&D service provider with insignificant risk for transfer pricing purposes
  
Ø   

Understanding Section 68 of Income Tax Act 1961

According to section 68 of Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of the same or the explanation offered by him is not satisfactory in the opinion of A.O., the sum so credited may be charged to income tax as the income of the assessee of that previous year. An attempt here is made to understand the provisions of section 68 of Income Tax Act,1961 here below:

Sec 35CCC – Expenditure on Agricultural Extension Projects

APPLICABILITY – Where an assessee incurs any expenditure on agricultural extension project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction on such expenditure.

AMOUNT OF DEDUCTION – The assessee shall be allowed a deduction equal to 150 per cent or one and one-half times of such expenditure.


Green Signal to Companies Act by Election Commission.

Ever since the arrival of Companies Act, 2013, the corporate market is immersed in its tidal waves. Simple, Precise and to the point- this Act sweeps you off your feet with its 29 chapters, 7 schedules and 470 sections. The viral wave seems to have reached the Government as well. The ECI (Election Commission of India) has finally shown the green flag to this new-born Act.
The final rules governing this Act will be released by the Ministry of Corporate Affairs next week. Till date, 98 sections of the Act have been notified by the Ministry. Recently, the rules regarding Corporate Social

Friday, 21 March 2014

Looking to save tax? Don’t be taken in by hype on Section 80 C




Come March, Section 80 C enters the popular lexicon. We are talking about Section 80 C of the Income-Tax Act here. It allows tax deductions of up to Rs 1 lakh in some specific investments such as Public Provident Fund, 5-year bank fixed deposits and tax-saving mutual fund schemes, among others.

Many taxpayers always grumble that they don't get enough time to make an intelligent investment choice to save taxes. Financial advisors, on their part, blame it on the habit of finalising tax-saving investments at the eleventh hour as the main reason why many taxpayers get stuck with bad investments.

Whether interest obligation arises for the Revenue in every case where excess tax paid by assessee has been retained by the State for its own enjoyment - YES: Supreme Court

THE issues before the Apex Court are - Whether the statutory obligation to refund carries with it the right to interest also; Whether when the assessee deposits tax as per an order passed u/s 195(2), the Revenue is under obligation to pay interest on refund processed as per the appellate order and Whether interest obligation arises for the Revenue in every case where excess tax paid has been retained by the State for its own enjoyment. And the verdict goes against the Revenue.
Facts of the case
The assessee company is engaged in the manufacture of nitrogenous fertilizer. During the

Whether provisions of Sec 56(2)(vii) apply to all capital assets, including bonus and rights shares offered on proportionate basis even if offer price is less than fair market value - NO: ITAT

THE issues before the Bench are - Whether the provisions of section 56(2)(vii) apply to all capital assets, including bonus and rights shares offered on proportionate basis even if the offer price is less than the fair market value; Whether in case the value of the property in the additional shares is derived from that of the existing shareholding, it can be presumed that additional property have been received by the shareholder; Whether in case there is no disproportionate allotment, shares are allotted pro-rata to the shareholders, based on their existing holdings, there is any scope for any property being received by them on the said allotment of shares; Whether in case the value of additional shares is derived from that of the existing shares, the decline in the

ITR-V due date for A.Y. 2012-13 and 2013-14 extended to 31.03.2014

Notification for Extension of date for receipt of ITR-Vs in CPC, Bengaluru, for the cases of AY 2012-13 and 2013-14 received/e-filed in FY 2012-13- Reg.
There are many taxpayers who have uploaded their Income Tax Returns (without digital signature Certificate) for A.Y. 2012-13 [filed between 1.4.2012 to 31.10.2013] and for A.Y. 2013-14 [filed between 1.4.2013 to 31.10.2013], but have either not filed the corresponding ITR-V or have filed it with the local Income-Tax Office. ITR-V is accepted only at CPC, Bengaluru by ordinary or speed post. Therefore an opportunity is being given to such taxpayers to regularize their Income-tax returns.All Such taxpayers may mail the ITR-V, by 31St March, 2014, by ordinary post or speed post at Post Bag No. 1,

Thursday, 20 March 2014

Few Concepts on Safe Harbor Rules:


Ø  Exemption from TP documentation if international transaction is less than one crore and no TP audit is international transaction is less than 15 Crore.

Ø  The transfer price contained in the safe harbor rules shall be applicable for five years beginning from financial year (FY) 2012-13.

Ø  The safe harbor rules, optional for a taxpayer, contain the conditions and  circumstances under which the norms/margins would be accepted by the Tax Authority and the related compliance obligations 

Whether when assessee enters into an MoU with non-resident consignment agent to reimburse all such costs that are incurred to complete exports sales, such expenses can be allowed as business expenditure - YES: ITAT

THE issue before the Bench is - Whether when the assessee enters into an MoU with a non-resident consignment agent to reimburse all such costs that are incurred to complete the exports sales, such expenses can be allowed as business expenditure. And the answer goes in favour of the assessee.
Facts of the case
A) The assessee company is engaged in the business of manufacturing, food processing and infotech. During assessment, the AO noticed that assessee had claimed certain expenses as "USA

S. 244A: Deductor entitled to interest on refund of excess TDS from date of payment

UOI vs. Tata Chemicals Ltd (Supreme Court)

The assessee made an application u/s 195(2) for permission to remit technical service charges and reimbursement of expenses to a foreign company without deduction of tax at source. The AO passed an order directing the assessee to deduct TDS at the rate of 20% before making remittance. The assessee effected the deduction and filed an appeal before the CIT(A) in which it claimed that the said remittance was not subject to TDS. The CIT(A) upheld the claim with regard to the reimbursement of expenses with the result that the TDS thereon was refunded to the assessee. However, the AO declined to grant interest u/s 244A on the said interest by relying on Circular Nos 769

Mumbai ITAT rules on payment to head office for data processing facilitated by software installed at the head office

Tax alert which summarizes a recent ruling of the Mumbai Income Tax Appellate Tribunal (ITAT) in the case of Antwerp Diamond Bank NV (Taxpayer) on the issue of whether reimbursements made, by its Branch Office (BO) in India to its Head Office (HO) in Belgium, towards data processing facilitated by a software amounts to “royalty” under the India–Belgium Double Taxation Avoidance Agreement (DTAA).

Wednesday, 19 March 2014

Few Points on Specified Domestic Transactions.


Ø  Applicable from FY 2012-13.

Ø  Transaction value exceeds Rs. 5 Crore.

Ø  SDT include payments to related parties, inter-unit transfer of goods or services of profit linked  tax holiday-eligible units, transactions of profit-linked tax holiday-eligible units  with other parties and any other transaction that may be notified by the Central Board of  Direct Taxes.

Supreme Court rules interest payable to deductor on refund of taxes withheld


This Tax Alert summarizes a recent ruling of the Supreme Court (SC) in the case of M/s Tata Chemicals Ltd. (Taxpayer). The SC was required to adjudicate on the issue of whether the Taxpayer, which is entitled to refund of excess taxes withheld by it under the provisions of the Indian Tax Laws (ITL), is also entitled to interest thereon.
In the facts of the case, the Taxpayer had withheld taxes as per the withholding orders issued by the Tax Authority and, on further appeal against such order, refund was granted to the Taxpayer. On claim of interest by the Taxpayer on such refund, the SC, while ruling in favor of the Taxpayer, held that interest is a kind of compensation for use and retention of money collected unauthorizedly by

Few Points on Advance Pricing Agreement.


Ø  Following are the few red flags by Indian tax authority under transfer pricing assessment.
§  Sales Supply chain structures
§  Procurement activities
§  Low margin
§  Intellectual Property payment  (IP)
§  Captive call center or BPO
§  Activities that develop IP
§  Inter group Loan, Corporate guarantee etc
§  Allocation of HO Expenses & management fees
§  Share capital & share application
§  Business restructurings.

Few Points on Section 10 of Income Tax



Ø  The following judgements where it held that losses of STPI Units is required to be adjusted with profit made by other units,

(a)  The ITAT Mumbai in the case of Capegemini India (P) Limited IT Appeal No. 7729/MUM./2010 held that “As per provisions of section 10A in force prior to assessment year 2001-02, the profit and gain from the eligible undertaking was not to be included in the total income which meant that the income from the eligible unit was exempt from tax. However, provisions were amended with effect from assessment year 2001-02 and as per the amended