Monday, 31 August 2015

India Taxes- Due Date Alert for the month September 2015




 


Sr No
Due Date
Related to
Compliance to be made
1
05.09.2015
 
Service Tax
Payment of Service Tax for the Month of August 2015
2
07.09.2015
 
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 August 2015.
·        Deposit TDS from Salaries  deducted during the month of August 2015
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of August 2015, if any
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of August 2015, if any
3
15.09.2015
 
Income Tax
Payment of second instalment of advance tax (45%) for corporate
4
20.09.2015
STPI
Filing of monthly softex forms
5
20.09.2015
 
VAT
Payment of VAT & filing of monthly return for the month of August 2015
6
30.09.2015
 
Income Tax
Income Tax  and Wealth Tax Return filing along with tax audit report excluding Transfer pricing

Whether adducing of additional documents during course of hearing before Settlement Commission is to be construed as failure of assessee to make true and full disclosure of unaccounted income - NO: HC

THE issue before the Bench is - Whether adducing of additional documents during course of hearing before the Settlement Commission, can be construed as the failure of the assessee to disclose true & full details of its unaccounted income. NO is the answer.
Facts of the case
The assessee is a subsidiary of M/s. Jupiter Networks LLC USA, and is engaged in rendering I.T. related services to its holding company inter alia from its unit registered with both STPI and

Friday, 28 August 2015

ANNUAL RETURN – 2 SECURITIES HOLDERS


SHAREHOLDINGS PATTERN:
There is a requirement of detailed information in several heads regarding shareholdings pattern.
Category wise details:
For each category of shareholders, company shall disclose number of shares held at beginning and end of the year with details of demat and physical shares, and their percentage of total shares.
The classes are:

Income Tax - Deduction - Excise Duty paid under protest - ITAT allows

RECENTLY, the ITAT delivered an important judgement related to Central Excise.
Section 43B of the Income Tax Act reads as,

Whether income from sale of property acquired in past can be claimed as capital gains when assessee, engaged in developing housing project, failed to declare same in books audited every year - NO: HC

THE issue before the Bench is - Whether income from sale of property acquired in the past can be claimed as capital gain, when the assessee engaged in the business of development of housing project has continuously failed to record such acquisition in his books of account which is audited every year. NO is the verdict.

Latest Court rulings


Hasmukh N. Gala vs. ITO (ITAT Mumbai)

S. 54: Giving advance to builder constitutes "purchase" of new house even if construction is not completed and title to the property has not passed to the assessee within the prescribed period
The word ‘purchase’ used in Section 54 of the Act should be interpreted pragmatically. The intention behind Section 54 was to give relief to a person who had transferred his residential house and had purchased another residential house within two years of transfer or had purchased a residential house one year before transfer. It was only the excess amount not used for making purchase or construction of the property within the stipulated period, which was taxable as long term capital gain while on the amount spent, relief should be granted. Principle of purposive interpretation should be applied to subserve the object and more particularly when one was concerned with exemption from payment of tax
 

CESTAT rules that licence fees shall be included in the assessable value of commercial import of packaged software under Customs Act, 1962


We are pleased to release a Tax Alert on the recent decision of the Customs, Excise and Service Tax Appellate Tribunal  (CESTAT) regarding, inclusion of royalty / licence fee in the assessable value of import of packaged software under the Customs Act, 1962.

SC rules clubbing provisions inapplicable to income arising to trust created for benefit of minors which is deferred beyond period of minority





 

This Tax Alert summarizes a recent ruling of the Supreme Court (SC) in the case of Kapoor Chand v. ACIT (Taxpayer), wherein the issue was whether income from a partnership firm arising to a trust created for the benefit of minors was taxable in the hands of the parent by virtue of the clubbing provisions as were operative during the year under appeal.

 

Supreme Court Stays Bar Council’s Directive On Advocates’ Verification




A Writ Petition No. 17361 of 2015 was filed by A. P. Ranganathan in the Karnataka High Court to challenge the Certificate and place of Practice (Verification) Rules, 2015. (copy of Writ Petition is available here). The High Court passed an order dated 24.04.2015 grating interim relief as prayed for “only in so far as the petitioner is concerned“. A similar Writ Petition in the case of MOHANAN L Vs. BAR COUNCIL OF INDIA (Writ Petition Civil 17467 of 2015) was filed in the Kerala High Court. The Kerala High Court’s interim order is not available. The Bar Council of India moved a Transfer Petition Nos. 1233-1243 of 2015 in the Supreme Court. In the said Transfer Petition, the Supreme Court has passed the following order dated 26.08.2015

Thursday, 27 August 2015

Whether when there is no pro rata transfer of land to developer, assessee can be made liable to pay capital gains tax for remaining land for which no payment was received as development agreement was cancelled due to various court orders - NO: HC

THE issue before the bench is - Whether when there is no pro rate transfer of land to developer, assessee can be made liable to pay capital gains tax with respect to remaining land for which no payment was received as development agreement was cancelled due to various court orders. NO is the answer.
Facts of the case
The assessee, an individual, is a member of M/s Defence Services Cooperative House Building Society Limited, Mohali consisting of various members. The society was owner of 27.3 acres of

Four Imp Verdicts On Low Tax Effect Circular, S. 147 On S. 143(1) Assmnts, S. 194C/194J TDS And TP On KPO vs. BPO Services


CIT vs. Suman Dhamija (Supreme Court)

CBDT Instruction No. 3/2011 dated 9.2.2011 specifying monetary limits for filing appeals by the department applies only to appeals filed after that date and not to pending appeals
The appeals and review petitions preferred by the department before the High Court, were disposed of on the basis of the instructions issued by the Central Board of Direct Taxes dated 9.2.2011. It is not a matter of

Tuesday, 25 August 2015

Bangalore Tribunal rules on the coverage of international transaction to even include an arrangement




In a recent ruling the Bangalore Bench of the Income-tax Appellate Tribunal (the Tribunal), following the findings made in taxpayer’s own case for assessment year 2009-10  has:

SEZ SCHEME IN INDIA.

Special Economic Zone (SEZ) Scheme was introduced under the Export & Import policy by Government of India w.e.f. 1-4-2000 with a view to provide an international competitive and hassle-free environment for export.
The SEZ is an enclave, a foreign territory outside the customs territory of India, with special rules for export-oriented production.
Salient features are :

ANNUAL RETURN – 1 CORPORATE INFORMATION


Sub – Rule (1) of Rule 11 of the Companies (Management and Administration) Rules 2014 seems very simple. Every company shall prepare its annual return in Form No MGT – 7.
In this post, we will study this Form MGT – 7. This is yet to be an E – Form therefore may be changed before actual notification.
REGISTRATION AND OTHER DETAILS:
Company shall fill Registration Number of the Company like Corporate Identification (CIN) or Global Location Number (GLN), and date of registration.

Whether, to prove point that land was used for agricultural purposes, assessee is required to furnish some accounts of expenses incurred for sowing crops and also revenue generated by selling agri produce - YES: HC


THE issue before the Bench is - Whether, to prove that certain land has been used for agricultural purposes in the last two years, the assessee is required to present some accounts with regard to expenditure made by the assessee for sowing the crops and also revenue generated by selling the agricultural produce. YES is the answer.
Facts of the case
The assessee is a Class-IV employee in the postal department. He purchased certain land in village Dummannahalli on 27.7.2006. The said land was notified for acquisition under the

Central Board of Direct Taxes notifies Income-tax (11th Amendment) Rules, 2015 for furnishing statement of reportable accounts as per section 285BA of the Income-tax Act, 1961


CBDT notifies Income-tax (11th Amendment) Rules, 2015 for furnishing statement of reportable accounts as per section 285BA of the Income-tax Act, 1961



 

Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 by the Government of the United States of America (USA) (Govt. of US) with a view to combat tax evasion by U.S. citizens and residents through the use of offshore accounts.

 

FATCA requires financial institutions globally to share information about the financial accounts held by U.S. citizens/ residents for tax purposes to the Internal Revenue Services (IRS) of the Govt. of US.

Monday, 24 August 2015

Taxation of E Commerce

E-commerce sector is buzzing with deals and sales. But when it comes to taxation policy, the sector does not sizzle, especially on the Budget day. The only spark was the Government’s pledge to implement the much-delayed Goods and Service Tax (GST) by April, 2016 and the improvement associated with debit and credit card transactions.

Special Economic Zone- Concept, Benefits and Tax Savings

Special Economic Zone is not a new concept. China has successfully boosted its export and share in world trade through SEZs. In India, SEZs contribute approximately 30% of total exports of goods and services. However, not many SEZs have come in manufacturing sector and maximum SEZs are in IT and ITeS sector. One of the key benefit for SEZs is exemption from taxes / duties on construction material and from income tax.

Whether charge relating to TDS would abate with time and tax dues can be construed as not payable if no action for its recovery is initiated - NO: ITAT

THE issue before the Bench is - Whether charge relating to TDS would abate with time and tax dues can be construed as not payable if no action for its recovery is initiated. NO is the answer.
Facts of the case
The assessee is an individual. A survey u/s 133A was conducted at the assessee's business premises, wherein it was found that tax at source as required u/s.194A had not been deducted on the interest credited/paid by the assessee to some depositors. Further, Form 15H, i.e., a declaration by the depositor that no tax was payable in respect of the interest allowed,

Imp Verdicts On Whether Taxable/ Non-Taxable Can Be Included/ Excluded From Book Profits


Shivalik Venture Pvt. Ltd vs. DCIT (ITAT Mumbai)

S. 115JB: (i) Even if an amount is credited to the P&L A/c, the assessee can seek exclusion of that amount for purposes of “book profits” if a note to that effect is inserted in the A/cs (ii) The exemption conferred by S. 115JB to sums exempt u/s 10 should be extended to all sums which are not chargeable to tax
The profit arising on transfer of capital asset to its wholly owned Indian subsidiary company is liable to be excluded from the Net profit., i.e., the Net profit disclosed in the Profit and Loss account should be reduced by the amount of profit arising on transfer of capital asset and the amount so arrived at shall be taken as “Net profit as shown in the profit and loss account” for the purpose of computation of book profit under Explanation

Supreme Court rules that no Service tax shall be levied on the service element in composite works contracts prior to 1 June 2007

We are pleased to release a Tax Alert on the decision of the Supreme Court (SC) regarding the levy of Service tax on indivisible and composite works contract prior to the introduction of Works Contract Service w.e.f. 1 June 2007.

Friday, 21 August 2015

Resident and Residential Address


Form – DIR – 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, asked strange information therein – 5 – Whether (applicant is) resident in India – yes or no (radio button). Any person filing and certifying the form should be confirm what is asked and what is purpose? Whether permanent residential address or present resident address has any relation with resident status? What is definition of these terms; Resident Status, Permanent Residential Address and Present Residential Address?

More so, verification by applicant contain direct reference of infamous Sections 447, 448 449 and certificate by professional contain direct reference of Section 449.

FAQ on NRI Taxation Assement Year 2015-2016



Q) Who is NRI as per Income Tax Act?
A) Residential status of an individual or HUF or a company is of great importance in Indian Income Tax Act as the liability to pay tax in India does not depend on the nationality or domicile of the Tax payer but on his residential status. Residential Status is determined on the basis of physical presence i.e. the number of days of stay in India in any year.

NRI Taxation Issues: Overview and Solutions

The NRIs (Non Resident Indians) are having lots of taxation issues especially when it comes to sale or purchase of property, securities, investments settlement, filling of returns, other various compliances etc. So, we will be discussing the each major issues in brief so that every NRI can become aware of such situation and also how to deal with such situations.

Whether if assessee-firm makes contribution to a not-for-profit organisation for creating awareness about its activities, such expenditure is allowable u/s 37(1) - YES: HC

THE issue before the Bench is - Whether if assessee-firm makes contribution to a not-for-profit organisation for creating awareness about its activities, such expenditure is allowable u/s 37(1). YES is the answer.
Facts of the case
The assessee firm was initially constituted with Smt. Manju Vaish, Smt. Kali Vohra and Mr. Vinay Vaish and was carrying on the profession of law in New Delhi and Mumbai. With effect from 1st April 2006, Smt. Manju Vaish and Smt. Kali Vohra retired from the partnership and Mr. Ajay Vohra and Mr. Bomi F. Daruwala joined the partnership. A fresh retirement-cum-

Three Imp Verdicts On Taxability Of Int On NPAs, S. 40(b)(v) Partners Salary And S. 40(a)(ia) TDS Disallowance


CIT vs. Deogiri Nagari Sahakari Bank Ltd (Bombay High Court)


Interest on NPAs and Stick Loans, even if accrued as per the mercantile system of accounting, is not taxable as per prudential norms

The assessee herein being a Cooperative Bank also governed by the Reserve Bank of India and thus the directions with regard to the prudential norms issued by the Reserve Bank of India are equally applicable to the Cooperative banks. The provisions of Section 45Q of Reserve Bank of India Act has an overriding effect vis-à-vis income recognition principle under the Companies Act. Hence, Section 45Q of the RBI Act shall have overriding effect over the income recognition principle followed by cooperative banks. Hence, the Assessing

Mumbai Tribunal rules exempt capital gains not liable to MAT despite credit to profit and loss account

We are pleased to release a Tax Alert summarizes a recent ruling of the Mumbai Income Tax Appellate Tribunal (Mumbai Tribunal) in the case of M/s. Shivalik Venture Pvt. Ltd. (Taxpayer) , on the issue of exclusion of exempt capital gains, credited to the Profit & Loss account (P&L), from ”book profit” while computing Minimum Alternate Tax (MAT) under the provisions of the Indian Tax Laws (ITL).

The Special Bench (SB) of the Hyderabad Tribunal had earlier ruled in the case of Rain Commodities v. DCIT  that exempt capital gains credited to the P&L are liable to MAT in the absence of any specific downward adjustment in the MAT provision.

CBEC issues clarification relating to waiver of issuance of SCN and conclusion of proceedings in Service tax and Central Excise


We are pleased to release a Tax Alert which gives an update on recent clarification issued by the Central Board of Excise and Customs (CBEC) in F.No.137/46/2015-Service Tax dated 18 August 2015. The clarification is regarding the provisions of Section 73, 76 and 78 of the Finance Act, 1994 and Section 11AC of the Central Excise Act, 1944 after amendments were made vide the Finance Act, 2015.

 

Thursday, 20 August 2015

Whether if assessee declares income during search, assets seized are liable to be appropriated towards tax liability on such income as per provisions of Sec 132(5) - NO: HC

THE issue before the bench is - Whether if assessee declares income during search, assets seized are liable to be appropriated towards tax liability on such income as per provisions of Sec 132(5). NO is the answer.
Facts of the case
The present appeals involve a common question concerning the treatment of the currency seized during the search and seizure operations conducted u/s 132. The Assessees claimed that the amounts seized during the search ought to be accounted for as payment of advance tax on the date of seizure and interest chargeable u/s 234A, 234B and 234C ought to be computed

Delhi Tribunal (Larger Bench) rules that interchange fees and merchant establishment discounts earned in respect of credit card transactions not subject to Service tax prior to May 2006

We are pleased to release a Tax Alert summarizing the decision of the Larger Bench of the Delhi Tribunal wherein it addresses the dispute regarding the taxability of interchange fee and merchant establishment discount earned during settlement of amounts in respect of credit card transactions.

In this case the Larger Bench held that a customary relationship exists between issuing bank, acquiring bank and merchant establishments in context of credit card services as mentioned under Banking and other Financial Services (BOFS).

Wednesday, 19 August 2015

Superannuation Funds: Time to re-examine the structure

Employer sponsored superannuation scheme were very popular in India, especially on account of the tax rules relating to the same. The modus operandi was that the employer would create a superannuation fund (SAF) Trust and have the same approved from the Income Tax Authorities.  The employer would thereafter contribute for its employees in order to provide retirement benefit to its employees. A superannuation fund is a voluntary tax-advantaged pension plan that can act as a supplementary social security pillar in addition to the mandatory occupational plans run by Employee Provident Fund Organization (EPFO). Constitution of a superannuation fund The Fourth Schedule of the Income Tax Act, 1961 (the Act)

Tax Benefits to BIHAR


Income-Tax Act 1961 Amended Through Finance Act 2015 to Provide Certain Tax Benefits to Notified Backward Areas in Specified States Including State of Bihar to Give
These Areas an Opportunity to Grow Faster;21 Districts of Bihar Notified as Backward Areas; Any Manufacturing Undertaking or Enterprise Set-Up During the Period From 01.04.2015 to 31.03.2020 in the Aforesaid Backward Areas of Bihar will be Eligible for 15% Additional Depreciation and 15% Investment Allowance Under the Income-Tax Act, on the Cost of Plant and Machinery Acquired and Installed by it During the Said Period

NIDHI COMPANIES UNDER COMPANIES LAW

Nidhi is a special class of companies under the Companies Act 2013. Sub – Section (1) of Section 406 define Nidhi. “Nidhi” means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

A Nidhi must be –

Whether expenditure incurred for curing defect in title of vacant land to be used for business purpose in future is to be treated as revenue in nature - NO: HC

THE issue before the Bench is - Whether expenditure incurred for curing defect in title of vacant land to be used for business purpose in future is to be treated as revenue in nature. NO is the answer.
Facts of the case
The assessee is engaged in the business of manufacturing of cutting tools at its factory and along with factory land assessee owned another area of land which was vacant. Pursuant to enactment of Urban Land (Ceiling and Regulation) Act, 1976, the assessee had applied to the

Whether when assessee is a member of JV, business loss of JV can be set off against profit of assessee from other business even before JV files its return - NO: HC

THE issue before the Bench - Whether when assessee is a member of the JV, business loss of the JV can be set off against the profit of assessee from other business even before JV files its return. NO is the answer.
Facts of the case
The assessee firm entered into a joint venture with M/s Unitech Limited as an association of persons (AOP) of which the Assessee’s share was 50% in the profit and loss account for the

Tuesday, 18 August 2015

CBDT Notification On Computation Of Period Of Stay In India U/s 6(1)

The CBDT has issued a Notification dated 17.08.2015 in which it has laid down rules on the computation of period of stay in India in certain cases. The rules come into effect with retrospective effect from 01.04.2015.

CBDT Directive Reg Representation Before Authority For Advance Rulings

The CBDT has issued a directive dated 14.08.2014 in which it has expressed concern that officers of the level of DCIT/ACIT are being nominated for representing cases before the Authority of Advance Rulings and that such officers are not able to effectively represent the Departmental view on complex

CBDT Circular Of Clarifications On Grant Of Approval And Claim Of Exemption u/s 10(23C)(vi)


The CBDT has issued Circular No. 14/2015 dated 17.08.2015 in which it has provided important clarification on various issues related to grant of approval and claim of exemption u/s 10(23C)(vi) of the Income-tax Act, 1961

Imp Supreme Court Verdict On Review Power U/s 260A


CIT vs. Meghalaya Steels Ltd (Supreme Court)


S. 260A: High Courts, being Courts of Record under Article 215, have the inherent power of review. There is nothing in s. 260A(7) to restrict the applicability of the provisions of the CPC to s. 260A appeals

High Courts being Courts of Record under Art. 215 of the Constitution of India, the power of review would in fact inhere in them. Section 260A(7) only states that all the provisions that would apply qua appeals in the

Monday, 17 August 2015

S. 234B interest is automatic if conditions are met. Form I.T.N.S. 150 is a part of the assessment order and it is sufficient if the levy of interest is stated there


CIT vs. Bhagat Construction Co. Pvt. Ltd (Supreme Court)





It will be seen that under the provisions of Section 234B, the moment an assessee who is liable to pay advance tax has failed to pay such tax or where the advance tax paid by such an assessee is less than 90 per cent of the assessed tax, the assessee becomes liable to pay simple interest at the rate of one per cent for every month or part of the month. The levy of such interest is automatic when the conditions of Section 234B

Putting TDS provisions for recurring deposits to work


TDS on recurring deposits makes investors either submit the exemption forms if there is no taxable income. In case of TDS on RD, they may have to revisit their tax calculations and accordingly pay tax

Important message for employees retiring within the next six months

The Department of Pension and Pensioners Welfare is organizing a Pre-retirement counselling workshop on 25th August, 2015 from 2.00 PM to 5.00 PM in the Lecture Room-I, India International Centre (Annexe) 40, Max Muller Marg, New Delhi-110003.

Whether judgment is fit to be recalled by HC when it was given without framing substantial questions of law - YES: Supreme Court


THE issue before the Supreme Court is - Whether a judgment is fit to be recalled by the High Court when it was given without framing the substantial questions of law. The verdict was YES.
Facts of the assessee
The assessee had claimed deductions u/s 80IB of the Income Tax Act and availed transport subsidies along with other incentives. The matter went into dispute and the appeal went upto

Friday, 14 August 2015

If tax is deducted under a wrong provision of the Income-tax Act, the payment is to be disallowed under Section 40(a)(ia) of the said Act

Recently, the Kerala High Court (High Court) in the case of P V S Memorial Hospital Ltd1 (the taxpayer) held that if the tax is deductible under Section 194J2 of the Income-tax Act, 1961 (the Act) but is deducted under Section 194C3 of the Act, the disallowance under Section 40(a)(ia) of the Act is still applicable. The High Court observed that the expression ‘tax deductible at source under Chapter XVII-B’ occurring in Section 40(a)(ia) of the Act has to be understood as tax deductible at source under the appropriate provision of Chapter XVII-B of the Act. Further, the latter part of this

Simple 3 steps for Service Tax code verification online.

Service tax code verification can be done online using simple 3 steps. It is helpful to determine the genuineness of the party whom we are paying service tax. Here, we have explained the manner of verification of service tax number and basics of service tax number.

Whether Sec 54F benefit is available to assessee when construction work though has started but is not yet complete in all respects within stipulated period - YES: ITAT


THE issue before the Bench is - Whether Sec 54F benefit is available to the assessee when construction work though has started but is not yet complete in all respects within the stipulated period. YES is the answer.
Facts of the case
The assessee is an individual. He filed return for relevant AY. During the year, assessee sold one property. The capital gain on sale of the aforesaid property was invested by the assessee in purchasing another house. The Assessee claimed deduction u/s 54F of the Act. To verify the claim of the Assessee, AO issued summons, u/s 131 of the Act. Response on behalf of assessee

SC confirms mutuality of interest as a pre-requisite to constitute a related party transaction for the purpose of CE Valuation

We are pleased to release a Tax Alert on a recent decision of the Supreme Court (SC) in the case CCE, Aurangabad V M/s Goodyear South Asia Tyres P L & Ors 2015-TIOL-165-SC.

This Tax Alert gives an update of a recent Supreme Court (SC) decision on valuation of manufactured goods sold by the assessee for the purpose of charging excise duty having regard to the applicability of the provisions involving related party transaction.

SC held that what is necessary to prove mutuality of interest, is interest both ways. This legal requirement is necessary in view of the definition of related persons. The expression “in the business of each other” clearly denotes that interest of the two persons have to be mutual, i.e., in each other, in order to treat them as related persons. In absence of mutuality of interest between the seller and the buyer, Apex Court concluded that the transaction between the parties is not a related party transaction.

Further, where assessee is an inter-connected undertaking as per the definition of related party, Rule 9 of CE Valuation Rules shall not apply as it does not include inter-connected undertakings.

SC ruling will provide relief to companies where relationship does not involve any mutuality of interest. Facts of each case need to be examined to understand if mutuality of interest exists between the companies.

The subjectivity in the provisions of Central Excise law pertaining to related party transactions still exist, which can be eliminated to avoid any possible litigation.

Thursday, 13 August 2015

SC confirms mutuality of interest as a pre-requisite to constitute a related party transaction for the purpose of valuation under Central Excise





 

This Tax Alert gives an update of a recent Supreme Court (SC) decision1 on valuation of manufactured goods sold by the assessee for the purpose of charging excise duty having regard to the applicability of the provisions involving related party transaction.

 

NRI Taxation In India & Tax Benefits


Paying a percentage of your earning as taxes to your country’s coffer contribute towards the nation’s functioning and development. Income Tax is levied on all sources of income other than agricultural income. Income taxes are applicable on all the resident citizens who earn their income in India. If you are an NRI (Non Residential Indian), you are only liable to pay taxes for the income that is earned in India. Thus the Income tax rules for the NRIs differ from that of the resident citizens.
 

Whether sales tax rebate can be said to be part of profit and gain derived from business entitled for Sec 80IC benefits - NO: HC

THE issue before the Bench is - Whether sales tax rebate can be said to be a part of profit and gain derived from business entitled for Sec 80IC benefits. NO is the verdict.
Facts of the case

The
ITAT held that the income from Sales Tax Deferment Rebate received by the assessee is

SC Stay On Advocates Service-Tax + ITAT Raps CBDT For 'Grave Assault On Trust And Reputation Of Fair Play


Bombay Bar Association vs. UOI (Supreme Court)


Interim stay of the operation and implementation of the judgement of the Bombay High Court upholding the constitutional validity of service-tax on lawyers granted

In P. C. Joshi vs. UOI, a Writ Petition was filed in the Bombay High Court to challenge the levy of service-tax on advocates. It was claimed that an advocate renders services which cannot be said to be commercial or business like. They cannot be equated with the service providers mentioned in the Finance Act 1994. It was also contended that advocacy is not a business but a profession and a noble one

 

Wednesday, 12 August 2015

Whether when expenditure in past was allowed as revenue in nature, merely because equipments were described as most important for tyre manufacturing plant, such expenditure is to be treated as capital in nature - NO: HC

THE issue before the Bench is - Whether when the expenditure incurred in the past was allowed as revenue in nature, merely because the equipments were described as most important for tyre manufacturing plant, such expenditure is to be treated as capital in nature. NO is the answer.
Facts of the case
The assessee concern filed its return of income declaring losses. AO had adjusted all the

Four Imp Verdicts On Capital Gains, Bad Debts Claim For ICDs, Tax Of Unclaimed Liabilities


Fibre Boards (P) Ltd vs. CIT (Supreme Court)


S. 54G does not require that the machinery etc has to be acquired in the same AY in which the transfer takes place. It is sufficient if the capital gain is “utilized” towards purchase of P&M by giving advances to suppliers. Section 24 of the General Clauses Act applies also to ‘omissions’ along with `repeals’ and saves rights given by subordinate legislation

The aforesaid construction by the High Court of Section 54G would render nugatory a vital part of the said Section so far as the assessee is concerned. Under sub-section (1), the assessee is given a period of three years after the date on which the transfer takes place to purchase new machinery or plant and acquire building or land or construct building for the purpose of his business in the said area. If the High Court is right, the assessee has to purchase and/or acquire machinery, plant, land and building within the same assessment year in which the transfer takes place. Further, the High Court has missed the key words “not utilized” in sub-

Tuesday, 11 August 2015

Decoding Secretarial Standards – Preservation, Records, Report and Disclosures

In this post, I will discuss Secretarial Standards related to Preservation, Records, Report and Disclosures under SS – 1 and SS – 2.
Minutes of all Meetings shall be preserved permanently in physical or in electronic form with Timestamp. [Paragraph 8.1 of SS – 1 and Paragraph 18.1 of SS – 2]
Where, under a scheme of arrangement, a company has been merged or amalgamated with another company, Minutes of all Meetings of the transferor company, as handed over to the transferee company, shall be preserved permanently by the transferee company, notwithstanding that the transferor company might have been dissolved. [Background Paragraph 1 after

Whether if assessee participates in reassessment proceedings without questioning Sec 148 notice and proceedings are later dropped but CIT invokes revisionary powers, in such case assessee is free to challenge Sec 148 notice - YES: HC


THE issue before the Bench is - Whether if assessee participates in reassessment proceedings without questioning Sec 148 notice and proceedings are later dropped but CIT invokes revisionary powers, in such case assessee is free to challenge Sec 148 notice. YES is the answer.
Facts of the case
The assessee is a partnership firm and derives income from business of manufacturing and

FATCA update: Indian Government notifies rules for FATCA reporting; due date for 2014 reporting set at 31 August 2015


 
The Indian Government signed an Inter-Governmental Agreement (IGA) with the United States (US) on 9 July 2015 to implement the Foreign Account Tax Compliance Act (FATCA) in India (refer to our newsflash dated 10 July 2015 for details). According to the IGA read with the FATCA provisions, foreign financial institutions (FFIs) in India are required to report tax information about US account holders to the Indian Government which will, in turn, relay that information to the US Internal Revenue Service (IRS).

Monday, 10 August 2015

5 Important Key Changes in New ITR Forms 3,4,5,6 and 7 For Asstt. Year. 2015-16

The new ITR Forms 1, 2 and 4S were notified for the Assessment Year 2015-16 vide Notification No. 41/2015, Dated 15-04-2015. However, in view of representations received from various stakeholders, the CBDT came out with simplified version of ITR forms 1, 2, 2A and 4S.

Whether any delay in furnishing TDS returns would lead to cascading effect and would stall assessment of returns filed by deductees - YES: HC

THE issue before the Bench is - Whether any delay in furnishing TDS statements would consequently have cascading effect and would stall the processing of the return of income filed by the deductee. YES is the answer.
Facts of the case
The assessees under the present petition had challenged the constitutional validity of Section 234E contending it to be ultra vires of Constitution of India and seeking declaration that under the newly inserted Section 234E, fee could be levied only after affording the assessee a reasonable opportunity of hearing and for consequential relief of quashing the intimations

Levy Of Penalty And Factors Affecting Levy Of Penalty Including Nature Of Offense, Mens Rea And Bona Fide Belief

Longstanding and never ending has been the debate regarding what is penalty and whether mens rea is an essential ingredient in levy of penalty or bonafide belief that “what was being done was correct” would hold good and save the offender from penalty. Over the years the law has evolved and Courts of Law have tried to lay down a law providing clarity in this regard.

Law On Claiming Deduction For Unspecified Expenditure U/s 37(1) Of The Income-tax Act, 1961

According to section 37(1) of the Income Tax Act, 1961, any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession.Also, according to Explanation inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1962 to section 37 (1), any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such

Five Imp Verdicts On Core Issues


CIT vs. Ovira Logistics (P) Ltd (Bombay High Court)

S. 43B: Service-tax billed to customer but not collected from him cannot be disallowed u/s 43B on ground of non-payment to treasury
Section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee. Liability to pay service tax into the treasury will arise only upon the assessee receiving the funds and not otherwise
 

Saturday, 8 August 2015

Whether wheeling charges paid on transfer of electricity under bulk power transmission pact without any distribution licence are to be treated as fees for technical services - NO: HC

THE issue before the court is - Whether 'wheeling charges' paid in respect of transfer of electricity under a bulk power transmission agreement without any distribution licence, can be categorised as 'fees for technical services'. NO is the verdict.
Facts of the case
The assessee is the State Transmission Utility for National Capital Territory of Delhi, which is responsible for the transmission of power and for upgrading, operating and maintaining the high voltage network. The assessee had entered into bulk power transmission agreement with the

Amendments to the Modified Special Incentive Package Scheme notified





 

This Tax Alert summarizes the amendments made in the Modified Special Incentive Package Scheme (M-SIPS) vide Notification no. 27(35)/2013-IPHW dated 3 August 2015 issued by the Ministry of Communications and Information Technology (Division of Electronics and Information Technology).

 

M-SIPS policy was first introduced in July 2012 by the Central Government to promote investment in the Electronics Systems Design and Manufacturing (ESDM) sector, by providing various incentives to new units/ significant expansion by manufacturers and service providers in this sector.

 
The revised M-SIPS policy seeks to expand the scope of the scheme by extending the benefits to additional products / verticals. Further, the time limit for making applications under the Revised Scheme has been extended for a period of 5 years beyond the original expiry date of the scheme in July 2015. The revised investment thresholds for various units to be eligible for incentives under the scheme have also been prescribed

Friday, 7 August 2015

Supreme Court rules aircraft landing and parking charges are not “rent” for withholding tax purposes


 
This Tax Alert summarizes a recent decision of the Supreme Court (SC) in the case of Japan Airlines Co. Ltd. v. CIT (Taxpayer)  on the issue of whether payments made by airlines to the Airports Authority of India (AAI) for landing and parking charges of aircrafts can be characterized as “rent” liable for withholding at a higher rate, instead of being treated as “work” under the Indian Tax Laws (ITL) for withholding at a lower rate.

Tax is not to be deducted at a higher rate of 20 percent u/s. 206AA of the Income-tax Act when the benefit of tax treaty is available

Recently, the Bangalore Bench of the Income-tax Appellate Tribunal (the Tribunal) held that there is no scope for the tax deduction at source (TDS) at a higher rate of 20 per cent as per the provisions of Section 206AA of the Income Tax Act, 1961 (the Act) when the benefit of tax treaty is available to a non-resident.

Facts of the case

Decoding Secretarial Standards – Contents of Minutes

In this post, I will discuss Secretarial Standards related to Contents of Minutes under SS – 1 and SS – 2.
General Contents:
Minutes shall state, at the beginning the serial number and type of the Meeting, name of the company, day, date, venue and time of commencement and conclusion of the Meeting. [Paragraph 7.2.1.1 of SS – 1]

Whether interest income earned by assessee-developer through housing finance activities is to be treated as income from other sources u/s 56 and not business income - YES: ITAT

THE issue before the Bench is - Whether interest income earned by assessee-developer through housing finance activities is to be treated as income from other sources u/s 56 and not business income. YES is the answer.
Facts of the case
A) The assessee is a developer. During assessment, the AO noticed that the assessee had claimed interest income as business income instead of assessing it under the head 'Income from Other Sources'. The assessee had explained that its main object was the development of

Thursday, 6 August 2015

Understanding Tax audit under Income tax act.


 

An Assessee is liable to get his Tax Audit done by a Chartered Accountant mandatorily, if in the previous year, 

 

1. The Person is carrying on business and his Total Sales/Turnover exceeds Rs. 1 Crore (Limit increased  wef 1st April 2012) or

 

2. The Person is carrying on Profession, and his Gross Receipts exceed Rs. 25 Lakhs (Limit increased wef 1st April 2012) or

 

Revised Formats under Takeover Regulations

SEBI vide its Circular No CIR/CFD/POLICYCELL/3/2015 dated 5th August, 2015 has issued revised formats for disclosure under the Takeover Regulations.

The copy of the relevant circular along with revised formats can be viewed and downloaded using the following link





Precautions to avoid Income tax notices.

Tth the Income Tax Department becoming net savvy and going online, it has become very easy for them to identify discrepancies in your papers and to keep a close eye on almost every financial transaction. Therefore, while filing return, one needs to be extra careful. Any wrong details furnished might put you in trouble.   images

From past few years, almost every taxpayer is receiving notices from Department. Now, it has become important that every provision and clause of tax laws shall be strictly abided. There are few reasons due to which notices are being issued and these reasons are very common among taxpayers. Find below, things to note to avoid notice from Department:

Whether addition can be made solely on basis of declaration made by assessee before Settlement Commission - NO: ITAT


THE issue before the Bench is - Whether any addition can be made solely on basis of declaration made by assessee before the Settlement Commission. NO is the verdict.
Facts of the case
The assessee an individual, at the relevant point of time, was working as Manager in JB Education Society. A search and seizure operation u/s 132 was conducted in case of JB Group of Institutions as well as their trustees. Simultaneously, a search and seizure operation was also

Three Imp Verdicts On TDS Deduction, TDS Disallowance And Bogus Purchases/ Sales


Japan Airlines Co. Ltd vs. CIT (Supreme Court)

S. 194-I: In deciding whether a payment is for "use of land", the substance of the transaction has to be seen. If the payment is for a variety of services and the use of land is minor, the payment cannot be treated as "rent"
When the airlines pay for these charges, treating such charges as charges for ‘use of land’ would be adopting a totally naïve and simplistic approach which is far away from the reality. We have to keep in mind the substance behind such charges. When matter is looked into from this angle, keeping in view the full and larger picture in mind, it becomes very clear that the charges are not for use of land per se and, therefore, it cannot be treated as ‘rent’ within the meaning of Section 194-I of the Act
 

Service tax controversy around an Indian “intermediary”


In India the export status of sales promotion services has historically been an area prone to dispute with the Indian Revenue seeking to tax such services provided by an Indian service provider to an overseas principal/ customer, based on the location of performance of such services in India. TaxbyManish discusses how, with the proposed treatment of ‘intermediary for goods’ in the Budget, this controversy may come to the fore yet again.
The export status of sales promotion services controversy appeared to settle in favour of the taxpayer with a series of court rulings upholding export status of such services having regard to the location of the service recipient abroad. Further, introduction of the “Place of Provision of Service Rules 2012” (PPS Rules) considerably strengthened the case for non-taxation of sales promotion services provided by a commission agent to an overseas principal/ customer in connection with facilitating supply of goods into India.

Wednesday, 5 August 2015

Important Information - Why reject the correction in Challan Details by TDS-CPC ?

Mostly, the correction in challan of TDS payment rejected by TDS-CPC we found, but can we think about that why TDS-CPC reject ? Read the following for better understanding :

Challan detail record on which correction has been filed does not exist in regular / previous statement

In a correction statement, verification keys from challan data should match with the corresponding fields in regular statement

Whether sale of tea manufactured out of purchased green leaves and also blending of purchased and manufactured tea are to be construed as part of business of growing and manufacturing of tea - YES: HC

THE issue before the Bench is - Whether sale of tea manufactured out of purchased green leaves and also blending of purchased and manufactured tea are to be construed as part of business of growing and manufacturing of tea. YES is the answer.
Facts of the case
The assessee is a public limited company, which carries on the business of growing and manufacturing tea. As part and parcel of the said business, the assessee purchases a small

Decoding Secretarial Standards – Maintenance of Minutes

In this post, I will discuss Secretarial Standards related to Maintenance of Minutes under SS – 1 and SS – 2.
Every company shall keep Minutes of all General Meetings, Board and Committee Meetings in a Minutes Book. Minutes kept in accordance with the provisions of the Act evidence the proceedings recorded therein. Minutes help in understanding the deliberations and decisions taken at the Meeting. [Paragraph 7 of SS – 1 and Paragraph 17 of SS – 2]
Maintenance of Minutes: