Ahmedabad ITAT invokes Explanation 1 to Sec. 37(1), disallows cost of production of goods incurred by assessee (manufacturer of pan masala) which were found to containing magnesium carbonate, a known carcinogenic substance, in excess of permissible limits; ITAT notes that in terms of a court order under the Prevention of Food Adulteration Act, the goods had to be destroyed, thus holds that expenditure for making this product was something "prohibited by law"; Observes that "Pan masala is a controversial product and, even when it is manufactured within the permissible legal norms, it is considered to be responsible for oral cancer and other severe ill effects on health. In the present case, the assessee has gone even further against the public interests", thus holds expenditure on manufacturing such products whether deliberately or inadvertently, cannot be allowed as deduction; Rejects assessee’s contention that no penalty, etc. was imposed on it, observes that "... as long as the expenditure is incurred for a purpose which is prohibited by law, it is immaterial whether the said act of the assessee constitutes an offence or not"; Further remarks that "What is even more disturbing is the indifferent attitude to the assessee to the possible damage their products could have caused, and, without any remorse or regret in his conduct, claim business deduction of expenses incurred ...":ITAT
Saturday, 18 November 2017
CBDT: Issues draft notification u/s. 115JG (1) relating conversion of foreign banks’ Indian branch into
CBDT issues draft notification u/s. 115JG(1) specifying the conditions to be fulfilled upon conversion of Indian Branch of foreign bank into Indian subsidiary company and also specifying modifications, exceptions, in applicability of certain provisions of the Act to such conversion; Draft notification proposes following conditions, viz. (a) all the assets and liabilities of the Indian branch immediately before conversion become the assets and liabilities of the Indian subsidiary Company, (b) the foreign company (engaged in banking business in India through branch) or its nominees hold the whole of the share capital of the subsidiary company and (c) the foreign company does not receive any consideration or benefit, other than by way of allotment of shares in the Indian subsidiary company; With respect to unabsorbed depreciation, draft notification proposes that the aggregate depreciation deduction allowable to the Indian branch and the Indian subsidiary company shall not exceed the deduction calculated at the prescribed rates as if the conversion had not taken place, and such deduction to be apportioned between the Indian branch and the Indian subsidiary company in the ratio of the number of days for which the assets were used by them; Further, it proposes that the tax credit of the Indian branch shall be deemed to be the tax credit of the Indian subsidiary company for the purpose of the previous year in which conversion was effected and the provisions of Sec. 115JAA shall apply accordingly; Invites stakeholders comments/suggestions on the draft notification by November 30th
Wednesday, 15 November 2017
Pursuant to GST Council’s 23rd meeting at Guwahati, CBEC issues notification for change in rates of various goods; Also, issues notification in respect of rate of tax applicable to restaurants (including those located in hotel premises); Notifies 5% IGST/GST rate in respect of Scientific and technical instruments, apparatus, accessories, parts, live animals computer software, CD-ROM, recorded magnetic tapes, prototypes, supplied to public funded research institution, specified Universities, research institutions, Departments and laboratories of the Government and Cancer Institute; Extends exemption to services by way of admission to a protected monument so declared under the Ancient Monuments and Archaeological Sites and Remains Act 1958; These changes shall come into force w.e.f. November 15, 2017: CBEC Notifications
Saturday, 28 October 2017
Google India Private Ltd vs. ACIT (ITAT Bangalore)Royalty u/s 9(1)(vi) & Article 12: The Google Adwords advertisement module is not merely an agreement to provide advertisement space but is an agreement for facilitating the display and publishing of an advertisement to the targeted customer using Google's patented algorithm, tools and software. Google Adwords uses data regarding the age, gender, region, language, taste habits, food habits, etc of the customer so as to maximize the impression and conversion to the ads of the advertisers. Consequently, the payments to Google Ireland are taxable as "royalty" and the assessee ought to have deducted TDS thereon u/s 195
Govt. notifies extension of period for submission and revision of Form GST TRAN-1 under Rule 117 and 120A of CGST Rules respectively, till November 30; Also notifies extension of time limit for submission of registration application in Form GSTR-26 till December 31, while time limit for intimation in Form GST CMP-03 of details of stock held before opting for composition levy has been extended till November 30; Declaration in Form GST ITC-04 in respect of goods dispatched to job-worker or received from job-worker or sent from one job-worker to another, during quarter July to September 2017, can be filed by November 30; Further, time limit for making declaration of entitlement to Input Tax Credit u/s 18(1) of CGST Act in Form GST ITC-01 has been extended till November 30; Notifies CGST (Eleventh Amendment) Rules 2017 amending inter alia Rule 24(4) to allow submission of application in Form GST REG-29 for cancellation of registration by December 31, while information relating to exports shall be furnished after return in Form GSTR-3B has been filed where date for Form GSTR-1 has been extended under Rules 96 & 96A : CBEC Notifications & Orders
When assessee discharges onus to prove that there was good and sufficient reason for failure to deposit TDS deducted, it does not warrant penalty u/s 221: HC
THE issue before the Bench is - Whether when the assessee discharges the onus to prove that there was good and sufficient reason for failure to deposit TDS deducted, it does not warrant penalty u/s 221. YES is the answer.
I-T Any investment made after furnishing of return, but before extended date available u/s 139(4), would not receive beneficial construction in view of express provision of section 54(2): ITAT
THE ISSUE BEFORE THE TRIBUNAL IS - Whether capital gain employed towards purchase of new asset before the actual date of furnishing return of income either u/s 139(1) or u/s 139(4), will be deemed to be sufficient compliance of section 54(2). YES is the answer.
Burnt coal residue from paper manufacturing process classifiable as “coal including coke in all its form….”, taxable at 4% under U.P. VAT Act as it retains its combustible properties; HC finds that during AYs 1999-2000, 2000-01 & 2001-02, said product was taxed at 4% but pursuant to HC decisions in Modi Spinning & Weaving Mills and British India Corporation Limited, same came to treated as “unclassified” residual article taxable at 10% from AY 2002-03 onwards; Observes that in case of Modi Spinning & Weaving Mills, the issue pertained to taxability of “coal cinder” whereas British India Corporation case dealt with taxability of “coal ash”, thus these cases cannot be understood or applied without bearing in mind the particular commodities under consideration therein; Noting that Revenue had not submitted any evidence to establish that residual commodity had lost all its combustible properties, HC remarks that “In issues of classification, the Department cannot be permitted to vacillate unless there be new material and evidence which may justify or warrant a change in stance”; Referring to Division Bench decision in District Cooperative Development Federation Ltd. which held that “coal dust” would classify as “coal” as both have same combustible properties and similar usage, HC rules in favour of assessee : Allahabad HC
HC refuses to exercise extraordinary writ jurisdiction under Article 226 of Constitution against its revision order passed u/s 11 of U.P. Sales Tax Act, 1948; Notes assessee’s grievance that demand for purchase tax was raised on foodgrains procured for sale to Food Corporation of India after the HC had finally decided its revision petition; Holds that order passed by the Court cannot be annulled or reviewed by invoking Article 226 inasmuch as the issue in question had been dealt, considered and decided against assessee; However, referring to SC decisions in Major General Shri Kant Sharma & Anr. and Mafatlal Industries Ltd. HC states that assessee can assail the revision order before SC : Allahabad HC
The OECD has published a handbook to help tax authorities in the effective use of CbC Reports which they will shortly be receiving, by incorporating them into a tax authority's risk assessment process. The handbook contains:
· a description of the role of tax risk assessment in tax administration, the core characteristics of an effective risk assessment system, and examples of the approaches used in different countries;
· an outline of the information contained in CbC Reports, and the potential advantages CbC Reports have over data from other sources;
· consideration of the ways in which CbC Reports can be incorporated into a tax authority's risk assessment framework and a description of some of the main potential tax risk indicators that may be identified using CbC Reports;
· a description of some of the challenges that may be faced by a tax authority in using CbC Reports for tax risk assessment and how some of these may be dealt with;
· an outline of some of the other sources of data that may be used by a tax authority alongside CbC Reports; and
· an overview of how the results of a tax risk assessment using CbC Reports may be used and the next steps that should be taken.
There’s also a description of some of the main potential tax risk indicators and some innocent explanations. The handbook is available in English, French and Spanish at http://www.oecd.org/tax/beps/country-by-country-reporting-handbook-on-effective-tax-risk-assessment.htm
Visakhapatnam ITAT upholds levy of interest u/s 201(1A) for AY 2013-14 and 2014-15 in case of assessee failing to deduct tax at source u/s 194J, rejects assessee’s contention that since the deductee had filed nil return of income and had no tax liability, even after taking into account receipts from assessee, interest u/s 201(1A) was not leviable; Notes that proviso to Sec. 201(1A) inserted w.e.f July 1, 2012 makes it very clear that even though the assessee is not deemed to be 'assessee in default' under the first proviso to Sec. 201(1), the interest u/s 201(1A) shall be payable from the date on which such tax is deductible to the date of furnishing of return of income by such deductee; Holds that the tax liability in the hands of the deductee has no connection with charging of interest u/s 201(1A), distinguishes assessee's reliance on co-ordinate bench rulings as they pertained to AY prior to amendment to Sec. 201(1A); Relies on Calcutta HC judgment in Kanoi Properties Pvt. Ltd to hold that charging of interest from the date on which the tax was required to be deducted till the date of furnishing of return of income by the deductee is automatic and mandatory; Rejects assessee’s contention that interest u/s 201(1A) was compensatory in nature relying on Madras HC decision in Chennai Properties & Investments Ltd.:ITAT
HC : Condemns Revenue's rejection of some revised returns while passing re-assessment order, remands matter
HC sets aside re-assessment order passed by Assessing Authority (AA) accepting some monthly revised returns while rejecting some on ground of non-mention of additional tax liability and proof of payment thereof, however, refrains from deciding matter on merits; Criticises AA’s pedantic approach in adopting Division Bench’s order of this Court in Jones Lang Lasalle Property Consultant India (P) Ltd. wherein it was held that, any ‘additional tax liability’ would mean ‘additional net tax liability’ and that, there is no reason to not adjust input credit against additional tax liability; Remarks, judgments of Constitutional Courts have to be discussed in detail and Authorities should record their own reasons it they take a different view, else it would be utter disregard of their (i.e. Constitutional Court’s) judgments and may drag Authorities in realm of judicial indiscipline and consequent disciplinary action; Observes, “judgments of the Constitutional Courts can be altered, modified or reversed only by the superior Constitutional Courts of larger strength or hierarchy, but they are not allowed to be casually referred and forgotten…..Otherwise the very purpose of maintaining the hierarchical judicial discipline will be lost”; Consequently, stating that, Revenue has not fully discussed / understood ratio of said judgment, remands matter with a direction to pass fresh orders for each month / tax period after accepting all revised returns for re-assessed period : Karnataka HC
HC : Input credit disallowance to bona-fide purchaser for seller's tax deposit default, unconstitutional
Delhi HC holds Section 9(2)(g) of Delhi Value Added Tax, 2004 (“DVAT Act‟) to the extent it disallows Input Tax Credit (ITC) to purchaser due to default of selling dealer in depositing tax, as violative of Articles 14 and 19 (1) (g) of the Constitution of India; Accepts assessee’s plea that expression “dealer or class of dealers” occurring in Section 9(2)(g) should be read down as not including a purchasing dealer who has entered into bona fide purchase transactions with validly registered selling dealers who have issued tax invoices in accordance with Section 50 where there is no mismatch of transactions in Annexures 2A and 2B; States, a purchasing dealer cannot be expected to keep track of whether selling dealer has in fact deposited tax or adjusted it lawfully against output tax liability, and unless Commissioner has placed information in the public domain, it is impossible for purchasing dealer to ascertain selling dealer’s failure to make a correct disclosure of the sales made in his return; Moreover, Department is not helpless if the selling dealer commits a default as in view of Section 40A inserted w.e.f. November 16, 2005, a purchasing dealer acting in connivance with a selling dealer can be proceeded against; States, Cabinet note outlining purpose behind introducing Section 9(2)(g) in DVAT Act w.e.f. April 2009 strangely did not mention Section 40A and also did not took note of practical difficulty that would be faced by the purchasing dealer, which is a major omission of important factors having a bearing on ITC claimed by a dealer; Remarks, Section 9(2)(g) gives a free hand to the Department in deciding to proceed either against the purchasing dealer or selling dealer, however, in the situation envisaged by said section, clearly the defaulting party is the selling dealer for which the purchasing dealer is expected to bear the consequence; Notes assessee’s submission that, there is a distinction between those categories specified in Section 9(2)(a) to (f) of DVAT Act which disentitle grant of ITC and one u/s 9(2)(g), whereas conditions specified in clause (a) to (f) are within the control of and can be vouched for by the purchasing dealer, the condition under Section 9 (2) (g) is not within its control; Accordingly holds that, failure by Legislature to distinguish between bona fide and non-bona fide purchasing dealers, results in Section 9(2)(g) applying equally to both the classes of purchasing dealers, which would certainly be hit by Article 14 of Constitution; Relying on host of SC cases, concludes that there was need to restrict denial of ITC only to the selling dealers who had failed to deposit tax collected by them and not punish bona fide purchasing dealers who cannot be expected to do the impossible; Observes,“It is trite that a law that is not capable of honest compliance will fail in achieving its objective. If it seeks to visit disobedience with disproportionate consequences to a bona fide purchasing dealer, it will become vulnerable to invalidation on the touchstone of Article 14 of the Constitution”; Distinguishes, Bombay HC and Tamil Nadu HC decisions in Mahalaxmi Cotton Ginning Pressing & Oil Industries and Jayam & Co, respectively : Delhi HC
Friday, 27 October 2017
Friday, 20 October 2017
Ahmedabad ITAT initiates series of steps on an experimental basis with immediate effect, as part of its go-green initiative, invites suggestions and feedback from stakeholders; Directs that no hard copies of the orders will be issued for the DRs, CIT(A)s and the DRPs henceforth, further directs that registry to not accept any paper book containing copies of judicial precedents reported in recognized journals and databases; Similarly directs that registry to not accept any paper-books containing any of the documents, copies of which are statutorily required to be filed anyway along-with the appeal itself, e.g. assessment order, CIT(A)’s order, DRP order, form 35, form 35A, form 36, grounds of appeal etc.; Ahmedabad ITAT also encourages use of paper on both the sides in every document and paper-book filed, to the extent possible and practicable to do so, further keeps a cap of 12.5 for font size and 1.5 lines for internal spacing; Requires that soft copy of the cause lists / constitution of benches to be placed on ITAT’s official website and twitter account, in addition to hard copies which shall be used only for limited internal communications; States that a guidance note regarding the operations of the paperless court and use of soft copies of the paperbooks, will be issued by December 15th, 2017
CBEC decides to reassign cases pending as on June 30, 2017 at Commissioner (Appeals) level, among all other jurisdictional officers of the rank of Commissioner (including Principal Additional Director General / Additional Director General), as a measure to reduce huge pendency of litigation; Accordingly, vests such Central Excise Officers with power of passing order-in-appeal w.r.t. appeals u/s 35 of Central Excise Act and Section 85 of Finance Act that were filed on or before June 30; While laying down administrative guidelines for Principal Chief Commissioners / Chief Commissioners to formulate proposals for reallocation of pending appeals, CBEC states, “In no event should the assessees be put to inconvenience by creating situations where they have to travel to other towns and cities to attend hearings.”; Further states, “Proposals for redistribution should be done in such a manner so that officers who are relatively familiar with the relevant law are assigned cases. In particular officers without a background knowledge of service tax law should not be assigned service tax cases.”; Warns Commissioner (Appeals) of a serious view in the event of mechanical remanding or hasty dismissal for nonappearance or ex parte orders, or a mechanical upholding of order-in-original, merely in order to achieve disposal : CBEC Notification & Circular
Govt. notifies supply of goods against advance authorization, supply of capital goods against EPCG authorization, supply of goods to EOU and supply of gold by bank / PSU against advance authorization as “deemed exports”; As per the Explanation, “advance authorization” means an authorization for import / domestic procurement of inputs on pre-import basis for physical exports, while EOU means EOU / EHTP / STP / BTP unit; Amends CGST Rules to provide that refund in terms of Rule 89 may be filed by recipient of deemed export supplies or by supplier in cases where recipient does not avail ITC thereon and furnishes an undertaking to the effect that supplier may claim refund; Govt. further issues clarification w.r.t. movement of goods within State or from State of registration to another State for supply on approval basis; States that such goods can be moved on the basis of delivery challan along with e-way bill wherever applicable, and invoice may be issued at time of delivery; Person carrying goods for such supply can carry invoice book with him so that invoice can be issued once supply is fructified; Also clarifies that where goods are carried from one State to another, same will be inter-state supplies attracting IGST; Moreover, Govt. authorizes Assistant / Deputy Commissioner to approve or reject application for enrolment as GST Practitioner, while clarifying that applicant is at liberty to choose either Centre / State as enrolling authority : CBEC Notifications & Circulars
Monday, 16 October 2017
Mumbai ITAT treats loss suffered by assessee-company (engaged in share broking business) on sale of shares held by it as investments, as speculation loss for AY 2012-13, upholds Revenue’s invocation of Explanation to Sec. 73; Rejects assessee’s stand that Explanation was not applicable as loss was offered as short term capital loss [‘STCL’] in the return of income and thus, cannot be assessed as ‘speculative loss’; ITAT clarifies that considering the word ‘any’ used in the explanation, restrictive meaning should not be given to phrase 'any part of the business', holds that as assessee was not covered by exclusions contemplated therein, Explanation to Sec. 73 was clearly attracted, cites Calcutta HC ruling in Arvind Investments Ltd.; Distinguishes assessee’s reliance on Gujarat HC ruling in Apollo Vikas (P) Ltd. wherein the adjudication was in context of 'income' earned by assessee on sale of shares and it was held that Sec. 73 was applicable only in context of losses; Separately, with respect to loss on F&O transaction, ITAT finds force in assessee’s contention that F&O transactions cannot be categorized as speculative transactions in light of amendment to Sec. 43(5)(d), however, in absence of evidence on record to prove that transactions qualify as 'eligible transactions' as contemplated by Expl (1) to Sec. 43(5), restores matter back to CIT(A)directing assessee to substantiate its claim.:ITAT
Excess land exchanged for locational advantage and dispersed nature of holding, does not require specific disclosure in books, failure to which will attract Section 69B: HC
THE ISSUE BEFORE THE COURT IS - Whether value of excess land acquired under an exchange, if not recorded in books, would result in additions u/s 28(iv) or 69B, without factoring in adjustment for locational advantage and dispersed nature of holding. NO is the verdict.
FACTS of the case: The assessment in the case of Assessee for AY 2006-07 was completed u/s 143(3) on total income of Rs. 15,87,03,349/- against return income of Rs. 6,55,453/-. The reasons for such addition was that the Assessee had shown purchase of land of Rs. 40,36,91,100/-. The documents filed by Assessee showed that it had acquired 17.81 acres of land at Ullawas and Behrampur villages in exchange for 16.16 acres of land at Badshahpur village. According to AO, the Assessee thus acquired 1.65 acre of land in excess for which no value was shown in the books of account. The AO sought explanation from Assessee, and in its reply the Assessee stated that it had not made any sale/purchase of the land but had merely exchanged the land as a result of which no profit or gain had arisen. However, the differential amount, according to the AO, had been withheld by Assessee and accordingly additions were made by invoking Section 69B. On appeal, the CIT(A) deleted the addition. Thereafter, in an alternative submission before the CIT(A), the Revenue urged that even if Section 69B could not have been invoked, the differential amount could be brought to tax u/s 28(iv) of the Act. Repelling this contention, the CIT(A) held that since the stamp valuation authorities would not have determined the value of any land without factoring in demand and supply, locational advantage, proximity to public facilities, infrastructure, the determination of fair value by Assessee of land at Behrampur and Ullawas at the same rate after adjustment for locational advantage and dispersed nature of holding, could not have been faulted. Parity in the market rates and the rate determined by the stamp valuation authorities at the two locations was given more so when evidences were not on record to indicate that Assessee paid more as against the documented price as part of the exchange.
HIGH COURT held that,
++ it is seen that when the Revenue went before the ITAT pleading its contentions, the ITAT concurred with the findings of CIT(A) and held that there was exchanges of Land in the same locality and the duration of purchase of land and its exchange i.e. four-five months was very short. Furthermore, land rates are never uniform as in the share market and the A0 has not brought on record any allegation, material, evidence or document on record supported by proof of any rate variation resulting in a profit and addition has been made purely on the estimate basis and the stand of the A0 taken in the case of Golden View Builders Pvt. Ltd, which has dismissed by the Tribunal's order. In absence of any material or evidence or documents to establish that the assessee has made investment and amount expended on making such investments or acquiring land exceeds the amount recorded in this behalf in the books of accounts, which has been properly audited and accepted by the department. Having heard counsel for the parties, the Court is of the view that no substantial question of law arises inasmuch as the revenue has been unable to persuade the Court that the aforementioned factual finding of the CIT (A), concurred with by the ITAT, suffers from perversity.
Monday, 9 October 2017
Wednesday, 4 October 2017
Bombay HC upholds recovery of Local Body Tax (‘LBT’) on SIM cards and recharge coupons / vouchers brought into municipal limits by telecom service provider, u/s 127(2)(aaa) r/w Section 152-P of Maharashtra Municipal Corporations Act, 1949 (‘Act’); Rejects assessee’s reliance on SC rulings in BSNL and Idea Mobile Communication Ltd. to contend that SIM cards and recharge coupons are not goods, with no intrinsic value at all and incapable of being used independent of cell phone; Perusing the relevant provisions of said Act, HC observes that concepts of Sales Tax and LBT are not same, “LBT can be levied on the goods brought within the limits of a Municipal Corporation even if the same are not sold, but the same are brought either for consumption or use.” States that SIM cards and recharge vouchers are tangible goods capable of being transferred, stored, possessed, and used after being brought into limits of city and hence, will be “goods” within the meaning of Section 2(25) of said Act; While Apex Court in Idea Mobile Communication Ltd had come to the conclusion that no sales tax is payable as SIM cards have no intrinsic value, it had not considered whether they are capable of being used which is relevant consideration for charging LBT, observes HC; However, HC remarks that e-recharges, which are nothing but electronic downloads, can by no stretch of imagination be said to be capable of being brought into limits of a city and are not covered by Item No. 133 of Govt. Notification dated March 28, 2013; In view thereof, observes, “E-recharge is capable of being used. But it cannot be said that by downloading erecharge through internet, e-recharge is brought into limits of a Municipal Corporation. Hence, LBT cannot be recovered on erecharge.” : Bombay HC
The judgment was delivered by Justice A. S. Oka and Justice Vibha Kankanwadi.
Mr. Surel S. Shah alongwith Mr. Amitt Khairnar , Mr. Amit Dande and Mr. Taufia Kapadia appeared on behalf of the assessee, while Revenue was represented by Mr. N. R. Bubna and Mr. A. A. Alaspurkar.
Detailed summary will be uploaded on the portal shortly.
CBDT provides functionality to make corrections in the challans used for the purpose of the Pradhan Mantri Garib Kalyan Yojana Scheme, 2016 ('PMGKY'); CBDT acknowledges that despite abiding by the prescribed time limit under the Scheme and making all the payments/deposits within that period, declarants are deprived of availing benefit of PMGKY Scheme due to procedural defaults i.e. use of wrong challan for making tax payment under PMGKY or for making deposit under Pradhan Mantri Garib Kalyan Deposit, 2016 Scheme ('PMGKD') or making certain incorrect entries therein; CBDT now provides for modalities for correction of PMGKY challans, however, clarifies that correction of challans pertaining to compulsory deposits under the PMGKD does not fall within power of CBDT, lays down four types of challan errors which can be corrected, viz. 1) Change of AY to 2017-18, 2) Correction in PAN, 3) Change of Major Head to 0028 i.e. Other taxes in PMGKY challan in ITNS 287 and 4) Change of Minor Head to 112 i.e. payment under PMGKY in ITNS 287; CBDT clarifies that the correction would not apply to correction of challans in a vice-versa manner, i.e. challan for PMGKY sought to be used for the purposes of making payments towards Advance tax, Self assessment Tax & Regular-assessment Tax; Howevever, a PMGKY payment would be allowed to be converted into an IDS payment (under the Income Declaration Scheme, 2016) in which case the Major Head, Minor Head and AY may be changed; CBDT reiterates that relaxation of PMGKY challans covers only those cases where declaration in Form 1 was pending due to non-credit of PMGKY challan, “It cannot grant any relaxation to those cases where either the taxpayer wants to revise his declaration under the PMGKY or remove any error in deposit under the PMGKD in any manner, whatsoever
HC : Dy. Commissioner's 'revision' powers exercisable within limitation; Show cause notices without enquiry, unsustainable
HC quashes show cause notices issued by Deputy Commissioner (CT) in exercise of special powers u/s 32 of Tamil Nadu General Sales Tax Act seeking to re-determine total taxable turnover of assessees, being barred by limitation u/s 16 (dealing with escaped assessment); Notes that Section 32 allowed Dy. Commissioner to suo moto revise / modify assessment order / proceedings if upon enquiry it was found that same were prejudicial to interests of the Revenue; However, such power could not be exercised if – (i) time for appeal against the order had not expired, (ii) order had been made the subject of appeal / revision, and (iii) more than 5 years had expired after passing thereof; HC finds that in present cases, Dy. Commissioner had no new material to come to a conclusion which warranted reopening of assessments and the averments set out in the show cause notices did not reveal any independent enquiry having been made before issuing them; Referring inter alia to Division Bench decision in A. Velayutha Raja, HC holds that impugned show cause notices were wholly without jurisdiction : Madras HC
HC stays penalty imposition on Electronic Banking routed loan; Assessee claims 'retrospective' relief
Taxpayer approaches Delhi HC against the levy of penalty for accepting loan by way of electronic transfer; Delhi HC issues notice to Revenue and grants stay on recovery of the penalty pursuant to a writ petition filed by the assessee company challenging penalty order passed u/s. 271D for contravening Sec. 269SS provisions; During AY 2013-14, assessee had received loan through Electronic clearing system (‘ECS’) and consequently penalty was imposed by AO since the payment was not by way of cheque or bank draft; Before HC, assessee submits that Finance (No. 2) Act, 2014 amendment in Sec. 269SS allowing use of ECS was curative in nature and hence should be applied retrospectively; Further, assessee argues that penalty is contrary to the legislative intent; HC lists the matter for November 22
CESTAT Larger Bench (LB) shall decide whether co-noticee in show cause notice is entitled to immunity from penalty when noticee’s case is settled by Settlement Commission; Notes that penalty was imposed on assessee (co-noticee) u/s 112(b) and 114AA of Customs Act in connection with misdeclaration of imported car against which, assessee contended that it should be absolved from punishment of penalty as case of the main noticee had been settled; Further takes note of assessee’s submission that 2:1 favourable verdict in case of S.K. Colombowala should be considered as LB judgment in view of Delhi HC ruling in P.C. Puri and CESTAT decision in Larsen & Toubro Ltd., and same shall prevail over contrary division bench ruling in K. I. International Ltd.; CESTAT states that majority decision cannot be considered as LB judgment in view of SC ruling in Pankajakshi vs. Chandrika case wherein it was held that reference to Third Member in case of conflicting views between division bench members cannot be considered as LB judgment; Accordingly, in view of conflicting division bench decisions, CESTAT refers matter to President for constitution of LB : Mumbai CESTAT
Gujarat HC holds that mere issuance of notice u/s. 143(2) & claiming extended period for processing of refund u/s. 143(1) would not be sufficient to withhold tax refund for AYs 2015-16 and 2016-17; Assessee (a turnkey projects contractor) had filed tax returns for both the years declaring high amount of tax losses and claimed tax refunds arising on account of TDS and for one of years i.e. AY 2015-16, notice u/s Sec 143(2) was issued but the assessment was not complete; Considering the financial crunch and liquidity problems, the assessee followed up several times with the IT Department for the release of the tax refunds, but did not receive any response after which the assessee decided to approach HC; Noting the amendments by Finance Act, 2017 and provisions as applicable to the assessee i.e. post deletion of section 241 of the Act and prior to insertion of section 241A, HC observes that "the Revenue cannot contend that even though no intimation under sub-section (1) of section 143 was issued within the time envisaged and no notice under sub-section (2) of section 143 was issued, the Assessing Officer can sit tight over the refund claimed by the assessee arising out of the return filed"; HC further adds that "We simply cannot accept the interpretation of the counsel for the Revenue that once a notice under sub-section (2) of section 143 is issued, the suspension of the refund arising out of the return filed by the assessee would be automatic and till the passing of the order of assessment under sub-section (3) of section 143"; HC states that it would be 'wholly inequitable' for the AO to merely sit over the petitioner's request for refund citing the availability of time upto the last date of framing the assessment u/s 143(3); Applying the reasonable interpretation of the provisions, HC observes that AO is expected to take up an expeditious disposal of the processing of return u/s 143(1) once the assessee requests for release of the refund and send as an intimation to the assessee if he wishes to withhold the refund; For AY 2015-16, HC directs AO to complete the process of the assessee's return u/s 143(1) latest by October 31, 2017 and notes that for AY 2016-17 the time for processing the return under sub-section (1) of section 143 read with proviso is not yet over:HC
CBDT launches e-assessment pilot in 7 cities for time-barring cases; Gives taxpayers 'opt-out' choice
IT department issues order covering various aspects of conducting scrutiny assessments electronically in cases which are getting barred by limitation during the financial year 2017-2018; The e-assessments will be conducted using the Income-Tax Business Application (ITBA) which is an integrated platform to conduct various tax-proceedings electronically through the 'e-Proceeding' facility and is a part of Income-tax Department’s digital transformation of its business processes; Assessment proceedings in the two categories of time-barring scrutiny cases, pending as on October 1, 2017, where hearings have not been completed, would be carried out through the 'e-Proceeding' facility on the ITBA; The first category covers time-barring scrutiny cases in seven metro cities namely Ahmedabad, Bengaluru, Chennai, Kolkata, Hyderabad, Delhi and Mumbai where assessment proceedings are already underway through the 'e-mail based communication' and where assessee is having 'e-Filing' account; In time-barring scrutiny assessments under 'e-Proceeding', the assessees can voluntarily opt out from 'e-Proceeding' at a subsequent stage under intimation to the AO; The CBDT order states that online submissions may be filed till the office hours on the date stipulated for compliance; In e-assessment cases, manual intervention is permissible in the specified situations viz., i) where manual books of accounts or original documents have to be examined; ii) where AO invokes provisions of Sec 131 of the Act or a notice is issued for carrying out third party enquiries/investigations; iii) where examination of witness is required to be made by the concerned assessee or the Department; iv) where a show-cause notice contemplating any adverse view is issued by the Assessing Officer and assessee requests for personal hearing to explain the matter
Govt. decides to extend facility of furnishing Letter of Undertaking, in place of bond, to small exporters without bank guarantee; States, “The issue of cash blockage is expected to be partially addressed by this measure”; Relevant Notification for this shall be issued in due course : Finance Ministry Press Release
Govt. notifies CGST (Eighth Amendment) Rules 2017, thereby amending Rules 24, 118, 119, 120 and 120A of CGST Rules and Form GST REG-29; Accordingly, allows cancellation of GST registration for migrated taxpayers not liable to be registered, by October 31 under Rule 24(4); Transitional information in Form GST TRAN-1 with respect to supplies on which VAT / service tax was paid before appointed day, stock held by principal and agent, and goods sent on approval basis shall be furnished within the period specified in Rule 117 or such period as extended by Commissioner; As per Order No. 3/2017-GST, period for submitting Form GST TRAN-1 has been extended till October 31 : CBEC Notification
Govt. permits manufacturers / packers / importers of pre-packaged commodities to declare revised MRP on unsold stock as on appointed date, in addition to existing MRP, upto December 31; Unexhausted packaging material / wrapper can also be used upto earlier of said date or till such date same is exhausted after making corrections required in MRP on account of implementation of GST; Declaration of changed MRP shall be made by way of stamping / putting sticker / online printing after following prescribed conditions; These conditions stipulate that – (a) MRP originally printed on package and revised price shall not be higher than extent of increase in tax on account of GST, (b) new MRP should be declared after factoring in and taking into consideration extra availability of Input Tax Credit (including deemed credit) under GST, (c) revised MRP shall not overwrite original one, and (d) manufacturers / packers / importers must make atleast 2 advertisements in newspapers indicating change in price if not done earlier; Also clarifies that for reducing MRP, a sticker with revised lower price (inclusive of all taxes) may be affixed and same shall not cover MRP declaration made by manufacturer / packer / importer on the label of package : Dept. of Consumer Affairs Letter
ITAT : Allows interest u/s. 244A on refund of interest u/s. 234B ; Narrow ‘tax’ definition u/s. 2(43) inapplicable
Ahmedabad ITAT upholds CIT(A)’s order and rules in favour of assessee, grants Sec. 244A interest on the refund of interest paid u/s. 234B [relating to advance tax default] for AY 2007-08; As per Income Tax computation form (‘ITNS 150’) prepared by AO, interest u/s. 234B was originally computed at Rs. 4 cr., which was subsequently reduced to Rs. 1.41 cr. due to reversal of certain additions in appeal proceedings, rejects Revenue’s stand that Sec. 244A only provides for interest on refund of tax or penalty amount and not the interest amount; ITAT upholds CIT(A)’s reliance on Ahmedabad ITAT ruling in Alembic Glass Industries Ltd. wherein it was held that in the context of Sec. 244A(1)(b), the expression 'tax' would include interest also and the definition of tax in Sec. 2(43) meaning 'income-tax' may not be applicable in the context of Sec. 244A(1); ITAT holds that the expression ‘in any other case’ occurring in Sec. 244A(1)(b) would include interest on an amount of refund resulted from reversal of excess interest charged u/s. 234B, thus concludes that “the assessee would be entitled the claim u/s. 244A from the original date”. :ITAT
Pr CIT vs. Reliance Capital Asset Management Ltd (Bombay High Court)S. 14A/ Rule 8D: The AO is not entitled to make any disallowance under Rule 8D if he does not specifically record that he is not satisfied with the correctness of the assessee's claim. The fact that the CIT(A) and ITAT were not satisfied with the assessee's disallowance and enhanced it does not mean that Rule 8D becomes applicable and the disallowance should be computed as per the prescribed formula
The Assessing Officer did not specifically record that he is not satisfied with the correctness of the claim of the assessee in respect of the expenditure in relation to the income which does not form part of the total income under the Act. However, he felt obliged and going by the presence of Rule 8D that once Section 14A is attracted, the disallowance is to be made as per Rule 8D only which has been prescribed by the Legislature. The Assessing Officer has not adverted to the plain language of subsection (2) of Section 14A
Friday, 29 September 2017
|S. No||Due Date||Related to||Compliance to be made|
|1||04.10.2017||SEZ Compliance||Monthly exemption details for the month of September 2017|
|2||10.10.2017||GST||Filing of GSTR 1 for the month of July, 2017|
|3||11.10.2017 to 31.10.2017||GST||Filing of GSTR 2 for the month of July, 2017|
|4||20.10.2017||GST||-Payment of GST for the month of September, 2017|
-Filing of GSTR 3B for the month of September, 2017
|· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of September 2017.|
· Deposit TDS from Salaries deducted during the month of September 2017
• Deposit TCS for collections made under section 206C including sale of scrap during the month of September 2017, if any
• Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of September 2017, if any
|6||31.10.2017||TDS Return||· Filing of 2nd Quarter (1st July to 31st September) TDS return.|
|7||15.10.2017||TCS Return||· Filing of 2nd Quarter (1st July to 31st September) TCS return.|
|8||31.10.2017||Income tax||Filing of income tax return for the Corporate assesses (or) Non Corporate assesses (Whose books of accounts are required to be audited U/s 44AB of IT act 1964 (or) working partner (of a firm whose books of accounts required to be audit ( in case of Assesses not having international or specified domestic transaction).|
Delhi HC impleads CBEC as respondent in writ petition challenging curtailment of duty exemption benefit under Advance Authorisation Scheme; Directs CBEC to instruct all Customs Commissionerates to comply with interim order dated September 11 allowing imports without payment of IGST against authorisations issued prior to July 1; Notes that despite such interim order, petitioner was compelled to pay IGST to effect clearance of raw material under specified authorisations; Matter is listed on February 22, 2018
The option for amendment of GST registration (both core and non-core amendments) available in the GST portal now. The information being showing in the portal like “Application for Amendment in Registration Particulars (for both core and non-core) service is available on the portal now. Taxpayers who wish to change their particulars may do so now.”
HC : Grants relief to Vedanta; 'Vagaries of litigation' irrelevant for asset transfer pre-approval u/s 281
Goa bench of Bombay HC sets aside AO’s order rejecting Vedanta’s prior permission request u/s Sec. 281(1) (applicable before effecting an asset transfer or creating a charge thereon); HC refers to Sec. 281 and opines that the section demands precision, holds that the AO cannot generally say that “no proposed transaction or charge over any asset, though unencumbered, can be permitted because there is a possibility of another demand, or on account of the vagaries of litigation, etc.”, clarifies that the section only requires AO to ensure that the known claims of the Revenue are sufficiently secured; HC further observes that "There is no room in considering an application under Section 281 for a response that is speculative, predicated on imponderables and unknowns such as litigation outcomes, or on suppositions that all stay orders obtained by an assessee are bound to be vacated and an assessee’s appeals lost"; HC notes that assessee has available assets in excess of Rs. 80,000 crores of which roughly assets of Rs. 49,000 crores assets have some form of encumbrance on them, while the remaining are not so encumbered; However, without rendering a decision on the merits of assessee’s application, HC directs AO to consider assessee’s application afresh, uninfluenced by the previous order, further lays down timelines and directs both the parties to consider provisions of Sec. 281 and Circular No.4/2011 setting out the guidelines for the grant of prior permission u/s. 281 :HC
HC : Prescribes four guidelines for Revenue on re-assessments; Quashes Sec 147-proceedings on share issue
Delhi HC quashes Sec. 148 proceedings (initiated beyond 4 years period) on assessee–company (engaged in the real estate business) for AY 2008-09; AO had recorded reasons that the five companies that subscribed to assessee’s share capital were ‘paper companies’, however, HC notes that assessee had disclosed the names of all the five companies along with the details of share premium amount received from them during original assessment proceedings; Accordingly, HC holds there was ‘no new material’ for initiating re-assessment, remarks that “the reasons for reopening do not mention as to what fact or information was not disclosed by the Petitioner…. An allegation that the companies are `paper companies' without further facts is by itself insufficient to reopen assessments”; However, considering that a large number of writ petitions are filed on a routine basis challenging reopening u/s. 147/148, HC lays down a four-point guideline in matters of reopening of assessments, viz.: 1) while communicating reasons, copy of the standard form used by AO for obtaining the approval of the Superior Officer should itself be provided to assessee, 2) reasons ought to spell out all the reasons and grounds available with the AO for re-opening including reference to investigation report or enquiry, 3) where the reasons make a reference to another document, such document and/ or relevant portions of such report should be enclosed along with reasons and 4) the exercise of considering assessee’s objections to reopening, not a mechanical ritual, hence AO should give proper reasons for the conclusion.:HC
CBEC issues clarification on certain transitional issues arising w.r.t. payment of service tax after June 30; Clarifies that in cases where service was received and payment thereof was made before July 1 but service tax was paid by July 5 / 6, details of credit should be indicated in Part I of Form ST-3 by filing revised return; Accordingly, to give assessees an immediate and viable window to file revised returns within 45 days, CBEC states that all ST-3 returns for the period April – June 2017 which have been filed upto and inclusive of August 31, shall be deemed to have been filed on August 31; Once details of such credit are reflected in ST-3, assessee may proceed to fill in the details in Form GST TRAN-1; Assessees who were not registered under ACES and who want to make payment of service tax on after July 1, can avail the category of “non assessee registration” in registration module of ACES : CBEC Circular
ITAT : ITAT Special Bench- Lays down law on penalty for self-assessment tax payment default in original return
ITAT Special Bench (ITAT SB) holds that penalty u/s. 221(1) attracted for default in payment of self-assessment tax due u/s 140A while filing original tax-return even though assessee subsequently files a revised return of income and pays tax; Assessee
SC issues notice in Revenue’s SLP, stays operation of Delhi HC’s interim order which had allowed petitioner to utilize credit of ‘Clean Energy Cess’ paid on stock of coal towards payment of Compensation Cess leviable in terms of GST Compensation Rules r/w Notification No. 1/2017-Compensation Cess (Rate); Finding prima facie merit in challenge to legislative competence of Parliament to enact Compensation Act, HC had observed that power of Parliament to enact said Act cannot be traced to Section 18 of Constitution (One Hundred and First Amendment) Act, 2016; Accordingly, HC had barred additional payment on sale and clearance of stocks of coal which have already suffered Clean Energy Cess, while listing matter for hearing on October 26 : SC
This is to update you that CBEC has issued by Notification 91/2017(NT) dated 26 September 2017 which amends the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Further, a circular 39/2017 dated 26 September 2017 has also been issued clarifying the key changes that have been made vide the amendment Notification. We have summarised the amendments below for your ease of reference:
Supply of goods to merchant-exporter constitutes ‘export clearances’, not includible in aggregate turnover for purpose of SSI exemption; CESTAT notes that CBEC Circular No. 648/39/2002-CX allows SSI units to export goods either directly or through merchant exporter and documents prescribed by Sales Tax Dept. viz. Form H / equivalent Forms, are acceptable as proof of export; States that CBEC has very consciously prescribed such Forms as proof of export for the reason that they are issued by Dept. only in respect of those goods which are exported; Therefore, interpretation of Adjudicating Authority that goods should have been directly exported from factory of manufacturer (i.e. assessee) is very narrow and defeats the entire objective of simplified export procedure prescribed by the Board, states CESTAT; Accordingly, observes that if the supplies made by assessee get correlated with details in said Sales Tax Forms, same must be accepted and certificates issued by merchant exporter fortifying assessee’s claim cannot be simply brushed aside : Mumbai CESTAT
ITAT : Equity from directors' daughter not transaction between strangers, deletes 'unexplained credit'
Ahmedabad ITAT deletes unexplained cash credit addition with respect to share application money received by assessee (a private limited company) during AY 2010-11 from one of the shareholder (who is daughter of one of the assessee’s directors); Rejects Revenue’s stand that source of funds in the hands of shareholder and creditworthiness was not proved; ITAT takes note of earning statements, bank account details of the shareholder and her husband, which “show prima facie evidence of the means of the shareholder.”; Further, ITAT observes that the relationship between the assessee-company and the shareholder was well established in the sense that the shareholder is the daughter of one of the directors, remarks that “It is, therefore, not a transaction between two strangers.”; Also, ITAT observes that amounts were received through the banking channels.:ITAT
Payment of 'Admitted tax liability' u/s 140A, through Revised return, will not obliterate default committed in original return, and hence penal consequenses will follow u/s 221(1): ITAT Special Bench
THE issue before the Bench is - Whether payment of admitted tax liability at the time of filing revised return, would obliterate the lapse committed in non-payment of such liability at the time of filing original return, so that the consequences of earlier lapse will not be visited with penal consequences. NO is the answer of the Special Bench.
Tuesday, 19 September 2017
HC sets aside Single Judge Bench order, finds direction to release detained goods on payment of 50% of demand and execution of simple bond contrary to provisions of Section 129 of Central GST Act / Kerala GST Ordinance r/w Rule 140 of CGST Rules; Notes that goods were detained by Revenue on ground that documents accompanying them had no nexus with actual goods under transport; Observes that Section 129 provides for detention, seizure and release of goods and conveyances in transit, whereby goods may be released provisionally upon execution of bond and furnishing of security in prescribed manner or on payment of applicable tax, interest and penalty in terms of Section 67(6); Hence, when statute itself provides a mechanism for adjudication following detention of goods including provisional release thereof, a deviation therefrom cannot be ordered, holds HC; However, taking note of Rule 140 obliging dealer to produce goods upon demand, and considering the inconvenience and prejudice likely to be caused on account of delay, HC emphasizes the necessity of an expeditious adjudication even in cases where goods are released provisionally : Kerala HC
Jammu and Kashmir HC reverses ITAT order and rules in favour of assessee (a JV company) for AY 2005-06, railway contract receipts of over Rs. 12 cr. not income of assessee, but diversion of income by overriding title; Assessee (a joint venture between two companies) was formed for construction of railway tunnels, HC notes that assessee was formed only for the purposes of submission of tender and that the contract was not executed by assessee, but by JV members, and contract was merely allotted in assessee’s name; Further, noting that the contract receipts of over Rs. 12 cr. were allocated to the JV partners (in the ratio of 97:3), HC holds no income accrued to assessee as there was diversion of income by overriding title, extensively relies on SC ruling in Sitaldas Tirathdas; Remarks that “neither amount would have been received by the assessee from the northern railways for no work performed by it nor it could be stated that the assessee has performed any activity but still the income has accrued.”; Separately, HC rules that the amount allocated / distributed to JV partners could not be disallowed u/s. 40(a)(ia), holds Finance Act, 2012 amendment inserting proviso to Sec. 40(a)(ia) [stating that once tax is paid by payee, deductor cannot be treated as assessee-in-default] is retrospective in nature, also cites CBDT circular on allocation of revenues in consortium arrangements:HC
CESTAT extends service tax exemption to manufacturer under Notification No. 6/2005-ST in respect of renting of open space within factory, finding no violation of any conditions stipulated therein with respect to non-availment of CENVAT credit; Observes that assessee had neither received / used any capital goods at the premises rented out nor utilized inputs / input services and no credit thereto was availed; Hence, all conditions thereunder stood complied with by assessee; Holds that availment of CENVAT credit in respect of inputs, input services and capital goods only in relation to manufacturing activity does not debar assessee from availing exemption under said Notification for service of renting of immovable property; Stating that activity in manufacturing unit and service related to immovable property are two distinct activities, CESTAT concludes that assessee is not liable to pay any service tax : Mumbai CESTAT
Friday, 15 September 2017
Goods and Services Tax or GST is made simple compared to earlier indirect tax laws. The confusion which we had earlier is very specifically articulated by government regarding reimbursements of expenses incurred at the time of provision of services.
Expenses incurred by service provider acting as a PURE AGENT shall be excluded from value of supply if some specified conditions are fulfilled.
It should be noted that you cannot exclude expenses incurred on behalf of recipient of service unless you satisfy the conditions specified.
Rule 7 of the valuation rules issued in public domain is the applicable rule to ascertain whether expenses incurred by service provider should be excluded or not
The conditions which should be satisfied before excluding reimbursements are:
- The supplier acts as a pure agent of the recipient of the supply, when he makes payment to the third party for the services procured as the contract for supply made by third party is between third party and the recipient of supply;
- The recipient of supply uses the services so procured by the supplier service provider in his capacity as pure agent of the recipient of supply;
- The recipient of supply is liable to make payment to the third party;
- The recipient of supply authorises the supplier to make payment on his behalf;
- The recipient of supply knows that the services for which payment has been made by the supplier shall be provided by the third party;
- The payment made by the supplier on behalf of the recipient of supply has been separately indicated in the invoice issued by the supplier to the recipient of service;
- The supplier recovers from the recipient of supply only such amount as has been paid by him to the third party; and
- The services procured by the supplier from the third party as a pure agent of the recipient of supply are in addition to the supply he provides on his own account.
Explanation . - For the purposes of this rule, “pure agent” means a person who -
- Enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;
- Neither intends to hold nor holds any title to the goods or services or both so procured or provided as pure agent of the recipient of supply;
- Does not use for his own interest such goods or services so procured; and
- Receives only the actual amount incurred to procure such goods or services.
Which expenses can be claimed as reimbursements and excluded from value of supply/sale/service?
You must have doubts whether expenses listed below can be claimed as reimbursements and be excluded from value of supply.
- Expenses such conveyance, transportation, food, team lunch,
- Payment made to government departments such as ROC, Income Tax, GST etc.,
- Goods/materials purchased on behalf of client/customer,
- Other expenses incurred on behalf of client/customers.
The first condition is that supplier of service should act as a Pure Agent of his client/customer. If you are not providing services as a pure agent then you can not deduct expenses incurred on behalf of customer/client from value of supply of services.
You can deduct only those payments which were supposed to be made by your customer and parties involved in transaction knew the fact that it is your customer who is supposed to make payment.
Your customer should have authorised you to make payments on his behalf and you should:
- Specify this amount separately in invoice,
- Recover from client only actual amount paid,
- The payment are in addition to other services you provide to your client.
- Not hold title of goods or services procured on behalf of your client,
- Not use goods or services for your personal use,
Let us understand this rule with an example.
We will take an example of professional services provided by CA, CS or Lawyers. Professionals such as Chartered Accountants sometime have to make payment on behalf of their clients. Take an example, of a CA who provides service of LLP Registration.
CA charges client his professional fee along with expenses incurred in form of payment to ROC. In this case CA acts as a pure agent of his client.
If fee of providing services was Rs. 15,000 and ROC expenses incurred are Rs. 5,000.
CA need to charge tax only on Rs. 15,000 and not Rs. 5,000 which were paid in discharge of his duty as a Pure Agent.
Here things to be noted are that, the payments to ROC were made on behalf of service recipient and CA acted as a pure agent between his client and ROC. Service received from ROC by making payment were not used by CA but by his client to get the name approval and registration.
Allahabad HC upholds ITAT order for AY 2001-02, denies Sec. 80-IB deduction to assessee-company’s (running a flour mill) on profits of industrial unit formed by takeover of entire business from another entity; Holds that the industrial unit was set up by purchase of used plant and machinery thus, resulting in violation of condition u/s 80IB(2)(ii), observes that the purpose of Sec. 80-IB is to promote setting up of a new industrial undertaking by purchasing new plant and machinery which stands defeated in assessee's case; Relies on Madras HC ruling in Heartland KG Information Limited rendered in context of Sec. 10A(2), observes that Sec. 80IB(2)(ii) is pari materia with Sec. 10A(2)(iii); Clarifies that transfer of used plant and machinery to a new undertaking and the formation of an industrial undertaking by splitting up/ reconstruction of existing business are two separate conditions u/s 80IB(2), distinguishes assessee's reliance on Bombay HC ruling in Sonata Software Limited in the context of splitting up/reconstruction; Remarks that “The transfer of the used plant and machinery may not result in splitting and reconstruction of the existing industrial undertaking but nevertheless when an unit as a whole is transferred, it includes the transfer of plant and machinery which was in use by the existing unit of a separate legal entity for the formation of a separate industrial undertaking. This kind of transfer is clearly hit by clause (iii) of Sec. 10A(2)..”:HC