CBDT: India - China sign Protocol amending DTAA incorporating BEPS related changes

India - China sign a Protocol today amending DTAA incorporating BEPS related changes; Protocol incorporates changes required to implement BEPS minimum standards as well as other changes as per BEPS Action reports as agreed upon by two sides; Further, the Protocol updates the existing provisions for exchange of information to the latest international standards 

How countries override bilateral tax treaties unilaterally?

Taxation is a sovereign right of a country/ state.  Each country has a right to levy tax on the person based on the specified connection with the country.  Specified connection which gives right to the country to tax is typically based on factors like residence, nationality, domicile of the tax payer, place of accrual of income earned by the tax payer, situs of the transaction/ asset etc.   

When Apex Court has already given its ruling on certain matters, then appeals containing identical issues reconsideration on similar terms, rather than deciding them on merits: HC

THE ISSUE BEFORE THE DIVISION BENCH IS - Whether certain matters calls for remand & fresh enquiry rather than rendering any finding on the merits of case, if dictum laid down by Apex Court under identical circumstances is available on record. YES IS THE VERDICT.    

Merely based on unexpected price movement purchase and sale transaction in shares can not be held as bogus when all relevant evidence is furnished to prove genuineness: ITAT

THE ISSUE IS - Whether merely based on unexpected price movement the purchase and sale transaction in shares can not be held as bogus when all relevant evidence in the form of bills, contract notes, demat statement and bank account are furnished to prove the genuineness of the transactions resulting in long term capital gain. - YES IS THE VERDICT.  

Forseeable loss cannot be claimed in respect of a contract which is yet to be executed: HC

THE ISSUE BEFORE THE BENCH IS - Whether forseeable loss can be claimed in respect of a contract which is yet to be executed. NO IS THE VERDICT.       

Haryana Tax Commissionerate issues internal guidelines on blocking of input tax credit under GST

Excise & Taxation Commissioner, Haryana has issued internal guidelines to all the Deputy Excise & Taxation Commissioners in Haryana, vide Memo^[1] dated 30 October 2018.    

ITAT: Disallows IPL sponsorship fees; No ‘advertisement benefit’ by displaying group logo

bangalore ITAT denies deduction u/s. 37(1) for payment made by assessee (part of GMR group co.) during AY 2012-13 for sponsoring the Delhi Daredevils team for IPL season-4; Rejects assessee’s stand that it has derived benefit of advertisement by way of displaying GMR logo on Delhi Dare Devils outfit; Notes that the logo common for GMR group was displayed on jersey, observes that nothing was brought on record to show that assessee’s name was displayed on the jersey;  Further noting that assessee is engaged in the business of civil and highway construction, ITAT remarks that “assessee has failed to demonstrate….as to how this expenditure has resulted in getting more projects in infrastructure industry and further how it is related to the business of assessee.”:ITAT 

Three Imp Verdicts On Core Issues +

Sushila N. Rungta vs. TRO (Supreme Court)

Interpretation of statutes: Effect of repeal of a statute u/s 6 of the General Clauses Act on pending proceedings explained in the context of the Gold Control Act and in view of law laid down in State of Punjab vs. Mohar Singh [1955] 1 SCR 893, New India Assurance Co. Ltd. vs. C. Padma (2003) 7 SCC 713 etc   

Where is Citizen Charter in tax department?

It seems that there is no end of harassment for tax payer even though there are lot of assurance provided by Prime Minister to improve the process. .  Given below few instances, where there is no time limit of disposal by government. 

(i)                  As per law, there is no time limit fixed to resolve rectification application filed by the tax department.  Further, the tax department reject  this application in case the applicant does not do follow up his rectification in every six months.  There are instances, where this application are pending more than a decade. 

 

(ii)                The tax payer has the option to go for appeal when he is not agree with the order passed by tax department. Even though for disposal of appeal, time limit has been prescribed as per law, the appellate forum does not follow the same and again the appeal kept pending for long time and the appellant keep waiting for the justice. 

(iii)               The Tax officer on receipt of the order passed by the appellate level suo moto require to pass the  order giving  effect to the order passed by appellate authority. However, law does not provide any such time limit and again the tax payer even after getting the appellate order, require to wait indefinite for the  justice .  

(iv)              The law does not provide any time limit when the tax payer will get  their refund cheque.  None of the tax payer of the country don’t know when they are going to receive their tax refund cheque. Further, at present, the tax officer keep raising tax demand for forthcoming years and keep adjusting the tax refund of previous years.  Now, the tax payer have strong belief that its impossible to receive the tax refund.

Thus, it seems that there is no end of harassment of taxpayer in the country and government is not taking any steps to provide resolution to the tax payer.   The government should take strong steps to solve hardship caused by the tax payer.                    

HC : NPA interest non-taxable for Co-op. bank even prior to 2018 Sec 43D amendment

Punjab and Haryana HC deletes addition towards interest due on Non performing Assets (NPA) of co-operative bank (assessee) for AY 2009-10; Rejects Revenue’s stand that in view of specific provisions of Sec 43D which excluded from its purview, entities like assessee at relevant time, assessee cannot indirectly claim benefit to Sec 43D and thus,  interest on NPA was taxable on accrual basis u/s 145; Relying on SC decision in Southern Technologies case, notes that RBI Directions 1998 are essentially income recognition norms and they “..have nothing to do with the accounting treatment or taxability of income under the Act and the two, viz. the Act and the RBI Directions, 1998 operate in different fields”; However also observes that “Assessing Officer has to follow the RBI Directions 1998 in view of Section 45Q of the 1934 Act. Hence, as far as Income Recognition is concerned, Section 145 of the Act has no role to play in the present dispute”; Also takes note of various judicial precedents such as in case of Southern Technologies, UCO Bank, Vasisth Chay Vyapar Ltd wherein ‘real income theory’ was upheld as per which “notwithstanding that the assessee may be following the mercantile system of accounting, it can be taxed on real income and not accrued interest which is hypothetical income.:HC 

HC: NPA interest non-taxable for Co-op. bank even prior to 2018 Sec 43D amendment

Punjab and Haryana HC deletes addition towards interest due on Non performing Assets (NPA) of co-operative bank (assessee) for AY 2009-10; Rejects Revenue’s stand that in view of specific provisions of Sec 43D which excluded from its purview, entities like assessee at relevant time, assessee cannot indirectly claim benefit to Sec 43D and thus,  interest on NPA was taxable on accrual basis u/s 145; Relying on SC decision in Southern Technologies case, notes that RBI Directions 1998 are essentially income recognition norms and they “..have nothing to do with the accounting treatment or taxability of income under the Act and the two, viz. the Act and the RBI Directions, 1998 operate in different fields”; However also observes that “Assessing Officer has to follow the RBI Directions 1998 in view of Section 45Q of the 1934 Act. Hence, as far as Income Recognition is concerned, Section 145 of the Act has no role to play in the present dispute”; Also takes note of various judicial precedents such as in case of Southern Technologies, UCO Bank, Vasisth Chay Vyapar Ltd wherein ‘real income theory’ was upheld as per which “notwithstanding that the assessee may be following the mercantile system of accounting, it can be taxed on real income and not accrued interest which is hypothetical income.:HC 

United States ups the ante, warns of retaliatory action over UK Digital Tax

Senior leader of the Republican Party in the US and Chairman of the House Ways & Means Committee, Kevin Brady, issues strongly worded statement warning European nations and specifically the UK, over the Digital Services Tax (DST) proposal; Mr. Brady terms the 'unilateral' DST proposals as 'troubling' and that it seeks to pre-empt the ongoing global dialogue on the taxation of digital economy; Finally, he warns of "appropriate actions" by the USA through a review of America's tax & regulatory approach, to ensure a level playing field in global markets. 

HC : Explains SC judgment effect on Allahabad HC Full bench decision on deemed trust registration

Kerala HC confirms ITAT order, holds that failure to consider assessee trust's application for registration within stipulated period of 6 months would result in deemed grant of registration, but such registration is effective from date of expiry of 6 months from application date; HC finds Revenue’s request to interpret relevant provisions as done by Full Bench of Allahabad HC in Muzafar Nagar Development Authority (wherein it was held that non-disposal of application cannot result into deemed registration) as persuasive; However observes that it was obliged to follow SC decision upholding Allahabad HC decision in Society for the promotion of Education, Adventure Sport & Conservation of Environment, holds that “The opinion as expressed by the Allahabad High Court, regarding deemed registration .. having not been differed from by the Hon'ble Supreme Court in the Civil Appeal; the declaration by the High Court assumes the authority of a precedent by the Hon'ble Supreme Court on the principles of doctrine of merger”; Reject Revenue’s contention that SC decision is not declaration of law as it was based on concession from Department Counsel, notes that only apprehension raised by Department before SC was about effective date of deemed registration; Also takes note of CBDT Instruction No. 16/2015 which stated that requirement to pass order granting or rejecting registration within 6 months is a mandatory requirement.:HC 

HC : Cannot treat FTS as royalty merely citing general IP protection clause in agreement

Madras HC dismisses Revenue’s appeal against ITAT order holding that payment made by assessee (automobile company) to the Austrian company for design of cylinder for improvement of fuel efficiency is not royalty, but in the nature of fees for technical services taxable only in Austria, as per provisions of India-Austria DTAA; Revenue had relied on clause in the general terms and conditions of the agreement which provided that know-how, patents and ideas introduced into the project shall remain exclusive property of Austrian company and held that since assessee had only a right to use such know-how, etc., payment was to be treated as royalty; Noting that relevant clause in the general terms and condition was generic in nature and application to all agreement entered by Australian company with third parties, holds that “it will be an improper manner of interpretation of the technical assistance agreement by reading clause 7 of the general conditions to state that the agreement between the parties was a licence for which the payment made is to be treated as royalty”; Notes that engine was developed by assessee and scope of the technical services agreement was only to design a new 3-valve cylinder head with a specified combustion system, thus holds that Tribunal decision in assessee's own case for earlier year holding payment to be FTS "would be applicable with full force to the case on hand"  :HC