Few points on Service Tax- Place of Provision.

01.  This rule means for import & export of services and service provider functioning from multiple location without centralized registration.

02.  Export are not taxable and import are taxable.

03.  Location can be determined – in case of centralized registration – office which is registered and in other case- usual place of service provider.

04.  In case of telecommunication service- the address of the service receiver.

05. 

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

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

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

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

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

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

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

Emco Ltd vs. UOI (Bombay High Court)

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

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

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

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

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

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

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

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

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

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

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

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

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

What is Deficit financing?

Deficit financing is that, which, if used responsibly, can lead an economy to prosperity; however, if used thoughtlessly, can do the opposite. It is the tool suggested years ago by known economist John Keynes, and used today throughout the world by various finance ministers of different economies in their budgets.

Let us begin our understanding of this important tool by knowing its meaning. It is a practice by which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds (the printing of new currency notes and making of coins). As highlighted earlier, the

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

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

Facts of the case

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

RTI & Professionals

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

Few points on Service Tax- Valuation Rules.

01.  Where the consideration is only money, then gross amount charged.

02.  In case where consideration is not or partly for money, then the monetary value of service.

03.  In case value not ascertainable, then in the prescribed manner.

04.  Electricity provide free of cost to service provider is not a consideration. Refer, Inox Air Products Limited.

05.  Rate of exchange of rate of service tax – when the taxable services has been provide or agreed to be provided.

06.  Forex Profit / loss is not taxable for service tax.

0

Packaged Commodity Rules for Indian Importer

Website :   http://consumeraffairs.nic.in/consumer/?q=node/398

Important points.

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

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

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

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

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

These Notifications have major ramifications for the packaged software industry and this article is a quick attempt to understand some of these.....

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

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

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

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

This Tax Alert summarizes a recent decision of the Authority for Advance Rulings (AAR) in the case of Booz & Co. Group (Group entities) on the issue of whether provision of technical and professional employees to the Indian affiliate company (ICo) results in a permanent establishment (PE) of the relevant Group entities in India. The AAR, having regard to the interdependency amongst the Group entities and the nature of services rendered, held that a PE exists for the Group entities in India.

In this decision, the AAR has referred to many decisions on how the courts in India have looked at deputation of employees and technical personnel in the context of constitution of a PE. However, it is unclear as to how these observations were applied by the AAR

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

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

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

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

DCIT vs. Air Liquide Engineering India (ITAT Hyderabad)

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

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

Tilda Riceland Pvt Ltd vs. ACIT (ITAT Delhi)

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

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

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

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

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

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

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

Important CPC (TDS) Communication forsubmitting Correction Statements

Customer Care: Toll-Free 1800 103 0344 +91 120 4814600 ContactUs@tdscpc.gov.in Useful Links : TRACES Home TRACES Login e -Tutorials: Register as Deductor Register as Taxpayer Register as PAO Request for ConsoFile Justification Report Online Correction Download TDS Certificates Digital Signature Request for Refund Quick Links: e-Tutorials New Forms Tax Rates and Tables TDS on Sale of Property Right To Information TDSCPC Communications Circulars & Notifications FAQs

011/2014 Date of communication : 22/02/2014 The Centralized Processing Cell (TDS), in its constant endeavour to keep our stakeholders informed and educated, feels glad to remind important facts related to submitting Correction Statements. Following are some useful information to adhere before submitting Corrections, with special reference to C3 & C9:

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

Garware Wall Ropes Ltd vs. ACIT (ITAT Mumbai)

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

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

Visvesvaraya Technological University vs. ACIT (Karnataka High Court)

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

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

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

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

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

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

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

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

Income Tax Department has mandated form 15CA to be submitted for Remittance outside India. Form 15CA can be submitted in any of the following mode :-

1. Submission of Form 15CA Online (Single Upload) – In this Mode remitter can submit the form Online by logging into https://incometaxindiaefiling.gov.in/ . In this mode at a time only one form 15CA can be uploaded. Bulk submission is not possible in online submission of form 15CA.

2. Submission of Form 15CA Online (Single Upload/ Bulk upload) – In this mode remitter can

Updated Utility Form 15CA released by Income Tax

Tax deductor and collector holding valid TAN can register and use the TAN based credentials to file Form 15CA but to fill form 15CA if no tax is been deducted it is still not mandatory for remitter to have TAN.

Link To Register on Income Tax E-Filing Website

https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html

Link to Download Revised updated utility of Form 15CA

https://incometaxindiaefiling.gov.in/eFiling/Portal/DownloadUtil/FORM_UTILITY/1.0/FORM_UTILITY_PR4.zip

Interim Budget 2014 passed in Lok Sabha

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

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

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

Facts of the case

Save Tax on Capital Gain.

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

Procedure of payment of TDS Demand

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

Income Tax - No time limit for initiation of penalty proceedings

THE CAG in its report laid in Parliament on 18.02.2014 observed,

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

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

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

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

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

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

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

RENTING OF IMMOVABLE PROPERTY BY JOINT OWNERS

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

SERVICE TAX ON SHARING WORK

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

Know status of your PAN/ TAN on Phone

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

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

.

This circular states as under:

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

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

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

Facts of the case

The assessee is an individual. In respect of AY 2003-2004, proceedings were initiated by issuing

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

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

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

Date of communication : 17/02/2014


Dear Deductor,

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

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

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

Date of communication : 17/02/2014


Dear Deductor,

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

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

Key highlights of the Interim Budget 2014-15

Direct Tax.

01.  No Change in Tax rate.

02.  Tax Holiday to power sector come to an end.

03.  No Concession of 15% rate on dividend received from foreign companies.

04.  New approach on tax benefits for funding scientific research.

05.  DTC to be put for public discussion.

Service Tax

01.   No Change in rate of 12%.

02.   Paddy & Rice now have same meaning.

03.   Stem cell preservation now comes under health services.

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

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

CBDT Circular On Payment Of Dividend Distribution Tax By Mutual Funds

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

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

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

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

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

Arvind Singh Chauhan vs. ITO (ITAT Agra)

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

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

DCIT vs. Virola International (ITAT Agra)

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

HAPPY VALENTINE DAY

Important Amemdment in AS-11

Insertion of new paragraph 46 in AS 11, The Effects of Changes in Foreign Exchange Rates, issued by The Institute of Chartered Accountants of India, for their applicability to entities other than companies

1. The Ministry of Corporate Affairs, Government of India, inserted paragraph 46 by notification dated 31st March, 2009 which was subsequently modified in 2011 by notification dated May 11, 2011 and notification dated 29th December, 2011 and paragraph 46A in AS 11, inserted by

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

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

Facts of the case

The assessee company is engaged in the business of manufacturing and exporting of food items

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

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

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

Highlights of the Interim Railway Budget- 2014

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

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

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

---

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

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

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

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

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

THE issue before the Bench is - Whether when the assessee enters into agreement for transporting employees and guests of a Research Institute and hires certain vehicles on rent to fulfil its obligations, any TDS liability u/s 194C arises on payments made in this regard. And the answer goes against the Revenue.

Facts of the case

The assessee concern had undertaken a contract of transporting the employees of Institute of Plasma Research by supplying vehicles for the purpose. In the course of executing the contract,

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

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

Facts of the case

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

Service tax Notificate No.03/2014.

Government of India

Ministry of Finance

(Department of Revenue)

***

Notification No. 03/2014-Service Tax

New Delhi, 3^rd February, 2014

G.S.R….(E).- Whereas, the Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), under section 66 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as ‘the Finance Act’), on services provided by an authorised person or sub-broker to the member of a recognised association or a registered association, in relation to a forward contract, and that such services were liable to service tax under the Finance Act, which was not being levied according to the said practice during the period commencing from the 10^th day of September 2004 and ending

Exchange Rate effective from 07/02/2014

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, PART-II, SECTION 3, SUB-SECTION (ii), EXTRAORDINARY]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF EXCISE AND CUSTOMS

Notification No.9/2014-Customs (N.T.)

DATED THE 6^th February, 2014

17 Magha, 1935(SAKA)

S.O. (E). – In exercise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), and in super session of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.3/2014-CUSTOMS (N.T.), dated the 16^th January, 2014 vide number S.O.118 (E), dated the 16^th January, 2014, except as respects things done or

CBDT Circular On Extension Of Due Date For Filing Refund Claims

The CBDT has issued Circuar 04/2014 dated 10.02.2014 pointing out that a large number of returns have become non-est as ITR-V was not furnished within the due date. As a result the refund claims have not been processed. In order to mitigate the hardships of taxpayers pertaining to non-receipt of tax refunds, the CBDT has extended u/s 119(2)(a) the date for filing ITR-V for AYs 2009-10, 2010-11 and 2011-12 to 31.03.2014. The time-frame under the second proviso to s. 143(1) for issuing the Intimation has been extended to 6 months from the end of the month in which ITR-V is received. 

Interest u/s 244A is not taxable in the year of grant of refund but has to be spread over the respective AYs to which it relates

M. Jaffer Saheb (Decd.) vs. CIT (Andhra Pradesh High Court)

In AY 1982-1983 the AO raised a demand which the assessee paid. In AY 1990-91 (16.06.1989) the AO gave effect to the Tribunal’s order and refunded the tax paid by the assessee together with interest for the period from 30.10.1985 to 31.08.1989. The AO held that the said interest was assessable to tax in AY 1990-1991 while the assessee claimed that the said interest had to be spread over and assessed in AYs 1985-1986 to 1988-1989. The CIT(A) upheld the claim of the assessee though the Tribunal upheld the stand of the AO. On appeal by the assessee to the High Court HELD allowing the appeal:

S. 263: CIT cannot revise the TPO’s transfer pricing order passed u/s 92CA(3). CIT also cannot revise s. 143(3) order because such order is not erroneous if it follows binding order of TPO

Tata Communications Limited vs. DCIT (ITAT Mumbai)

The AO made a reference u/s 92CA(1) to the TPO for the computation of arm’s length price (“ALP”) in relation to the international transactions in AY 2005-06 & 2006-07. Pursuant thereto, the TPO passed an order u/s 92CA(3) proposing an adjustment of Rs. 12.19 crore for AY 2005–06 & Rs. 9.18 crore for AY 2006–07. The AO computed the income of the assessee in conformity with the ALP determined by the TPO. Thereafter, the CIT passed an order u/s 263 by

Delhi HC rules that outsourcing of services by a US company to its Indian affiliate does not constitute a PE

This Tax Alert summarizes a recent decision of the Delhi High court (HC) in the case of E Funds Corporation and its group entities on whether outsourcing of services to an Indian affiliate results in a Permanent Establishment (PE) in India for the Foreign Enterprise (FE) under the provisions of the India-US Double Taxation Avoidance Agreement (DTAA). The HC held that a subsidiary constitutes an independent legal entity for taxation purpose and, hence, the holding-subsidiary relationship or control exercised by a parent on its subsidiary, by itself, does not result in a PE of the FE in India unless the contrary is proved.

On facts, the outsourcing of activities to the Indian affiliate was found not to result in either a fixed place or agency PE of the FE in India. Deputation of employees of the FE to carry out stewardship activities to protect the interests of the FE does not result in a

Procedure of Income Tax Refund

How to get that Delays in income tax refunds, even after the stipulated number of months, are faced by many tax payers. Running from pillar to post at the income tax office, having to deal with impolite income tax officials become a part of the ordeal. At such times tax payers often feel helpless with absolutely no recourse. To address such issues, the government has set up the Tax Ombudsman in select cities, to address grievances and to provide tax payers a platform to put forth his issues and problems.

S. 41(1): Unclaimed liabilities (of earlier years), which are shown as payable in the accounts, are not taxable as income even if creditors untraceable & liabilities are non-genuine

CIT vs. Bhogilal Ramjibhai Atara (Gujarat High Court)

In AY 2007-08 the assessee showed an amount of Rs. 37.52 lakhs as being due to various creditors. The AO issued summons to the creditors. Some of the creditors were not found at the given address and some stated that they had no concern with the assessee. The AO took the view that there was a “cessation” of the liabilities and assessed the said liabilities to tax u/s 41(1).

Whether when agreement which assessee entered into gets terminated, all expenses relating to such agreement is allowable as revenue expenditure - YES: ITAT

THE issue before the Bench is - Whether when agreement which assessee entered into gets terminated, all expenses relating to such agreement is allowable as revenue expenditure. And the answer is YES.

Facts of the case

The assessee is engaged in the business of Realtor and Contractor. It used to enter into

Form 27A generated by TDS-TCS FVU mandatory from Feb 1, 2014.

As you may be aware, the e-TDS/TCS File Validation Utility (FVU) version 4.1 and 2.137 which has been released on January 3, 2014 has the feature of generating pre-filled Form 27A. The deductor/collector need not prepare a Form 27A separately as all the requisite information of the e-TDS/TCS statement gets printed in the Form 27A generated by e-TDS/TCS FVU.

With effect from February 1, 2014, deductors/collectors will mandatorily be required to submit Form 27A generated by e-TDS/TCS FVU duly signed along the e-TDS/TCS statement. Form 27A submitted in any other format will be treated as invalid submission and the same will be rejected by TIN-FC branches.

You are therefore requested to suitably advise your staff who looks after preparation and submission of e-TDS/TCS returns.

Please let us know in case of any concerns or clarifications. Do not reply to this email ID. For clarification on the above you may send e-mail to tin_returns@nsdl.co.in or contact TIN call center at 020 - 2721 8080.

For and on behalf of

Tax Information Network of Income Tax Department

Tax clearance necessary for restructuring/ M&A schemes

 

The Ministry of Corporate Affairs (“MCA”) vide circular dated January 15, 2014^[1] (“Circular”) has mandated all Regional Directors to seek inputs/ comments in all cases of arrangement/ compromise or reconstruction/ amalgamation undertaken in accordance with Section 391-394 of the Companies Act, 1956 (“1956 Act”) from Income Tax Department and other sectoral regulators.  We have, in this alert, summarized the key changes introduced by MCA vide the Circular and the related impact. 

S. 220: AO’s action of coercive recovery is illegal and shocks the conscience. The Tribunal cannot remain a silent spectator to such illegal action

DIT vs. Maharashtra Housing & Area Development Authority (Bombay High Court)

The assessee received the order of the CIT(A) on 16.11.2013. It filed an appeal before the Tribunal on 18.11.2013 which was the next working day. The assessee also filed an application before the Tribunal requesting stay of demand. The said application was fixed for hearing on 22.11.2013. However, the AO, without awaiting the outcome of the stay application, attached the assessee’s bank account u/s 226(3) on

The investment limit in Government securities is increased for certain types of FIIs from US$ 5 billion to US$ 10 billion

The Government of India, in consultation with the Reserve Bank of India (‘RBI’) and the Securities and Exchange Board of India (‘SEBI’), has raised the investment limit in Government debt available to long-term investors registered with SEBI as FIIs under the categories of: (i) Sovereign Wealth Funds (‘SWFs’), (ii) Multilateral Agencies, (iii) Endowment Funds, (iv) Insurance Funds, (v) Pensions Funds, and (vi) Foreign Central Banks, from the current limit of US$ 5 billion to US$ 10 billion

Form 27A generated by TDS-TCS FVU mandatory from Feb 1, 2014.

As you may be aware, the e-TDS/TCS File Validation Utility (FVU) version 4.1 and 2.137 which has been released on January 3, 2014 has the feature of generating pre-filled Form 27A. The deductor/collector need not prepare a Form 27A separately as all the requisite information of the e-TDS/TCS statement gets printed in the Form 27A generated by e-TDS/TCS FVU.

Supreme Court upholds initiation of prosecution for failure to file return (Sasi Enterprises)

Supreme Court of India (SC) in the case of Sasi Enterprises (Taxpayer) v. ACIT where the SC held that prosecution can be initiated against a taxpayer who fails to furnish return of income (ROI) within the statutory due date or in response to a notice issued by Tax Authority. The SC also reiterated that, in the prosecution proceedings for failure to file ROI on time, the initial burden lies on the taxpayer to prove the circumstances which prevented the taxpayer from filing ROI on time and it is not for Tax Authority to prove that taxpayer had wilfully committed the default. Further, the fact that taxpayer’s assessment has not become final due to pendency of appeal proceedings would not act as bar against initiating prosecution proceedings.

S. 14A disallowance has to be applied while computing book profits under clause (f) of Explanation to s. 115JA

CIT vs. Goetze (India) Ltd (Delhi High Court)

In AY 2000-01 the assessee offered income on the basis of book profits u/s 115JA. The assessee had credited the P&L A/c with dividend income of Rs. 1.57 crore. It claimed that the said dividend had to be excluded while computing the book profits, which was accepted by the AO. The CIT thereafter passed an order u/s 263 in which she claimed that the expenditure incurred to earn the said dividend had to be disallowed under clause (f) of the Explanation to section 115JA while computing the book profits. She

S. 14A & Rule 8D: If AO does not deal with assessee’s arguments, it means that he has not reached objective satisfaction that assessee’s method is incorrect & cannot invoke Rule 8D

Kalyani Steels Ltd vs. ACIT (ITAT Pune)

In AY 2008-08 the assessee earned dividends of Rs. 5.45 crore and offered a disallowance u/s 14A of Rs. 5 lakhs. It gave a detailed explanation on why the amount of disallowance was adequate. However, the AO refused to accept the explanation and made a disallowance under Rule 8D of Rs. 1.05 crore. This was upheld by the CIT(A). On appeal by the assessee to the Tribunal HELD allowing the appeal: (i) The invoking of Rule 8D to compute the disallowance u/s 14A is neither automatic and nor is triggered