Friday, 9 October 2015
Fee for technical service in DTAA between India-China covers provision of service while Pak-China treatise talks about 'provision of rendering of services. Hence DTAA between India-China gives more comprehensive coverage to fee for technical service and service might get covered even if it is not rendered. Hence Chinese subsidiary of Indian company getting service cost plus 10% from Indian company for specialized services of market research and information on new developments in China with regard to technology/product/process upgrade etc., held taxable at gross amount including reimbursement of actual service cost following Timken India Limited (AAR No.617 of 2003). [2015] 62 taxmann.com 96 (AAR - New Delhi)
Thursday, 8 October 2015
No TDS on payment made in kind as per Para 9 of Judgment delivered by Karanatka High Court in Bruhat Banglore Mahanagar Palike ITA 94/2015 dated 29-09-2015.The Court held that no TDS was liable to be deducted under section 194LA of the Act on land acquired through voluntary surrender by land owners in lieu of development rights on the ground that the section contemplates payment of a sum of money which was not satisfied as development rights did not constitute monetary consideration
PAN/Voter Identity Card is a KYC norm, which does not apply to the sale of goods under the Sale of Goods Act. Hence where dealer of automobiles could not produce these evidences in respect of advance from customers which is converted to sale in two to three months, no addition can be made in respect of advances received from customers-DUTTA AUTOMOBILES (P) Ltd(kol Trib)Oct 5, 2015 (2015) 45 CCH 0100 KolTrib
Wednesday, 7 October 2015
Investments on which no dividend income is earned should be excluded for calculation of disallowance u/s 14A-Living Media India Ltd [2015] 61 taxmann.com 206 (Delhi - Trib.)
Battery of Cases u/s 14A relied upon by assessee:
Delhi High Court in the case of CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28 and
Delhi High Court in the case of CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28 and
Para 63 of Karanatka High Court in Manju Nath Cotton & Ginning factory 359 ITR 565 on Penalty followed by Banglore Tribunal in H.LakshmiNarayan [2015] 61 taxmann.com 373 (Bangalore - Trib.)
63. In the light of what is stated above, what emerges is as under :
| (a) | Penalty under section 271(1)(c) is a civil liability. | |
| (b) | Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. | |
| (c) | Willful concealment is not an essential ingredient for attracting civil liability. |
Tuesday, 6 October 2015
When statements of witnesses are made basis of demand, not allowing assessee to cross-examine witnesses is a serious flaw which makes order nullity, as it amounts to violation of principles of natural justice - It is not for adjudicating authority or Tribunal to have guesswork as to for what purposes assessee wanted to cross-examine witnesses and what extraction assessee wanted from them- Andaman Timber Industries [2015] 62 taxmann.com 3 (SC) SUPREME COURT OF INDIA SEPTEMBER 2, 2015
Ancilary services such as loading/ unloading, packing/unpacking, transshipment, temporary storage services provided by goods transport agency in course of transportation of goods by road to be treated as part of composite service and shall enjoy abatement of 70% like principal service- Circular No. 186/5/2015 by CBEC dated 05-10-2015-
Assessee filed returns in response to notices under section 148 issued by ITO, Erode - While said returns were pending for disposal, assessee's file was transferred to jurisdiction of ITO, Madras, who issued second notice under section 148 - Whether, while reassessment proceedings were pending, impugned second notice was valid - Held, no-A.S.S.P. & Co. [1986] 27 Taxman 623 (Madras)
Wednesday, 30 September 2015
Tuesday, 29 September 2015
Once the Council of Ministers takes a policy decision, the implementing Vat Department cannot issue a notification contrary to the policy decision taken by the Government.
Held by Supreme Court in Lloyd Electric And
Engineering Ltd. 2015] 61 taxmann.com 311 (SC) SEPTEMBER 3, 2015 where
central sales exemption was extended by decision of the State Cabinet, the
notification issued by vat department of the Himachal pradesh at a later point
of time extending exemption from the date of issue of notification shall have
effect from the date decided by State cabinet only. Excise and Taxation
department can not take a different stand
Failue of the assessee partner to deduct TDS on Interest on overdrawn balance with the firm is liable to penalty for failure to deduct tax.
S. 19A(3)(iv) exempts interest credited or paid by a firm to
a partner of the firm but vice versa is not true . So the alleged belief of the
partner that vice versa is true i.e partner is also not liable to deduct tax
form the overdrawn balance was brushed aside by Kerala High Court in Thomas
Muthoot [2015] 61 taxmann.com 76 (Kerala) JULY
3, 2015 . The plea of reasonable cause u/s 273B also held not
applicable
Sunday, 27 September 2015
Mere possession and recovery of currency notes from an accused is not sufficient to establish an offense under the Prevention of Corruption Act. Proof of demand of illegal gratification is essential. Its absence is fatal to the complaint.P. Satyanarayana Murthy vs. Dist. Inspector of Police (Supreme Court) September 14, 2015
Friday, 25 September 2015
CBEC has issued a circular on 21-09-2015, directing field officers not to follow the CBEC circulars contrary to the judgement of supreme court. The Board has quoted Supreme Court Judgement in Rattan Meltings which says that circular only represent department's understanding of the law, while power to declare the law is vested with Supreme Court only under Article 141. Board has also urged to start the process of referring such circulars to Board so that they may be declared non est. The board may suo moto also take such action.
Compensation of Rs. 1.95 crores received by prospective employee for not joining the employment held not taxable. Also held not covered by Section 17(3)(iii) "profits in lieu of salary" which includes any amount due to or received, whether in lump sum or otherwise, by any assessee from any person before his joining any employment with that person or after cessation of his employment with that person. Further not held taxable as income from other sources- Pritam Dass Narang [2015] 61 taxmann.com 322 (Delhi) SEPTEMBER 16, 2015
1. Depreciation of business and administrative expense to be allowed for business suspended due to govt orders but not discontinued. 2. Interest income from margin money and bank guarantee deposits to be set off against expenses and not to be treated under Income from other sources- .MS. ASSOCIATES vs.ASSISTANT COMMISSIONER OF INCOME TAXSep 21, 2015(2015) 45 CCH 0069 DelTrib
Notice u/148 issued to address in PAN data base which is no longer occupied by assessee. Assessee not precluded from pleading that notice served to wrong address. Also even if assessee participates in reassessment proceedings , the Jurisdictional defect does not get cured.IN THE HIGH COURT OF DELHI AT NEW DELHI 2. + ITA 665/2015 ATLANTA CAPITAL PVT. LTD.
Matters which are not covered by notified standards u/s 145(2) and are also not covered by provisions of income tax law can be interpreted as per non notified standards or guidance notes of ICAI although not mandatory in nature- Held by AP High Court in Pact Securities on 05-02-2015 ITA 252/2003. The Court allowed deduction of lease equalization charges as per Guidance Note issued by ICAI applicable before 01-04-2001
Refund of excess salary which was granted in earlier years is deductible because the assessee is under legal obligation to repay the amount. Ahmadabad Trib. lays down that salary “due” and not salary “accrued” or “arising” is sought to be taxed u/s 15. The legislature has intentionally used the words “due” and not “accrued”. -Vrajeshwari B. Parikh 15-09-2015 ITA 1512/2014
Section 40(a)(ia) 2nd Proviso Inserted by Finance Act wef AY 2013-14 abating TDS disallowance on production of CA certificate attesting payment of tax and filing of return by deductee which was held applicable with retrospective effect by Agra Bench in Rajiv Kumar Agarwal ITA PGB/2013 and confirmed by ITAT Delhi in Ansal Land Mark Township P Ltd also upheld by Delhi High court in ITA 161/2015 dated 26-08-2015. High Court praised ITAT for thorough analysis on the subject
TAT withdraws adverse remark against ICAI and its members in Vijay V. Meghani [2015] 61 taxmann.com 114 (Mumbai - Trib.) 04-09-2015
Para 9.6 of the order amended to substitute following remarks: However, if it is considered for a moment that the above said C.A. firm has really given such advice to the assessee herein and accordingly it has furnished the letter and affidavit, then it is a cause of concern to one and all. We have already noticed that the self study model coupled with "on-site articled clerk training" embedded in the Chartered Accountancy course aims to achieve high quality education and training .
CBDT Instructions no. 1916 dated 11-05-1994, requiring non seizure of jewellery to the extent of 500 gms for married lady, 250 gms for unmarried lady and 100 gms for male to be extended to assessment proceedings also and to be treated as explained income . The circular also explained by Hon'ble Ahmedabad I.T.A.T. in case of Kishorbhai V Sakaria, Rameshchandra R Patel 89 ITD 203 and Manila S Dave 117 Taxman 23- Ahemdabad Tribunal in RASIK GOPALDAS PATEL (2015) 45 CCH 0032 AhdTrib on 04-09-2015
Held by Calcutta High Court in Smt. Mina Deogun "We can imagine a situation where a person can be the owner of the land and another can be the owner of the structure. This is permissible in law because in joint ownership unity of title is not required. In the case before us the land admittedly belonged to the husband. He has raised the building with the joint funds belonging to himself and his wife. Therefore, one inference which can be drawn is that the land belonging to the husband has been thrown into the common stock of joint property between the husband and the wife. Both of them thus became the joint owners by operation of the doctrine of blending. They admittedly have borne the cost of construction in the ratio of 1/3rd and 2/3rd. Therefore, the income arising out of the property is in fact an income arising out of house property which has to be taxed under Section 22 rather than as an income arising out of other sources under Section 56. [2015] 60 taxmann.com 430 (Calcutta)
Due date extension from 31st Aug to 7th Sep is applicable to only those who were required to file return electronically. However as per Rule 12(3) Ind and HUF neither having income above 5 lacs nor having any refund claim and super senior citizens ( 80 yrs or above) can file return in paper form also. Hence there is no date extension for such categories of assesses
Sale of Shares held taxable under Short term capital gain and not profits and gains of business for following reasons: 1. No borrowings for purchase of Shares 2. Shares held for more than 30 days.( Shri Sugam Chand C. Shah Ahd Trib relied upon) 3. Had shares been held for business, stock would be been valued at cost or market price , whichever is less while in present case stock of Shares valued at cost only. 4. Shares reflected in Investment account. 5. Separate account maintained for F&O BHUPENDRA SHANTILAL SHAHITA No. 1496/Ahd/2011 (28-08-2015)(Ahd Trib)
Where land given for development, the capital gain shall arise in the year in which constructed flats handed over to land owner and not when Construction completed and accordingly exemption u/S 54/54F allowable in the year of taking flats.DR. S. VENKATESWARE PRASAD2015) 44 CCH 0563 HydTrib 28-08-2015
Monday, 31 August 2015
After SC Judgement in Suman Dhamija dtd 01-07-2015, CBDT has instructed the officers to file review petitions/ misc. applications in cases where appeals before 2011 were dismissed following low tax effect Instruction No. 3/2011dtd 09-02-2011 applied to pending cases filed before issue of these Instructions.Relevant Instructions Issued on 27-08-2015
In absence of fulfilment of fundamental fact that land was used for agriculture, merely mentioning of land as agricultural land in purchase deed or sale deed or even in revenue records cannot establish case of assessee that land sold by it was an agricultural land
Abhijit Subhash Gaikwad[2015] 60 taxmann.com 259 (Pune - Trib.)MAY 27, 2015
Punjab & Haryana High Court interpreting "service of notice/order" in Vat case: The order of appeal communicated by DETC A to the branch of the dealer, where as he had communicated head office address for communications, due to which there was delay of 907 days in filing appeal to the VAT Tribunal. The Vat Tribunal upheld the service under section 27 of General Clauses Act. Punjab and Haryana High Court however held quoting ” The Commissioner of Income Tax, Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh and Chandigarh, Patiala V/s Lalita Kapur’ (P&H)(DB), 1970 CurLJ 523, that Division Bench of this Court has already held that presumption under Section 27 of the General Clauses Act, 1897 stands rebutted in case the service is effected on an assessee under Section 63 (1) of the Income Tax Act, 1922 through its agent never appointed by it, as it shall not be a valid service”. Hence service is invalid and delay condoned- M/s. B.K. Steels VAT AP 214/2014 dated 10-08-2015 Comments: Section 27 of General Clauses Act is applicable under Income tax law also, by virtue of Section 282 of Income tax Act. The above Judgement substantiated that presumption u/S 27 is not non rebuttable.
Friday, 28 August 2015
No service tax on food served by home delivery/pick up
Clarified by Service Tax Department of Chandigarh vide
letter dated 13-08-2015 that no service tax shall be charged for home delivery/pick
up of food because dominant purpose is not enjoyment of services like ambience,
air conditioning or personalized hospitality. Service tax can be charged only
if element of service is involved. Earlier restaurants such as McDonald’s, Domino’s, Pizza Hut etc.
were providing home delivery/pick up facility and were also charging service
tax. This clarifications shall bring much sought for relief to consumers
Monday, 24 August 2015
A contract was entered by assessee- joint venture company to execute project work for its client - Assessee did not execute contract work and said work was done by one of its constituents, namely 'SMS Ltd.' - Receipts for project work were reflected in books of account of 'SMS Ltd.' and in return, 'SMS Ltd.' had disclosed said income and assessment was completed - Whether since there was no finding of receipt of any income by assessee on account of said contract, same would not be treated as income in hands of assessee
SMSL-UANRCL (JV) MARCH 2, 2015 60 Taxmann.com 206
assessee sold immovable property resulting in capital loss - On basis of valuation made by sub-registrar, Assessing Officer issued notice to assessee for adoption of higher sale value of property - In response to said notice, assessee submitted revised computation of income showing increased selling price to assessee - Assessing Officer accepted said valuation and completed assessment - Subsequently, he initiated re-assessment proceeding on ground that certain long-term capital gain arising out from sale of property escaped assessment - Whether mere fact that in response to notice issued by Assessing Officer, assessee had filed revised computation of income, not revised return of income, therefore it could not be ground to reopen assessment - Held, yes - Whether, moreover, assessee had disclosed all relevant facts at time of assessment, initiation of re-assessment proceedings after expiry of 4 years, from relevant year, merely on basis of change of opinion was not sustainable
Chandrakant Keshavram Singapuri [2015] 60 taxmann.com 136 (Gujarat) MARCH 11, 2015
Where principal objects of assessee were to encourage study of theory of banking and for that purpose to institute a scheme of examinations and to give certificates, scholarships and prizes, activities of assessee would squarely be covered by definition of charitable purpose and it was eligible for exemption under section 11
Indian Institute of Banking & Finance[2015] 60 taxmann.com 193 (Mumbai - Trib.) FEBRUARY 11, 2015
Section 115BBC taxing anonymous donations @ 30% is not applicable to trust being a temple or shrine; provisions of this section are meant to check inflow of unaccounted/black money into system with a modus operandi to make out as a part of accounts of institutions like university, medical institutions where problem relating to receipt of capitation fees, etc. is generally highlighted. Such type of offerings are made/put into the donation box by numerous visitors and its generally not possible for any such type of institutions to make and keep record of each of the donor with his name address etc. Even sometimes the donors out of their esteem, respect and regard and selflessness they do not want that their name be registered as a donor before the deity for whom them make the prayer in the belief that the deity is the ultimate giver of all the worth and virtues of their life. Gurudev Siddha Peeth JULY 22, 2015 ITAT MUMBAIIT APPEAL NOS. 3466 AND 3467 (MUM.) OF 2012
Income/loss from letting out of multiplex/shopping mall and cinema theatre along with amenities was to be assessed under head ‘business income’ of the assessee and not ‘Income from house property’ as main intention was found to be exploitation of property by way of commercial activities. As held by Apex Court in Chennai Properties & Investment Ltd that where the letting of the properties was in fact the business of the assessee, the income arising therefrom was to be treated under the head “Income from Business” and that it cannot be treated as income from House Property. Thus, assessee was also entitled to the claim of deductions in respect of expenditure incurred and depreciation on assets etc. in relation to such income SHREEJI EXHIBITORS vs.ASSISTANT COMMISSIONER OF INCOME TAX BOMBAY TRIBUNAL Aug 14, 2015 (2015) 44 CCH 0492 MumTrib
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