Due to lack of tax exemptions under the Goods and Services Tax (GST) regime for investing in industrially marginal areas of Uttarakhand, J&K, Himachal Pradesh and the North East, the suppliers to major Fast Moving Consumer Goods ( FMCG ) Companies have approached the Uttarakhand High Court.
Under the old tax regime, several tax exemptions were given to the manufacturers who would invest in some areas with a view to promoting investments in the exempted zones.
Before the Nainital bench of the Uttarakhand High Court, the petitioners contended that there is no clarity in GST of what would happen to the exemptions given under the earlier regime.
Under the transitional credit rules, these manufacturers have not been able to claim the credit of the past taxes paid or exemptions availed to set off their current GST liabilities. “The Indian Constitution provides that GST Council shall make recommendations with respect to special provisions for area-based exempted units,” the petition reads.
The denial of credit on capital goods… in these cases appears to be an unintended omission as section 140 of the CGST Act doesn’t cover the proportionate availing of credit”, said Abhishek A Rastogi, partner, Khaitan & Co, and an advocate for the manufacturers.
The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal, while allowing tax relief to M/s Punj Lloyd Ltd, held that Structure created for Commonwealth Games cannot be considered as the commercial or industrial venture for the purpose of imposing service tax.
In the present case, the dispute arose with the decision of Revenue considering that agreement agreed to by the appellant company liable for service tax under ‘works contract service’. The Assessee entered into an agreement with Municipal Corporation of Delhi for providing the parking facility for Commonwealth Games-2010. Proceedings were initiated against the appellant by issuing show cause notice and the appellant contested for the same, therein original authority raised the demand and confirmed the penalty under section 78 and 77 of the Finance Act, 1994.
The counsel for Appellant Company, Advocate Sujit Ghosh & Shashant Shekhar contended before the bench that the above-mentioned construction is a part of the infrastructural requirement for the Commonwealth Games, called for substantial parking facility to cater to the vehicles used for transporting sportspersons and other connected personnel.
The assessee also argued that the said facility created for commonwealth games and not meant for commercial usage then the tax liability under works contract service cannot be sustained. The appellant also reminded the bench that WCS covers only civil structures primarily used for the purpose of commerce or industry.
After hearing the arguments from both the sides and analyzing the agreement, the bench observed that regarding usage of the said facility it was clarified that no parking charges were levied during the Commonwealth Games. Thereafter, the said parking facility is being used as road connection between Barapullah Elevated Corridor and the other part of the facility being used for the parking of City Bus Service under the control of GNCTD.
The Tribunal bench admitted the contention of Assessee that WCS covers only civil structures which are for commerce or industry and observed that “It is clear that the said games were organized and conducted by the Govt. involving the participation of a large number of countries. Such sports event and the structure created for such sports event cannot be considered as commercial or industrial venture”.
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The Madras High Court has dismissed the petition which sought to bring Petrol and Diesel under the Goods and Services Tax ( GST ) regime.
A division bench comprising of Justice M. Sathyanarayanan and Justice R. Hemalatha yesterday dismissed the petition filed by Activist K.K. Ramesh said that the court could not interfere in Government’s policies.
The petition said that bringing Petrol and diesel under GST would results down of fuel prices. With petrol and diesel left outside the ambit of the GST, fuel prices were increasing on a daily basis, he said.
He claimed that taxes and excise duties exceeded the actual cost of production in the country. There were discrepancies in fuel prices among the States, he added.
While dismissing the petition, the division bench said that the process was involved in the legislature, in which the court could not give any direction. The petitioner said that the main aim of GST is one nation one tax. But, petrol and diesel had not come under the GST.
Subscribe Taxscan Premium to view the JudgmentThe Delhi High Court, following a-five broad tests to decide the nature of income, ruled that the receipt out of sale of shares is Capital Gain if the Company treated the same as investment.
In the instant case, the Assessee was engaged in the business of investment and securities and had a distinct portfolio in respect of stock in trade and investment.
For the year under consideration, the Assessee acquired the share of certain companies which underwent amalgamation and he shifted some of the shares to its investment account and later sold them during the Assessment Year.
However AO brought to tax substantial amount for the concerned Assessment Year rejecting the assessee’s claim of capital gains and held the same as stock-in-trade and treated the profit earned as business income. The CIT (A) upon re-appraisal of the facts and consideration of the authorities held that the action of the AO treating the entire income as business income is not justified; hence addition made by him on this account is deleted.
When this matter carried to the Tribunal, the Tribunal concluded the matter in favour of the assessee.
On further appeal before the High Court, Justices Ravindra Bhatt and A K Chawla observed that in order to ascertain whether a particular income constitute business income or capital gain, the following five tests have to be followed;
By following this test Tribunal noticed that AO’s approach in singular fixing scrutiny to the shifting and regulations of some shares to treat as business income, was erroneous.
Accordingly, the bench decided that the disputed amount amounted to capital gain, and not business income.
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The Calcutta High Court, while quashing an order passed by the Revenue against IRS Manjith Singh, former CBDT official, has clarified that the sale consideration of a floor developed under a Joint Venture Agreement is taxable as Long Term Capital Gain (LTCG) and not as business income under the provisions of the Income Tax Act, 1961.
Shri Manjit Singh, entered into a joint venture agreement with a builder as per which, the assessee has right over the entire first floor, basement etc. assessee sold the same and disclosed the same in the return under the head ‘Capital Gain’.
However, the Assessing Officer took a view that this transaction constituted the adventure in the nature of trade and therefore, it must be treated as business income. During the course of assessment, the assessee died and was represented by his wife in the proceedings.
Advocate D. Chowdhury, the counsel for the assessee contended before the Court that the intention of higher profit clothed the transaction with the character of adventure in the nature of trade and no element of pride of possession came into the picture.
Dismissing the revenue’s appeal, the Justice Aniruddha Bose and Justice Amitabha Chatterjee held that the income in dispute is taxable as long-term capital gain. The bench said that “It might be natural for a person, who is not undertaking any business venture, to seek the higher return from the sale of his assets. That would be a rational pursuit and in our view reflects normal human behavior and not a special attribute for a trader or a businessman. Just because for a particular unit, an intervening transaction is aborted for the reason that the property would fetch a better price, if sold to another person, the grievance may be caused to the person with whom the earlier arrangement was entered into. But such an exercise would not transform the nature of activity from the normal sale of the capital asset to a business venture. There is the substantial gap in time between the day of acquisition of the asset and its development and part-sale. The original assessee was not a property dealer but a member of the Indian Revenue Service, working with the Income Tax department itself. Only a portion of the property was sold. In these circumstances, the test laid down in the case of G.Venkataswami Naidu & Co. (supra) has to be decided in favor of the assessee.”
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Excise and Customs (CBEC) today clarified certain issues relating to the export refund under GST. A circular issued by the Board, in this regard, deals with issues such as non-availment of the drawback, non-processing of refund claims on account of data mismatches, Exports without LUT, Exports after the specified period, Deficiency memo, Self-declaration for non-prosecution, refund of transitional credits etc.
With regard to the non-availment of the drawback, the circular said that a supplier availing of drawback only with respect to basic customs duty shall be eligible for the refund of unutilized input tax credit of central tax / State tax / Union territory tax / integrated tax/compensation cess under the said provision. It is further clarified that refund of eligible credit on account of State tax shall be available even if the supplier of goods or services or both has availed of the drawback in respect of the central tax.
Regarding the issue of non-processing of refund claims on account of mismatches between data contained in FORM GSTR-1, FORM GSTR-3B and shipping bills/bills of export. The Board, in this regard, has advised that while processing refund claims on account of zero-rated supplies, information contained in Table 9 of FORM GSTR-1 of the subsequent tax periods should be taken into cognizance, wherever applicable.
“Field formations are also advised to refer to Circular No. 26/26/2017 – GST dated 29th December 2017, wherein the procedure for rectification of errors made while filing the returns in FORM GSTR-3B has been provided. Therefore, in case of discrepancies between the data furnished by the taxpayer in FORM GSTR-3B and FORM GSTR-1, the officer shall refer to the said Circular and process the refund application accordingly,” the bench said.
On the issue of Exports without LUT, the Board clarified that the substantive benefits of zero-rating may not be denied where it has been established that exports in terms of the relevant provisions have been made. “The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex-post facto basis taking into account the facts and circumstances of each case.”
Subscribe Taxscan Premium to view the JudgmentIn a significant ruling, the Supreme Court of India has ruled that foreign law firms cannot set up offices in India or practice in Indian Courts.
A two-judge bench comprising of Justice Adarsh Kumar Goel and Justice U.U Lalit has upheld the judgments of Madras and Bombay High Courts.
While upholding the High Courts Judgments, the Court has answered the issued categorically and observed that “practising of law includes not the only appearance in courts but also giving of opinion, drafting of instruments, participation in conferences involving legal discussion. These are parts of non-litigation practice which is part of the practice of law. The scheme in Chapter-IV of the Advocates Act makes it clear that advocates enrolled with the Bar Council alone are entitled to practice law, except as otherwise provided in any other law. All others can appear only with the permission of the court, authority or person before whom the proceedings are pending. Regulatory mechanism for the conduct of advocates applies to non-litigation work also. The prohibition applies to any person in India, other than advocate enrolled under the Advocates Act, certainly applies to any foreigner also”.
“Visit of any foreign lawyer on the fly in and fly out basis may amount to the practice of law if it is on regular basis. A casual visit for giving advice may not be covered by the expression ‘practice’. Whether a particular visit is casual or frequent so as to amount to practice is a question of fact to be determined from situation to situation. Bar Council of India or Union of India is at liberty to make appropriate rules in this regard. We may, however, make it clear that the contention that the Advocates Act applies only if a person is practising Indian law cannot be accepted. Conversely, the plea that a foreign lawyer is entitled to practice foreign law in India without subjecting himself to the regulatory mechanism of the Bar Council of India Rules can also be not accepted. We do not find any merit in the contention that the Advocates Act does not deal with companies or firms and only individuals. If prohibition applies to an individual, it equally applies to the group of individuals or juridical persons”, the bench said.
“It is not possible to hold that there is absolutely no bar to a foreign lawyer for conducting arbitrations in India. If the matter is governed by particular rules of an institution or if the matter otherwise falls under Section 32 or 33, there is no bar to conduct such proceedings in the prescribed manner. If the matter is governed by an international commercial arbitration agreement, the conduct of proceedings may fall under Section 32 or 33 read with the provisions of the Arbitration Act. Even in such cases, Code of Conduct, if any, applicable to the legal profession in India has to be followed. It is for the Bar Council of India or Central Government to make a specific provision in this regard if considered appropriate”.
“The BPO companies providing the range of customized and integrated services and functions to its customers may not violate the provisions of the Advocates Act, only if the activities in pith and substance do not amount to the practice of law. The manner in which they are styled may not be conclusive. As already explained, if their services do not directly or indirectly amount to the practice of law, the Advocates Act may not apply. This is a matter which may have to be dealt with on the case by case basis having regard to a fact situation” the bench also added.
While upholding the view of the Bombay High Court and Madras High Court in para 63 (i) of the judgment to the effect that foreign law firms/companies or foreign lawyers cannot practice the profession of law in India either in the litigation or in nonlitigation side.
The Court, however, modify the direction of the Madras High Court in Para 63(ii) that there was no bar for the foreign law firms or foreign lawyers to visit India for a temporary period on a “fly in and fly out” basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues. We hold that the expression “fly in and fly out” will only cover a casual visit not amounting to “practice”.
In case of a dispute whether a foreign lawyer was limiting himself to “fly in and fly out” on casual basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues or whether in substance he was doing practice which is prohibited can be determined by the Bar Council of India. However, the Bar Council of India or Union of India will be at liberty to make appropriate Rules in this regard including extending Code of Ethics being applicable even to such cases.
The Court also modified the direction in Para 63 (iii) that foreign lawyers cannot be debarred from coming to India to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.
The two-judge bench held that there is no absolute right of the foreign lawyer to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration. If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration Act, foreign lawyers may not be debarred from conducting arbitration proceedings arising out of international commercial arbitration in view of Sections 32 and 33 of the Advocates Act. However, they will be governed by the code of conduct applicable to the legal profession in India. Bar Council of India or the Union of India is at liberty to frame rules in this regard.
Concluding the Judgment, the Court also observed that, “the expression “fly in and fly out” will only cover a casual visit not amounting to “practice”. In case of a dispute whether a foreign lawyer was limiting himself to “fly in and fly out” on casual basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues or whether in substance he was doing practice which is prohibited can be determined by the Bar Council of India. However, the Bar Council of India or Union of India will be at liberty to make appropriate Rules in this regard including extending Code of Ethics being applicable even to such cases”.
Subscribe Taxscan Premium to view the JudgmentThe Delhi High Court, on Monday dismissed a petition by a Chartered Accountant and held that a four-member Appellate Authority constituted under section 22A of the Chartered Accountants Act can hear and decide the appeal, in spite of recusal of one of the members.
The petitioner, in the instant case, has challenged the order of the Appellate Authority wherein the four-member authority upheld the order of the Disciplinary Committee holding him guilty of professional misconduct within the meaning of clauses (5) to (9) of the Second Schedule to the CA Act.
Before the High Court, the petitioner contended that as per the provisions of the Act, the AA ought to have included five members. He, therefore, sought for a direction from the Court for the constitution of the Appellate Authority of five members and for passing a restraint order against the four-member Appellate Authority from proceeding till reconstitution.
Rejecting the plea of non-quorum, the bench observed that the Appellate Authority of four members can hear and decide the appeal, in spite of recusal of one of the members.
After analyzing the provisions of the Chartered Accountants Act in the light of settled judicial decisions, the bench observed that “the CA Act does prescribe that the Appellate Authority will be a body constituted of five persons, but does not prescribe and does not fix a minimum quorum. The statute is silent on the procedure to be followed and adopted when one or more members cannot participate. In absence of a provision and stipulation to the contrary, the quorum in such cases is in order and complete when the majority of the members are present and participate. Therefore, if one of the members of the Appellate Authority for valid and good reason has recused and does not want to participate, hearing in the appeal can proceed and would not suffer invalidity on the ground of lack of quorum.”
“The rationale behind the Rule is that the litigation cannot be a non-sequitur. In other words, there cannot be a litigation system in which it is impossible to litigate a given case. It is on the aforesaid principle that we have examined the statutory provisions of the CA Act and the effect of recusal of one member of the five members of the Appellate Authority and held that recusal will not stall hearing and decision of the appeal. The contention of lack of quorum on account of recusal of one member of the five-member Appellate Authority for the aforesaid reasons fails and is rejected,” the bench said.
Subscribe Taxscan Premium to view the JudgmentIn a major setback to the NDA Government’s nine months old Goods and Services Tax ( GST ), the World Bank said that it is one of the most complex with the second highest tax rate in the world among a sample of 115 countries which have a similar indirect tax system.
The Goods and Services Tax (GST) was launched by the Central Government on 1st July 2017 with five tax slabs of Nil, 5%, 12%, 18%, and 28%. Several goods and services were exempted under the new tax regime. Gold is taxed at 3% and 0.25% for precious stones etc.
Out of 115 countries around the world, 49 countries have a single slab of GST, while 28 countries use two slabs, and only five countries, including India, use four non-zero slabs. Countries like Italy, Luxembourg, Pakistan, and Ghana have four or more slabs, the World Bank said in a report.
The World Bank, in its bi-annual India Development Update released on Wednesday, said the introduction of GST has been accompanied by state administrations experiencing disruptions in initial days after GST’s introduction.
There also have been reports of an increased administrative tax compliance burden on firms and a locking-up of working capital due to slow tax refund processing, the Bank said. “High compliance costs are also arising because the prevalence of multiple tax rates implies a need to classify inputs and outputs based on the applicable tax rate. Along with the need to apply the correct rate, firms are required to match invoices between their outputs and inputs to be eligible for full input tax credit, which increases compliance costs further,” it added.
It further suggested that the adjustment process can affect economic activity for multiple months, the benefits of the GST are likely to outweigh its costs in the long run. “Key to success is a policy design that minimizes compliance burden, for example by minimizing the number of different rates and limiting exemptions, with simple laws and procedures, an appropriately structured and resourced administration, compliance strategies based on a balanced mix of education and assistance programs and risk-based audit programs,” it said.
Subscribe Taxscan Premium to view the JudgmentA division bench of the Delhi High Court, on Monday held that penalty under section 271AAC of the Income Tax Act, 1961 would not attract when an application filed under the Pradhan Mantri Garib kalian ( PMGK ) was rejected by the tax department for gullible mistake arising out of confusion about options to make declaration under the said scheme.
The bench of Justices Sanjiv Khanna and Prathiba M Singh was hearing a petition filed by an advocate, who is an income tax practitioner whose application for PMGK scheme was rejected by the authorities.
In the instant case, the assessee had admitted the cash deposits in demonetized notes in his bank accounts and also stated that he had already paid approx. subsequent to a search operation by the department. Thereafter, he paid Rs.1,00,00,000 as the advance tax with an intent to declare the unaccounted money as income in his return. As per the direction of the Tax Officers, the Assessee had also issued cheques towards 49.90% payable as tax, surcharge and penalty and 25% to be deposited in the Bond Ledger Account.
When the assessee requested the credit of the advance tax already paid by treating the same as tax under the scheme, the Revenue refused to it. Subsequently, the declaration made by the Assessee was rejected by the Revenue Officials by stating that the credit of advance tax paid, TDS or TCS was not to be allowed under the PMGK Scheme and also imposed 10 percent penalty.
Aggrieved by the action of the authorities, the assessee approached the High Court.
Counsel for the Revenue, on the other hand, had submitted that the PMGK Scheme was a complete and self-contained code that had required payment of full tax, surcharge and penalty and deposit under the Deposit Scheme. PMGK Scheme did not envisage benefit of prior payment of taxes, advance tax or the TDS.
“Legislations do not and cannot deal with all circumstances with abstract symmetry. When interpretation and understanding of legal provisions and applicability in a peculiar factual matrix were ambiguous and nebulous at the given point of time and confusion had prevailed, the Courts should provide succour to the party who would suffer an infelicitous and odious harm, subject to the purpose of the legislation not being defeated and subdued.”
Analyzing the provisions of the Scheme in the light of the CBDT circular dated 18th January 2018, the bench held that in case of seized cash/money deposit adjustment for payment of tax, surcharge and penalty was permitted.
The bench further said that “Despite the circular, facts narrated in some detail to show that the Amendment Act had equally puzzled and flummoxed the tax law enforcers with whom the petitioner was in constant interaction and had sought guidance and assistance. Tax officers certainly had failed to appreciate and understand the difference between the two options and the procedure, and have substantially contributed to the muddle. The petitioner we would accept was prompted, if not clearly directed to file the declaration and make deposits as made under the PMGK Scheme as the right course an option. Role of an assessing officer or the Income-tax authorities has been described as that of solicitude to the public exchequer with the inbuilt fairness to the assessee. Respondents, as tax authorities being law enforcers and having acted as facilitators, should have explicated doubts, when they had counselled the petitioner to make taxes etc. under the PMGK Scheme.”
“No provision prohibits or bars an assessee, who had made the true and correct disclosure, to partly take benefit of the option under Section 115BBE and partly exercise the second option in the form of the declaration under PMGK Scheme. The sections do not prohibit part declarations under both options, provided entire undisclosed income has been accounted for in the declaration made under PMGK Scheme and Section 115BBE. Such recourse to both or any option was available to the petitioner on or after the Amendment Act was notified on 15th December 2016. Of course, if the petitioner does not make payment as stipulated under Section 115BBE and applicable surcharge in respect of the aforesaid undisclosed income of Rs.1,71,34,268.54/-, it will be open to the respondents to treat the declaration under PMGK Scheme as invalid or void on the ground of misrepresentation or suppression of facts. Similarly if subsequently the declaration is found to be bad on account of suppression of facts or misrepresentation. In case of tax, interest etc. are paid we believe a fair-minded assessing officer would not initiate penalty proceedings under Section 271AAC of the Act,” the bench added.
Subscribe Taxscan Premium to view the JudgmentIn a major relief to exporters and other taxpayers, the Central Board of Excise and Customs (CBEC) is going to observe GST refund fortnight across all its field formations from 15th – 2B`h March, 2018 to deal exclusively with the pending GST refund claims (IGST & ITC).
An advisory issued by the Board in this regard directed the exporters and taxpayers to follow certain norms to get the benefit.
IGST Refunds on Exports
New facilities have been made available for sanction of IGST refunds held up due to mismatch in invoice related information provided in Shipping Bill vis-a-vis GSTR-1/Table 6A 4 and for errors associated with filing of Export General Manifest (EGM) in gateway port.
The Board further advises the taxpayers to follow the following steps while applying for refund in FORM GST RFD-01A:-
In the Case, Urvi M. Kothari vs Income Tax Officer (ITO), Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) recently held that Assessee gets the ‘benefit of the doubt’ and also deleted the penalty imposed by the Assessing Officer (AO).
The assessee in the present case is an individual has filed his return of income for the relevant assessment year and declared a total income at Rs. 3,78,850. While completing the assessment under section 143(3) of the Income Tax Act 1961, the Assessing Officer (AO) recomputed the total income of the Assessee at Rs. 36,11,254 and he has made an addition of Rs. 32,32,404 on account of unexplained investment from undisclosed sources regarding the payment received towards the services rendered by the Assessee. Penalty proceedings under section 271(l)(c) of the Act were also initiated by the AO.
On appeal, CIT(A) dismissed the appeal filed by the Assessee and confirmed the penalty imposed by the AO. However, Assessee carried the matter before the Tribunal on further appeal.
Before the bench counsel for the Assessee Advocate Urvashi Sodhan submitted that there is no dispute in the regard that the Assessee entered into agreements with various parties but the contracts were terminated before the expiry of the contract period and the Assessee had not received or accrued any payment towards the services rendered. Out of five parties agreement in respect of three parties were expired and there was no agreement with the remaining parties. As per the AO, the agreed amount was Rs.32,32,404 and the AO made the addition of the same as undisclosed income only on the basis of assumption and without made any enquiry.
After analyzing the above-narrated facts and circumstances, the Tribunal bench comprising of Judicial Member Mahavir Prasad and Accountant Member Pradip Kumar Kedia observed that “the finding of the lower authorities are ill-founded and cannot be sustained. As no contrary material has been placed by the Revenue and gathered any material by making enquiry in this respect and there was a fact existing in the present case is that the AO made the addition only on an assumption basis”.
The division bench further observed that “there is sufficient ambiguity exist in the interpretation of cancellation agreement. Therefore the benefit of the doubt should be given to the assessee and discretion for non-imposing the penalty should be exercised in favour of the assessee”.
Consequently, the bench directed the AO to delete the penalty imposed by him under Section 271(l)(c) of the Income Tax Act.
Subscribe Taxscan Premium to view the JudgmentThe National Capital Region Planning Board has invited application for the post of Assistant Director (Project Finance & Procurement).
The National Capital Region Planning Board was constituted in 1985 Enactment of the National Capital Region Planning Board Act by the Union Parliament, with the concurrence of the participating States of Haryana, Rajasthan and Uttar Pradesh.
Available post:
Eligibility Criteria:
Age Limit: up to 35 years.
How to apply: Eligible and interested candidates may forward their application duly completed in the prescribed format along with the necessary documents to the address given in the notification.
Last date to apply: 03.04.2018.
Subscribe Taxscan Premium to view the JudgmentThe Bombay High Court in The Commissioner of Income Tax 11 v. NGC Networks (India) Pvt. Ltd ruled that disallowance under Section 40(a)(i) of the Income Tax Act can be made only if the Royalty falls under Explanation 2 to section 9(1)(vi) but not if it falls under Explanation 6 to s. 9(1)(vi).
While concluding the matter in favour of the assessee, the division bench held that the payment made for channel placement as a Fee is not royalty.
During the relevant assessment year, Assessing Officer took a view that tax deducted at source on payment of channel placement fee about 7 crore to cable operators had to be at the rate of 10% by invoking section 194J of the Income Tax Act and not section 194C of the Income Tax Act, as the payment was in the nature of royalty defined in Explanation 6 to section 9(1)(vii) of the Income Tax Act.
Accordingly, AO disallowed the entire expenditure of such payment for failure to deduct tax under section 194J of the act. By preferring its objection in DRP, they upheld the decision of respondent by holding that deduction of tax at source was appropriately made as such payment wouldn’t fall under the ambit of royalty as decided by AO.
Being aggrieved revenue carried the matter before tribunal wherein held that Assessee is not liable to deduct the tax at source, at higher rate only on account of the subsequent amendment made in Act, with retrospective effect from 1976.
While hearing the appeal preferred by the Revenue, the bench comprising Justice M.S.Sanklecha and Justice Riyaz I. Chagla held that a party cannot be called upon to perform an impossible Act especially a provision not in force at the relevant time but introduced later by retrospective amendment.
Court observation regarding the case was “section 40(a)(i) of the Act, under which the expenditure has been disallowed by the Revenue, meaning of royalty as defined therein, is that as provided on explanation 2 to section 9(1)(vi) of the Act and not explanation 6 to section 9(1)(vi) of the Act. Thus, the disallowance of expenditure under section 40(a)(i) of the Act can only be if the payment royalty in terms of explanation 2 to section 9(1)(vi) of the Act. Undisputedly, the payment made for channel placement as a fee is not royalty”.
Subscribe Taxscan Premium to view the JudgmentThe Union Cabinet, chaired by Prime Minister Narendra Modi has approved an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income between India and Iran.
The Agreement will stimulate the flow of investment, technology and personnel from India to Iran & vice versa, and will prevent double taxation. The Agreement will provide for the exchange of information between the two Contracting Parties as per latest international standards. It will thus improve transparency in tax matters and will help curb tax evasion and tax avoidance.
The Agreement is on similar lines as entered into by India with other countries. The proposed Agreement also meets treaty related minimum standards under G-20 OECD Base Erosion & Profit Shifting (BEPS) Project, in which India participated on an equal footing.
In so far as India is concerned, the Central Government is authorized under Section 90 of the Income Tax Act, 1961 to enter into an Agreement with a foreign country or specified territory for avoidance of double taxation of income for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under the Income Tax Act, 1961.
While hearing the case of Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd, a two-judge bench of the Supreme Court categorically held that the Commissioner of Income Tax (CIT) has no power to cancel or withdraw or recall the registration certificate granted under section 12A of the Income Tax Act 1961. The bench clarified that in order to recall the 12A registration so granted, the power to do so must be specifically provided under section 12AA(3) of the Act.
Assessee in the instant case, is a limited company registered under the Companies Act 1956 and it is state Government undertaking established with a view to develop and assist the State in the development of industrial growth centers or areas to promote, encourage and assist the establishment growth and development of industries in the state of Madhya Pradesh.
In the year 1999 the Assessee Company filed an application before the Commissioner of Income Tax (CIT) for grant of registration under section 12A of the Income Tax Act 1961 as a charity Trust by holding that they were engaged in public utility activity. Thereafter the Officer granted certificate of registration and in clause 3 of the certificate, it was mentioned that the certificate is granted without prejudice to the examination on merits of the claim of exemption after the return is filed.
In 2000, the CIT issued a show cause to the Assessee in order to cancel or withdraw the registration certificate granted to the Assessee under section 12A of the Act. However the Assessee opposed the grounds raised by the authority regarding the withdrawal. But the CIT did not found any merit in the stand taken by the Assessee in its reply and accordingly he cancelled the registration certificate under the said section.
Thereafter the Assessee filed a rectification application under section 154 of the Act and contended that once the CIT grants the registration certificate under section 12A of the Act, then he has no power to recall or cancel the same. But the Officer rejected the same and confirmed his action.
After considering the facts and circumstances the Supreme Court Justice R.K.Agarwal and Justice Abhay Manohar Sapre observed that “the CIT has no express power of cancellation of the registration certificate once granted by him to the Assessee under section 12A till 01.10.2004. because there was no express provision in the Act vesting the CIT with power to cancel the registration certificate granted under section 12A of the Act and the order passed by the CIT under the section is a quasi-judicial order and being quasi-judicial in nature, it could be withdrawn or cancel by the CIT only when there was express power vested in him under the Act to do so, but in the present case there was no such express power”.
The Court further observed that “section 21 of General Clause Act has no application to the order passed by the CIT under section 12A because the order is quasi-judicial in nature and the CIT had no jurisdiction to cancel the registration certificate once granted by him under section 12A till the power was expressly conferred on the CIT by section 12AA(3) of the Act”.
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A division bench of the Delhi High Court has admitted an appeal against the order of the Single bench in the CA Final Result mismatch case.
Earlier, there was a lot of discussion in the social media about the mismatch that happened in the CA Final November 2017 results announced on 17th January 2018. There have been a lot of question which has been raised on the ICAI’s examination mechanism. After CA Final November 2017 Results on 17th January 2017, students accessed a score list wherein many of the students who had failed to clear the exams were shown as passed. This raised question in student’s mind about the authenticity of the results.
The Single bench, in January, dismissed a petition filed by Milind Agarwal and Ors challenging the results of Chartered Accountants ( CA Exam Final) examination held in November 2017.
Against the decision of the Single bench, the petitioners approached the division bench contending that the ICAI and its officers cannot be allowed to reduce the grace marks, once the grace marks have been allotted, the results have been tabulated and thereafter decoded and published as the Respondents would be estopped from withdrawing a benefit once granted and acted upon. It was contended that the Institute acted arbitrarily while dealing with this issue.
“Once de-codification takes place, any change thereafter is bound to be affected by personal bias and individual interests and in the present case there are thousands of the candidates which are adversely affected.,” the petition reads.
Admitting the appeal on files, the bench comprising Justices S Ravindra Bhatt and A K Chawla passed an interim order on Friday and asked the Institute to produce some relevant documents before the Court. “The respondent Institute shall produce the relevant official records pertaining to the receipt and compilation of the documents, the moderation procedure adopted leading to the final declaration of results which would also include the relevant notings etc.”
Advocates, Mr.Vikas Nagwan, Dr.Suneel Maggo and Mrs.Manvi appeared for the petitioner/appellants.
Subscribe Taxscan Premium to view the JudgmentThe Institute of Chartered Accountants of India ( ICAI ) today announced that stringent actions will be taken against the candidates of CA Final exam held in November 2017 for adopting/ attempting unfair malpractices.
“Cases of adoption/attempt to adopt unfair means are reported in respect of the examinations held every time. In respect of the Examinations held in November 2017, over 90 cases of infringement/ violation of Instructions to Examinees, which tantamounts to adoption of unfair means, were reported,” the ICAI said.
The nature of infringement/ violation in these cases, inter alia, included the following.
(1) Writing/jotting on the question paper [other than Roll Number at the specified place].
(2) Writing in the answer book or additional book of, e.g. Roll Number [other than at the specified space]/ Registration Number, Name, Mobile number, unwarranted Remarks, irrelevant notes etc.
(3) Possession of material inside the examination hall/room/washroom, e.g. writing/copying material / books / notes / writing on desk/writing on writing pad/geometric box/admit card (relevant for the day of the examination or otherwise), mobile phone [in switched off mode or otherwise], I Pod etc.
(4) Seeking sympathy/making appeal, e.g. parent or relative passed away, met with accident /was hospitalized/ award marks/minimum required marks, inducement to examiner/writing irrelevant / unrelated remarks etc.
(5) Writing/making in the answer book or additional answer book distinguishing marks – e.g. religious symbols, prayers, Om, Swastika, 786, etc.
(6) Others, e.g. not handing over the answer book at the conclusion of the specified time, taking away the answer book, misbehaving with the examination functionaries, use of different inks/highlighter, availing of the services of an ineligible person as a writer by candidates with permanent disability.
The Institute said that the above cases were considered by the Examination Committee in accordance with the provisions of Regulation 41, read with Regulation 176, of the Chartered Accountants Regulations, 1988. The decision taken by the Committee included cancellation of result and debarment from appearing in the examination in future.
“In view of the above, students are advised to download the Instructions to Examinees supplied along with the admit card, from the website, read them carefully and familiarize themselves with the same to avoid falling within the ambit of unfair means leading to avoidable difficulties,” it said.
The Central Board of Direct Taxes (CBDT) has asked the taxpayers to pay fourth and final installment (100 percent) advance tax before 15th March 2018.
The persons who are liable to pay advance tax are, (i) Any assessee, including salaried employee, whose tax liability for the financial year as reduced by the tax deducted/ collected at source is Rs. 10,000/- or more. (ii) The assessee in respect of eligible business referred to in section 44D is liable to pay the whole amount of such advance tax on or before 15th March of respective financial year.
However, a Resident Senior Citizen (individual who is of the age of 60 years or more) not having income from business/ profession is not liable to pay advance tax.
According to an advisory issued by the Board today, online payment of advance tax is mandatory for all Corporates and also those assessees whose accounts are required to be audited under section 44AB of the income tax Act, 1961.
“Though e-payment is not mandatory for other taxpayers, it would be convenient for them since it ensures correct credit,” the Board said.
Advance tax means income tax should be paid in advance instead of lump sum payment at year end. It is also known as pay as you earn tax. These payments have to be made in installments as per due dates provided by the income tax department.
The due date for paying the third installment was 15th December 2017.
In its endeavour to increase interaction with various stakeholders, the 15th Finance Commission today interacted with the Members of the Parliament.
The Meeting was to convey the proposed schedule of the Commission’s work as well as its Terms of Reference (TOR) and also to seek their suggestions on these. Parliamentarians appreciated the inclusion of Sustainable Development Goals (SDGs), Disaster Management, Climate Change, progress made in Sanitation, Solid Waste Management and bringing in Behavioural Change to end open defecation among others.
Focus on the Aspirational Districts
Today’s meeting was the First interaction with the Parliamentarians and the process will be continued with further dialogue at State Level. The Members of the Parliament thanked the Chairman,15th Finance Commission, Shri N.K. Singh and welcomed the meeting.
Parliamentarians gave their views and suggestions to further the consultative process in Delhi as well as in different States. The Meeting assumes significance as 15th Finance Commission has to work in a very different economic scenario in the light of the fact that Planning Commission is no more there and the distinction between Plan and Non-Plan grants has been done away with.
Wide-ranging suggestions were made by the Parliamentarians including
State consultations to start with Arunachal Pradesh from April 2018
The commission is starting its state-level visits with Arunachal Pradesh in April 2018 and intends to finish the State Level visits by the end of the fiscal year. Since some States will be having assembly elections, visits will be arranged according to that. During State visits, Commission, apart from meeting State leadership and Government officials, will also meet various political parties, local bodies and other bodies.
The Chairman in his remarks outlined the Commission’s responsibility and TOR and solicited their views. He encouraged them to also send any letters and written comments in this regard. The meeting was arranged by PRS which acts as the nodal point for such interactions.
The Ahmedabad bench of Income Tax Appellate Tribunal allows the deduction and held that the loss of consumable stock can be held as accidental to the business of allowability.
In instant case, Assessee Rasna Pvt Ltd. is a soft drink concentrate brand owned by Pioma Industries which is based in Ahmedabad, India. The Assessee company also buys soft concentrate in bulk quantity from supplier M/s. Pioma Industries and sells through various clearing and forwarding agents as well as through own Depot to the stockiest.
Here the allegation starts with deletion of disallowance on account of destroyed stock is concerned. CIT (A) allowed the loss of consumable stock and had given relief to the Assessee.
Being aggrieved with the action of appellate authority Revenue came to Ahmedabad Tribunal by observing that similar addition was seen in the case of Waves Foods Pvt. Ltd on the ground that claim of Assessee that stock becomes perishable on account of expiry date has not been accepted by the department and they made the addition.
The bench while hearing the recital of Assessee observed that life of products dealt by Rasna Pvt Ltd is 18 to 24 months depending on their nature. After the shelf life period consumption of such products are also subject to Government Health Department inspection.
Accordingly, the bench noted that “Such item has to be destroyed and the loss of consumable stock can be held as accidental to the business of allowability”.
By following the above observation bench found the decision of first appellate authority is best and do not want to interfere with it.
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