While clarifying issues relating to classification and GST rate on Terracotta idols, the Central Board of Excise and Customs (CBEC) clarified that no tax is payable on such items.
Earlier, as per notification 2/2017 dated 28.06.2017 the Government had exempted Idols made of clay from the ambit of GST.
In this regard, the Board has received question seeking clarification on whether this entry would cover idols made of terracotta.
“The matter has been examined. As terracotta is clay based, terracotta idols will be eligible for Nil rate under Sl. No. 135A of notification 2/2017 dated 28.06.2017,” the Board said.
Subscribe Taxscan Premium to view the JudgmentThe Union Cabinet chaired by the Prime Minister Narendra Modi has given its approval for continuation of the scheme on Indian Institute of Corporate Affairs (IICA) for another three financial years (FYs 2017-18 to 2019-20) and providing Grants-in-aid of Rs.18 crore to the Institute. It will make the Institute self-sustainable by the end of FY 2019-20.
Impact:
Background:
The National Foundation for Corporate Social Responsibility (NFCSR) at IICA is responsible for Corporate Social Responsibility (CSR) initiatives. The Foundation has been designed around the new provisions of Companies Act, 2013. The NFCSR conducts various activities in partnership with Corporates in the field of CSR, oriented towards social inclusion.
IICA is a think-tank and repository of data and knowledge to support rational decision-making for the policy makers, regulators as well as other stakeholders working in areas related to the corporate sector. It offers services to stakeholders in the field of corporate laws, corporate governance, CSR, accounting standards, investor education, etc. Various activities of IICA also help first-generation entrepreneurs and small business for imparting multi-disciplinary skills as they are unable to afford to employ separate experts in management, law, accountancy, etc.
The Lok Nayak Jayprakash Narayan National Institute of Criminology and Forensic Science has invited application for the post of Junior Fellow (Law).
The Institute of National Institute of Criminology and Forensic Science was established by Government of India in 1972 within the bureau of Police Research and Development following recommendations of the University Grants Commission (UGC) to setup a Central Institute for Teaching Criminology and Forensic Science.
Available Vacancy:
Qualification: LLM with specialization in criminal law Or IPR along with NET qualified.
Age Limit: up to 30 years.
Walk in Date: 28/11/2017.
For More Information and Application Form Refer Here
Till the date of implementation of the most significant tax reform in India, i.e, the Goods and Services Tax (GST) law, it has been subjected to various amendments so far. Till November 22nd, the Government has issued 66 Notifications and 21 circulars on CGST itself. This is in addition to the rate revision for goods and services.
CGST Rules
The Central Goods and Services Tax (CGST) Rules, 2017 has been revised by the Government twelve times after its implementation. Lastly, notification 55//2017–Central Tax was issued, amending the Central Goods and Services Tax (CGST) Rules and prescribing new refund application form RFD-01A.
Date Extension for GST Returns
Due to technical glitches, return filing under the GST regime has been a headache for all the taxpayers and tax professionals and even for the Government. With a view to address the problems faced by the tax payers, the time limit for filing returns had been extended. Till now, the Government has, for around 25 times, extended the due date for filing various GST returns.
Composition Scheme
Composition scheme is an alternate method of taxation, which allows small businesses with annual turnover up to a prescribed threshold limit to pay tax at a concessional rate, as well as reduce the compliance cost. The enrollment into the plan is optional. Earlier, the revenue threshold for this purpose was Rs 75 lakhs for dealers. Later, the same has been enhanced to one crore and now, the GST Council’s last meeting has proposed the Government to further enhance the threshold limit to 1.5 crores.
Reverse Charge Mechanism
Reverse charge is a mechanism where the recipient of the goods and/or services is liable to pay GST instead of the supplier. If a vendor who is not registered under GST, supplies goods to a person who is registered under GST then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.
The Government, however, has deferred the implementation of provisions relating to reverse charge mechanism will be applicable from 1st April 2018.
Late Fee and Interest
As mentioned earlier, the tax payers were unable to file returns in time due to the technical glitches in the GST portal. This has often resulted in giving an additional burden to pay late fee of Rs. 200 per day. The Government had promised to take a lenient approach to the defaulters for the initial six months of GST implementation. Till now, the Government has waived late fee for GSTR 3B till the month of September.
Post GST Council’s meeting held on November 10th, the Government has reduced the amount of late fee payable by a taxpayer whose tax liability for that month was ‘NIL’ to Rs. 20/- per day (Rs. 10/- per day each under CGST & SGST Acts) instead of Rs. 200/- per day.
Export Procedure
Under the new tax regime exports without the payment of tax can be made only after filing a bond or letter of undertaking (LUT) as applicable to the exporter. There was a lot of ambiguity regarding the exports which are to be made without the payment of IGST. The government of India has released few notifications regarding the filing of bond and LUT in the case of certain specified people. Exporters can make the payment of IGST at the time of export and then claim the refund later but it will block their working capital.
Tax Deduction at Source
The new GST law mandates certain entities to deduct tax at source. The Central Government will implement the provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) under the new Goods and Services (GST) Laws from 1st April 2018.
The registration for these provisions has already started in the GSTN portal. Earlier, The Government had decided to defer the implementation of provisions relating to TDS and TCS considering the difficulties of the traders. Representations were made by e-commerce firms that it would be an additional compliance burden and would lock-down working capital for merchants selling online.
Subscribe Taxscan Premium to view the JudgmentThe Software Technology Parks of India (STPI) has invited application for the post of Chief Finance Officer.
B.Com or M.Com or CA/ ICWA/ SAS (IAAD/ICAD)/ MBA experienced candidates can apply.
Chief Finance Officer (A-VIII)
Educational requirements:
Graduate in Commerce from recognized University with fifteen (15) years’ experience in the field of commerce/finance/accounts. OR Post Graduate in Commerce from a recognized University with thirteen (13) years’ experience in the field commerce/finance/accounts. OR CA/ ICWA/ SAS (IAAD/ICAD)/ MBA with specialization in Finance from recognized Institution/ University followed by B.Com with nine (9) years’ experience in the field of commerce/finance/accounts.
No of vacancies: 01
Last date to apply for this job: 12/02/2017
How to apply:
Candidates meeting the above eligibility requirements may fill up the application online available at website www.stpi.in. Applicants are required to take the printout of the filled in Application Form and signed it and send the same along with duly attested copies of certificates (uploaded on the website) relating to qualification(s), date of birth, experience certificate(s), caste certificate etc. by the last date of receipt of application to the Chief Admn Officer, Software Technology Parks of India, 9 th Floor, NDCC-II, Jai Singh Marg, New Delhi -110001. Name of the post applied for should invariably be mentioned on the top of the envelope containing application form. For detailed general terms and conditions, the candidates may refer to STPI website www.stpi.in
For more details please click here.
The Robotics Education and Competition Foundation has invited application for the post of Executive (Finance).
The Robotics Education & Competition (REC) Foundation seeks to increase student interest and involvement in science, technology, engineering, and mathematics (STEM) by engaging students in hands-on sustainable and affordable curriculum-based robotics engineering programs across the U.S. and internationally.
Number of Posts:
Qualification:
Experience:
How to Apply: Eligible candidates may send their resumes and necessary documents at the address given in the advertisement.
Last Date to Apply: 04/12/2017.
For More Information Refer Here.
The current UIDAI CEO and interim chairman of Goods and Services Tax Network (GSTN) Ajay Bhushan Pandey will lead a committee tasked with simplification of GST returns filing will consult tax experts and trade bodies to make the process convenient for businesses that have minimal transactions.
GSTN chairman A.B.Pandey headed panel comprises of VAT commissioners of various states such as Karnataka, Gujarat, Telangana etc.
The main objective of the committee is to simplification of GST and return filing to make the public more aware about their tax liabilities. In order to avoid confusions and mistakes the panel included more tax experts and also avoids the technical problems regarding the GST portal.
The chairman A.B.Pandey said that “We are also discussing with experts and taking opinion from various other stakeholders as to what simplification could be achieved. The whole idea is that people who are nil filers, who have no sale/purchase transactions, have taken a registration for some future use, they should be able to file GSTR-1 and GSTR-3B by pressing just a few buttons. That is our ultimate aim”.
The Central Government has constituted New Task Force for drafting a New Direct Tax Legislation.
During the Rajaswa Gyan Sangam held on 1st and 2nd September, 2017, the Prime Minister Narendra Modi had observed that the Income Tax Act, 1961 was drafted more than 50 years ago and it needs to be re-drafted.
Accordingly, in order to review the Act and to draft a new Direct Tax Law in consonance with economic needs of the country, the Government has constituted a Task Force with the following Members:
(i) Shri Arbind Modi, Member (Legislation), CBDT – Convener
(ii) Shri Girish Ahuja, practicing Chartered Accountant and non-official Director, State Bank of India;
(iii) Shri Rajiv Memani, Chairman & Regional Managing Partner of E&Y;
(iv) Shri Mukesh Patel, Practicing Tax Advocate, Ahmedabad;
(v) Ms. Mansi Kedia, Consultant, ICRIER, New Delhi;
(vi) Shri G.C. Srivastava, Retd. IRS (1971 Batch) and Advocate.
Dr. Arvind Subramanian, Chief Economic Adviser (CEA) will be a permanent Special Invitee in the Task Force.
The Terms of Reference of the Task Force is to draft an appropriate Direct Tax Legislation keeping in view:
(i) The direct tax system prevalent in various countries,
(ii) The international best practices.
(iii) The economic needs of the country and
(iv) Any other matter connected thereto.
The Task Force shall set its own procedures for regulating its work and shall submit its report to the Government within six months.
The Union Cabinet chaired by Prime Minister Narendra Modi has approved the signing and ratifying of an Agreement between India and the Philippines on co-operation and mutual assistance in customs matters.
The Agreement will help in the availability of relevant information for the prevention and investigation of Customs offenses. The Agreement is also expected to facilitate trade and ensure efficient clearance of goods traded between the countries.
This Agreement shall enter into force after the necessary national legal requirements for entry into force of this Agreement have been fulfilled by both the countries.
Background:
The Agreement would provide a legal framework for the sharing of information and intelligence between the authorities of the two countries. It would help in the proper application of Customs laws, prevention and investigation of offenses and the facilitation of legitimate trade.
The draft text of the proposed Agreement has been finalized with the concurrence of the two Administrations. The draft Agreement takes care of Indian Customs’s concerns and requirements, particularly in the area of exchange of information on the correctness of the Customs value declared and authenticity of certificates of origin of the goods traded between the two countries.
The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the setting up of the 15th Finance Commission. Under Article 280 (1) of the Constitution,it is a Constitutional obligation. The Terms of Reference for the 15th FC will be notified in due course of time.
Background:
Article 280(1) of the Constitution lays down that a Finance Commission (FC) should be constituted “…within two years from the commencement of this Constitution and thereafter at the expiration of every fifth year or at such earlier time as the President considers necessary…”.In keeping with this requirement, the practice has generally been to set up next Finance Commission within five years of the date of setting up of the previous Finance Commission.
Fourteen (14) FC have been constituted in the past. The 14th FC was set up on 02.01.2013 to make recommendations covering the period of five years commencing on 1st April, 2015. The Commission submitted its Report on 15th December, 2014. The recommendations of the 14th FC are valid upto the financial year 2019-20. In terms of Constitutional provisions, setting up the 15th FC, the recommendations of which will cover the five years commencing on April 1, 2020, has now become due.
The Central Government has clarified that the inter-state movement of rigs, tools and spares, and all goods on wheels is exempt from payment of Integrated Goods and Services Tax (IGST).
Earlier, IGST exemption was granted on inter-state movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the Central Goods and Services Tax Act, 2017, carrying goods or passengers or both; or for repairs and maintenance, [except in cases where such movement is for further supply of the same conveyance.
The circular issued today said that the last meeting of the GST Council has discussed the issue pertaining to inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes] and it was decided that the above circular shall mutatis mutandis apply to inter-state movement of such goods, and except in cases where movement of such goods is for further supply of the same goods, such inter-state movement shall be treated ‘neither as a supply of goods or supply of service,’ and consequently no IGST would be applicable on such movements.
‘In this context, it is also reiterated that applicable CGST/SGST/IGST, as the case maybe, is leviable on repairs and maintenance done for such goods,” the circular said.
To Read the full text of the Circular CLICK HERE
While upholding the proceedings against Advocate Rohit Tandon, a three judge bench of the Supreme Court confirmed the Delhi High Courts’ order denying bail for possession and conversion of Demonetized Currency.
In the instant case, criminal investigation was initiated against the appellant for allegedly indulged in converting demonetized currency into new currency which was entrusted to bank/Govt officials with the help of Bank manager, Kotak Mahindra and a Chartered Accountant violating the guidelines issued by the Reserve Bank of India/Ministry of Finance. Since the accused persons have cheated the public at large and have caused monetary loss to the Govt. of India, offences u/s 420, 406, 409, 467, 468, 471, 188, 120B IPC were charged against them.
Subsequently, the Enforcement department initiated proceedings finding the same as a fit case for investigation under the Prevention of Money Laundering Act, 2002.
The appellant, while praying for bail before the subordinate courts and High Court, pleaded that the matter cannot be investigated by the Enforcement Directorate.
Both the Sessions Court and the High Court rejected the plea of the appellant.
The High Court found that the Act of 2002 does not prescribe that the Enforcement Directorate is debarred from conducting investigation in relation to the offences under Sections 3 & 4 of the Act of 2002 unless the Crime Branch concludes its investigation in relation to FIR No.205/2016 or was to file charge sheet for commission of scheduled offence. It further noted that the proceedings under the Act of 2002 are distinct from the proceedings relating to scheduled offence and both the investigations can continue independently.
Before the Top-Court, the appellant contended that there is no allegation in the charge sheet filed in the scheduled offence case or in the prosecution complaint that the unaccounted cash deposited by the appellant is as a result of criminal activity. Absent this basic ingredient, the property derived or obtained by the appellant would not become proceeds of crime for the purpose of PMLA.
However, the Bench comprising Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud rejected the above contentions and upheld the view taken by the High Court.
Relying on its past decisions, the Apex Court held that “The consistent view taken by this Court is that economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Further, when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the Act of 2002.”
“The possession of demonetized currency in one sense, ostensibly, may appear to be only a facet of unaccounted money in reference to the provisions of the Income Tax Act or other taxation laws. However, the stated activity allegedly indulged into by the accused named in the commission of predicate offence is replete with mens rea. In that, the concealment, possession, acquisition or use of the property by projecting or claiming it as untainted property and converting the same by bank drafts, would certainly come within the sweep of criminal activity relating to a scheduled offence. That would come within the meaning of Section 3 and punishable under Section 4 of the Act, being a case of money laundering,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Institute of Chartered Accountants in India (ICAI) today issued the revised guidance note on transfer pricing under section 92E of the Income Tax Act, 1961.
The law relating to transfer is dynamic and the members of the Institute are getting acquainted with the practical implications of the provisions and rules relating to Transfer pricing. Guidance has been given with regard to how the Chartered Accountant should exercise due diligence while verifying international transactions in view of the increased scope of the definition of International Transactions.
CA. Nilesh S. Vikamsey, President, ICAI said, “the responsibility of examining the records and issuing the report under section 92E is on our members. Laws in respect of transfer are complex but our members have been discharging their responsibilities ably. ICAI too guides its members in respect of the ever-changing complex laws oF Pricing. This Guidance Note on Report under Section 92E of the Income-tax Act, 1961 provides guidance to the members in this regard.”
To Read the full text of the Guidelines CLICK HERE
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has held that assessment under section 153C without incriminating material is invalid and no additions can be made without any clear evidences under Section 153A of the Income Tax Act 1961.
In the instant case the assessee company has filed its return of income for the relevant assessment year. During the course of assessment proceedings the Assessing Officer found that the assesse company has received such a huge amount of Rs. 6, 50, 00,000 on fresh share capital and share application money and the assessee was asked to provide the details about the said amount.
The assessee filed all the details regarding the said amount including the details of the companies from where the share application money received by the assessee. But the Assessing Officer also contended that there wasn’t getting a response from one of the said companies about 2 crores therefor he treated the said amount as unexplained. Hence the Assessing Officer issued notice under section 133(6) of the Income Tax Act and also made additions accordingly.
While allowing the appeal of the assessee on the basis of judicial decisions, the bench comprising of Judicial Member Bhavnesh Saini and Accountant Member L.P.Sahu observed that in this case the Assessing Officer can’t found any incriminating materials during the time of search. And the assessee also submitted the relevant documents which are reflected the fact that the Assessing Officer was conducted a search under section 132(1) of the act. And the Assessing Officer has failed to detect any incriminating materials as a result of the search conducted by him. Hence the bench declared that the Assessing Officer cannot make any additions under section 153A of the Act.
To Read the full text of the Judgment CLICK HERE
The Government is likely to take strong action against restaurants hiking food prices despite the sharp cut in GST to 5%.
In the meeting held on 10th November, 2017, the Council had recommended major relief in GST rates on certain goods and services. These recommendations spread across many sectors and across commodities, which subsumes all central and state levies and was introduced on July 1.
GST Council also brought all AC and non-AC restaurants in the 5 per cent GST bracket without the input tax credit (ITC). All members of the GST Council felt that Input Tax Credit (ITC) to restaurants is not passed on customers.
Reportedly, warnings had been given to FMCG companies, tax departments to focus restaurants not passing through the benefit of lower 5% rate and to reduce the hiking prices on food.
The restaurants has increased the price of food items to ensure consumers pay almost the same as before the 5% GST rate came into effect. When the restaurants are not allowed to benefit the ITC, gradually the running would lead to their costs rising by at least 6-7%, which is why they hiked prices in the first place.
Now the government instructed to cut price and ensure that bills are providing at 5% GST.
India has switched to the new GST regime in July 2017. As the new indirect tax reform gets 5 months older, around 4.3 million businesses have filed October monthly returns.
The Government, as per the decision of the GST Council, has extended the due date for filing tax returns for the month of August to December. The due date for filing GSTR 3B for the months of August, September, October, November and December is 20th day of September, October, November, December and January respectively.
On Tuesday, the CEO of Goods and Service Tax Network (GSTN) Mr.Prkash Kumar informed that
“There is a steady rise in the number of taxpayers filing their GSTR-3B returns every month which is encouraging to see. The trend of taxpayers filing their returns on the last day continues though. Taxpayers are urged to file their returns early to avoid last minute hassles”.
The Government has already set up a 10 member committee headed by the GSTN chairman Mr.Ajay Bhushan on the recommendations of GST council in order to manage all the requirements regarding the GST returns filing for the current financial year. This committee consists of GST commissioners of various states.
The Central Board of Excise and Customs (CBEC), on Saturday clarified that the exporters who have started using e-seals can continue the same whereas the other exporters who intend to voluntarily adopt the procedure can do the same if the readers are in place at the Customs Station of Export.
The Board also said that the exporters availing stuffing at approved premises under supervision shall continue to do so through GST commissionerates of CBEC.
The Government on last week, had mandated the units and AEOs to use RFID e-seals from 8th November 2017 if they have permission to self-seal without supervision of a Central Excise Officer. Also, units availing sealing at availed premises in the presence of Central Excise Officers or GST Officials were asked to use e-seals from 20th November 2017.
With a view to address the doubts from stakeholders, the Board has decided that the e-sealing procedure is optional to eligible exporters till December 15.
“Further, with effect from 15th December, e-sealing shall become mandatory in respect of the exporters, who have been permitted self-sealing facilities under the erstwhile in excise or GST regime, AEO exporters and exporters availing supervised stuffing at their premises for the specified location.”
To Read the full text of the Circular CLICK HERE
The Central Government, on Friday notified International Crops Research Institute for the Semi-Arid Tropics (‘ICRISAT’) as an eligible Scientific Research Association for the purpose of section 35(1)(ii) of the Income Tax Act, 1961.
Section 35 was introduced with a view to encourage investment in scientific research in the country. The provision grants tax benefits on expenditure towards scientific research.
ICRISAT is the only research Center in the world serving the semi-arid tropics, together with its partners. The Institute conducts research on five highly nutritious, drought-tolerant crops – chickpea, pigeonpea, pearl millet, sorghum and groundnut.
As per the notification, the Institute can enjoy tax exemption from the year 1017-18 subject to the following conditions, (i) The sole objective of ‘ICRISAT’ shall be to undertake scientific research; (ii) It shall carry out scientific research by itself; (iii) It shall maintain separate books of accounts for its activities and operations performed by it through grants received u/s.35(1)(ii) of the Act. ‘ICRISAT’ in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the competent officer and., (iv) It shall maintain a separate statement of donations received and amounts applied for scientific research for ‘ICRISAT’ and a copy of such statement duly certified by the auditor shall accompany the report of audit.
To Read the full text of the Judgment CLICK HERE
The Delhi bench of the ITAT last week held that bank guarantee commission are not included within the term ‘commission’ for the purpose of section 194H of the Income Tax Act and therefore, no tax is required to be deducted at source in case of such payments.
The assesse in the instant case has filed its return of income declared the total income of Rs. 26,18,310/- under the normal provisions and Rs. 1,46,26,148/- under provisions of section 115JB of the Income Tax Act. During the course of assessment proceedings, the AO has made disallowances of Rs. 1,32,540/- u/s 14A and Rs. 40,19,608/- u/s 40(a)(ia) of the Income Tax Act.
However, the CIT (A) has deleted the additions made by the AO on the appeal filed by the assessee.
The DCIT has challenged against deletion made by the CIT (A) before the Tribunal contending that the said amount was paid as bank guarantee commission paid to two different banks. The notification issued by the CBDT exempted that the persons from deducting tax at source from bank guarantee commission has to made payment prior to that period was not covered. According to this notification the assessee in this case was required to deduct tax at source on the bank guarantee commission and also uphold the addition made by the AO.
And also submitted that the disallowance u/s 14A read with Rule 8D of the Income Tax Rules is mandatory and has to be calculated at ½ % of the average investment which the A.O. had done.
The Delhi bench of Income Tax Appellate Tribunal comprising of Judicial Member Sudhanshu Srivastava and Accountant Member B.P.Jain has observed that the issue of disallowance of Rs. 40,19,608/- u/s 40(a)(ia) was concerned, the bank guarantee commission was charged by the respective banks by debiting the same to the bank account of the assessee and that the assessee company had not paid these amounts by issuance of any cheque or pay order. Hence it was not liable for deduction of tax at source.
And the bench also held that there is no principal – agent relationship between while the bank issuing guarantee to the assessee. When a bank issues a bank guarantee on behalf of the assessee it has to making payment of the specified amount on demand and also charges a fee for this service which termed as bank guarantee commission and the same is not in the nature of commission hence no TDS was deductible on such bank guarantee commission.
However the revenue could not point out any legal or factual infirmity in this case, there for the appeal filed by the revenue has dismissed by relied up on the decisions taken by the Mumbai bench of ITAT in the similar issue.
Subscribe Taxscan Premium to view the JudgmentThe Kandla Port Trust has invited application for the post of Company Secretary.
The Kandla port plays a major role in the country’s international trade. Having notched up a string of success, it has emerged as a forerunner, and has carved a niche for itself, by its steady growth and economy of operations.
Company Secretary
No of vacancies: 01
Educational requirements:
Degree in Law shall be preferred. · CA (Inter)/ICWAI (Inter)/ M.Com or Equivalent shall be preferred
Desirable qualifications:
Administration Experience: – Experience in Administrative matters desirable
Experience requirements:
Associate Member of the Institute of Company Secretaries of India with at least 10 years of post qualification experience, of working as a Company Secretary in a reputed organization. The Candidate possessing proficiency in Accounting and Tally will have distinct advantage.
Last date to apply for this job: 12/15/2017
Interested candidates can refer here for more information.
Due to difference of opinion between Justices S Muralidhar and Prathiba M Singh, the Delhi High Court, on Friday, has referred the Mitusubishi’s TDS case to the Chief Justice.
Sogo Shosha Company Mitsubishi-India was engaged in development of international trade, procuring raw materials and marketing finished products in India through various Indian joint ventures of Mitsubishi-group.
The question raised by the Revenue before the Court was that whether Mitsubishi-India was liable to deduct TDS for payments made by it in respect of transactions with different companies of Mitsubishi Group incorporated in Japan, Singapore, US?
Earlier, the ITAT held that Section 40(a)(i) of the Income Tax Act, 1961 cannot be applied in the case in view of the provisions of the Double Tax Avoidance Agreement between the Indian and Japan and India and the US. It further reversed the findings of the DRP with respect to the existence of the PEs in India and held that
Justice Prathiba M. Singh upheld the finding of the AO that the non-resident entities had a PE as well as a business connection in India. The Judge was of the opinion that since MC and the other entities have a business connection in India, the provisions of section 195 would apply and therefore, section 40(a)(i) can be invoked.
Justice S. Muralidhar, however, disagreed with the above opinion and held that the payments made by Mitsubishi-India would not at all be attracted and resultantly, section 40(a)(i) would also not be applicable to disallow such payments.
Finally, while referring the matter to CJ, the bench said that “In view of the difference of opinion between us on the questions framed in the appeal, as expressed in our individual opinions placed on file, the matter is placed before the Hon’ble Acting Chief Justice for appropriate orders.”
