UPDATES

 16.6.2016

1. No interest can be demanded on time-barred payment of service tax

Commissioner of Central Excise, Bhopal v. Western Coal Fields Ltd.

[2016] 70 taxmann.com 133 (New Delhi - CESTAT)

2. Levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more – reg.

Circular No. 1031/19/2016-CX Dated 14th of June, 2016

F. No. 332/5/2016-TRU Dated 14th of June, 2016

3. Works contract services used for maintenance of office equipment are eligible input services

Red Hat India (P.) Ltd. v. Principal Commissioner, Service Tax, Commissionerate, Pune

[2016] 70 taxmann.com 132 (Mumbai - CESTAT)

4. ITAT directs TPO to recalculate additions by considering only international transactions instead of total sales

Federal Mogul Automotive Products (India) Ltd. v. Deputy Commissioner of Income-tax, Circle-11 (1), New Delhi

[2016] 70 taxmann.com 121 (Delhi - Trib.)

1. Disallowance made under sec. 14A has to be added back to book profit to compute MAT

Haldia Petrochemicals Ltd. v. Joint Commissioner of Income-tax,Range- 12, 3, Kolkata

[2016] 70 taxmann.com 70 (Kolkata - Trib.)

2. Interest awarded under Land Acquisition Act forms part of compensation; not liable to sec. 194A TDS

Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat

[2016] 70 taxmann.com 45 (Gujarat)

3. Mere TP addition doesn't justify levy of penalty if assessee had applied incorrect TP method in good faith

Mitsui Prime Advanced Composites India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle- 6 (1), New Delhi

[2016] 70 taxmann.com 123 (Delhi - Trib.)

4. No cancellation of trust's registration due to commercial receipts above Rs 25 lakhs; HC follows CBDT circular

Director of Income-tax (Exemptions) v. Khar Gymkhana

[2016] 70 taxmann.com 181 (Bombay)

5. Disclosure of assets and liabilities of SEBI Chairman is invasion of privacy under RTI Act, rules CIC

Arun Kumar Agrawal v. Securities & Exchange Board of India, Mumbai

[2016] 70 taxmann.com 172 (CIC)

1. Amritsar based CA gets life time ban for being master-mind of accommodation entries

[2016] 70 taxmann.com 170 (Punjab & Haryana) 
Institute of Chartered Accountants of India v. Vivek Kapoor

2. IT : Where assessee received compensation on acquisition of his agricultural land, were existence of cattle shed, well, pump house, septic tank and compound wall on said land would not convert it into non-agricultural land
[2016] 70 taxmann.com 120 (Cochin - Trib.) 
T.C. Vavachan v. Income-tax Officer

3. Delhi Govt. introduces Reward scheme for highest tax paying dealers

4. An officer of same rank can't revise order passed by another authority: HC
[2016] 70 taxmann.com 90 (Punjab & Haryana) 
NVR Forgings v. Union of India

1. Corporate guarantee can't be equated with bank guarantee to determine ALP of commission, says Mumbai ITAT

Godrej Consumer Products Ltd v. Assistant Commissioner of Income-tax, Range- 10 (2), Mumbai

[2016] 69 taxmann.com 436 (Mumbai - Trib.)

2. No TDS under sec. 194A on reimbursement of bank commission to holding co. against bank guarantee

Neo Sports Broadcast (P.) Ltd. v. Commissioner of Income-tax (TDS), Mumbai

[2016] 69 taxmann.com 422 (Mumbai - Trib.)

3. Liquor trading in Uttar Pradesh without license would result in disallowance of business exp.

Royal Beverages (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 6(1), Mohali

[2016] 70 taxmann.com 86 (Chandigarh - Trib.) (TM)

1. Banks not liable to pay service tax on charges refunded to customers

Punjab National Bank v. Commissioner of Central Excise & Service Tax, Chandigarh-II

[2016] 70 taxmann.com 58 (New Delhi - CESTAT)

2. Extended period can't be invoked where no objection is raised on impugned issue during course of audit

Sanjay Automobile Engineers (P.) Ltd. v. Commissioner of Central Excise, Pune-III

[2016] 70 taxmann.com 59 (Mumbai - CESTAT)

3. Transaction charges paid to Stock Exchange doesn't attract sec. 194J TDS

Fiduciary Shares & Stock (P.) Ltd. v. Assistant Commissioner of Income-tax, Circle 4(2), Mumbai

[2016] 70 taxmann.com 23 (Mumbai - Trib.)

1. IT: Maharashtra State Road Transport Corporation is a 'State' for purpose of section 40A(3); where genuineness and business expediency of cash payments exceeding prescribed limits were not in dispute and payments were made to state road transport corporation, being a 'State', same could not be disallowed under section 40A(3) being protected by rule 6DD(b)

[2016] 70 taxmann.com 7 (Pune - Trib)
Smt. Sapna Sanjay Raisoni v. Income-tax Officer

2. An entity is charitable in nature if it provides essential commodities to poor at subsidized rates
IT : State Civil Supplies Corporation providing essential commodities to poor people at subsidized rates should be considered to be providing relief to poor and, thus, eligible for exemption under section 11; since assessee was neither a service organization nor rendering any services, amendment of proviso to section 2(15) was not applicable

[2016] 70 taxmann.com 48 (Hyderabad - Trib.) 
Deputy Commissioner of Income-tax v. A.P. State Civil Supplies Corporation Ltd.

3. Govt. issues consolidated FDI policy

4. SEBI mandates depositing of 5 % of net profit in the investors’ protection fund

5. Competition Act: Section 27(b) provides for imposition of penalty on average of turnover of preceding three financial years and, therefore, it was legally impermissible for Commission to apply different yardstick for imposing penalty on appellant merely because it did not file financial statement
[2016] 69 taxmann.com 451 (CAT) 
Hyderabad Cylinders (P.) Ltd.  v. Competition Commission of India

1. Services rendered by director aren't liable to service-tax if his remuneration is taxed as salary

Rent Works India (P.) Ltd. V. Commissioner of Central Excise, Mumbai-V

[2016] 70 taxmann.com 38 (Mumbai - CESTAT)

2. Loss from derivative is a normal business loss and not a speculation loss

Asian Financial Services Ltd. v. Commissioner of Income-tax-3, Kolkata

[2016] 70 taxmann.com 9 (Calcutta)

3. AO can deny C-forms on default in payment of VAT by dealers of Puducherry: Madras HC

M. Amurtham Petroleum Agency v. Additional Deputy Commissioner of Commercial Tax

[2016] 70 taxmann.com 78 (Madras)

1. Excise & Customs : When condonation of delay is sought on ground that delay occurred due to mistake of counsel, then, such plea cannot be accepted without affidavit of such counsel; hence, appeal was dismissed as time-barred 
[2016] 70 taxmann.com 18 (Punjab & Haryana) 
Premier Motor Garage v. Commissioner, Central Excise Commissionerate

2. Donation by one charitable trust to another charitable trust permissible under sec. 11 as application of income
[2016] 70 taxmann.com 21 (Kolkata - Trib.)
St. Joseph's Convent Chandannagar Educational Society v. Joint Commissioner of Income-tax, (O.S.D.)

3. Services by senior advocates to small business entities exempt from service-tax

4. Representational services provided by senior advocates are now taxable under reverse charge

1. Departmental officers have no power to conduct special audit under service tax: HC

Service-tax : Audit is a special function which has to be carried out by duly qualified persons like a Cost Accountant or a CA. It cannot possibly be undertaken by any officer of the Service Tax Department. There is a distinction between auditing the accounts of an Assessee and verifying the records of an Assessee. Therefore, without assigning any reasons and giving opportunity of being heard, conducting special audit by departmental officers is ultra-vires.
[2016] 70 taxmann.com 51 (Delhi) 
Mega Cabs (P.) Ltd. v. Union of India

2. ICAI's income from coaching is exempt as its main purpose is to train future CAs [2016] 70 taxmann.com 54 (Delhi - Trib.) 

Deputy Director of Income-tax (E), Trust Circle-IV v. Institute of Chartered Accountants of India

3. No reassessment to check creditworthiness of investor if all details were already furnished at assessment stage

[2016] 69 taxmann.com 444 (Delhi) 
Allied Strips Ltd. v. Assistant Commissioner of Income-tax
Section 68, read with section 147, of the Income-tax Act, 1961 - Cash credits (Share application money) - Assessment year 2007-08 - During original assessment proceedings, assessee, in response to specific queries raised by Assessing Officer regarding share application money, furnished complete details of shareholders, their addresses, PANs, acknowledgment of e-returns and their confirmation letters - After considering said details, Assessing Officer framed assessment making no addition on account of share application money - After four years, Assessing Officer reopened assessment on ground that creditworthiness of investors remained unverified - Whether on facts, issuing notice under section 148 would amount to change of opinion which is not permissible - Held, yes

1. Departmental officers have no power to conduct special audit under service tax: HC

Mega Cabs (P.) Ltd. v. Union of India

[2016] 70 taxmann.com 51 (Delhi)

2. Cos with turnover of above Rs. 200cr couldn't be compared with a co. having turnover of Rs. 3.3cr

Income-tax Officer, Ward 1 (1), Pune v. Avalara Technologies (P.) Ltd.

[2016] 69 taxmann.com 453 (Pune - Trib.)

3. Co. providing sale support services to its AE can't be compared with a trading company

Mitsui & Co. India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 6(1), New Delhi

[2016] 69 taxmann.com 405 (Delhi - Trib.)

Recent Important Case Laws

Supreme Court division bench reserves ruling on whether financial advisory consult

ancy service rendered by non resident to GVK Industries, falls within ambit of Sec 9(1)(vii) as 'fees for technical services'; GVK Industries had filed an appeal before SC against Andhra Pradesh HC ruling; HC held services fall within ambit of Sec 9(1)(vii)(b); HC also upheld constitutional validity of Sec 9(1)(vii)(b) by relying on SC decision in Electronics Corporation of India Ltd; On constitutional validity of Sec 9(1)(vii)(b), Constitution bench of SC subsequently upheld legislative competence of Parliament to enact laws that have extra territorial jurisdiction, provided territorial nexus exists

Entire consideration from share sale taxable as Long term Capital Gains, even though shares sold at price higher than fair market value (as determined in CA's valuation report); Rejects Revenue's stand that excess consideration received was towards transfer of management rights and taxable as business income u/s 28; Assessee sufficiently justified sale of shares at higher price and also explained circumstances in which the foreign company buyer paid the amount; Even if it was considered that assessee parted with ‘management rights’, ITAT holds that transfer of management rights is transfer of a capital asset liable to be taxed under capital gains head only and assessee eligible for Sec 54F benefit : Hyderabad ITAT

HC quashes re-assessment proceedings in BBC World News Ltd.’s case (assessee) for AY 2003-04; Rejects Revenue’s re-assessment to decide on Indian PE attribution income; AO had determined income attribution to assessee’s Indian PE based on criteria / formula adopted in assessee’s predecessor's case, BBC Worldwide Ltd, in earlier assessment; Mere change in AO’s view regarding income attribution criteria based on method in subsequent years is a matter of perception, hit by ‘change of opinion’ principle; HC criticizes Revenue’s serious lapse in duty to maintain proper records; Directs order copy to be sent to CBDT’s Chairman for proper record maintenance and issuance of directions : Delhi HC............Read More