Amendments to transfer pricing provisions can be prospective only: Mumbai ITAT

Amendments to the anti-abuse legislations such as transfer pricing provisions can only be given prospective effect. Therefore, Explanation to Section 92B inserted by Finance Act, 2012, though stated to be clarificatory and effective from 1st April 2002, has to be necessarily treated as effective from the Assessment Year 2013-14

Issue

“Whether amendments to transfer pricing provisions can only be prospective and not retrospective?”

The Mumbai ITAT held as under-

1)    Transfer pricing provision is in the nature of a SAAR (specific anti-abuse rule), and that every anti-abuse legislation, whether SAAR (specific anti abuse rule) or GAAR (general anti-abuse rule), is a legislation seeking the taxpayers to organize their affairs in a manner compliant with the norms set out in such anti-abuse legislation.

2)    An anti-abuse legislation does not trigger the levy of taxes; it only tells you what behaviour is acceptable or what is not acceptable.

An advance or debt is a capital asset; loss on sale of debt allowed as short-term capital loss

Facts

a)  Assessee, a foreign company, granted loan of € 90,00,000 to its subsidiary in India.

b)  It sold the aforesaid debt for € 7,31,000 as its subsidiary ran into serious financial crisis. The assessee claimed short term capital loss on this transaction of sale of debt.

c)  Assessing Officer (AO) disallowed claim of assessee on ground that loan couldn’t be treated as capital asset under Section 2(14).

d)  CIT(A) confirmed the order of AO. Aggrieved assessee filed the instant appeal before the tribunal.

Report of the Company Law Committee -II

I. Introduction:

The first part of this article was published in Taxmann's Corporate Professionals Today ,Vol. 35 , February 16 To 29, 2016, Pp. 325-339.

Carrying forward the spirit of enhancing 'ease of doing business' the Central Government has accepted mostly all recommendations of the Company Law Committee Report submitted in February,2016 and introduced the Companies (Amendment) Bill,2016 in the Lok Sabha on 16^thMarch 2016. Major changes introduced in the Bill include -

•		Allowing incorporation of companies without specific object clause;
•		Raising money through private placement without regulatory oversight and just by filing return of allotment;
•		Allowing six months remedial period when minimum membership of a company falls below the prescribed minimum level;
•		Allowing authentication of documents by any employee of the company authorised by the Board;
•		Complexity involved in the preparation of prospectus arising out of dual compliance of company law and SEBI requirements is removed by elimination company law requirements - Matters to be stated in the prospectus and reports to be included therein shall be as per the SEBI Guidelines to be developed in consultation with the Central Government;

No penalty on co. if cash in excess of Rs. 20,000 was received from directors for meeting business exigency

Facts

a)    Assessee, a private limited company, received share application money of Rs. 5 lakh in cash from its directors.

b)    Assessing Officer (AO) imposed penalty on it under Section 271D for violating the provisions of Section 269SS since the amount had been received in cash exceeding the limit of Rs. 20,000.

c)    Assessee contended that amount was received to meet business exigency warranting immediate discharge of certain liability. Therefore, such genuine transactions would not attract penalty under section 271D as envisaged in section 273B.

d)    Commissioner (Appeals) confirmed the order of the AO. Aggrieved assessee filed the instant appeal before the tribunal.

Digital Economy: Equalisation Levy

In this era of technology intertwined lifestyle, e-commerce has become a way of life. E-commerce seemingly facilitates every other aspect of our lives at a click of a button, whether its procurement of daily household items or requisitioning of any particular service. Today, accessibility to the digital world is not a privilege but a necessity for most people, particularly in urban areas.

Over the past few decades, the burgeoning development of the Information and communication technology ('ICT'), its accessibility and affordability has led to this digital revolution around the world. ICT has also provided opportunity to businesses to tap the world markets and bridge the requirement of physical presence across the globe.

The model of doing business electronically has provided immense growth opportunities.Digital economy across the world is reflecting a growth rate of 10%¹ which is significantly higher than the growth numbers of the global economy as a whole. Research and studies around the world have indicated that investment in ICT positively affects the productivity and GDP growth of a country. Developed countries in terms of ICT development have the highest GDP levels, which indicates that implementation of ICT in a country improves its overall economic health.

Lower tax rate of DTAA would apply even if assessee omitted to fill up schedule of ‘Special Income’ in ITR

Facts

a)  Assessee, a company incorporated in Cyprus, received interest in respect of investment made in debentures of an Indian Company.

b)  The said interest income was offered to tax at the rate of 10% purportedly in line with the provisions of Article 11(2) of the India-Cyprus Double Taxation Avoidance Agreement (DTAA).

c)  Assessing Officer taxed interest income at normal rate of 43.23 % on ground that assessee did not fill up the 'Special Income' (SI) schedule in the return of income.

d)  Aggrieved assessee filed the instant appeal before the tribunal.

New composition scheme of Tax of 5% under Delhi VAT

A new composition scheme has been notified under the Delhi VAT Act Vide Notification No. F.3(29)/Fin(Rev-I) 2015-2016/dsvi/93 dated 18.3.2016 with effect from 1.4.2016 for every registered dealer -

(i)		whose turnover during the preceding year as well as expected turnover during current year does not exceed Rs.50 lacs; and
(ii)		who is not making any sales other than that of ready to eat foods and non-alcoholic beverages including cooked food, snacks, sweets, savouries, juices, aerated drinks, tea & coffee etc. and served in or catered indoors or outdoors by hotels, restaurants, sweet-stalls, sweet shops, clubs, caterers & any other eating houses.

Such dealer may elect for the new composition scheme and pay tax @ 5% of the entire turnover. The electing registered dealer shall comply with the conditions and restrictions specified in this notification, such as, -

Depreciation should be allowed on trademark, even though it may not be registered in name of assessee

Facts

a)  Assessee acquired business of a company including its trademark. It claimed depreciation on cost incurred on acquisition of such trademark.

b)  Assessing Officer (AO) disallowed depreciation on ground that trademark was not registered in the name of assessee.

c)  CIT(A) confirmed the order of AO. Aggrieved assessee filed the instant appeal before tribunal.

FAQs on Panama Papers

1. What are the 'Panama Papers'?

The 'Panama Papers' are a set of confidential documents leaked from one of the biggest law firms of Panama - 'Mossack Fonseca'. The Panama Papers provide information about thousands of offshore entities, identities of their shareholders and directors. It listed various world leaders, public officials, billionaires, celebrities, sports stars and politicians.

2. How much data has been leaked and by whom?

a)  The leaked data consists of 11.5 Million Documents in around 2,600 GB taken from the Mossack Fonseca's internal database by one of its employees.

b)  These documents were obtained by Sueddeutsche Zeitung, a daily newspaper headquartered in Munich, Germany. Sueddeutsche shared the Panama Papers with the Washington-based International Consortium of Investigative Journalists (ICIJ) and other news outlets, including the BBC, the Guardian and the Indian Express.

c)  Sueddeutsche mentioned that an employee at the law firm had leaked the data, telling the newspaper that he had risked his life in doing so.

Provision allowing auditing by CMAs under Karnataka Societies Act doesn't encroach on CA profession

Karnataka Co-operative Societies Act, 1959 : Karnataka High Court rejected writ petition filed by 'Karnataka State Chartered Accountants Association' challenging the amendment to the Karnataka Co-operative Societies Act, 1959 (KCS) which allowed auditing of accounts by Cost Accountant or Cost Accountants Firm saying it to be statutorily governed and denied to interfere with same.

• Amendment to the definition of Auditor under the Karnataka Co-operative Societies Act, 1959 to include a Cost accountant, within the meaning of Cost and Works Accountants Act, 1959 couldn't be said to null and void and ultra-vires the Constitution of India and Central Legislatures as it did not result in encroachment on the profession of Chartered Accountants.