Thursday, January 28, 2016

An Infographic on 11 Key Incentives Announced Under Start-up Scheme

1. What is Start-up

Start-up shall mean an entity:

  a) Incorporated or registered in India not prior to five years, with annual turnover not exceeding
       Rs. 25 crore in any preceding financial year;

b) Working towards innovation, development, deployment or commercialization of new products,            processes or services driven by technology or intellectual property.

Note: Such entity should not be formed by splitting up, or reconstruction, of a business already in existence. Further the entity shall cease to be a Start-up if its turnover for the previous financial years has exceeded Rs. 25 crore or it has completed 5 years from the date of incorporation/ registration.

Tuesday, January 19, 2016

Sale of 100% shareholding in subsidiary Co. could not be treated as 'Slump Sale'


a) The assessee-co. sold its entire shareholding in its subsidiary co. 'UHEL' to a third party.

b) Assessee worked out capital gains under section 48 on such transaction.

c) The Assessing Officer(‘AO’) opined that the said transaction would amount to slump sale of an undertaking and capital gains had to be computed under section 50B.

Revised monetary limit for filing appeal would also apply to pending references in High Court

The disputed issue before the High Court was as under:

Whether revised monetary limit of Rs.20 lacs as specified in CBDT's Circular No. 21/2015 shall apply to pending references in High Courts?

The High Court held as under:

1) To ensure that there is uniformity in respect of filing of appeals the CBDT has fixed threshold limits which would do away with the discretion of the officer to file and pursue the appeal remedy where the tax effect is less than the minimum amounts specified.

2) It is noteworthy that the Circular specifically provides that where the tax effect is higher than that specified in the Circular then the filing of appeal in such cases is to be decided on the merits of the case. Therefore, to enable the Revenue to focus on matters where the tax implication is above Rs.20 lacs only such matters should be agitated in appeal before the High Court according to the Circular.

Wednesday, January 13, 2016

Income initially disclosed before SetCom couldn't be said to be concealed if additions were made due to TP provisions

Where correct determination of income was dependent upon application of appropriate transfer pricing rule and, consequently, assessee made a revision in income initially disclosed before SetCom after considerable debate during the course of hearing, it could not be said that full and true disclosure of undisclosed income was not made in original application filed before SetCom.

Tuesday, January 12, 2016

Penalty levied on co. as its directors tried to evade service tax with help of internal auditors

Where internal auditor of company perpetrated fraud by booking 'service tax due' as 'income'/'commission' in books of account and it was found that directors of company were aware thereof, company was liable to evasion penalty for consequent non-payment of service tax
1) Assessee was engaged in the activity of issuing Air Tickets for Domestic as well as International routes to its customers. It discharged Service Tax liability based on the basic fare charged by the Airlines.

Exclusive tie-up of super specialty hospital with a stem-cell bank isn't ant-competitive

Private super specialty hospital's exclusive tie-up with a stem-cell bank for collection of stem-cells from patients availing maternity services in the hospital and not allowing other stem cell banks to collect the same, has no adverse effect on competition
Whether exclusive tie-up of a super specialty hospital with a stem cell bank for collection of stem-cells from patients availing maternity services in the hospital could be said to be an anti-competitive Act?

Friday, January 8, 2016

Taking over management of business doesn't amount to 'Business Support Services'

1. Assessee entered into a contract with M/s. Kolhapur Sugar Mills Ltd. (' KSM') for manufacturing and sale of liquor in the name of KSM. It undertook the manufacturing activity as well as sale of products. KSM was allowed to use the entire infrastructure.

2. Since plant and machinery etc. were owned by KSM, it was decided that KSM would be paid Rs. 30 lakhs per annum; and balance profit (after deducting Rs. 30 lakhs) would be retained by assessee.

3. KSM was paying service tax on said amount under franchise services. Assessee booked said profit in its books as conducting charges. Department argued that 'conducting charges' received by assessee were consideration for Business Support Services and liable to service tax. Assessee filed appeal before Tribunal.

Thursday, January 7, 2016

No denial of sec. 54F relief just because part of investment was made out of housing loan

If assessee had fulfilled condition of making investment of entire capital gain in purchase of residential house, she would be entitled to exemption under section 54F even if part of investment was made out of borrowed money.


a)   The assessee had invested entire capital gains to purchase residential house. She had utilised housing loan to make part of the investment in house property. She claimed exemption under section 54F in respect of total investment.

b)   The Assessing Officer completed assessment accepting assessee's claim.

Tuesday, January 5, 2016

TDS Scheme is faulty as it doesn't allow more than 4 changes in character of PAN in revised return

System of processing TDS statements gives an option to deductor to correct invalid/no PAN entries in TDS statement through a correction statement without any restriction of correcting particular PAN with regard to number of characters
a)     The assessee was regularly filing TDS returns mentioning therein details of hundreds of deductee’s.
b)    Due to some clerical unintentional mistake it mentioned invalid PAN of a deductee in the quarterly TDS return.