Wednesday, June 29, 2016

How can NRs escape from higher TDS without furnishing PAN

The existing provision of section 206AA, inter alia, provides that any person who is entitled to receive income on which tax is deductible shall furnish his PAN to the payer, failing which tax shall be deducted at higher rates. Such provision is also applicable for non-residents.

Section 90 provides that non-resident taxpayers (to whom provisions of DTAA are applicable) shall apply provisions of the Income-tax Act or DTAA, whichever is more beneficial. However, due to application of Section 206AA such non-residents are taxed at higher rate of 20% even if tax rates under treaty are more beneficial.

The Finance Minister in his budget Speech had proposed to provide that on furnishing of alternative documents instead of PAN, the higher rate of TDS under Section 206AA will not apply to non-residents. Thus, in order to reduce compliance burden for the non-residents the Finance Act, 2016 provided exemption from applicability of Section 206AA in case of nonresidents subject to conditions as may be prescribed.

Now the CBDT has notified new Rule 37BC to prescribe such conditions. It has been provided that the provisions of Section 206AA shall not apply even if the nonresident payee does not have PAN subject to satisfaction of following conditions:

Tuesday, June 28, 2016

CLB ends family feud by dismissing oppression plea filed by mother against her three daughters


a) The petitioner (mother) alleged acts of oppression and mismanagement in the a airs of the company by her 3 daughters.

b)  The relief was sought on various matters such as: - To declare the illegal board meetings

- Removal of director from the directorship of the Company - To declare all illegal transfers of shares

c)  Disposing the petition the HC directed to constitute an adhoc board with the mother and her three daughters for managing day-to-day a airs of the company and to carry out the statutory obligations under the Act.

Monday, June 27, 2016

No TCS if cash receipts don’t exceed Rs 2 lakhs even if consideration exceeds Rs 2 lakhs: CBDT

TCS is to be collected by the seller from the buyer on sale of specified category of goods at rates in force. Initially, only specified items (such as alcoholic liquor for human consumption, tendu leaves, scrap, mineral being coal or lignite or iron ore, etc.) were within the TCS net. Subsequently, the Finance Act, 2012 provided for collection of TCS on sale of bullion and jewellery where the sale consideration received in cash–

a) for bullion, exceed Rs 2,00,000; or

b) for jewellery, exceed Rs 5,00,000.

The Finance Act, 2016 amended Section 206C to provide that seller is also required to collect TCS on sale of any goods (other than bullion or jewellery) or services where the sale consideration received in cash exceeds Rs 2,00,000.

Saturday, June 25, 2016

RBI approved royalty rate has only persuasive value, it isn't conclusive to determine ALP

The issue before the Delhi ITAT was as under:

Whether rate of Royalty/FTS approved by RBI is always at ALP?

The Delhi ITAT held as under:

1) The jurisdictional High Court in case of CIT v. Nestle India Ltd. [2011] 11 106 made following observation:

‘The Tribunal is not correct in observing that since the permission is given by the RBI, the reasonableness and genuineness of the expenditure could not have been gone into by the AO. The purpose for which such permission is given by the RBI is totally di erent. The RBI is only concerned with the foreign exchange and, therefore, would look into the matter from that point of view. The RBI, at the time of giving such permission would not keep in mind the provisions of the IT Act and that is the function of the IT authorities and, therefore, they can validly go into such an issue'

2) It is explicitly clear from the enunciation of law by the Delhi High Court that the grant of permission by the RBI to payment of royalty is not sacrosanct for the purposes of the Act and, can be examined by the Assessing O icer to ascertain its excessiveness.

Friday, June 24, 2016

Practice of builders to Copy Paste same arbitrary clauses in all agreements isn't anti-competitive

Competition Act: Mere inclusion of common arbitrary clauses in the contract for sale of residential flats by builders couldn’t be said to be anti-competitive

In the absence of any evidence of meeting of minds between any two or more developers of real estate with an intention of causing an appreciable adverse effect on competition, there could be no violation of Section 3 as was complained/ informed of by the petitioner/informer. Facts:

a) The petitioner alleged that real estate developers have an understanding amongst them whereby they compel the purchasers of real estate to sign one sided flat buyer’s agreement containing arbitrary clauses which are exploitative of buyer

b) The CCI passed an order under Section 26(1) directing DG to investigate the conduct of residential apartment complex builders and reported that certain practices are being commonly carried on by the developers by way of tacit agreement which caused implications for consumers and resultantly determining the final prices of apartments in contravention of Section 3(3)(a) of the Competition Act

c) The CCI differed from the findings of the DG on issue of contravention of provisions of Sections 3(3)(a) & (b) of the Competition Act and held that sufficient evidence is not available on record which warrants a finding of contravention of the provisions of the Act and accordingly closed the matter. 

On writ plea, the High Court held as under:

Thursday, June 23, 2016

Payment made to Automobile dealers for servicing of vehicles under warranty would attract sec. 194C TDS


1) The assessee-company, manufacturing and selling vehicles, was charging customers for services in nature of repair and maintenance of vehicles to be undertaken on reaching different milestones.

2) Under manufacturer-dealer contract, assessee's authorised dealers were obliged to provide such services to vehicles that satisfied conditions of warranty (qua services), against service coupons issued by assessee to customers.

3) The assessee allowed payment/credit to authorised dealers on presentation of service coupons received by them from vehicle owners on providing services. The Assessing Officer disallowed such payments made to dealers for non-deduction of tax at source under section 194C.

The ITAT held as under:

Wednesday, June 22, 2016

Job-work transactions under model GST law

In today's scenario, where the demand for goods and services is increasing at a rapid pace, a large number of industries as a part of their survival strategy are dependent on outside support for completing their manufacturing activities. Such activities are being undertaken by many small and medium scale industries to complete the process on raw material/semi-finished goods as desired by principal manufacturer and is known as "Job-Work". Job-work is otherwise also understood as the processing or working on goods supplied by the principal (i.e. the manufacturer) so as to complete a part or whole of the process. The principal usually sends the raw material or semi-finished goods or components which are processed by the job worker resulting in a further processed or finished product. The manufacturer may also send finished product to a job worker for assembling/packing. The term job-work has various synonyms in various industries – "job-work" or "sub-contracting" in engineering industry, "processing" in chemical or textile industry and "a loan licensee" in pharmaceutical industry, "contract manufacturing" in FMGC industry.
This being the commercial aspects of the entire transaction, the Indirect tax aspects broadly revolves around Central Excise Duty, Service tax and Value Added Tax/Central Sales Tax. The taxable events for all three taxes are different i.e. for Central Excise duty it is upon manufacture of goods, for Service tax it is rendition of service and for Value Added Tax/Central Sales Tax it is sale of goods.

Govt. allows 100% FDI in e-commerce, aviation and defense

With the objective of providing major impetus to employment and job creation in India, the Government has brought major FDI policy reforms in a number of sectors viz. Defence, Construction Development, Insurance, Pension Sector, Broadcasting Sector, Single Brand Retail Trading, Manufacturing Sector, LLPs, Civil Aviation, Credit Information Companies, Satellites- establishment/operation and Asset Reconstruction Companies. These amendments seek to further simplify the regulations governing FDI in the country and make India an attractive destination for foreign investors. The Key highlights of amended FDI policy are as follows:

1. Foreign Investment in Defence Sector up to 100%: Foreign investment beyond 49 % has now been permitted through government approval route, in cases resulting in access to modern technology in the country or for other reasons to be recorded. The condition of access to ‘state-of-art’ technology in the country has been done away with. 

2. FDI in Civil Aviation sector: Govt. has allowed 100% FDI in aviation sector under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route.

3. Changes for promoting Food Products manufactured/produced in India: It has now been decided to permit 100% FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured or produced in India. 

4. Private Sector Agencies: The extant policy permits 49% FDI under government approval route in Private Security Agencies. FDI up to 49% has now been permitted under automatic route in this sector and FDI beyond 49% and up to 74% would be permitted with government approval route.

Tuesday, June 21, 2016

Tax audit threshold of Rs 2 cr. only applicable to taxpayers opting for presumptive tax scheme

Closely held companies used to issues shares at substantial premium to convert black money into white money without providing any valuation justifying the premium. Thus, the Finance Act, 2012 inserted Section 56(2)(viib) to impose tax on closely held companies receiving consideration for shares in excess of fair market value.

Valuations of start ups have fallen sharply, recently, on worries over profitability, growth and intense competition. The Income-Tax Dept. discussed a controversial move to impose tax on those startups under the garb of Section 56(2)(viib) on the ground that their last round of valuation was lower than the first round. This move was likely to upset startups who were already worried over funding issue and falling valuations. Thus, there had been a long standing demand of the industry that the Govt. should either do away such tax on startups or provide a threshold exemption limit.

Monday, June 20, 2016

No criminal case arose on dishonour of blank cheque deposited a er 20 yrs in violation of agreement

Where a Managing Director, acting on behalf of the company issued a blank signed cheque as a security, he wasn’t liable for the dishonor of the cheque if he held no position whatsoever of the company when the cause of action in fact accrued.

Whenever a blank cheque or postdated cheque is issued, a trust is reposed that the cheque will be filled in or used according to the understanding or agreement between the parties. If there was a prima facie reason to believe that the said trust was not honoured, then the continuation of prosecution under Section 138 of the N.I. Act would be the abuse of the process of law. It was in the interest of justice that the parties in such cases are le to the civil remedy.


a) A blank cheque was drawn by the Managing Director and Vice President of the company in favour of the complainant firm as a security in decade of 90s. Therea er, he ceased to be MD of the company with e ect from 13th April 2005.

b) The cheque was deposited a er filling up other details by the complainant on 25th March 2013. Meanwhile the entire management of the accused company got changed with e ect from 30th May 2005 and was taken over by the A.P. Moller Group upon purchase of the shares and execution of the Transfer Agreement.

c) The complainant, therea er, proceeded to file a complaint in the Court of the learned Chief Judicial Magistrate at Mahuva and, accordingly, a criminal case was registered against accused.

d) The Company and the Directors filed an application for quashing of the criminal proceedings initiated for the o ence punishable under Section 138 of the Negotiable Instruments Act.

The High Court of Gujarat held as under:

Saturday, June 18, 2016

SEBI brings out consultation paper to allow REITs to invest up to 20% of their corpus in under construction assets

There is no public interest served in disclosure of assets and liabilities of SEBI Chairman as such disclosure is likely to cause unwarranted invasion of privacy of the individual under section 8(1)( j) of the RTI Act, Rules CIC Bench


a) The appellant filed RTI application before the Central Public Information O􀁹icer (CPIO), SEBI seeking the assets and liabilities and total present emoluments of Shri U.K. Sinha, Chairman of SEBI.

b) The CPIO rejected application saying that the information sought was personalinformation and it was held by the SEBI in fiduciary capacity. Hence, it could not be provided under section 8(1) (e) & (j) of the RTI Act.

Friday, June 17, 2016

15 things you should know about Model GST Law

On June 14, 2016 the Finance Ministry has released the 'Model GST Law'. It outlines the structure of the GST regime. Further, the draft of 'Integrated GST Bill, 2016' is also released along with such Model GST laws. It also provides the framework for levy and collection of CGST and SGST. "CGST" is the tax levied under the Central Goods and Services Tax Bill, 2016. "IGST" is the tax levied under the Integrated Goods and Services Tax Bill, 2016.
Key takeaways from ModelGST law are given hereunder:
1) Threshold limit for registration
The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds Rs.9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds Rs.4 lakhs.
2) Place of registration
The dealer has to take registration in the State from where taxable goods or services are supplied.
3) Migration of existing taxpayers to GST
Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registration certificate shall be granted by the Central/State Government.

Sec. 246A doesn’t allow filing of appeal before CIT(A) against order passed by AO under Sec. 195(2)


a) ONGC entered into a contract with Abu Dhabi Ship Building PJSC and Rodman Polyship, Vigo, Spain for construction of Immediate Support Vessels (ISV).

b) ONGC filed application before the Assessing Officer (AO) under section 195(2) requesting for approval for non–deduction of tax at source on payment for the construction of the ISVs.

c) AO rejected the application as he was of the view said payments were taxable in India and, thus, liable to tax deduction at source under section 195.

d) Abu Dhabi Ship Building (payee) filed an appeal before the CIT (Appeals) challenging the order under section 195(2). CIT (A) reversed the order of AO.

e) Aggrieved by the order of CIT (A), revenue filed the instant appeal before the Tribunal. The issue before the Tribunal was as under:

Thursday, June 16, 2016

Dividend income of Indian co. was exempt if Brazilian co. had paid taxes above 15% before distribution of dividend

a)    Assessee, an Indian company, invested certain amount in equity capital of Brazilian company and received certain dividend income during the year.
b)    Assessing Officer (AO) contended that dividend was received by assessee from a foreign company. Therefore, it would not fall in the ambit of dividend distribution tax as contemplated in section 115-O and, accordingly, it would not be exempt under section 10(34).
c)    Assessee contended that Brazilian company had already paid tax at the rate of 34% on its profits , i.e., in excess of rate of 15% as prescribed in paragraph 2 of Article 10 of DTAA between India and Brazil (DTAA), before distribution of dividend income. Therefore, it wouldn’t be liable to pay tax on such dividend income in India in terms of Paragraph 3 of Article 23 of India-Brazil DTAA.
d)    CIT (Appeals) set aside the addition taking view that the AO did not consider DTAA provisions while considering the taxability of dividend in India.

e)    Aggrieved by the order of CIT (A), revenue filed the instant appeal before the tribunal.

Wednesday, June 15, 2016

15 things you should know about Model GST Law

On June 14, 2016 the Finance Ministry has released the 'Model GST Law'. It outlines the structure of the GST regime. Further, the draft of 'Integrated GST Bill, 2016' is also released along with such Model GST laws. It also provides the framework for levy and collection of CGST and SGST. "CGST" is the tax levied under the Central Goods and Services Tax Bill, 2016. "IGST" is the tax levied under the Integrated Goods and Services Tax Bill, 2016. Key takeaways from Model GST law are given hereunder:

1) Threshold limit for registration

The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds Rs.9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds Rs.4 lakhs.

2) Place of registration

The dealer has to take registration in the State from where taxable goods or services are supplied.

3) Migration of existing taxpayers to GST

Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registration certificate shall be granted by the Central/State Government.

4) GST compliance rating score

Every taxable person shall be assigned a GST compliance rating score based on his record of compliance  ith the provisions of this Act. The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain.

5) Levy of Tax

The person registered under this law is liable to pay tax if his aggregate turnover in a financial year exceeds Rs 10 lakhs. However, a dealer conducting business in any of the North Eastern is required to pay tax if his aggregate turnover exceeds Rs. 5 lakhs. A negative list has also been prescribed for transactions and activities of Government and Local Authorities which shall be exempt from GST levy, like activities of issuance of passport, visa, driving license, birth certificate or death certificate, etc.

6) Taxable Event

The taxable event under GST regime will be supply of goods or services. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration. It also includes importation of service, whether or not for a consideration.

Tuesday, June 14, 2016

Amritsar based CA gets life time ban for being mastermind of accommodation entries

Chartered Accountant Act, 1949: Name of practicing Chartered Accountant shall be removed from register of members for life as he was master mind in scam of providing accommodation entries and was held guilty of professional misconduct. Facts:

a) The allegations against respondent, a practicing Chartered Accountant at Amritsar, were that he was master-mind in a scam of providing accommodation entries to various concerns after charging commission ranging from 1% to 3%.He was also operating all benami bank accounts.

b) After receipt of the complaint, proceedings were initiated against Chartered Accountant. Copy of the complaint was sent to him, however, the notice was received back undelivered with postal remarks “left country”. The matter was considered in the meeting of the Disciplinary Council in its meeting and Chartered Accountant was found guilty of professional and other misconduct.

c) After considering the submissions of the complainant, the Council accepted the report of the Disciplinary Committee. The Council, decided to recommend to this court for removal of the name of Chartered Accountant from the register of members for a period of 10 years.

d) The submission of learned counsel for the ICAI is that not only the recommendations made by the Council be accepted, but seeing the conduct of Chartered Accountant, he deserves to be penalised by removing his name from the register of members for life.

Monday, June 13, 2016

The Law not applied – a mistake apparent from the record

Rectification of mistake.
154. [(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,—

amend any order passed by it under the provisions of this Act ;

amend any intimation or deemed intimation under sub-section (1) of section 143;]]

amend any intimation under sub-section (1) of section 200A;]

amend any intimation under sub-section (1) of section 206CB. ]
1. The purpose of this study is to examine the scope of the usage "rectifying any mistake apparent fromthe record", as appearing in section 154. The pre-condition for the rectification of any mistake is that it should be an apparent mistake, obvious from the record. Interestingly, the terms mistake, apparent, &the record have not been defined in the Act, hence are subject to judicial interpretation.

Unabsorbed depreciation deductible from book profits even if it was adjusted under rehabilitation Scheme

a) The assessee-company made huge loss and its net worth got wiped out. Therefore, the case of the assessee was referred to BIFR under SICA. It was declared as 'sick' industrial unit. 

b) The Board has sanctioned the rehabilitation scheme and, all credit amounts lying in various accounts, such as, equity share capital account, share premium account, etc. were transferred to credit of rehabilitation account. Ultimately, the credit balance in that account was used to liquidate the debit balance of profit & loss account by way of transfer of debit balance of P&L to the rehabilitation scheme account to the extent of credit balance available therein.

c) Since the net worth of the company was negative till AY 2008-09, it was not under the obligation to pay book-profit tax as per clause(vii) of Explanation to section 115JB. During AY 2012-13, assessee claimed deduction of unabsorbed depreciation loss of earlier years while computing the book profit. However, AO denied such deduction. He held that once the assessee made credits in the P&L account by way of restructuring , then the debit balance would be considered as wiped out from the P&L account and thus no unabsorbed depreciation would be available for reduction under Section 115JB.On appeal, CIT(A) upheld AO’s order.

Saturday, June 11, 2016

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

a) The assessee debited certain amount on account of transaction charges paid to the Stock Exchange. The Assessing Officer disallowed such charges on the ground that the assessee had not deducted tax at source while making the payment of transaction charges.

b) The Commissioner (Appeals) held that the transaction charges were paid to the Stock Exchange for rendering the managerial services which constituted fees for technical services under section 194J and, hence, the assessee was liable to deduct tax at source before crediting the transaction charges to the Stock Exchange. In that view of the matter, the disallowance was upheld.

c) The aggrieved-assessee filed the instant appeal. 

The Tribunal held in favour of assessee as under:

Friday, June 10, 2016

InvITs- A New Investment Gateway for Infrastructure Growth in India

1. Large scale, efficient Infrastructure is the basic requirement for any economy to function competitively. This is also essential to maintain and updated these infra for continuous growth and smooth running of economy.
With the vision of Make in India, our Prime Minister has given much emphasis on infrastructure growth and taking various steps to revive the sector. Several infrastructure projects which are under development in India are on hold or delayed due to various reasons. These infra systems are high-cost investments.
The infrastructure projects comprising roads and highways, ports, power, Communication and water sanitation projects etc. have been facing severe liquidity crunch due to the limited funding options, high interest cost and lack of investor interest. Witnessing the requirement for infrastructure in a country like India coupled with the huge funding requirements of the infrastructure developers, the structureof InvIT seems to be a much needed and a welcome introduction.
Finance Minister Mr. Arun Jaitely announces exemption from dividend distribution tax (DDT) by a domestic company to business trust (InvITs) in his speech in Budget 2016 . This announcement has suddenly given momentum to attract investor in Infra companies.

Custom duty borne by purchaser would be deductible even if liability disputed by importer seller

a) Assessee-firm purchased certain imported products under two agreements. The price as agreed in both the cases was the gross costs to the sellers with certain amount of net profit. The gross cost included all expenditure incurred by the sellers for supplying the goods to the assessee.

b) However, as there was uncertainty about the incidence of customs duties, the parties inserted a clause in the agreements, to make it clear that any liability with respect to duty of customs payable by the seller, would be a part of the costs and the buyer (assessee) would pay for the same. In terms of the contract the assessee was required to pay custom duty of Rs 1.78 crores to its seller as a part of the cost of the goods.

c) While completing assessment, the Assessing Officer accepted expenditure incurred on account of customs duty. There after, the CIT, in exercise of powers under section 263, reversed assessment order holding that the amount of custom duty was a contingent liability as the sellers of goods had challenged the same in the Supreme Court.

d) On appeal, the Tribunal held that liability on account of customs duty was to be allowed as the deduction on accrual basis. Aggrieved-revenue filed the instant appeal. The High Court held in favour of assessee as under:

Thursday, June 9, 2016

CBDT releases Q&As on TCS applicability on sale of motor vehicles

In order to reduce the cash transactions in sale of goods and services, the Finance Act 2016 has expanded the scope of section 206C(ID) to provide that the seller shall collect tax @1% from the purchaser on sale in cash of any goods (other than bullion and jewellery) or providing of any services (other than payment on which tax is deducted at source) exceeding two lakh rupees.

Further, with a view to bring high value transactions within the tax net, it has been provided in sub- section (1F) of section 206C that the seller, who receives consideration for sale of a motor vehicle exceeding ten lakh rupees, shall collect 1% of the sale consideration as tax from the buyer.

In this regard a number of queries have been received about the scope of the provisions of TCS and the procedure to be followed. In this backdrop the CBDT now clarifies following issues in form of questions and answers as follows:

Question 1: Whether TCS @ 1 % is on sale of Motor Vehicle at retail level or also on sale of motor vehicles by manufacturers to dealers/distributors?

Answer: To bring high value transactions within the tax net, section 206C has been amended to provide that the seller shall collect the tax @ 1% from the purchaser on sale of motor vehicle of the value exceeding ten lakh rupees. This is intended to cover all transactions of retail sales and, accordingly, it will not apply to sale of motor vehicles by manufacturers to dealers/distributors.

Wednesday, June 8, 2016

Krishi Kalyan Cess-Hidden Misery

Krishi Kalyan Cess (KKC) at the rate of 0.5% is being imposed on all taxable services with effect from 01.06.2016 on all taxable services provided or agreed to be provided by the service provider. The revenue collected from this Cess will be utilised by the government for improving agricultural sector and for taking initiatives to promote agricultural activities. However, the complicated provisions enshrined for this Cess tend to defeat the 'Kalyankari intention' of the government.
It is provided that only a provider of output service shall be allowed to take cenvat credit of the Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016. This has the consequence of raising doubt as regards availment of cenvat credit of KKC levied on input services received by a manufacturer cum service provider. Not only this, it is being provided that the cenvat credit of any duty shall not be utilised for payment of KKC leviable under section 161 of the Finance Act, 2016. In the opinion of authors, literal interpretation of the provision leads to conclusion that only a service provider can avail the cenvat credit of KKC imposed on input services availed by it and the credit so availed can be utilised for payment of KKC and no other duty. 

Taxability of services provided by Senior Advocates

A senior advocate is an advocate, who with his consent, be designated as senior advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability and special knowledge or experience in law, he is deserving of such distinction. Earlier, CBEC made services of senior advocate taxable under forward charge. Now, CBEC further issued three notifications 32/2016, 33/2016 and 34/2016. The impact of these notifications are as follows:

1. Earlier, legal services provided by senior advocates to any person carrying out any activity relating to industry, commerce or any other business or profession were not exempt from service tax. Now, legal services provided by senior advocates would be exempt from service tax, if services are provided to –

- Any person other than business entity, or

Tuesday, June 7, 2016

No service-tax on sale of under-construction flats if contract price includes value of land: HC

a. Assessee purchased flat in a residential complex. The builder, in addition to the consideration for the flats, also recovered service tax from the assessee.

b. Assessee challenged levy of service tax on ground that composite contract (inclusive of value of land) could not be charged to service tax. It was argued that the agreement with the builder was a composite contract for purchase of immovable property and in absence of specific provisions for ascertaining the service component in the said agreement, the levy would be beyond the legislative competence of the Parliament. 

The Delhi High Court held as under:

1. The legislative competence of the Parliament to tax the element of service involved in constructing the complex could not be disputed. But the levy itself would fail, if it did not provide for a mechanism to ascertain the value of the services component which was the subject of the levy.

Monday, June 6, 2016

Interest on compensation paid to accident victim is tax-free

a) The assessee was travelling in a car, which met a serious accident, leaving her permanently disabled. She claimed a compensation for this tragic loss of her physical abilities. She did eventually get it after the long struggle of 21 years.

b) But this long struggle was not enough, the destiny had more in store for her. It is this settlement of the accident compensation claim that has led to a new round of litigation- this time about taxability of a component of compensation, i.e. interest component.

c) During assessment proceedings, the Assessing Officer held that that interest component on compensation was taxable as it is covered under section 145A(b) r.w.s. 56(viii).The CIT(A) had also confirmed this stand. The aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

IndiGo Airlines didn't abuse dominance by hiring AirIndia's pilots a􀁺er obtaining NOC from competent authority

a) The Appellant, Air India, had filed information against the respondent- Indigo alleging that it had systematically indulged in predatory recruitment of trained pilots of appellant and had contravened provisions of section 4 of Competition Act, 2002.

b) The Commission held that allegations against respondent did not raise any competition concern in market and there was no bar on informant or any other airlines from recruiting pilots belonging to other airlines after seeking 'No objection Certificate' from them On appeal, the Competition Appellate Tribunal held as under:

1) Since except making bald allegations appellant did not produce any tangible evidence on record to prima facie show that respondent had in fact indulged in predatory hiring of pilots already serving other airlines and, thereby, affected flying operations of particular airlines, which could be treated as abuse of dominant position within meaning of section 4(2) or violation of section 3(3)(b) and (c), Commission could not have returned a prima facie finding that respondent had indulged in anti-competitive activities or abused its dominant position in relevant market

Friday, June 3, 2016

"NCLT constituted with e ect from 1-6-2016"

The Ministry of Corporate A airs (MCA) has issued notifications on 1st June, 2016, constituting the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) with e ect from 1st June, 2016 for the implementation of the provisions of Companies Act, 2013.

Hon’ble Justice S. J. Mukhopadhaya, Judge (Retd), Supreme Court of India has joined as the Chairperson of NCLAT while Hon’ble Justice M. M. Kumar, Judge (Retd), has joined as the President, NCLT.

Initially, the NCLT will have eleven branches – two in New Delhi and one each in Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. Overall NCLT will have 21 benches and 63 members.

Thursday, June 2, 2016

DGFT defines e-Commerce for Merchandise Export India Scheme

The Foreign Trade Policy of India embarks a structure and environment for uplifting the export of goods and services. It is designed to lay emphasis on generation of employment and increasing value addition in the country to align its objectives with the "Make in India" vision of our Hon'ble Prime Minister. The government has considered extending its support to both the manufacturing and services sector, with special emphasis on improving "Ease of Doing Business in India".
The Foreign TradePolicy 2015-201 (hereinafter called as "FTP 2015-20"), introduced 2 new schemes for promoting exports in India. The main objective behind introducing the new schemes was to provide reward to exporters to offset infrastructural inefficiencies and associated costs involved and also to provide exporters a level playing field.

No denial of indexation benefit at assessment stage just because long-term capital gain wasn't declared in ITR

a) The assessee invested certain amount in mutual fund units of HSBC and earned long-term capital gain on its redemption. He had not declared the said long-term capital gain in the return of income.

b) During the course of assessment proceedings, it offered to pay tax on the long-term capital gain (LTCG). The Assessing O􀁹icer (AO) added LTCG and brought it to tax at special rate of 20 per cent without giving the benefit of cost inflation indexation.

c) Commissioner (Appeals) upheld the addition made by the AO. He further held that since the assessee had not disclosed the long-term capital gain in the return of income filed, AO was free to adopt either method with or without applying cost inflation index, whichever is favourable to revenue.

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

Tribunal held in favour of assessee as under

1) As per section 112(1)(a), any income arising to an individual from transfer of long-term capital asset is chargeable at the rate of 20% after allowing the benefit of the cost inflation indexation as provided in the second proviso to section 48. However, with respect to the income arising from the transfer of listed securities or units or zero coupon bonds, it shall be chargeable at the rate of 10% without applying cost inflation index.