Excise Duty on Jewellery – 15 things you should know

The Central Government proposed to impose excise duty on manufacturing of jewellery except silver jewellery (other than studded with diamond and precious stones) in the Union Budget. However, the jewellers protested against such levy of excise duty. They went on strike across the Country demanding withdrawal of excise duty levy on jewellery. Finally the Govt. did not change its stance and retained such levy in the Finance Act, 2016.

Now the rate of excise duty on jewellery is 1% if assessee does not avail of any credit on inputs and capital goods. However, the rate of excise duty will be raised to 12.5% if assessee avails of credit on inputs and capital goods. Recently the CBEC has issued set of Circulars and Notifications with regard to excise duty on

Jewellery. Key takeaways from such Circulars/Notifications are given here under:

Prepayment charges on home loans are deductible as 'interest' under Sec. 24(b): Mumbai ITAT

Facts:

a) The assessee had been claiming deduction on account of payment of interest to six bankers from whom the assessee had taken loan for construction of property.

b) The assessee took fresh loan from Axis Bank which was utilized for exclusive purpose of repayment of loans to the aforesaid six parties. In the process of change over of lender, it paid prepayment charges and processing charges to these six bankers.

c) It claimed deduction of such prepayment charges and processing charges under Section 24(b). The AO disallowed assessee's claim. The CIT(Appeals) upheld order of AO. The aggrievedassessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1) The only issue that needed to be decided was whether 'pre -payment charges' and 'processing fee' shall form part of 'interest' under section 24(b). The term 'interest' has been defined in section 2(28A) as under:

“Interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized”

Trust letting out its auditorium for marriage functions wasn't entitled to sec. 11 relief

Facts:

a) The assessee-trust was formed with the main objective of alleviating human suffering, eradication of illiteracy, poverty and imparting of sound education with opportunities for research. It was running an Auditorium in the name of community hall which was given on rent for different commercial activities like marriage functions, exhibition, etc.

b) The assessee claimed that the income earned from auditorium was not a business income and should be exempted under section 11 because the same income was used for the charitable purpose of the trust.

c) The AO denied such claim of exemption under section 11. The CIT(Appeals) confirmed the additions made by the AO. Aggrieved-assessee filed the instant appeal. 

The ITAT held as under:

Duty paid using DEPB scrip is also eligible for duty drawback: HC

FACTS

(a) Assessee was manufacturer and exporter of goods. It imported raw material and paid Basic Customs Duty using DEPB scrip. It claimed duty drawback of basic customs duty after exporting goods.

(b) The department denied its claim on the ground that the duty was not paid in cash but through DEPB scrip. Further, department also contended that the imports made under DEPB scheme were exempt from payment of customs duty and therefore, it could not be stated that the imports had suffered customs duty. But assessee was of the view that payment through DEPB scrip would also deemed as 'payment of duty' and it was eligible for drawback. 

The High Court held as under:

Govt. to allot PAN and TAN in one day through paperless hassle free process

Govt. has enabled filing of PAN and TAN application via digital signature certificates on the portals of PAN Service provides (i.e., M/s NSDL eGov and M/s UTIITSL). Under the new process PAN and TAN will be allotted to companies within one day after completion of valid on-line application 

Similarly, a new Aadhaar e-Signature based application process for Individual PAN applicants has been made available on the portals of PAN service providers M/s NSDL eGov.

The URL links for the above applications are available in ‘important links’ on the homepage of the departmental website ‘incometaxindia.gov.in’.

Introduction of Aadhaar based e-Signature not only ensures paperless hassle free PAN application process but also seeding of Aadhaar in PAN which will curb the problem of duplicate PAN to a great extent.

No Sec. 69C additions when assessee is covered by presumptive taxation Scheme of Sec. 44AD

Facts:

a) The assessee, being a civil contractor, had declared its profits under section 44AD. The Assessing O􀁹icer made additions under Section 69C for unexplained expenditure.

b) The assessee was of the view that the AO could not disturb the profits declared as per the scheme of presumptive taxation. The CIT(Appeals) dismissed this ground of appeal and upheld the additions made by AO.

c) The aggrieved-assessee filed the instant appeal.

The ITAT held as under:

1) The provisions of the section 44AD are quite unambiguous to the effect that in case of an eligible business based on the gross receipts/total turnover, the income under the head 'profits & gains of business' shall be deemed to be @ 8% or any higher amount. It is undisputed that 'deemed' means presuming the existence of something which actually is not.

FAQs on Income-tax Returns for Assessment Year 2016-17

The deadline for filing Income-tax return for financial year 2015-16 is around the corner. It marks the beginning of worries among taxpayers as various doubts arise in their minds. The CBDT has issued various notifications, circulars and instructions to bring clarity among taxpayers so as to achieve maximum filing of income-tax returns. FAQs may help you to clear all your confusions and file returns timely to avoid last minute hassles.

Few FAQs are listed hereunder:

1. Do I need to furnish details of my assets and liabilities in ITR 1?

2. Whether a firm can file ITR-4S for presumptive income?

3. I am an Individual and resident of India. Do I need to file return if my income is below taxable limit but I am having an account in a foreign bank?

4. I am a resident individual and have income from any source outside India. Whether I can file my income-tax return in paper mode?

Click here to view all FAQs

Prize money paid to service provider for good performance isn't liable to service tax

Facts:

a. Assessee was a registered service provider under the category of ‘site formation and clearance and excavation services’. It was discharging its service tax liability on basis of bills raised and amount paid by the service recipient.

b. One service recipient provided specific quantities of explosives and diesel oils for rendering services. There was agreement that if assessee used quantity of explosives and diesels below agreed quantity, it would be paid bonus/incentive by the service recipient.

c. Revenue contended that explosives and diesel oils which were provided free of cost and amount of bonus paid in shape of incentives would form part of assessable value of services. Assessee did not pay service tax on aforesaid amount and a show cause notice was issued to it.

No denial of Sec. 54F relief if taxpayer is unable to get possession of flat due to builder’s fault

Section 54F relief cannot be denied to assessee when he has invested entire sales consideration in purchase of residential house but he is unable to get possession of flat, which is under construction, due to fault of builder.

The issue before the ITAT was:

Whether Section 54F relief could be denied when assessee was not able to get the title of the flat or unable to get possession of the flat, which was under construction, due to fault of the Builder?

The ITAT held as under :

Commercial expediency of loan to AE not relevant for computing ALP of interest: ITAT Special Bench

The issue before the special bench of ITAT was as under:

Whether ALP adjustment was required to be made in respect of interest free loan granted by the assessee, a non-resident company, to its wholly owned subsidiary in India?

The Special Bench of Kolkata ITAT held as under:

1) The commercial expediency of a loan to subsidiary is wholly irrelevant in ascertaining arm’s length interest on such a loan. There is indeed no bar on anyone advancing an interest free loans to anyone but when such transactions are covered by the international transactions between the associated enterprises, Section 92 of the Act mandates that the income from such transactions is to be computed on the basis of arm’s length price.

2) The assessee is not really correct in contending that when the assessee has not reported any income from a particular international transaction, the ALP adjustment cannot compute the same. The computation of income on the basis of arm’s length price does not require that the assessee must report some income first, and only then it can be adjusted for the ALP. Section 92(1) is not an adjustment mechanism; it is a computation mechanism. The arm’s length price principle requires that an arm’s length price is assigned to the transactions between the associated enterprise, and if the income in computed, if any, on the basis of the

arm’s length price so assigned.