Here is the analysis of Union budget 2016-17 by Zawar Associates, Aurangabad:

Dear Friends,
               Here is the analysis of Union budget 2016-17 by Zawar Associates, Aurangabad:

Tax Proposals:
Changes in Direct Taxes

2. Limit for Tax Audit for Professionals is Rs. 50 lakh
3. Professionals deemed profit will be 50%.
4. 80JJAA will be available to all Tax Audit assesses.
5. Accelerated depr will be limited to max 40%
6. New mfg co. to be taxed at 25% + surcharge and cess (effective 29 %)
7. 100% deduction of profits for 3 yrs for startups. MAT will apply in such cases.
8. No tax for profits to housing project for flats upto 30 sq. mtrs in 4 metro cities; and 60 sq. mtrs in other cities.
9. Surcharge @ 15% on income > Rs. 1 crore.
10. TCS @ 1 % on purchase of luxury cars > Rs. 10 lakh.
11. TCS 1% on  purchase of goods and services in cash > Rs. 2 lakh.
12. STT on 'Options' will be 0.05%. (Existing 0.017%)
13. Interest on IT refund @ 9% p.a against present rate of 6% p.a
14. No need to deduct TDS @ 20% of assessee having no PAN if other specified documents are provided.
15. Tax exemption limit increased to Rs 300000 for persons having taxable income < Rs. 500000.
16. Limit of deduction U/s 80 GG is increased from Rs. 24000/- to Rs. 60000/-.
17. No Capital Gain tax if the capital gain amount is invested in start up.
18. House purchased for < Rs. 50 lacs,  loan < Rs.35 lacs, 1st time purchase, Additional deduction of Rs. 50000/- in housing loan interest.
19. Voluntary Declaration Scheme - Undisclosed income can be disclosed by paying tax @ 45% (No scrutiny or enquires will be held for the same).
20. Corporate tax reduced to 29% for small business having turnover less than Rs. 5 Crores.
21. Concealment penalty @ 50% for under reporting of Income and 200% for Misreporting of Facts.
22. Tax on Dividend @ 10% if dividend received > Rs. 10 lakhs.
23. No CG tax on realization of Sovereign Gold Bond issued by RBI.
24. No CG tax on transfer of units in merger or consolidation of plans of a mutual fund.
25. No CG tax on realization of Deposit issued under Gold Monetization Scheme, 2015.

Changes in Indirect Taxes
1. No GST brought in this session.
2. Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.
3. Increase in Excise duty for Tobacco Products (except Beedi) 10-15%.
4. Excise duty @ 1%   (If input credit not taken) and @ 12.5% (if credit taken) on artificial jewellery, diamond jewellery, and all kind of designer jewellery.
5. 11 new benches will be set-up at CESTAT i.e. Customs, Excise and Service Tax Appellate Tribunal for faster Tax assessments.
6. Krishi Kalyan Cess will be charged on all types of taxable services @ 0.5%. Hence effective rate of Service Tax would be 15%.
7. No Service Tax will be charged for houses built in less than 60 sq. Meter.
8. Service tax exemptions to Rural Electrification Plans.
9. No service tax will be levied on General Insurance Service in case of Nirbhaya Health Insurance.

-Regards
CA. C. V. PAWAR

BUDGET - HIDDEN AMENDMENTS AFFECTING SMALL PRACTITIONERS:

BUDGET - HIDDEN AMENDMENTS AFFECTING SMALL PRACTITIONERS:

1) In section 50C saving provisos similar to section 43CA (3) and (4) added as follows w.e.f. A.Y. 17-18:

"Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:

Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer."

2) No loss shall be allowed to set off from income chargeable u/s 115BBE (i.e. income added u/s 68-69-69A-69B-69C-69D) W.E.F. A.Y. 17-18.

3) Section 139(4) and 139(5) changed as follows:

139(4)- Any person who has not furnished a return within the time allowed to him under
sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.";

It means henceforth belated return must be filed before expiry of relevant ast. year!!!

139(5)- " If any person, having furnished a return under sub-section (1) or sub-section (4), discovers
any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.";

It means, henceforth belated return can also be revised!!!

4) Powers of adjustments by way of 143(1) intimation widened to large extent!!!!

5) TDS related Changes:
i) Section 194C : Threshold increased from 75000 to 100000
ii) Section 194H: Threshold increased from  5000 to 15000
iii) Section 194H: Rate reduced from 10% to 5%
iv) TCS @ 1% introduced on sale of motor vehicles value above Rs. 10 Lacs
v) Existing provision of TCS @1% on sale of bullion, jewellery extended to all goods for sale in cash above Rs. 200000/-
    (Subject to certain conditions, to be prescribed later)

6) Advance tax provision applicable to 44AD income, advance tax to be paid on or before 15th March in single installment.
   (Accordingly interest u/s 234C made applicable on tax on such income u/s 44AD)

ENJOYTHE AMENDMENTS!!!!

-Regards
CA. C. V. PAWAR

Budget Highlights : 2016

Budget Highlights :

Relief under Section 87A proposed to be increased from Rs. 2,000 to Rs. 5,000

Tax proposals will bring additional revenue of Rs. 19,610 crores to Govt. exchequer: FM

No higher withholding tax if non-resident does not have PAN but furnishes an alternative document

FM proposes to rationalize TDS provisions

FM proposes to amend Section 14A; disallowance under Sec. 14A should not increase the actual expenditure

FM proposed to introduce limited period compliance window for domestic taxpayer to declare domestic black Money

11 news benches of CESTAT proposed to be setup

FM has announced introduction of one time dispute resolution Scheme for cases already pending due to retro-amendment

Services provided by EPFO exempted from service tax: FM

A new dispute resolution scheme is introduced, no penalty upto disputed amount of 10 lacs

Services provided by EPFO exempted from service tax: FM

FM proposes to increase excise duty on tobacco products from 10% to 15%

Excise duty on branded ready made garments rised to 6% without input credit from Nil

Surcharge raised from 12% to 15% on incomes above 1 Crore

Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh

Krishi Kalyan Cess 0.5%to be levied on all taxable services

FM has proposed to provide tax exemption on withdrawal of 40% from national pension Scheme at the time of retirement

40% Withdrawal from Super Annuation Funds proposed to be tax exempt

POEM proposed to be deferred by 1 year
Complete pass through proposed for trust of ARCs

Capital gain exemption proposed for investment in start-up

Corporate tax reduced to 29% for small business having turnover less than 5 crores

Reduction in corporate tax - New manufacturing companies after March 1, 2016 have to pay tax at 25%

Presumptive taxation scheme introduced for all professionals with receipts up to Rs. 50 lakhs.

FM increases the turnover limit of presumptive taxation Scheme to 2 crores

Deduction under Section 80GG for individuals paying rent but not receiving HRA proposed to be increased from Rs. 24,000 to Rs. 60,000.

Registration of Companies should be given in one day - Companies Act proposed to be amended

RBI Act to be amended to give statutory backing for monetary policy: FM

Comprehensive Code to be introduced to provide a specialised resolution mechanism for bankruptcy of banks/insurance companies: FM

Direct transfer of subsidies to farmers account will be introduced on pilot basis for fertilizers

RBI Act to be amended for providing framework for Monetary Policy Code: FM

SEBI Act proposed to be amended to provide more numbers of Securities Appellate Tribunal
Amendments proposed to SAFRAESI Act to tackle problem of stressed assets in ARCs

FM proposes various amendments to SARFAESI Act

A comprehensive code to provide bankruptcy resolution mechanism will be presented: FM proposes

100% FDI to be allowed in marketing of food products manufactured and produced in India
Public utility distribution bill to be introduced for resolution of dispute in construction contracts and PPP projects

Amendments to be made in Motor Vehicles Act; Entrepreneurs can ply buses on various routes subject to safety norms

Sec. 80JJAA deduction extended from only manufacturing units to all assessees who are subject to tax audit

Deduction under Section 80JJAA proposed to be extended to all assessee who are subject to tax audit

Govt. will pay 8.33% provident fund for new government employees for first 3 years, 1,000 crore budget proposed

Rs. 1700 crores allocated for Skill India Mission under Pradhan Mantri Kaushal Vikas Yojna
Regulatory framework will be provided to 10 public and 10 private institutions to become world class educational institutions

National SC/ST hub will be created to provide professional support to SC/ST entrepreneurs

Stand up India scheme to promote SC & ST entrepreneur: FM

Certain Dialysis equipment are proposed to be exempted from Basic Custom Duty, Excise Duty and CVD

Govt will launch new health protection scheme to provide health cover of Rs. 1 Lakh

National Dialysis Service program is proposed in all district hospitals

Health Insurance of Rs. 1,00,000 with top up of Rs. 30,000 proposed for senior citizen

New mission to provide LPG connection in name of female poor members, Scheme for 2 years

2,000 Crores allocated to provide LPG connections to poor families: FM

Digital India initiatives - Digital literacy mission for rural India to cover 6,000 additional households: FM

Till Feb 23, 5542 villages have been electrified, which is higher than the work done in last 3 years in aggregate: FM

Rs. 38000 crore proposed to be spent on MANREGA in FY 16-17

Union Budget 2016 built on 9 pillars 1) Agri/Farm and welfare 2) Rural Focus 3) Social Healthcare 4) Education and Job creation 5) Investments to improve quality of Life 6) Infratructure Focus 7) Ease of Business 8) Fiscal discipline

Provision of Rs. 15,000 crores is proposed to reduce burden of farmers loan: FM

Unified agriculture e-market platform will be provided: FM

Finance Minister proposes twofold increase in fund allocation for Pradhanmantri Sadak Yojna

FM: Nominal premium and highest ever compensation in case of crop loss under PM 'Fasal Bima Yojana'

Farm, rural sector, infra, social sector to have more Government expenditure, says FM

We need tax reforms to reduce tax compliances: FM

Govt to focus on passing of GST and Bankruptcy laws: FM Arun Jaitley

Govt. will start initiative to provide free gas connection to BPL families: FM

FM Arun Jaitley: We have bridged the trust deficit created the previous government

Forex reserves at highest level and fiscal deficit has declined: Arun Jaitley

Growth of GDP accelerated, CPI inflation come down: FM

-Regards
CA. C. V. PAWAR

Trade circular 7 T dt 25th Feb 16 issued on the changes in the automation processes and other changes in the procedure.

MVAT Update on e-service:
====================

Trade circular 7 T dt 25th Feb 16 issued on the changes in the automation processes and other changes in the procedure.

Following e services will be offered to dealer through Web portal.
1. Edit of his profile to make certain changes in registration record.

2. Filing returns, audit report,  refund applications application for declaration.
3. Filing of Appeals
4. Appointment of Authorised Representative
5. View his pending recovery assessment
6. Appointment for hearing
7. Clearance certificate
8. Online payment of tax through payment gateway

The new process of registration returns assessment refund appeals is explained in the circular.

Click here for Trade Circular :

https://drive.google.com/file/d/0B8GyRsbVIg8gYm5hb0EzQkFOQms/view?usp=sharing 

-Regards
CA. C. V. PAWAR

ITR Volume 381 : Part 2 (Issue dated : 22-2-2016)

 

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Capital gains --Business--Capital gains or business income--Shares held as stock-in-trade by company belonging to group--Resolution to convert shares into investment--Income from sales within few months--Finding that transaction was collusive--Income assessable as business income--Income-tax Act, 1961, ss. 28, 45-- CIT v. Abhinandan Investment Ltd.(Delhi) . . . 139

Income-tax --General principles--Transactions to evade tax--Principle in McDowell and Co.'s case [1985] 154 ITR 148 (SC) explained-- CIT v. Abhinandan Investment Ltd. (Delhi) . . . 139

Loss --Carry forward and set off--Income from transfer of shares and sale of entitlement to acquire partly convertible debentures--Business income--Loss on sale of entitlement to acquire partly convertible debentures--Transactions among related companies--Transaction collusive--Loss not allowable--Income-tax Act, 1961, s. 28, 45-- CIT v. Sun Investments Ltd.(Delhi) . . . 164

----Loss on sale of entitlement to acquire partly convertible debentures--Finding that loss was contrived--Loss not allowable--Income-tax Act, 1961--CIT v. Abhinandan Investment Ltd. (Delhi) . . . 139

Non-resident --Income deemed to accrue or arise in India--Permanent establishment in India--Income from permanent establishment assessable as business income--Receipts in US dollars not taxable--Income-tax Act, 1961, s. 9(1)-- DIT International Taxation v. J Ray McDermott Eastern Hemisphere Ltd. (Bom) . . . 137

 

PRINT EDITION

ITR Volume 381 : Part 2 (Issue dated : 22-2-2016)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business --Business income--Computation of income from distribution of feature films--Effect of rule 9B--Distribution rights acquired on basis of minimum guarantee--Amount paid to be taken as cost of acquisition of distribution rights--Cost of acquisition would not include publicity expenses or expenditure incurred for preparation of positive prints of film--Income-tax Act, 1961, s. 28--Income-tax Rules, 1962, r. 9B-- Honey Enterprises v. CIT (Delhi) . . . 258

----Business income--Computation of income from distribution of feature films--Films not released for exhibition at least one hundred eighty days before end of relevant previous year--Cost of acquisition of distribution rights not exceeding amount realised allowable as deduction--Income-tax Act, 1961, s. 28--Income-tax Rules, 1962, r. 9B-- Honey Enterprisesv. CIT (Delhi) . . . 258

Business expenditure --Disallowance of expenditure--Payments exceeding prescribed limit otherwise than by crossed cheque or crossed bank draft--Exclusion from disallowance--Scope of rule 6DD and Circular No. 220 dated 31-5-1977--Rule 6DD allows exclusion where payment made in unavoidable circumstances--Circumstances enumerated in circular not exhaustive--Practicability of payment to be judged from point of view of businessman--Genuineness of payments and identities of payees established--Circumstances indicating unavoidable circumstances--Payments cannot be disallowed--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD--Circular No. 220 dated 31-5-1977-- Honey Enterprises v. CIT (Delhi) . . . 258

----Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source--Income-tax Act, 1961, ss. 40(a)(i), 172, 195-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303

----Interest on borrowed capital--Assessee having sufficient interest-free advances from its directors, shareholders and members of their families to cover interest-free advances made by company--Interest on borrowings not to be disallowed--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Kapsons Associates (P&H) . . . 204

----Interest on borrowed capital--Effect of Explanation 8 to section 43(1)--Borrowed capital used for construction of hotels as part of expansion of business--Interest deductible--Income-tax Act, 1961, ss. 36(1)(iii), 37-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222

----Investments in shops and penthouses--Merely because some properties were rented it cannot be inferred that investments in other properties not for business purpose--Assessee can give its properties on rent and acquire further properties towards investment--Deduction allowable--Income-tax Act, 1961-- CIT v. Kapsons Associates (P&H) . . . 204

Capital gains --Exemption--Sale of long-term capital asset and purchase of residential house within prescribed time--Finding that shares had been held for prescribed period before being sold and that assessee did not own another residential house--Assessee entitled to exemption under section 54F--Income-tax Act, 1961, s. 54F-- CIT v. Kapil Nagpal (Delhi) . . . 351

----Transfer--Conversion of firm into company--Shareholders of company consisting of erstwhile partners of firm--Allotment of shares to partners--No accrual of full value of consideration to transferor and no distribution of capital assets--Section 45(1) or (4) not applicable--No accrual of capital gains--Income-tax Act, 1961, s. 45(1), (4)-- Deputy CIT v.R. L. Kalathia and Co. (Guj) . . . 180

Cash credit --Amounts claimed to be gifts--Tribunal finding that creditworthiness of donors and genuineness of gifts not proved--Amounts assessable under section 68--Income-tax Act, 1961, s. 68-- Laxmandas Sujandas Dalpat v. ITO (Guj) . . . 283

Collection of tax at source --Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof--Income-tax Act, 1961, ss. 201(1), (1A), 206C(1)--Income-tax Rules, 1962, r. 37C-- CIT (TDS) v. Priya Blue Industries P. Ltd. (Guj) . . . 210

Income --Computation of income--Disallowance of expenditure relating to exempt income--Investments in mutual funds and equity funds--Assessee claiming investments to be old made out of capital and outstanding reserves of company and no separate amount borrowed for making such investments--Disallowance only after recording satisfaction that claim not correct--Assessing Officer not recording any reasons for rejecting claim of assessee--Finding of fact recorded by Commissioner (Appeals) and Appellate Tribunal not perverse--No substantial question of law arose for consideration--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- CIT v. Kapsons Associates (P&H) . . . 204

Income-tax --General principles--Res judicata not applicable-- Honey Enterprises v. CIT(Delhi) . . . 258

International transactions --Arm's length price--Selection of comparables--Companies large and distinct with different area of development of services--Cannot be benchmarked or equated with assessee--Exclusion of three companies based on appreciation of evidence on record--Concurrent findings of fact by authorities below cannot be re-appreciated in appeal--Income-tax Act, 1961, s. 92CA-- CIT v. Pentair Water India Pvt. Ltd. (Bom) . . . 216

Precedent --Effect of decision of Supreme Court in Deputy CIT v. Core Health Care Ltd.[2008] 298 ITR 194 (SC)-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222

Transfer pricing --International transactions--Arm's length price--Determination--Advertising, marketing and promotion expenses--No evidence to show existence of international transaction between assessee and its foreign associated enterprise as regards such expenses--Question of determination of arm's length price does not arise--Incidental benefit to foreign associated enterprise--Not to be concluded as brand building exercise--Income-tax Act, 1961, s. 92B-- Bausch and Lomb Eyecare (India) Pvt. Ltd. v. Addl. CIT (Delhi) . . . 227

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 14A --Income--Computation of income--Disallowance of expenditure relating to exempt income--Investments in mutual funds and equity funds--Assessee claiming investments to be old made out of capital and outstanding reserves of company and no separate amount borrowed for making such investments--Disallowance only after recording satisfaction that claim not correct--Assessing Officer not recording any reasons for rejecting claim of assessee--Finding of fact recorded by Commissioner (Appeals) and Appellate Tribunal not perverse--No substantial question of law arose for consideration-- CIT v. Kapsons Associates (P&H) . . . 204

S. 28 --Business--Business income--Computation of income from distribution of feature films--Effect of rule 9B--Distribution rights acquired on basis of minimum guarantee--Amount paid to be taken as cost of acquisition of distribution rights--Cost of acquisition would not include publicity expenses or expenditure incurred for preparation of positive prints of film-- Honey Enterprises v. CIT (Delhi) . . . 258

----Business--Business income--Computation of income from distribution of feature films--Films not released for exhibition at least one hundred eighty days before end of relevant previous year--Cost of acquisition of distribution rights not exceeding amount realised allowable as deduction-- Honey Enterprises v. CIT (Delhi) . . . 258

S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Assessee having sufficient interest-free advances from its directors, shareholders and members of their families to cover interest-free advances made by company--Interest on borrowings not to be disallowed-- CIT v. Kapsons Associates (P&H) . . . 204

----Business expenditure--Interest on borrowed capital--Effect of Explanation 8 to section 43(1)--Borrowed capital used for construction of hotels as part of expansion of business--Interest deductible-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222

S. 37 --Business expenditure--Interest on borrowed capital--Effect of Explanation 8 to section 43(1)--Borrowed capital used for construction of hotels as part of expansion of business--Interest deductible-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303

S. 40A(3) --Business expenditure--Disallowance of expenditure--Payments exceeding prescribed limit otherwise than by crossed cheque or crossed bank draft--Exclusion from disallowance--Scope of rule 6DD and Circular No. 220 dated 31-5-1977--Rule 6DD allows exclusion where payment made in unavoidable circumstances--Circumstances enumerated in circular not exhaustive--Practicability of payment to be judged from point of view of businessman--Genuineness of payments and identities of payees established--Circumstances indicating unavoidable circumstances--Payments cannot be disallowed--Honey Enterprises v. CIT (Delhi) . . . 258

S. 45(1) --Capital gains--Transfer--Conversion of firm into company--Shareholders of company consisting of erstwhile partners of firm--Allotment of shares to partners--No accrual of full value of consideration to transferor and no distribution of capital assets--Section 45(1) or (4) not applicable--No accrual of capital gains-- Deputy CIT v. R. L. Kalathia and Co. (Guj) . . . 180

S. 45(4) --Capital gains--Transfer--Conversion of firm into company--Shareholders of company consisting of erstwhile partners of firm--Allotment of shares to partners--No accrual of full value of consideration to transferor and no distribution of capital assets--Section 45(1) or (4) not applicable--No accrual of capital gains-- Deputy CIT v. R. L. Kalathia and Co. (Guj) . . . 180

S. 54F --Capital gains--Exemption--Sale of long-term capital asset and purchase of residential house within prescribed time--Finding that shares had been held for prescribed period before being sold and that assessee did not own another residential house--Assessee entitled to exemption under section 54F-- CIT v. Kapil Nagpal (Delhi) . . . 351

S. 68 --Cash credit--Amounts claimed to be gifts--Tribunal finding that creditworthiness of donors and genuineness of gifts not proved--Amounts assessable under section 68--Laxmandas Sujandas Dalpat v. ITO (Guj) . . . 283

S. 92B --Transfer pricing--International transactions--Arm's length price--Determination--Advertising, marketing and promotion expenses--No evidence to show existence of international transaction between assessee and its foreign associated enterprise as regards such expenses--Question of determination of arm's length price does not arise--Incidental benefit to foreign associated enterprise--Not to be concluded as brand building exercise--Bausch and Lomb Eyecare (India) Pvt. Ltd. v. Addl. CIT (Delhi) . . . 227

S. 92CA --International transactions--Arm's length price--Selection of comparables--Companies large and distinct with different area of development of services--Cannot be benchmarked or equated with assessee--Exclusion of three companies based on appreciation of evidence on record--Concurrent findings of fact by authorities below cannot be re-appreciated in appeal-- CIT v. Pentair Water India Pvt. Ltd. (Bom) . . . 216

S. 172 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303

S. 195 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303

S. 201(1) --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210

S. 201(1A) --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210

S. 206C(1) --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210

 

Income-tax Rules, 1962 :

R. 6DD --Business expenditure--Disallowance of expenditure--Payments exceeding prescribed limit otherwise than by crossed cheque or crossed bank draft--Exclusion from disallowance--Scope of rule 6DD and Circular No. 220 dated 31-5-1977--Rule 6DD allows exclusion where payment made in unavoidable circumstances--Circumstances enumerated in circular not exhaustive--Practicability of payment to be judged from point of view of businessman--Genuineness of payments and identities of payees established--Circumstances indicating unavoidable circumstances--Payments cannot be disallowed--Honey Enterprises v. CIT (Delhi) . . . 258

R. 8D --Income--Computation of income--Disallowance of expenditure relating to exempt income--Investments in mutual funds and equity funds--Assessee claiming investments to be old made out of capital and outstanding reserves of company and no separate amount borrowed for making such investments--Disallowance only after recording satisfaction that claim not correct--Assessing Officer not recording any reasons for rejecting claim of assessee--Finding of fact recorded by Commissioner (Appeals) and Appellate Tribunal not perverse--No substantial question of law arose for consideration-- CIT v. Kapsons Associates (P&H) . . . 204

R. 9B --Business--Business income--Computation of income from distribution of feature films--Effect of rule 9B--Distribution rights acquired on basis of minimum guarantee--Amount paid to be taken as cost of acquisition of distribution rights--Cost of acquisition would not include publicity expenses or expenditure incurred for preparation of positive prints of film-- Honey Enterprises v. CIT (Delhi) . . . 258

----Business--Business income--Computation of income from distribution of feature films--Films not released for exhibition at least one hundred eighty days before end of relevant previous year--Cost of acquisition of distribution rights not exceeding amount realised allowable as deduction-- Honey Enterprises v. CIT (Delhi) . . . 258

R. 37C --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210

 

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>

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ITR (TRIB) Volume 46 : Part 1 (Issue dated : 22-2-2016)

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Reassessment --Condition precedent--Formation of belief that income had escaped assessment--Reopening of assessment based on information from persons providing accommodation entries to assessee--Assessing Officer having no copies of statement or other details or document to form belief independently that income escaped assessment--Reopening of assessment without application of mind and examination of facts--Reopening of assessment invalid and bad in law--Income-tax Act, 1961, ss. 147, 148-- Unique Metal Industries v . ITO (Delhi) . . . 108

----Reopening of assessment based on information from persons providing accommodation entries to assessee--Failure to permit cross examination and furnish details to assessee--Assessee able to co-relate each transaction of purchase with sales--Restricting disallowance to 20 per cent. not sustainable--Income-tax Act, 1961-- Unique Metal Industries v . ITO (Delhi) . . . 108

Search and seizure --Assessment of third person--Notice under section 153C--Condition precedent--Satisfaction to be recorded by Assessing Officer of person in respect of whom search conducted--Cheque issued by assessee found on search not pertaining to any of years for which notice issued--Cheque "belongs to" person upon whom drawn and not to assessee who issued cheque--Condition for issue of notice under section 153C not satisfied--Income-tax Act, 1961, s. 153C-- Smt. Rekhaben Thakkar v . Asst. CIT (Ahd) . . . 97

 

PRINT EDITION

Volume 46 : Part 1 (Issue dated : 22-2-2016)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Amortisation of preliminary expenses --Expenses on initial public offer--Allowability of claim attaining finality in assessee's own case for same assessment year by Tribunal--Question not open to further adjudication--Assessment in pursuance of revision merely a ministerial task--Income-tax Act, 1961, ss. 35D, 263-- Yes Bank Ltd. v. Asst. CIT (Mumbai) . . . 88

Appeal to Commissioner (Appeals) --Additional evidence--Deduction of discount on issue of debentures on proportionate basis consequent to assessment order in case of subsidiary--Assessee prevented by reasonable cause from making claim before Assessing Officer during assessment proceedings--Additional ground admitted--Matter remanded--Income-tax Act, 1961, s. 246A-- Deputy CIT v. Rain Commodities Ltd.
(Hyd) . . . 1

Banks --Valuation of stock--Provision for revaluation of securities transferred from category "held to maturity" to "available for sale"--Deductible--Income-tax Act, 1961-- Yes Bank Ltd. v. Deputy CIT (Mumbai) . . . 121

Business expenditure --Capital or revenue expenditure--Amortisation of preliminary expenses--Initial public offer--Expenses not incurred prior to commencement of business--Not a case of setting up new business--Expansion only acquisition of existing undertaking--Expenses do not qualify for amortisation--Expenses not also allowable as revenue expenditure--Income-tax Act, 1961, ss. 35D, 37-- Deputy CIT v . Accel Frontline Ltd.(Chennai) . . . 138

----Commercial expediency--Nexus between expenditure and purpose of business--Business need not necessarily be business of assessee--No role of Revenue to decide how much is reasonable expenditure--Debt restructuring scheme pursuant to transfer of business from subsidiary to assessee--Transfer of liability also to be considered part of transaction of transfer of business to assessee--Amount paid to bank as one-time settlement on behalf of subsidiary--Business purpose of assessee--Revenue expenditure--Income-tax Act, 1961, s. 37-- Deputy CIT v. Rain Commodities Ltd.
(Hyd) . . . 1

----Deduction only on actual payment--Interest on sales tax deferment--Assessing Officer to verify difference in liability recorded in books of subsidiary and actual liability of sales tax--Matter remanded--Income-tax Act, 1961, s. 43B-- Deputy CIT v. Rain Commodities Ltd.(Hyd) . . . 1

Capital gains --Cost of improvement--Legal expenses to protect investments of assessee--Should be added to cost of shares as cost of improvement--Income-tax Act, 1961-- Vaipa Pharmaceuticals P. Ltd. v. Asst. CIT (Mumbai) . . . 109

----Long-term capital gains--Maximum marginal rate--Capital gains arising as a consequence of contravention of section 13(1)(c)--Taxable at maximum marginal rate--Income-tax Act, 1961, ss. 2(29C), 112, 164(2)-- Deputy DIT (Exemptions)-I v. India Cements Educational Society (Chennai) . . . 80

Capital or revenue expenditure --Tests--Expenditure on showroom maintenance and interior furnishing in leased premises--Nature of civil works not stated--Matter remanded--Income-tax Act, 1961-- K. R. Bakes P. Ltd. v. Asst. CIT
(Chennai) . . . 73

Capital or revenue loss --Banking company--Loss on revaluation of securities--Intention of assessee at time of purchase of securities that they were to be held "available for sale"--Investments to be treated as stock-in-trade--Loss arising on account of year end revaluation of securities to be allowed--Matter remanded for fresh consideration--Income-tax Act, 1961--Yes Bank Ltd. v. Deputy CIT (Mumbai) . . . 121

Charitable purpose --Exemption--Capital gains arising to trust on sale of land advanced to company--Money returned not invested within previous year--Trust not entitled to exemption--Income-tax Act, 1961, s. 11(1)(a)-- Deputy DIT (Exemptions)-I v. India Cements Educational Society (Chennai) . . . 80

----Exemption--Funds invested in limited company where trustee was managing director and his wife was a director--Trust not entitled to exemption--Income-tax Act, 1961, s. 11--Deputy DIT (Exemptions)-I v. India Cements Educational Society
(Chennai) . . . 80

Depreciation --Application software--Actual cost of assets acquired to be considered in terms of Explanation 3 to section 43(1)--Assessee not entitled to depreciation because already claimed by previous owner--Restricting depreciation at twenty-five per cent. on intellectual property rights and sixty per cent. on other software--Reasonable--Income-tax Act, 1961, s. 43(1)-- Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

----Leasehold premises--Temporary wooden structures--Assessing Officer to consider whether expenditure is revenue or capital in nature and decide afresh--Income-tax Act, 1961, s. 32(1)-- Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

Exemption --Export of computer software--Apportionment of expenses on basis of turnover of exempt unit and other unit--Fair--Income-tax Act, 1961-- Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

Housing project --Special deduction--Built-up area means inner measurement of residential unit at floor level including projections and balconies as increased by thickness of walls--Does not include common areas shared with other residential units--Open terrace not covered within meaning of built-up area--To be excluded from built-up area--Income-tax Act, 1961, s. 80-IB(10)-- Ashiana Amar Developers v. ITO
(Kolkata) . . . 17

----Special deduction--Project completed within allotted time and possession certificate produced--Completion certificate--Local authority instructing assessee to take completion certificate from registered architect for official purposes--Assessing Officer expecting assessee to produce completion certificate from local authority--Impossible of compliance--Income-tax Act, 1961, s. 80-IB(10)-- Ashiana Amar Developers v. ITO
(Kolkata) . . . 17

----Special deduction--Residential and commercial properties independent units and belonging to two independent entities--Deduction to be claimed unit-wise--Denial of deduction on ground commercial area in project more than three per cent.--Not justified--Income-tax Act, 1961, s. 80-IB(10)-- Ashiana Amar Developers v. ITO
(Kolkata) . . . 17

Income --Accrual of income--Method of accounting--Remuneration for services rendered by assessee in connection with project--Quantification of actual remuneration payable to assessee depending on completion of project--Amount received by assessee during year only advance--Assessee justified in adopting project completion method for accounting receipt--Amount not to be taxed in year in question--Income-tax Act, 1961-- ITO v. Trendsetter Construction P. Ltd. (Mumbai) . . . 132

----Computation--Disallowance of expenditure relating to exempt income--No borrowed funds utilised for earning exempt income--Dividend directly credited in bank account and no expenditure claimed--No disallowance--Disallowance in any case not to exceed exempt income--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Daga Global Chemicals P. Ltd. v. Asst. CIT (Mumbai) . . . 70

----Disallowance of expenditure in relation to exempt income--No interest expenditure incurred for earning tax-free dividend income--Disallowance not proper--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Yes Bank Ltd. v. Deputy CIT
(Mumbai) . . . 121

----Computation--Disallowance of expenditure relating to exempt income--Provision prescribing disallowance inserted with effect from 24-3-2008 not retrospective--Cannot be applied for earlier assessment year--Assessing Officer directed to disallow 2 per cent. of exempted income for earlier year--Disallowance not to exceed exempt income for assessment years 2008-09 and 2009-10--Income-tax Act, 1961, s. 14A-- Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

Interest on borrowed capital --Interest-free advances to subsidiary--Capital financing not international transaction as law then in force--Nexus established by assessee--No interest burden on assessee by virtue of loan advanced to its subsidiary--No such interest could be attributed in hands of assessee--Income-tax Act, 1961-- Deputy CIT v. Rain Commodities Ltd. (Hyd) . . . 1

Penalty --Failure to deduct tax at source--Assessee, State Electricity Board, transmitting power through transmission network of Power Grid Corporation--Payment of wheeling and transmission charges to Corporation--Corporation paying tax--Assessee not in default--Reasonable cause for not deducting tax at source--Penalty cannot be levied--Income-tax Act, 1961, ss. 201, 271C-- Himachal Pradesh State Electricity Board v. Addl. CIT (TDS)(Chandigarh) . . . 113

Revision --Commissioner--Erroneous and prejudicial to Revenue--Assessing Officer failing to record in assessment order reasons for conclusion reached on issues arising for consideration--Revision directing fresh assessment proper--Income-tax Act, 1961, s. 263--Medall Health Care P. Ltd. v. Principal CIT (Chennai) . . . 36

----Commissioner--Powers--No power to decide issue adjudicated by appellate authorities--Search and seizure--Original seized document relating to agreement for purchase of land already considered by appellate authorities against Department--Copy of same document not admissible in evidence in subsequent revision proceedings--Income-tax Act, 1961, s. 263--R. P. Import and Export P. Ltd. v. Principal CIT
(Chandigarh) . . . 97

----Scope of proceedings--Failure by assessee to challenge addition in original assessment--Addition cannot be challenged in appeal against order passed pursuant to revision--Income-tax Act, 1961, ss. 143(3), 263-- Deputy CIT v. Accel Frontline Ltd.
(Chennai) . . . 138

Transfer pricing --International transaction--Arm's length price--Determination--Assessee falling within category of companies having turnover between Rs. 1 crore and Rs. 200 crores--Companies having turnover of more than Rs. 200 crores to be eliminated from list of comparables--Comparables having related party transactions of up to 15 per cent. of total revenues can be considered--Income-tax Act, 1961, s. 92CA-- Obopay Mobile Technology India P. Ltd. v. Deputy CIT (Bang) . . . 42

----International transaction--Arm's length price--Determination--Foreign exchange fluctuation gains--To be added to operating revenue--Income-tax Act, 1961, s. 92CA-- Obopay Mobile Technology India P. Ltd. v. Deputy CIT
(Bang) . . . 42

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 2(29C) --Capital gains--Long-term capital gains--Maximum marginal rate--Capital gains arising as a consequence of contravention of section 13(1)(c)--Taxable at maximum marginal rate-- Deputy DIT (Exemptions)-I v. India Cements Educational Society (Chennai) . . . 80

S. 11 --Charitable purpose--Exemption--Funds invested in limited company where trustee was managing director and his wife was a director--Trust not entitled to exemption-- Deputy DIT (Exemptions)-I v. India Cements Educational Society
(Chennai) . . . 80

S. 11(1)(a) --Charitable purpose--Exemption--Capital gains arising to trust on sale of land advanced to company--Money returned not invested within previous year--Trust not entitled to exemption-- Deputy DIT (Exemptions)-I v. India Cements Educational Society (Chennai) . . . 80

S. 14A --Income--Computation--Disallowance of expenditure relating to exempt income--No borrowed funds utilised for earning exempt income--Dividend directly credited in bank account and no expenditure claimed--No disallowance--Disallowance in any case not to exceed exempt income-- Daga Global Chemicals P. Ltd. v. Asst. CIT (Mumbai) . . . 70

----Income--Computation--Disallowance of expenditure relating to exempt income--Provision prescribing disallowance inserted with effect from 24-3-2008 not retrospective--Cannot be applied for earlier assessment year--Assessing Officer directed to disallow 2 per cent. of exempted income for earlier year--Disallowance not to exceed exempt income for assessment years 2008-09 and 2009-10-- Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

----Income--Disallowance of expenditure in relation to exempt income--No interest expenditure incurred for earning tax-free dividend income--Disallowance not proper-- Yes Bank Ltd. v. Deputy CIT (Mumbai) . . . 121

S. 32(1) --Depreciation--Leasehold premises--Temporary wooden structures--Assessing Officer to consider whether expenditure is revenue or capital in nature and decide afresh--Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

S. 35D --Amortisation of preliminary expenses--Expenses on initial public offer--Allowability of claim attaining finality in assessee's own case for same assessment year by Tribunal--Question not open to further adjudication--Assessment in pursuance of revision merely a ministerial task-- Yes Bank Ltd. v. Asst. CIT (Mumbai) . . . 88

----Business expenditure--Capital or revenue expenditure--Amortisation of preliminary expenses--Initial public offer--Expenses not incurred prior to commencement of business--Not a case of setting up new business--Expansion only acquisition of existing undertaking--Expenses do not qualify for amortisation--Expenses not also allowable as revenue expenditure-- Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

S. 37 --Business expenditure--Capital or revenue expenditure--Amortisation of preliminary expenses--Initial public offer--Expenses not incurred prior to commencement of business--Not a case of setting up new business--Expansion only acquisition of existing undertaking--Expenses do not qualify for amortisation--Expenses not also allowable as revenue expenditure-- Deputy CIT v . Accel Frontline Ltd.
(Chennai) . . . 138

----Business expenditure--Commercial expediency--Nexus between expenditure and purpose of business--Business need not necessarily be business of assessee--No role of Revenue to decide how much is reasonable expenditure--Debt restructuring scheme pursuant to transfer of business from subsidiary to assessee--Transfer of liability also to be considered part of transaction of transfer of business to assessee--Amount paid to bank as one-time settlement on behalf of subsidiary--Business purpose of assessee--Revenue expenditure-- Deputy CIT v. Rain Commodities Ltd.
(Hyd) . . . 1

S. 43B --Business expenditure--Deduction only on actual payment--Interest on sales tax deferment--Assessing Officer to verify difference in liability recorded in books of subsidiary and actual liability of sales tax--Matter remanded-- Deputy CIT v. Rain Commodities Ltd.(Hyd) . . . 1

S. 43(1) --Depreciation--Application software--Actual cost of assets acquired to be considered in terms of Explanation 3 to section 43(1)--Assessee not entitled to depreciation because already claimed by previous owner--Restricting depreciation at twenty-five per cent. on intellectual property rights and sixty per cent. on other software--Reasonable--Deputy CIT v . Accel Frontline Ltd. (Chennai) . . . 138

S. 80-IB(10) --Housing project--Special deduction--Built-up area means inner measurement of residential unit at floor level including projections and balconies as increased by thickness of walls--Does not include common areas shared with other residential units--Open terrace not covered within meaning of built-up area--To be excluded from built-up area-- Ashiana Amar Developers v. ITO
(Kolkata) . . . 17

----Housing project--Special deduction--Project completed within allotted time and possession certificate produced--Completion certificate--Local authority instructing assessee to take completion certificate from registered architect for official purposes--Assessing Officer expecting assessee to produce completion certificate from local authority--Impossible of compliance-- Ashiana Amar Developers v. ITO
(Kolkata) . . . 17

----Housing project--Special deduction--Residential and commercial properties independent units and belonging to two independent entities--Deduction to be claimed unit-wise--Denial of deduction on ground commercial area in project more than three per cent.--Not justified--Ashiana Amar Developers v. ITO (Kolkata) . . . 17

S. 92CA --Transfer pricing--International transaction--Arm's length price--Determination--Assessee falling within category of companies having turnover between Rs. 1 crore and Rs. 200 crores--Companies having turnover of more than Rs. 200 crores to be eliminated from list of comparables--Comparables having related party transactions of up to 15 per cent. of total revenues can be considered-- Obopay Mobile Technology India P. Ltd. v. Deputy CIT(Bang) . . . 42

----Transfer pricing--International transaction--Arm's length price--Determination--Foreign exchange fluctuation gains--To be added to operating revenue-- Obopay Mobile Technology India P. Ltd. v. Deputy CIT (Bang) . . . 42

S. 112 --Capital gains--Long-term capital gains--Maximum marginal rate--Capital gains arising as a consequence of contravention of section 13(1)(c)--Taxable at maximum marginal rate--Deputy DIT (Exemptions)-I v. India Cements Educational Society
(Chennai) . . . 80

S. 143(3) --Revision--Scope of proceedings--Failure by assessee to challenge addition in original assessment--Addition cannot be challenged in appeal against order passed pursuant to revision-- Deputy CIT v. Accel Frontline Ltd.
(Chennai) . . . 138

S. 164(2) --Capital gains--Long-term capital gains--Maximum marginal rate--Capital gains arising as a consequence of contravention of section 13(1)(c)--Taxable at maximum marginal rate-- Deputy DIT (Exemptions)-I v. India Cements Educational Society (Chennai) . . . 80

S. 201 --Penalty--Failure to deduct tax at source--Assessee, State Electricity Board, transmitting power through transmission network of Power Grid Corporation--Payment of wheeling and transmission charges to Corporation--Corporation paying tax--Assessee not in default--Reasonable cause for not deducting tax at source--Penalty cannot be levied--Himachal Pradesh State Electricity Board v. Addl. CIT (TDS)
(Chandigarh) . . . 113

S. 246A --Appeal to Commissioner (Appeals)--Additional evidence--Deduction of discount on issue of debentures on proportionate basis consequent to assessment order in case of subsidiary--Assessee prevented by reasonable cause from making claim before Assessing Officer during assessment proceedings--Additional ground admitted--Matter remanded--Deputy CIT v. Rain Commodities Ltd. (Hyd) . . . 1

S. 263 --Amortisation of preliminary expenses--Expenses on initial public offer--Allowability of claim attaining finality in assessee's own case for same assessment year by Tribunal--Question not open to further adjudication--Assessment in pursuance of revision merely a ministerial task-- Yes Bank Ltd. v. Asst. CIT (Mumbai) . . . 88

----Revision--Commissioner--Erroneous and prejudicial to Revenue--Assessing Officer failing to record in assessment order reasons for conclusion reached on issues arising for consideration--Revision directing fresh assessment proper-- Medall Health Care P. Ltd. v. Principal CIT (Chennai) . . . 36

----Revision--Commissioner--Powers--No power to decide issue adjudicated by appellate authorities--Search and seizure--Original seized document relating to agreement for purchase of land already considered by appellate authorities against Department--Copy of same document not admissible in evidence in subsequent revision proceedings-- R. P. Import and Export P. Ltd. v. Principal CIT
(Chandigarh) . . . 97

----Revision--Scope of proceedings--Failure by assessee to challenge addition in original assessment--Addition cannot be challenged in appeal against order passed pursuant to revision-- Deputy CIT v. Accel Frontline Ltd. (Chennai) . . . 138

S. 271C --Penalty--Failure to deduct tax at source--Assessee, State Electricity Board, transmitting power through transmission network of Power Grid Corporation--Payment of wheeling and transmission charges to Corporation--Corporation paying tax--Assessee not in default--Reasonable cause for not deducting tax at source--Penalty cannot be levied--Himachal Pradesh State Electricity Board v. Addl. CIT (TDS)
(Chandigarh) . . . 113

Income-tax Rules, 1962

R. 8D --Income--Computation--Disallowance of expenditure relating to exempt income--No borrowed funds utilised for earning exempt income--Dividend directly credited in bank account and no expenditure claimed--No disallowance--Disallowance in any case not to exceed exempt income-- Daga Global Chemicals P. Ltd. v. Asst. CIT (Mumbai) . . . 70

----Income--Disallowance of expenditure in relation to exempt income--No interest expenditure incurred for earning tax-free dividend income--Disallowance not proper-- Yes Bank Ltd. v. Deputy CIT (Mumbai) . . . 121

 

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>

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Summary of Notifications, Circulars from 16th January 2016 to 15th February 2016

---------- Forwarded message ----------
From: <idtc@icai.in>
Date: Fri, Feb 19, 2016 at 8:21 PM
Subject: Summary of Notifications, Circulars from 16th January 2016 to 15th February 2016
To: cvpawar@gmail.com

Summary of Notifications, Circulars from 16^th January 2016 to 15^th February 2016

SERVICE TAX

1. Recommendation regarding valuation of flats for levy of Service Tax

Valuation method for flats handed over to land owners by builders/ developers as recommended by Education Guide 2012 (Para 6.2.1) and the CBEC Circular No. 151/2/2012-ST dated 10.2.2012 are divergent in nature.

According to the CBEC Education Guide on Taxation of Services, 2012 value of construction service provided to land owner will be the value of the land when the same is transferred and the point of taxation will also be determined accordingly. However, Circular No. 151/2/2012-ST dated 10.2.2012 states that value of land / development rights in the land may not be ascertainable ordinarily and therefore, value, in the case of flats given to the land owner, is determinable in terms of section 67(1)(iii) read with rule 3(a) of Service Tax (Determination of Value) Rules, 2006. Accordingly, the value of these flats would be equal to the value of similar flats charged by the builder/developer from the other of service receivers. Service tax is liable to be paid by the builder/developer on the 'construction service' involved in the flats to be given to the land owner, at the time when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument(e.g. allotment letter).

Thus CBEC vide Instruction F.No.354/311/2015-TRU Dated 20^th January 2016 has clarified that in valuing the service of construction provided by a builder/developer to a landowner, who transfers his land/development rights to builder, for getting, in return, constructed flats/dwellings from builder/developer, the Service Tax assessing authorities should be guided by the said Board Circular dated 10.2.2012 and not the Education Guide.

[Instruction F.No.354/311/2015-TRU Dated 20^th January 2016]

2. Exports - Rebate by way of refund of Service Tax – Notification No. 41/2012 –ST amended

CBEC vide Notification No. 01/2016-Service Tax, Dated: February 03, 2016 has amended Notification No. 41/2012 - ST, Dated: June 29, 2012 so as to allow refund of service tax on services used beyond the factory or any other place or premises of production or manufacture of the said goods for the export of the said goods and to increase the refund amount commensurate to the increased service tax rate.

The schedule of rebate has been revised as follows:

S. No.	Old Rates	New Rates
	0.04	0.05
	0.06	0.07
	0.08	0.09
	0.12	0.14
	0.18	0.21
	0.20	0.23

[Notification No. 01/2016-Service Tax, Dated: February 03, 2016]

3. Refund of Swachh Bharat Cess to a unit located in a SEZ or Developer of SEZ

CBEC vide Notification No. 02/2016-Service Tax, Dated: February 03, 2016 has provided that the SEZ Unit or the Developer will be entitled to refund of the Swachh Bharat Cess paid on the specified services on which ab-initio exemption is admissible but not claimed. The refund of amount would be determined by multiplying total service tax distributed to SEZ/ developer by effective rate of Swachh Bharat Cess and dividing the product by rate of service tax specified in section 66B of the Finance Act, 1994 i.e. 14%.

[Notification No. 02/2016-Service Tax, Dated: February 03, 2016]

4. Service Tax & Cess for the purpose of Rebate of Service Tax to include Swachh Bharat Cess

CBEC vide Notification No. 03/2016-Service Tax, Dated: February 03, 2016 has amended the meaning of "service tax and cess" so as to include Swachh Bharat Cess therein for the purpose of Rebate of Service Tax paid for providing service exported in terms of rule 6A of the Service Tax Rules, 1994, to any country other than Nepal and Bhutan, subject to the conditions, limitations and procedures specified.

[Notification No. 03/2016-Service Tax, Dated: February 03, 2016]

CENTRAL EXCISE

5. Amendments in CENVAT Credit Rules

The CENVAT Credit Rules have been amended vide Notification Nos. 01/2016- CX (N.T) and 02/2016- CX (N.T), both Dated: February 03, 2016 as follows:

1. For the purpose of definition of Input Services, sales promotion would include services by way of sale of dutiable goods on commission basis.

2. The condition of allowing only 85% of CENVAT credit of the additional duty of customs paid under section 3(1) of the Customs Tariff Act, on ships, boats and other floating structures for breaking up falling under tariff item 8908 00 00 of the First Schedule to the Customs Tariff Act has been done away with.

3. It has been provided that CENVAT Credit of any duty specified in Rule 3(1) will not be utilised for payment of the Swachh Bharat Cess levied under sub-section (2) of section 119 of the Finance Act, 2015.

[Notification Nos. 01/2016- CX (N.T) and 02/2016- CX (N.T), both Dated: February 03, 2016]

[Instruction F.No.390/Misc./163/2010-JC dated February 04, 2016]

CUSTOMS

6. All Industry Rates of Duty Drawback notified w.e.f. 11.02.2016

CBEC vide Notification No. 22/2016-Cus., (N.T.), Dated: February 8, 2016 has notified the All Industry Rates of Duty Drawback effective from 11.02.2016 subject to the notes and conditions specified therein. The detailed rates and explanations can be obtained from www.cbec.gov.in.

[Notification No. 22/2016-Cus., (N.T.), Dated: February 8, 2016; Circular No. 06/2016-Customs, Dated: February 09, 2016]

VALUE ADDED TAX

NAGALAND VAT:

7. Road Permits (RP) to be mandatorily issued online w.e.f. 26.01.2016

With a view to further expand the e-Services for better service delivery, Nagaland Government has notified that all Road Permits (RP) shall be mandatorily issued online w.e.f. 26^th January, 2016. The Road Permit shall be issued for the purpose of importing goods into the state as under:

• Personal use/ consumption;

• Use in setting up of an industrial unit;

• Use as raw materials directly in the manufacture of goods in an industrial unit;

• Use in operation of an industrial unit;

• Others: To be compulsorily specified by the applicant.

[Notification No. CT/M/5/69(Pt) Dated 15^th January, 2016]

ODISHA VAT:

8. Composition Scheme for works contractor effecting sales by way of transfer of property in goods

Odisha Government vide Notification No. 1457-FIN-CT1-TAX-0035-2015 dated 16^th January, 2016 has provided a composition scheme for a dealer who has effected sales by of transfer of property in goods under a works contract. Subject to the conditions specified in the notification, such dealer may in lieu of amount of tax (VAT), pay by way of composition as specified below:-

Nature of Works Contract	Composition tax rate (As % of turnover)
	Scheme A	Scheme B
Every registered dealer engaged in execution of works contract of following categories and incidental or ancillary activities in connection with or thereto: Civil Contracts; Repair & maintenance of any moveable Property, including vehicles, AMCs & other similar contracts; All other types of works contracts, including those involving moveable goods, not specified elsewhere in this notification.	3%	6%
Every registered dealer engaged in,- Printing and/or book-binding; Textile processing such as dying, fabrication, tailoring, embroidery and other similar activities; Electro plating, electro galvanizing, anodizing, powder coating and other similar activities; Re-treading of old tyres.	2%	4%

Scheme A : A registered dealer, at any time during the period for which he opts to avail this Scheme, shall not purchase or procure goods from any place outside Odisha and not sell or supply goods to any place outside Odisha.

However, he may procure his own Plant & Machinery and Equipments from outside Odisha, meant exclusively for use in execution of works contract by him or for inward transfer of stocks from other States or by way of imports.

Scheme B : A registered dealer opting to pay composition tax shall be entitled to purchase goods required for works contract in course of inter-State trade or commerce on the strength of his registration certificate or by inward transfer of stocks from other States or by way of imports from other countries solely for the purposes of utilizing the same in works contract in Odisha only.

Provided the dealer shall use the material or goods imported or procured from outside Odisha strictly for use in execution of the works contract.

[Notification No. 1457-FIN-CT1-TAX-0035-2015 dated 16^th January, 2016]

9. Composition Scheme for the registered dealer who undertake construction of flats, dwellings or buildings etc.

Odisha Government vide Notification No. 1461-FIN-CT1-TAX-0035-2015 dated 16^th January, 2016 has provided a composition scheme for the registered dealer who undertake the construction of flats, dwellings or buildings or premises and transfer of property along-with land or interest underlying the land. Subject to the conditions specified in the notification, such dealers may, in lieu of VAT, pay tax at the rate of 3.5% of the aggregate amount determined in the agreement or value determined for the purpose of Stamp Duty in respect of said agreement under the Odisha Stamp Rules, 1952, whichever is higher.

[Notification No. 1461-FIN-CT1-TAX-0035-2015 dated 16^th January, 2016]

10. Amendment, omission and insertion of rules in Odisha Value Added Tax Rules, 2015

Following changes have been made in Odisha Value Added Tax Rules, 2015:

1. Rules 6, 9, 27, 27A, 30, 33, 40, 41, 45, 59, 65, 86 have been amended;

2. Rule 8, 28, 32, 48 have been omitted;

3. Rules 1A, 49A, 49B, 59A, 66A have been inserted.

[Notification No. 1465-FIN-CT1-TAX-0001-2013 dated 16^th January, 2016]

MADHYA PRADESH VAT:

11. Amendment in Madhya Pradesh Value Added Tax Act, 2002.

The following amendments will come into force from the date of its publication in the Madhya Pradesh Gazette.

1. Levy of Additional Tax: A new Section 9AA has been inserted to levy additional tax at rate as may be notified by the State Government. It will be based on weight, volume, measurement on unit, on the sales of such goods specified in Schedule II, other than declared goods.

2. Waiver from submitting Affidavit and proof of registration fees: Section 17 (Registration) have been amended so as to give waiver from submitting affidavit and proof of payment of registration fees.

[MADHYA PRADESH ACT No. 4 OF 2016]

JHARKHAND VAT:

12. Extension of date for applying and making payment under Karasamadhana Scheme, 2015.

Karasamadhana Scheme was introduced to allow partial waiver of arrears, penalty and interest payable upto the Assessment Years 2005-06. The Jharkhand Government has extended the following mentioned dates:

Last dates under the Scheme for	Extended Date	Earlier Dates
Filing application	15.03.2016	31.12.2015
Making payment	31.03.2016	28.02.2016

[Order No. 98 dated 7^th January, 2016]

ANDHRA PRADESH VAT:

13. Generation of e-CST Waybills/ CST statutory forms only for commodities which are mentioned in CST Registration Certificate

Andhra Pradesh Government has developed a system from 01.02.2016 by which a dealer would be able to generate e-CST Waybills only for commodities which are registered in the VATIS. Similarly, the dealers cannot generate eWaybills (VAT) for sensitive commodities, if the same are not registered in the VATIS.

All the dealers are required to follow the procedure mentioned in the given Circular for registering the additional Commodities by 31.01.2016, failing which they will not be able to generate CST e- Way Bills and Statutory forms.

[Circular No. CCTs Ref No.CCW/152/2015, dated 19^th January, 2016]

14. Person/ authority notified for deducting tax

Andhra Pradesh Government vide Notification (Commercial Taxes) dated 30^th January, 2016 has notified a list of persons/authority for deducting tax from amounts payable to a dealer in respect of sale of any taxable goods effected by him and also on the amounts payable towards lease/hiring charges at rates of taxes prescribed in the notification.

[Notification (Commercial Taxes) dated 30^th January, 2016]

15. Online registration to facilitate ease of doing business.

Andhra Pradesh Government has introduced online registrations by the prospective dealers, thereby dispensing with the manual filing of Registration applications in the offices of the CTO for ensuring ease in doing business.

Further to obtain registrations in a hassle free manner, the practice of pre-registration visits is required to be dispensed with. However, in order to check the bogus registrations particularly in hypersensitive and sensitive commodities, the timelines will be prescribed for conducting post registration advisory visits by the department officers.

[Circular No. CCTs Ref No.CCW/CS(1)/128/2015 dated 8^th February, 2016]

16. Earlier guidelines for detention of goods by check post officials withdrawn

Earlier guidelines states that whenever check post officials notice irregularities in consignments in parcel lorries, they were directed to transfer the goods along with detention notice and other documents to the assessing authority for verification of documents and to take appropriate action. The above instructions has been withdrawn. Now, they have to take action duly following the procedure prescribed under section 45 (establishment of check-post) of APVAT Act, 2005.

[Circular No. CCTs Ref No.ENFT/D2/611/2007 dated 9^th February, 2016]

BIHAR VAT:

17. Amendment in Bihar Value Added Tax Rules, 2005.

Sub-rule (2)(b) of Rule 14 has been substituted. Now, the value of stock transfers outside the State shall be arrived at after applying the following Formula-

R2 = [B x I / P]

{Earlier formula was: R2 = [4 x B ÷ 100]}

Where,

R2 = reverse credit on account of stock transfers outside the state

B = total value of stock transfers outside the state

I = input tax paid by the dealer on purchase of inputs, other than those specified in Schedule I, during the month

P = value of goods, other than goods specified in Schedule I, purchased during the month from within the State

Rule 17 (Refunds) has been omitted.

[Notification No. S.O. 12 Dated 13^th January, 2016]

18. Amendment in Rate of surcharge, tax & time limit for interest on delayed refunds

Following Sections have been amended by the Ordinance No. 1, 2016 which shall come into force at once.

Increase in rate of Surcharge (Section 3A) : Every dealer liable to pay tax shall in addition pay a surcharge not exceeding 30% (earlier it was 20%) of the total amount of tax payable by him.

Increase in rate of tax (Section 14) : Tax shall be payable at the rate of 14.5% (earlier it was 13.5%) on the sale price of any goods which are not specified in Schedules I, II, III, IIIA and IV.

Interest on delayed refund(Section 27) : Now where the refund is not made within a period of 60 days (instead of 90 days) of the amount having become refundable then authority shall pay a simple interest of 6% p.a. or part thereof from the date immediately following the expiry of the period of 60 days to the date of the refund.

[Ordinance No. 1, 2016]

PUNJAB VAT:

19. Launching of Pilot Project for online issuance of 'C' forms in SAS Nagar, Mohali

The Department has launched a pilot project for online issuance of 'C' forms for Quarter-1 and Quarter-2 of financial year 2015-16 for District Mohali for the convenience of the dealers. Now onwards, dealer can simply enter his login ID and click on the link "Apply for Statutory Forms" to apply for 'C' forms.

[Public Notice by Department of Excise & Taxation]

RAJASTHAN VAT:

20. Amnesty Scheme 2016 to be effective upto 15.03.2016

Rajasthan Government vide Notification No. F. 12(16) /FD/ TAX /2009-116 dated 21^st January, 2016 has introduced Amnesty Scheme 2016 which provide for waiver of interest & penalty. To avail the benefit under the Scheme, the applicant is required to submit an application in Form AS-I appended to this Scheme to the assessing authority, along with detail of deposit of tax and/or penalty and/or interest, as the case may be, and proof of withdrawal of case from the concerned Court, Tax Board, or Appellate Authority, if applicable, up to 15.03.2016.

[Notification No. F. 12(16) /FD/ TAX /2009-116 Dated 21^st January, 2016]

21. Information to be submitted by e-commerce companies

The e-commerce companies, transporters/ courier companies (effecting delivery) or intermediaries (receives any amount) who sold or purchased goods in the State through e-commerce is liable to furnish information in Form EL-1, EL-2 and EL-3 to AC/ Commercial Tax Officer within 15 days from the end of relevant month. In this regard, detailed process of functionality has been made available on the website www.rajtax.gov.in. It may be mentioned that the information for the month of January, 2016 is to be filed latest by 15.02.2016.

[Circular- No. 10/2015-16- No. F.16 (95)/Tax/CCT/14-15/2171 to 2178 Dated 28^th January, 2016]

DELHI VAT:

22. Ratio for auto-downloading of central statutory forms has been revised from 60% to 45%.

Delhi Government has prescribed that the facility of auto-downloading of the forms shall not be available for the tax period where the ratio of sale to purchase, (including stock transfer and local transactions) falls below 45%. The purchase of capital goods has be kept out of the proposed mechanism which shall be available only to eligible dealers. The download of forms shall also be further subject to the following conditions:

(i) Items should be allowed on the R.C.

(ii) The dealer for whom forms are obtained should not be cancelled dealer.

(iii)There is no adverse material on record.

[Circular No. F.3(556)/Policy/VAT/2015/1366-71 Dated 27^th January, 2016]

23. Amendment in Rule 28 (Dealer's periodic Returns) of Delhi Value Added Tax Rules, 2005.

Sub-rule (3) of Rule 28 states that return DVAT-16 & DVAT-17 shall be furnished by transmitting the data in the return electronically on www.dvat.gov.in and thereafter submitting the Return Verification Form in Form DVAT-56, in duplicate. Such return and form shall be furnished within 28 days from the end of the tax period. On submitting of Form DVAT-56, the Commissioner shall issue the acknowledgement with signature and stamp on one copy of the said Form.

Now a proviso has been inserted in above sub-rule stating that Commissioner may by a notification require a dealer or class or classes of dealer to furnish return with digital signatures. Such dealers will not be required to submit Form DVAT-56 for acknowledgement of the return separately.

[Notification No. F.3(28)/Fin(Rev-I)2015-2016/dsvi/42 dated 11^th February, 2016]

TAMIL NADU:

24. Exemption from tax on sale of goods to units located in SEZ

Tamil Nadu Government hereby makes an exemption of tax payable by any dealer on the sale of goods made to a registered dealer for the purpose of-

• setting up, operation and maintenance of a unit located in a SEZ in Tamil Nadu or

• for development, operation and maintenance of SEZ by a developer if such registered dealer is authorized to establish such units or establishments within SEZ or

• to develop, operate and maintain such SEZ by the Authority specified by the Government of India, subject to the following conditions, namely:-

The dealer should obtains and furnishes a Certificate and the goods purchased are used only for the aforesaid purposes.

[Notification IV No. G.O. Ms.No. 15, Dated 29^th January, 2016]

25. Amendment in Rules of Tamil Nadu Value Added Tax Rules, 2007.

Tamil Nadu Government vide Notification No. G.O. Ms.No. 18 dated 29^th January, 2016 has amended following rules of Tamil Nadu Value Added Tax Rules, 2007:

1. Rule 4 - Application for Registration

2. Rule 5 - Certificate of Registration

3. Rule 6 - Accounts

4. Rule 7 - Filing of Returns

5. Rule 9 - Tax deduction at source

6. Rule 10 - Input Tax Credit

7. Rule 11 - Refunds

8. Rule 12A - Authority for Clarification and Advance Ruling

9. Rule 14 - Appeal & Revision

10. Rule 15 - Check Post

11. Rule 16A - Procedure for Filing Audit Report

12. Rule 17 - Appearance by Authorised Representative

13. Rule 19 - Service of notices summons or orders

14. Rule 23 - Mode of Payment

15. Rule 25 - Forms & their manners of filing

[Notification No. G.O. Ms.No. 18, Dated 29^th January, 2016]

MAHARASHTRA VAT:

26. Modification in the list of documents required to be submitted along with the registration application

Maharashtra Government has given following relaxation in the documents to be uploaded at the time of online registration:

Scanned copy of-	Relaxation
PAN Card	If not available, details of PAN obtained from www.incometaxindiaefiling.gov.in may be accepted as a proof of PAN.
MOA or AOA in case of Company	Copy of Form No. DIR 12 or list of present directors obtained from www.mca.gov.in; and Copy of Certificate of Incorporation issued by registrar of Companies.
Proof for permanent residence address	Following shall also be allowed as a proof: Latest copy of MTNL/ BSNL landline bill. 1st page of saving bank accounts' passbook or certificate issued by nationalized bank showing applicant's address. Latest copy of bill of domestic gas connection.
Proof of place of business	A new category has been added for the online sellers working for online selling portals shall submit a copy of Agreement with main company (online platform).

[Trade Circular No. 4T of 2016 dated 5^th February, 2016]

27. Guidelines for granting refund to the certain class of dealers within stipulated time limit

Maharashtra Government has provided following time limit for granting refund to Dealers eligible to file Audit Report in Form e-704, Dealers not eligible to file Audit Report and PSI cases:

Time Limit-	Condition-
Within 45 days from due date for filing of Audit Report.	Dealer is eligible to file Audit Report & refund application is filed before due date of filing Audit Report.
Within 45 days from the due date for filing of Audit Report.	Dealer is not eligible to file Audit Report.
Within 45 days from the due date for filing of refund application in Form e-501.	Dealer is eligible to file Audit Report and refund application is filed after due date of filing of Audit Report.

[Trade Circular No. 5T of 2016 dated 6^th February, 2016]

KARNATAKA VAT:

28. Electronically submission of appeal on http://vat.kar.nic.in

Karnataka Government has notified, with immediate effect, that any person objecting to any order or proceedings affecting him shall submit an appeal electronically through the website http://vat.kar.nic.in as per the instructions contained in the user manual hosted onto the website available under "Reports and Help".

[Notification No. EG1.CR-23/2015-16 dated 20^th January, 2016]

TELANGANA VAT:

29. Date of mandatory usage of e-waybills by VAT dealers extended to 1^st April, 2016

Telangana Government has extended the date for mandatory usage of e-waybills from 01.02.2016 to 01.04.2016. It has also been specified that no more further extension will be given and all dealers should make necessary arrangements for use of e-waybills mandatorily w.e.f. 01.04.2016.

[Circular-CCT's Ref No. Enft/D2/172/2010 dated 3^rd February, 2016]