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TMI Tax Updates - e-Newsletter
January 13, 2012
Case Laws in this Newsletter:
Income Tax
Service Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Levy of interest u/s 220(2) - fresh notices of demand need not be issued every time the total income undergoes a change due to appellate or revisional orders.... - HC
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Indo French DTAA - Having held that the PE did not exist on the facts of this case, it is not really necessary to deal with profit attribution in the case of PEs..... - AT
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Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - Georgia. - Ntf. No. 04/2012 Dated: January 6, 2012
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Determination of annual value where premises are not regulated by Delhi Rent Control A/C - income from house property - Standard Rent Cannot be adopted" - the rateable value, if correctly, determined, under the municipal law can be taken as ALV under Section 23(1)(a) of the Act.... - HC
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Block Assessment - Interpretation of Word 'Abatement' - If the interpretation given by the ITAT is to be accepted, the entire proceedings of penalty will also abate giving an unreasonable advantage to the assessee, insptie of adverse findings inviting penalty..... - HC
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Non-deduction of tax at source u/s 194J - payment made by the University to the coordinator colleges to be paid to evaluation staff for conducting the evaluation of copy books of the examinees - matter restored to CIT(A) for fresh decision.... - AT
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The opinion of the Assessing Officer may have been legally erroneous but this cannot be a ground for initiation of re-assessment proceedings. An erroneous decision which is prejudicial to the Revenue can be revised but the said option was not exercised. .... - HC
DGFT
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Minimum Export Price of Onions. - Ntf. No. 94 (RE – 2010)/2009-2014 Dated: January 11, 2012
SEZ
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Set up a sector specific Special Economic Zone for information technology and information technology enabled services at Mount Poonamalee High Road, Aiyappanthangal, Porur, Chennai . - Ntf. No. S.O. 14(E) Dated: January 4, 2012
FEMA
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Foreign Exchange Management Act, 1999 – Export of Goods and Services - Forwarder’s Cargo Receipt . - Cir. No. 65 Dated: January 12, 2012
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Review of the policy on Foreign Direct Investment- liberalization of the policy in Single-Brand Retail Trading. - Cir. No. Press Note No.1 (2012 Series) Dated: January 10, 2012
Indian Laws
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Secondary outer packing for transportation or for safety of the goods being transported or delivered cannot be described as a wholesale package within the definition of the expression 'wholesale package' under Rule 2(x) of the Rules.. .... - SC
Service Tax
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Demand of service tax in respect of services rendered for issue of PAN Cards on behalf of the Income Tax department under the category 'Business auxiliary service' - Activities are not taxable... - AT
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The balance sheet figures are the income figures on accrual basis while the figures shown in ST-3 return were of actual receipt of payment. - Matter remanded back to adjudicating authority to reconsider the issue afresh..... - AT
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Levy of Service Tax on free after sale service - Service Tax cannot be charged on free after sale services.... - AT
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Penalty - Revenue is empowered to levy penalty at the rate of Rs. 100/- per day if the assessee fails to pay duty only in respect of the period from 10-9-2004 onwards and not prior to the said date..... - HC
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Cenvat Credit - 'Repair and Maintenance' Services on air-conditioning plant for the office space of the factory - credit allowed .... - AT
Central Excise
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SSI exemption - There is no question of extending separate SSI exemption limit to each partner of a firm or to different firms being run by the same person especially in a situation where goods are manufactured by one firm and sold in the name of different firms..... - AT
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CENVAT Credit - It is the obligation of the assessee that he takes precautions under Rule and then only take credit. Availment of credit without such verification would lead to a conclusion that there was suppression of facts of non-verification/non-compliance with the provisions of rule and therefore mandatory penalty u/s 11AC is attracted..... - AT
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Demand and Penalty - Clandestine removal of M.S. Ingots - adopting of power consumption norm of another unit is arbitrary and the confirmation of duty demand on this basis would not be sustainable.... - AT
Case Laws:
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Income Tax
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2012 (1) TMI 10
Levy of interest u/s 220(2) - requirement of notice – Held that:- (a) fresh notices of demand need not be issued every time the total income undergoes a change due to appellate or revisional orders - (b) a case where the assessee has paid the full amount of tax demanded by the AO pursuant to the assessment order stands on a different footing from a case where such demand was not satisfied in full and different considerations shall apply to such a case; (c) the original demand made by the AO on the basis of the assessment order is merely kept in abeyance or suspension during the entire proceedings by way of appeal or revision taken against the assessment and gets revived from inception once the assessment gets finally confirmed in those proceedings; (d) when the assessment order is finally affirmed, the doctrine of merger also applies and interest being compensatory in nature, the revenue is entitled to charge the same from the date of the original order which merged with the final appellate order; (e) as a corollary to the above, it follows that where an assessment is restored and the original demand gets revived from inception, the assessee is liable to pay interest u/s.220(2) of the Act from that date on the unpaid amount and any variation in the amount of the demand favourable to the assessee which was directed by any of the appellate authorities in the interregnum has no effect on the liability of the assessee to pay the interest.
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2012 (1) TMI 9
Indo French DTAA - foreign company's business of operations of ships in international traffic carried out through agents's fixed place in India question of existence of a Permanent Establishment Dependent Agent Permanent Establishment(DAPE) or independent agent - Article 5, 7 9 of Indo French DTAA - determination of profits attributable to PE Relief under article 9 levy of interest u/s 234B - Held that:- Permanent establishment in the present case will be governed by Article 5(5) read with Article 5(6) of Indo French DTAA. Since there are no findings by the A.O., or the DRP, to the effect that the transactions between the agent and the assessee are not at an arm's length price, the agent is treated to be an independent agent in view of the provisions of Article 5(6). Such a finding by the revenue is a sine qua non for existence of DAPE. Thus, it is held that the assessee did not have any PE in India. Having held that the PE did not exist on the facts of this case, it is not really necessary to deal with profit attribution in the case of PEs. With respect to relief under Article 9 in respect of freight earnings it is held that the issue is covered against the assessee by a coordinate bench's decision in assessee's own case for the assessment year 2001-02 therefore, the assessee may take up the issue before Hon'ble Courts. Levy of interest under section 234 B A.O. is directed to grant necessary relief. - Decided partly in favor of assessee.
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2012 (1) TMI 6
Validity of re-opening of assessment – erroneous deduction u/s 80HHC & 80IA – change in opinion – Held that:- The question of deductions u/s 80IA and 80HHC were specifically examined at the time of original assessment proceedings. Assessee had justified the claim and furnished documentary evidence or proof. The quantification of the claim was justified. This is a case of change of opinion. The opinion of the Assessing Officer may have been legally erroneous but this cannot be a ground for initiation of re-assessment proceedings. An erroneous decision which is prejudicial to the Revenue can be revised but the said option was not exercised. - Decided against the Revenue.
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2012 (1) TMI 5
DTAA with AUSTRALIA – Fees for technical services (FTS) or inclusive contracts of technical nature - applicability of Articles 7 or 12 of the DTAA – assessee having PE in India – whether income to be construed as 'business income' or gross receipts to be taxed without any deduction – assessee opted to be taxed as per the provisions of the DTAA - Held that:- The payment in the present case is for furnishing of evaluation report. The assessee undertook certain tests, mapping and studies. Drilling for tests as to evaluate is to gain information and knowledge. The payment made is to acquire technical information. Therefore, it is fee for technical services. As per articles of DTAA, once an assessee has a PE in the contracting state of which he is not resident, then paragraphs 1 and 2 of the Article 12 of DTAA would not apply. In such cases Article 7 or 14 would apply. Thus, it is held that Article 12 of the DTAA is not applicable. Article 7 deals with business profits and will apply. Expenses incurred by the assessee can be claimed as a deduction but only in accordance with and subject to limitation stipulated in the Act. Section 44D postulates non-applicability of Sections 28 to 44C in case of foreign company earning income by way of royalty or fees from technical services. Thus, Section 44D is applicable to compute taxable Income. - Decided against the Revenue
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2011 (12) TMI 152
Non-deduction of tax at source u/s 194J - payment made by the University to the coordinator colleges to be paid to evaluation staff for conducting the evaluation of copy books of the examinees - evaluation work deemed to be technical in nature by A.O. - assessee did not filed replies before the AO nor ascribed any reasons as to why tax was not deducted at source – demand imposed - Held that:- CIT(A) deleted the addition on the basis of additional material submitted before him, without following the principles of natural justice. Since CIT(A) has not recorded any findings on the applicability or otherwise of provisions of sec. 194J of the Act nor the relevant documents, explaining the exact nature of payments made by the University to the Principals of aforesaid colleges are presented, therefore, the issues raised in appeal are restored to file of CIT(A) for fresh adjudication in accordance with law, in the light of aforesaid observations, bringing out clearly as to whether or not provisions of sec. 194J are applicable in this case.- Decided in favor of Revenue for statistical purposes.
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Service Tax
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2012 (1) TMI 4
Penalty imposed u/s 76, 78 of Finance Act 1994 deleted by Tribunal – service tax liability established on payments/commission received by assessee from banks/financial institutions on cars sold under finance schemes - Business Auxiliary Service – two corrigendums were issued calling upon and asking the assessee to defend the penalty - Held that:- The order of Tribunal specifically states that the corrigendums were issued invoking Section 78 of the Act hence, penalty u/s 78 cannot be deleted on the ground that the show cause notice did not grant any opportunity of rebuttal to the respondent to defend the penalty under the said Section. Therefore, the matter is remitted to the Tribunal for a fresh decision. The Tribunal while deleting the penalty u/s 76 has not discussed and stated the stand of the assessee only. Thus, matter is restored back to the Tribunal to decided whether or not there was any reasonable cause. - Decided in favor of Revenue.
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