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TMI Tax Updates - e-Newsletter
February 1, 2012
Case Laws in this Newsletter:
Income Tax
Service Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Capital gain - period of limitation for deposit the amount in Capital Gain Account Scheme - Sub-Section (4) of Section 139 provides extended period of limitation as an exception to Sub-Section (1) of Section 139 of the Act. Sub-Section (4) is in relation to the time allowed to an assessee under Sub-Section (1) to file return. Therefore return filed by the assessee before the expiry of the year ending with the Assessment Year is valid under Section 139(4) of the Act..... - HC
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Fringe Benefit Tax car dealer - Expenditure incurred on accessories which were supplied to customers who have purchased cars cannot be treated as sale promotion including publicity expenses under clause (D) of Section 115WB(2)..... - HC
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Capital gains In view of the provisions of sub-section (2) of section 50C, if fair market value as assessed by the DVO is lower than the value adopted by Stamp Duty Authorities for collecting stamp duty then the value so adopted by DVO has to be adopted by the Assessing Officer for the purpose of computation of LTCG..... - AT
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Allowable u/s 37(1)- Whether the expenses incurred on construction of tennis court are allowable as revenue expenses or are capital in nature - the expenditure on Black Rose Tennis Court by the appellant firm is allowable u/s 37(1) of the Act .... - HC
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Unexplained Investment The assessee had valued the stock at cost price. The cost price as recorded in the books was not rejected or adversely commented upon in the assessment order. Thus an obvious mistake has been corrected by the Tribunal Decided in favor of assessee..... - HC
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Deduction u/s 43B in respect of interest paid on additional sales-tax - Tribunal rejected the claim on the ground that interest did not fall within the expression any sum payable used in Section 43B - Tribunal, not having considered the said provisions of Himachal Pradesh General Sales Tax Act has committed an error in law.... - HC
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Waiver of the loan liability - Capital receipt or Revenue receipt - the amount claimed as capital receipt is in respect to which there was no allowance or deduction claimed by the assessee for the previous year. - Thus Section 41 is not attracted..... - HC
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Disallowance u/s 40(b) - interest to partners - Assessing Officer is not entitled to compel the assessee to provide for depreciation in the books of account and consequently not entitled to recomputed the capital account balances of the partners by deducting the cumulative amount of depreciation that was allowed in the hands of the assessees herein .... - AT
Customs
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Notification 44/2002 - EPCG Scheme - The facts that the cars were not registered as a tourist vehicle and the Appellants did not bill for the use of car separately cannot be fatal for claiming the customs duty exemption... - AT
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Rate of exchange of conversion of each of the foreign currency with effect from 1st February, 2012. - Ntf. No. 09/2012- Customs (N.T.) Dated: January 30, 2012
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Amends Notification No. 12/97-Customs (N.T.), dated the 2nd April, 1997 thereby notifying Tondiarpet (TNPM), Chennai as ICD. - Ntf. No. 08 /2012 - Customs (N.T.) Dated: January 30, 2012
FEMA
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Memorandum of Instructions governing money changing activities. - Cir. No. 71 Dated: January 30, 2012
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Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses. - Cir. No. 72 Dated: January 30, 2012
Corporate Law
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Section 10E of the Companies Act, 1956 - Board of Company Law Administration - Constitution of - Revision of fees payable in terms of regulations 29 & 30 of the CLB Regulations, 1991. - Cir. No. 10/36/2001-CLB Dated: January 19, 2012
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Company Law Board (Amendment) Regulations, 2012 - Amendment in regulation 30. - Ntf. No. G.S.R. 32(E) Dated: January 18, 2012
Service Tax
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Authorized service station - authorised dealers of General Motors - also undertook the servicing of vehicles manufactured by the other manufacturers services provided in respect of vehicle cannot be held to be taxable services in the light of the definition of the authorized service station appearing under section 65 (9) of Finance Act 1994.... - AT
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Liability to pay Service tax by government authority undertaking Insurance business Insurance business is not a sovereign act. - service tax would be leviable and it falls within the ambit of taxable service. .... - HC
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Refund of Cenavt - Requirement of Service Tax Registration - Registration not compulsory for refund - Export of software not a taxable service still refund cannot be denied.... - HC
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Levy of service tax upheld on preferential location charges or development of complex..... - HC
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Levy of service tax on Builders - amendment to clauses (zzq), (zzzh) and (zzzzu) - Constitutional validity of levy of service tax upheld..... - HC
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Advertising Agency Service valuation - In instant case from the agreement between agency & its clients it does not come out clearly that the agency is working as a pure agent of the client. Therefore, service tax would be levied on the gross amount charged from clients.
.... - AT
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Application for refunds - assessee paid service tax on the interest collected from customers voluntarily and not under protest - Claim made under Article 265 of the Constitutions - refund not granted - appeal dismissed. .... - HC
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Telephone service provided through leased line (ACSR/copper wire) - covered under the existing entry for telephone service even prior to the period 16-7-01..... - AT
Central Excise
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Period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest thereon. - Demand of interest beyond one year set aside.... - HC
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Central Excise Registration - Change in premises - new address communicated - existing registration continue and no new registration sought - a technical or venial breach - Decided in favor of assessee with direction to department.... - HC
Case Laws:
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Income Tax
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2012 (1) TMI 100
Validity of reassessment proceedings failure to issue notice u/s 143(2) within the period stipulated in the proviso to clause (ii) - effect of Section 292BB - petitioner had filed returns of income vide letter dated 19th November, 2009 in response of notice issued u/s 147/148, adopting their earlier returns u/s 139(1) objections to the reopening were filed by petitioner on 13th July, 2010 and 19th July, 2010 and supplementary objections on 8th August, 2010 - A.O. issued notice u/s 143(2) on 23rd November, 2010 which is beyond the period of six months prescribed in the proviso to Section 143(2)(ii) - petitioner being foreign company, filed an application with the RBI for closure of their liaison office NOC required from the Income Tax Department Held that:- In the present case, the final assessment order has not been passed and only a draft assessment order u/s 144C has been passed. The proviso to section 292BB is applicable. The principle of estoppel u/s 292BB will, therefore, not apply. In respect of returns filed pursuant to notice u/s 148 after 1st October, 2005, it is mandatory to serve notice u/s 143(2), within the stipulated time limit. Thus, in present case, notice u/s 143(2) is deemed not to be served within the stipulated time. See ACIT vs. Hotel Blue Moon (2010 - TMI - 35251 - Supreme Court Of India. In view of the aforesaid position, reassessment proceedings should not continue as no notice u/s 143(2) was served on the assessee within the stipulated time. Accordingly, the writ petition is allowed and a Writ of Certiorari is issued quashing the assessment proceedings pursuant to the notices u/s 148. A Writ of Mandamus is issued to the Department to issue NOC to the petitioner as per the needs and requirements of the RBI within the stipulated time Decided in favor of petitioner.
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2012 (1) TMI 97
Validity of reopening of assessment previously framed after scrutiny beyond 4 years from the end of relevant A.Y. - assessment reopened on ground that income derived from the works contract would not qualify for deduction u/s 80IA - Explanation to Section 80IA added in year 2009 with retrospective effect from 1.4.2000 A.Y. 05-06 Held that:- By virtue of such retrospective amendment assessment previously framed after scrutiny could not have been reopened beyond the period of 4 years without any thing on record to suggest that the income chargeable to tax had escaped assessment for the failure on the part of the assessee to fully and truly disclose all material facts. The suggestion that the assessee failed to disclose the nature of works executed and that the same was executed only as works contractor and not as a developer, cannot be accepted for two reasons. Firstly, the reasons recorded do not refer to such a ground. Secondly, when the assessee filed the return of income, the Explanation in question was not in picture. It would not be possible to expect the assessee to comply with the requirements of such Explanation by making disclosures in this regard which Explanation did not form part of the statute book when he filed his return Decided in favor of assessee.
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2012 (1) TMI 96
Fringe Benefit Tax car dealer - levy of FBT on car accessories provided free of cost to the customers Revenue contending it to be sales promotion expenses - Held that:- Expenditure incurred on accessories which were supplied to customers who have purchased cars cannot be treated as sale promotion including publicity expenses under clause (D) of Section 115WB(2). Until and unless a customer purchases a car, no accessories are provided or furnished. The customer was not given a largesse but was offered and has managed to get a better deal for the consideration paid. Revenue did not invoke clause (O) to sub-section (2) to Section 115WB. It was not the contention of the Revenue that the accessories given free of cost as gifts. This is rightly so as gifts are given or presented without consideration. Consideration, in the present case is inbuilt as per person/customer is paying consideration for purchase of the car. For gift under clause (O), the same should be paid without consideration. There is no finding to this effect by the Assessing Officer or by the tribunal. - Decided in favor of assessee.
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Service Tax
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2012 (1) TMI 98
Levy of service tax on Builders - amendment to clauses (zzq), (zzzh) and (zzzzu) - constitutional validity - held that:- The fact that the activity in question is an activity which is rendered on land does not make the tax a tax on land. The charge is on rendering a taxable service and the fact that the service is rendered in relation to land does not alter the nature or character of the levy. The legislature has expanded the notion of taxable service by incorporating within the ambit of clause (zzq) and clause (zzzh) services rendered by a builder to the buyer in the course of an intended sale whether before, during or after construction. There is a legislative assessment underlying the imposition of the tax which is that during the course of a construction related activity, a service is rendered by the builder to the buyer. Whether that assessment can be challenged in assailing constitutional validity is a separate issue which would be considered a little later. At this stage, what merits emphasis is that the charge which has been imposed by the legislature is on the activity involving the provision of a service by a builder to the buyer in the course of the execution of a contract involving the intended sale of immovable property. - The submission that the explanation brings in two fictions and is ultra vires the provisions of Sections 67 and 68 of the Finance Act is completely lacking in substance. The levy under Section 66 is on the value of taxable services. Section 65(105) defines taxable services. The explanation cannot possibly be held to be ultra vires Sections 67 and 68. - Constitutional validity of levy of service tax upheld. Service tax on Preferential location charges or development of complex clause (zzzzu) - held that:- These according to the Revenue involve value additions and services when the prospective purchaser purchases a flat or a unit before the completion certificate is obtained. We find merit in the contention which has been urged on behalf of the Revenue that if no charge is levied for a preferential location or development, no service tax would be attracted in the first place. Builders, however, follow the practice of levying charges under diverse heads including preferred development of the property intended to be sold or in terms of a preferred location which is made available to the buyer. Clause (zzzzu) only intends to obviate a leakage of revenue and plugs a loophole which would have otherwise resulted. To reiterate, if no separate charge is levied, the liability to pay service tax does not arise and it is only where a particular service is separately charged for that the liability to pay service tax arises. The fact that the service is rendered in the context of a location, does not make it a tax on land within the meaning of Entry 49 of List II. The tax continues to be a tax on the rendering of a service by the builder to the buyer. There is no vagueness and uncertainty. The legislative prescription is clear. Hence, there is no excessive delegation. - Levy of service tax upheld on preferential location charges or development of complex.
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Indian Laws
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2012 (1) TMI 95
Indian Contract Act 1872 - Breach of contract agreement to sale failure of appellant in not having obtained the permission from the Income Tax Authorities u/s 230A nad 269UC - forfeiture of earnest money Held that:- In view of decision of Supreme Court in case of Fateh Chand vs Balkishan Dass, there is no merit in the appeal inasmuch as not only because the appellant was guilty of breach of contract but also because the appellant did not plead and prove the forfeiture of earnest money or any loss having been caused to him. The appellant was, therefore, liable to refund the amount which he received under the Agreement to Sell Decided against the appellant.
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