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TMI Tax Updates - e-Newsletter
February 28, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Highlights / Catch Notes
Income Tax
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Export commission payable to non-resident agents No doubt the agents rendered services abroad and have solicited orders, but the right to receive the commission arises in India when the order is executed by the applicant in India. - Taxable in India - TDS liable to be deducted. - AAR
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Penalty u/s 271C - Non deduction of TDS u/s 194A - Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007 -TMI - 1676 - SUPREME COURT OF INDIA] wherein the applicability of ss. 194C, 194I, 201(1A) has been explained - Decided in favor of the assessee - AT
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TDS on interest - liability of paying tax is that of the creditor and a statutory duty is cast on the debtor to deduct tax and make payments. The revenue cannot collect tax on interest from both the principal and the agent. - HC
DGFT
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Import of spares for the existing machinery procured indigenously under EPCG Scheme. - Cir. No. 54 (RE-2010)/2009-14 Dated: February 23, 2012
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Operationalisation of provisions of Para 5.11.2 of Hand Book of Procedure Vol.-1 (2009-14) [RE: 2010]. - Cir. No. 53 (RE-2010)/2009-14 Dated: February 23, 2012
FEMA
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Import of Gold on Loan Basis- Tenor of Loan and Opening of Stand - By Letter of Credit . - Cir. No. 83 Dated: February 27, 2012
Indian Laws
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Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, unless they fulfill the requirement of the Advocates Act, 1961 and the Bar Council of India Rules - HC
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Having regard to the aim and object of the International Commercial Arbitration introduced in the Arbitration and Conciliation Act, 1996, foreign lawyers cannot be debarred to come to India and conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration.
- HC
Service Tax
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If the assessee has discharged the service tax liability on his own ascertainment or on the basis of ascertainment by the Central Excise officers and inform the Central Excise officer of payment of such service tax then, no notice under sub-section (1) in respect of the amount so paid shall be served - AT
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Business Auxiliary Services - Job work - yamming process amount to manufacture - not liable to service tax - AT
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2012 (2) TMI 366
Transfer pricing adjustment to ALP Revenue contended that distinct operating profit margin to cost in the preceding year qua the AEs and non-AEs should not be applied to the ratio of operating profit to cost in the current year on a combined basis Held that:- Nature of international transactions in the year under consideration with its AE s are similar to the preceding year and Operating profit margin for the current year compares favorably with that finally determined for the preceding year therefore, CIT(A) order of deleting addition is upheld. Addition on account of non-charging of interest on trade debtors from the AEs Held that:- Section 92B transpires that the transactions of 'sale' and 'lending ... money' have been distinctly set out. It is evident that interest income is associated only with the lending or borrowing of money and not with sale. When the international transaction is that of 'sale', the interest aspect is embedded in it. Early or late realization of sale proceeds is only incidental to the transaction of sale, but not a separate transaction in itself. No adjustment is warranted. Further, relevant consideration is the taxation of the enterprises of the group that are chargeable to tax in India. If the concept of over all higher or lower rate/amount of tax in the other countries in which AEs are situated is taken into consideration, then Chapter-X of the Income-tax Act would become meaningless.
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2012 (2) TMI 365
Fees for technical services Revenue treated transportation fees receivable as FTS u/s 9(1)(vii) Hongkong company engaged in the business of provision of supply chain management, including the provision of freight and forwarding and logistics services Held that:- In instant case, role of the assessee in the entire transaction was to perform only the destination services outside India by unloading and loading of consignment, custom clearance and transportation to the ultimate customer. In our opinion, it is too much to categorize such restricted services as managerial services. Further, use of computer in tracing the movement of the goods, though indirect, remote and not necessary, can not bring the payment for freight and logistics services within the purview of "technical services". Also, section 9(1)(i) cannot be invoked since assessee rendered "International services" outside India - Decided in favor of assessee.
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2012 (2) TMI 364
Income deemed to accrue or arise in India - export commission payable to non-resident agents withholding of tax - Held that:- No doubt the agents rendered services abroad and have solicited orders, but the right to receive the commission arises in India when the order is executed by the applicant in India. We therefore hold such export commission payable to be deemed to accrue and arise in India, and is taxable in view of the specific provision of Section 5(2)(b) r.w.s. 9(1)(i). Applicant has not contended that it is availing benefits under the provision of DTAA with Pakistan nor has it a claim of tax exemption under any provision of the Act. The provision of section 195 would apply.
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2012 (2) TMI 363
Revisionary order passed u/s 263 - Long-term capital gains - 'Deemed transfer' of property u/s 2(47)(v) - dis-allowance of exemption u/s 54EC reckoning period of six months for the deposit in bonds from the date of agreement and receipt of part payment at the first instance Held that:- Admittedly, assessee received part payments after execution of agreement to sale and handing over of possession thereby completing the transaction in terms of section 53A of Transfer of Property Act and invested in specified bonds i.e. NABARD bonds within one month of the receipt of sale consideration being part payment. In our view, in such case, the period of six months for making deposit u/s. 54EC should be reckoned from the dates of actual receipt of the consideration. Therefore, assessee is eligible for exemption u/s 54EC on part payment received Decided in favor of assessee.
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2012 (2) TMI 362
Plea for stay of the collection of tax and the interest partial relief - Held that:- Petitioner is directed to deposit sum of Rs.1.75 lacs in respect of the tax demand of Rs. 6.95 lacs as per the impugned order dated 29.12.2011 within fifteen days from the date of receipt of a copy of this order for admissibility of appeal.
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Customs
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2012 (2) TMI 360
Goods Imported - Provisional release - Held That:- Respondent shall complete the proceedings pursuant to the show cause notice issued to the petitioner, expeditiously. The same shall be done within 3 weeks from the date of receipt of a copy of this judgment. The writ petition is disposed of as above.
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2012 (2) TMI 359
Re-export of goods petition filed by foreign exporter to seek permission for re-shipment of goods exported by it to India - importer abandons the goods Held that:- Since, Petitioner has the right to request such permission and importer does not have any objection for the re-export of the goods in question, the respondents are directed to consider the request of re-export of the goods in question unless there are other legal impediments, for granting such permission.
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Corporate Laws
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2012 (2) TMI 361
Companies Act 1956 - petition filed u/s 433(e) & (f), 434 & 439 of Companies Act, 1956 seeking to wind up the Respondent-Company non-payment of debt Held that:- From the facts of the case it is concluded that there is no bona fide dispute as regards the dues of the petitioning creditor and mere filing of a suit is not enough to say that there is bona fide dispute as regards the claim of the petitioner or this application is an abuse of process of this Court. There is no doubt that the Company failed and neglected to pay the dues of the Petitioner Company. Therefore, this winding up application is admitted. The winding up application is to be advertised. However, Company is granted an opportunity to pay the dues as aforesaid by five monthly equal installments as stipulated. In case of regular payment of installments, order of advertisement would remain stayed permanently. In case any one of the installments is not paid the petitioner is permitted to publish the notice as directed hereinabove - Decided in favor of petitioner.
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Service Tax
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2012 (2) TMI 368
Whether power u/s 84 of the Finance Act, 1994 can be exercised by Revisional Authority during pendency of the appeal before Commissioner Held that:- Issue which is pending before the first Appellate authority, shall not be subject to revision jurisdiction u/s 84 of the Finance Act, 1994.
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2012 (2) TMI 367
Determination of nature of activity - whether repair and maintenance or industrial and commercial construction Held that:- Matter remitted back to adjudicating authority.
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Central Excise
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2012 (2) TMI 358
Whether penalty and interest u/s 11AC of Central Excise Act, 1944 can be levied and collected when the duty has been paid before the issue of Show Cause Notice Held that:- In view of decision in case of Union of India Vs. Dharmendra Textile Processors Ors., (2008 - TMI - 31520 - Supreme Court) , Order of Tribunal is set aside and matter is remitted back to Tribunal for its fresh consideration and decision.
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2012 (2) TMI 357
Pre-deposit for admissibility of appeal petitioner pleaded financial hardship seeked part relief - Held that:- Petitioner is directed to make a pre-deposit of 50% of the sales tax said to be payable by the petitioner, within a period of four weeks from today for admissibility of appeal.
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2012 (2) TMI 356
Differential duty - assessee being manufacturer of Washing Machines demand raised by Revenue on ground of undercharging of sale price decided in favor of assessee by first appellate authority & Tribunal Held that:- In our considered view, the Tribunal and the First Appellate Authority have not committed any error whatsoever and findings and the conclusions reached by those Authorities cannot be characterized as perverse. Therefore, appeal dismissed.
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