TMI Tax Updates - e-Newsletter
April 14, 2015
Case Laws in this Newsletter:
TMI SMS
News
Summary: An Advisory Committee under the Industries (Development Regulation) Act, 1951, recommended de-reserving the last 20 items exclusively manufactured by Micro and Small Enterprises (MSE) in India. This decision, formalized by a government notification, aligns with India's economic liberalization policies since 1991. The deregulation aims to foster investment and competition by allowing imports and encouraging MSEs to adopt advanced technologies and economies of scale. The de-reserved items include pickles, bread, mustard oil, wooden furniture, exercise books, laundry soap, safety matches, fireworks, agarbatties, and various steel and aluminum products. This policy change is intended to boost competitiveness in both domestic and global markets.
Summary: The Reserve Bank of India (RBI) has issued a warning regarding an application circulating on WhatsApp that claims to help users check their bank account balances. This app, named 'All Bank Balance Enquiry No,' features the RBI logo and lists various banks alongside mobile or call center numbers. The RBI has clarified that it has not developed this application and advises the public to use it at their own risk.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 62.3885 on April 13, 2015, slightly higher than the previous rate of Rs. 62.3660 on April 10, 2015. Based on this rate and cross-currency quotes, the exchange rates for the Euro, British Pound, and Japanese Yen against the Rupee were also updated. On April 13, 2015, the rates were Rs. 66.1630 for 1 Euro, Rs. 91.0560 for 1 British Pound, and Rs. 51.83 for 100 Japanese Yen. The Special Drawing Rights (SDR) to Rupee rate will be determined based on this reference rate.
Notifications
Customs
1.
12/2015 - dated
11-4-2015
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ADD
Seeks to extend the validity of Notification No. 98/2010-Customs dated 28-09-2010 for a further period of one year i.e. upto and inclusive of 11-04-2016
Summary: The Government of India, through the Ministry of Finance, has extended the validity of Notification No. 98/2010-Customs, which imposes anti-dumping duties on Recordable Digital Versatile Discs (DVDs) originating from Thailand and Vietnam. This extension is valid until April 11, 2016, unless revoked earlier. The notification, effective from April 12, 2015, amends the previous notification by omitting certain entries and clarifying the definition of recordable DVDs. This action follows a review initiated by the designated authority under the Customs Tariff Act, 1975, to continue the anti-dumping measures.
2.
11/2015 - dated
11-4-2015
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ADD
Seeks to levy definitive anti-dumping duty on imports of Electrical Insulators of Glass or Ceramics/Porcelain, whether assembled or un-assembled originating in, or exported from the People’s Republic of China for a period of five years.
Summary: The Government of India imposed a definitive anti-dumping duty on imports of electrical insulators made of glass or ceramics/porcelain from China for five years, effective from September 16, 2014. This decision followed findings that these imports were priced below normal value, causing injury to the domestic industry. The duty applies to specific producers and exporters, with rates varying per metric tonne. Certain insulators, such as those for telephone or telegraph use with voltage ratings up to 1 KV, are excluded. The duty is payable in Indian currency, with exchange rates determined by relevant notifications under the Customs Act, 1962.
Income Tax
3.
38/2015 - dated
10-4-2015
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IT
Income tax (Fifth Amendment) Rules, 2015
Summary: The Income Tax (Fifth Amendment) Rules, 2015, effective from April 10, 2015, amend the Income-tax Rules, 1962. Key changes include provisions for companies not registered under the Companies Act, 2013, to apply for a Permanent Account Number (PAN) and a tax deduction and collection account number using Form No. INC-7. Additionally, the amendment updates proof of date of birth requirements, allowing various documents like birth certificates, passports, and Aadhaar cards. It also provides alternatives for proof of company registration, including the corporate identity number issued under the Companies Act, 2013.
4.
37/2015 - dated
10-4-2015
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IT
U/s. 80-IA of the IT Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc.
Summary: The Central Government has rescinded the notification granting industrial park status to an undertaking operated by a private company in Hyderabad under Section 80-IA of the Income Tax Act, 1961. Initially approved in 2005 and notified in 2006, the undertaking sought to transfer operations to another company. However, the government rejected further amendments to the approval terms in 2014 due to non-compliance with the Industrial Park Scheme and conditions set by the Ministry of Finance and Commerce. Consequently, the notification issued in 2006 is rescinded, effective retroactively from August 21, 2006.
5.
36/2015 - dated
10-4-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “'Punjab State Electricity Regulatory Commission” a Commission constituted by the Government of Punjab, in respect of the certain specified income arising to the said Commission.
Summary: The Central Government, under Section 10(46) of the Income-tax Act, 1961, has notified the Punjab State Electricity Regulatory Commission, established by the Government of Punjab, regarding specific income types exempt from taxation. These include processing fees for tariff determination, license fees, petition fees, and interest income from bank deposits. This notification applies to financial years 2011-12 to 2015-16, provided the Commission does not engage in commercial activities, maintains the nature of its specified income, and files income returns as per legal requirements.
6.
35/2015 - dated
10-4-2015
-
IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “'Haryana Electricity Regulatory Commission” a Commission constituted by the Government of Haryana, in respect of the certain specified income arising to the said body.
Summary: The Central Government, under Section 10(46) of the Income-tax Act, 1961, has notified the Haryana Electricity Regulatory Commission, established under the Haryana Electricity Reform Act, 1997, regarding specified income types. These include grants and loans from the Government of Haryana, fees under the Electricity Act, 2003, and interest on these funds. The notification stipulates that the Commission must not engage in commercial activities, maintain the nature of its income, and file income returns as per legal requirements. This notification applies to financial years 2012-13 to 2016-17.
7.
34/2015 - dated
10-4-2015
-
IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “'Rajasthan State Pollution Control Board” a Board constituted by the Government of Rajasthan, in respect of the certain specified income arising to the said Board
Summary: The Central Government, under Section 10(46) of the Income-tax Act, 1961, has notified the Rajasthan State Pollution Control Board, established under the Water (Prevention and Control of Pollution) Act, 1974, regarding specified income exemptions. The exempted income includes government grants, license fees, fines, and interest earned on these amounts for the financial years 2012-13 to 2016-17. The Board must not engage in commercial activities, maintain the nature of income, and file income returns as per the Act's provisions to qualify for these exemptions.
SEZ
8.
S.O. 763 (E) - dated
12-3-2015
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SEZ
Set up a sector specific Special Economic Zone for Information Technology and Information Technology Enabled Services at village Attipra, Taluk and District Thiruvananthapuram in the State of Kerala
Summary: The Central Government has approved the expansion of a sector-specific Special Economic Zone (SEZ) for Information Technology and Information Technology Enabled Services in Attipra, Thiruvananthapuram, Kerala, proposed by Electronics Technology Parks-Kerala (TECHNOPARK). Initially notified in 2009, the SEZ now includes an additional 10.83.17 hectares, making the total area 22.70.82 hectares. This expansion is in accordance with the Special Economic Zones Act, 2005, and the Special Economic Zones Rules, 2006. The notification includes detailed survey numbers and areas of the newly added land.
9.
S.O. 762 (E) - dated
12-3-2015
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SEZ
Set up a sector specific Special Economic Zone for Information Technology and Information Technology Enabled Services at Outer Ring Road, Devarabeesanhalli Village, Varthur Hobli, Bangalore East Taluk, Bangalore in the State of Karnataka
Summary: The Central Government has approved the inclusion of an additional 0.68 hectares to an existing Special Economic Zone (SEZ) for Information Technology and Information Technology Enabled Services located at Outer Ring Road, Devarabeesanhalli Village, Bangalore, Karnataka. This expansion, proposed by a private organization, increases the SEZ's total area to 38.84 hectares. The notification follows the provisions of the Special Economic Zones Act, 2005, and the Special Economic Zones Rules, 2006. The added land comprises survey numbers 11/3 (P) and 29/2 (P).
VAT - Delhi
10.
No. F.14/( 2)/LA-2015/cons2law/40-54 - dated
30-3-2015
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DVAT
Gazette Notification of the Delhi Value Added Tax (1st Amendment) Act, 2015 (Delhi Act 03 of 2015)
Summary: The Delhi Value Added Tax (1st Amendment) Act, 2015, received assent from the Lieutenant Governor on March 27, 2015, and was published for general information. This amendment modifies the Delhi Value Added Tax Act, 2004, specifically section 11, allowing taxpayers to carry forward or claim refunds of excess amounts at the end of a tax period. The amendment outlines that refunds will be processed as described in sections 38 and 39 of the principal Act. The Act extends to the entire National Capital Territory of Delhi and will commence on a date appointed by the government.
Circulars / Instructions / Orders
Income Tax
1.
Instruction No. 03/2015 - dated
10-4-2015
India-UK Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTAC or the Convention) - Suspension of Collection of Taxes during Mutual Agreement Procedure (MAP)
Summary: The India-UK Convention for Avoidance of Double Taxation and Prevention of Fiscal Evasion outlines a Mutual Agreement Procedure (MAP) to prevent double taxation. Article 27 allows the Competent Authorities to create procedures for MAP implementation. A Memorandum of Understanding (MoU) between India and the UK suspends tax collection during MAP, requiring a bank guarantee equal to the disputed tax amount. This applies to UK residents and Indian taxpayers involved in transfer pricing disputes. The MoU mandates the suspension of tax collection if MAP is pending, with conditions for bank guarantees. The MoU's provisions are also applicable to Indian taxpayers in transfer pricing cases.
Highlights / Catch Notes
Income Tax
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New Companies Can Simultaneously Apply for PAN and TAN u/s 7 of Companies Act, 2013; Rule 114, 114A Amended.
Notifications : New Companies going to be incorporated now can seek PAN and TAN numbers while getting incorporated u/s 7 of Companies Act, 2013 - Rule 114 and 114A of Income Tax Rules amended
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High Court Sets Aside Summoning Order in Case of Non-compliance with Section 142(1) on Foreign Bank Account Disclosure.
Case-Laws - HC : Criminal proceedings - prosecution - non-compliance/non-cooperation to the notices issued u/s 142(1) - discloser of foreign bank account which existed with the HSBC - summoning order set aside - HC
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Fair Rent Determines Annual Letting Value for Self-Occupied Properties in Ahmedabad, Not Standard Rent.
Case-Laws - HC : Annual Letting Value of the selfoccupied property at Ahmedabad - If the fair rent is less than the standard rent, then, it is the fair rent which shall be taken as annual letting value and not the standard rent. This will apply to both, self acquired properties and general cases where property is let out. - HC
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Government Grant Interest Not Taxable as Income, Says State Directive.
Case-Laws - HC : Taxability of interest receipt - interest temporarily earned on the grant received from the Government and that too as per the instructions given by the State Government cannot be included in the income of the assessee - HC
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Furniture Rental Income Treated as House Property Income, Not Business Income, Per Section 263 of the Income Tax Act.
Case-Laws - AT : Revision u/s 263 - income received towards furnitures and fixtures has to be treated as income from house property only as is the case with the rental income from letting out of the premises and cannot be treated as business income. - AT
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Deemed Dividends Addition Deleted: Beyond Assessment Scope Per Section 153A After Search u/s 132(1) of Income Tax Act.
Case-Laws - AT : Deemed dividend u/s 2(22)(e) - assessment in pursuance of search action u/s 132(1) - addition on account of deemed dividend u/s 2(22)(e) deleted as same is beyond the scope of assessment u/s 153A - AT
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Commissioner of Income Tax (Appeals) Upholds Estimation of Agricultural Income Due to Lack of Separate Accounts by Assessee.
Case-Laws - AT : Agricultural income - assessee has not maintained separate books of account related to agricultural income - orders of CIT (Appeals) on the issue of estimation of agricultural income sustained - AT
Customs
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Refund Allowed for Excess Duty Paid Due to Clerical Error Without Challenging Assessment.
Case-Laws - AT : Denial of refund claim - Refund of excess duty paid - assessment not challenged - in case excess duty has been paid on account of clerical error, refund is admissible. - AT
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Court Confirms Penalty; Denies Notification No. 52/2003 for Import of Finished Gold Chains Meant for Re-export.
Case-Laws - HC : Levy of penalty and redemption fine - benefit of notification No.52/2003 - Import of gold jewellery for the purpose of re-export after repair/remaking - exemption denied in respect of import of marketable commodity being finished ladies gold chain - levy of penalty confirmed - HC
Wealth-tax
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Tribunal Can Recall Orders for Mistakes or Errors Under Rectification Process, But Not for Other Reasons.
Case-Laws - HC : Tribunal, while exercising the power of rectification, can recall its order, if it is satisfied that on account of mistake, manifest error or omission attributable to the Tribunal, prejudice is caused to the party. The Tribunal can recall its order for rectification of mistake apparent from the record. Else, the Tribunal has no power to recall its order. - HC
Service Tax
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Refund Denied for CENVAT Credit on Non-Taxable Service Exports; Divergence from mPortal India Rulings Noted.
Case-Laws - AT : Refund of cenvat credit - export of non-taxable servcies - Decision in the case of mPortal India Wireless Solutions.(P) Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and [2010 (7) TMI 92 - CESTAT, BANGALORE] distinguished. - Refund denied - AT
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Penalty Waived for Commission Earnings from Banks Under Business Auxiliary Service Due to Doubts, Section 80 Invoked.
Case-Laws - AT : Levy of penalty - Business Auxiliary Service - Receipt of commission from the financial institutions/banks - The board circular specifically states that there were certain doubts in the mind of the field formation and hence, reference was made - penalty waived invoking section 80 - AT
Central Excise
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SCN Demand for Interest and Penalty Set Aside Due to Incorrect Invocation of Provisions After CENVAT Reversal.
Case-Laws - AT : CENVAT Credit - appellant did not reversed cenvat credit while removing the components - credit was reversed later before issue of SCN - SCN invoked the wrong provisions - demand of interest and penalty set aside - AT
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Fresubin Classified as 'Instant Food Mix', Not 'Food Supplement', Affecting Central Excise Regulations Compliance.
Case-Laws - AT : Classification of Fresubin - Classification as 'food supplement' or 'instant food mix' - Even if, Fresubin is used by patients recovering from illness, it will not cease to be a food mix. - AT
VAT
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Refund Denial for Overpaid Tax Creates Unfair Disparity Between Compliant Taxpayers and Initial Defaulters Paying Reduced Rate.
Case-Laws - SC : Denial of refund claim - The Explanation, which states that the amount shall not be refunded in any case on the basis that dealer had filed the tax at a higher rate, results in invidious discrimination towards those who have paid the tax at a higher rate, like the appellants, when compared with that category of the persons who were defaulters and have now been allowed to pay the tax at the rate of 1% for the relevant period. - SC
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Multi-System Operators Now Liable for Entertainments and Advertisements Tax Under "Proprietor" Definition.
Case-Laws - HC : Levy of Entertainments & Advertisements Tax - the MSO is undoubtedly an integral part of the chain of persons or agencies or organization providing such entertainment and since the definition of the "Proprietor" clearly covers such an assessee - HC
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