TMI Tax Updates - e-Newsletter
May 1, 2023
Case Laws in this Newsletter:
Articles
By: GEETANJALI PANDEY
Summary: Income deemed to accrue or arise in India for non-residents under Section 9 of the Income Tax Act includes income from interest, royalties, and fees for technical services, regardless of the non-resident's physical presence or business connection in India. Business connections or significant economic presence, such as transactions exceeding Rs. 2 crore or engaging with over 300,000 users in India, also lead to tax liability. Exclusions apply to independent brokers and certain operations like news collection or diamond display. Income from property, capital assets, and specific transactions involving Indian assets are taxable. Salary, dividends, and interest related to Indian activities are taxable, while certain investments and operations confined to exports or news collection are exempt.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The article discusses the execution of decrees under the Civil Procedure Code (C.P.C.), emphasizing the importance of enforcing decrees to realize their benefits. It highlights that execution applications are independent of the original suit and must be filed within 12 years as per Article 136 of the Limitation Act, 1963. The Supreme Court rulings in various cases, including the interpretation of enforceability dates, are examined. In a specific case, the Court determined the limitation period based on when the decree became executable, concluding that the execution application was filed within the permissible timeframe, thus dismissing the appeal.
By: Vivek Jalan
Summary: Section 92C(2) of the Income Tax Act allows for a tolerance limit of +/- 5% when determining the arm's length price (ALP) for international or specified domestic transactions. This provision applies even if only one comparable remains in the set. In a case involving a company and the tax authorities, the Tax Tribunal ruled that the benefit of this tolerance limit is available when the variation between the ALP and the actual transaction price falls within the specified percentage, even if only one comparable is used. This ensures flexibility for taxpayers in determining the ALP.
News
Summary: The Government of India announced the re-issue of three government securities: 7.06% GS 2028 for Rs 8,000 crore, 7.26% GS 2033 for Rs 14,000 crore, and 7.36% GS 2052 for Rs 11,000 crore. The auctions, conducted by the Reserve Bank of India on May 4, 2023, will use both uniform and multiple price methods. An additional subscription of Rs 2,000 crore may be retained for each security. Up to 5% of the securities will be allocated to eligible individuals and institutions. Bids must be submitted electronically via the RBI's E-Kuber system. Payment is due by May 8, 2023.
Summary: Finance and Corporate Affairs Minister launched a book titled "Reflections" by a prominent banker in Mumbai. The book details the author's extensive experiences in India's financial sector, highlighting significant events and initiatives. The launch event was attended by notable figures from the financial industry. The Minister praised the author for his leadership and contributions to mentoring future leaders, emphasizing his advocacy for women empowerment in financial services. The book is regarded as a significant account of the evolution of modern banking in India, showcasing the author's role in establishing sustainable practices and promoting gender-neutral meritocracy in the sector.
Notifications
Customs
1.
32/2023 - dated
28-4-2023
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
Summary: The Government of India, through the Central Board of Indirect Taxes and Customs, has issued Notification No. 32/2023, amending tariff values for various goods under the Customs Act, 1962. Effective from April 29, 2023, the revised tariff values include crude palm oil at $1001 per metric tonne, RBD palm oil at $1022, crude soyabean oil at $1024, and brass scrap at $5154. Gold is valued at $639 per 10 grams, and silver at $815 per kilogram. Areca nuts remain unchanged at $10379 per metric tonne. These adjustments follow prior amendments to the principal notification from August 3, 2001.
Circulars / Instructions / Orders
DGFT
1.
12/2023 - dated
28-4-2023
New TRQ Applications under tariff head 7108 under India-UAE CEPA for FY 2023-24
Summary: The Directorate General of Foreign Trade has announced the invitation of new applications for Tariff Rate Quota (TRQ) under tariff head 7108 as part of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) for the fiscal year 2023-24. Applications are open from the date of this notice until May 7, 2023, and must be submitted online through the DGFT website. The total TRQ allocation is 140 metric tons, with a minimum lot size of 5 kilograms, subject to adjustment based on the number of applicants. TRQ allocations will undergo a six-month review, and underutilized allocations may be reallocated.
Highlights / Catch Notes
Income Tax
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Court Orders New Stay Applications for Tax Recovery, Citing 'Trinity' Principles and Madras HC Guidelines in Queen Agencies, Kannammal Cases.
Case-Laws - HC : Stay of recovery of demand - application of 'Trinity' principles - first respondent is directed to pass fresh orders in the stay applications filed, keeping in mind the 'Trinity' principles laid down by this Court in the case of Queen Agencies and in the case of Kannammal. [2021 (4) TMI 609 - MADRAS HIGH COURT] - HC
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Uber Payments to Drivers Not Subject to TDS u/s 194C; Entity Not "Person Responsible" or "Assessee in Default.
Case-Laws - AT : TDS u/s 194C - payments made to driver-partners under the Uber App - the assessee cannot be treated as a “person responsible for paying” for the purpose of section 194C r/w section 204 of the Act in respect of payment made to driver partners on behalf of the Uber BV for the transportation services - assessee cannot be treated as an “assessee in default” - AT
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Interest Calculation Error for Late Income Tax Returns: Section 234A Misapplied for Returns Filed u/s 148.
Case-Laws - AT : Charging interest u/s 234A, 234B and 234C - late filing of return of income - CIT(A) was not right in levying interest under Section 234A of the Act when the return was filed under Section 148 itself and therefore, the interest should be charged from the date of notice under Section 148 of the Act itself and not from the date of return filed u/s 139 or it is due date u/s 139. - AT
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Excess stock found in tax survey leads to unexplained investment assessment u/s 69B and tax levy u/s 115BBE.
Case-Laws - AT : Unexplained investment u/s. 69B and levy of tax u/s 115BBE - income towards difference in stock - excess stock found during the course of survey - AO directed to assess additional income offered towards excess stock found during the course of survey under the head profits and gains of business and profession as considered by the assessee. - AT
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Assessing Officer to Re-evaluate Income Classification u/ss 69A, 69C, and 115BBE for Tax Purposes.
Case-Laws - AT : Chargeability of tax u/s 115BBE - Nature of income declared in survey proceedings u/s. 133A? - Undisclosed income u/s 69A and 69C or Business Income - when the contention of the assessee is that the assessee has no other business then the present business and the income declared is out of the business of the assessee, we are of view that the matter needs to be re-examined at the end of AO. - AT
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ITAT rules appellant company not a Permanent Establishment of Japanese parent, no TDS liability u/ss 195 & 40(a)(i).
Case-Laws - AT : TDS u/s 195 - non-deduction of TDS u/s 40(a) (i) - assessee company is a subsidiary company of its parent company in Japan - the appellant is not the PE of Mitusi & Co. Ltd (Japan), hence in view of said findings of the Honorable ITAT there is no question of attribution of any profit of Mitusi & Co. Ltd (Japan) to the appellant company - No TDS liability - AT
Customs
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Tribunal Dismisses Appeals Over Unresolved SAD Refund Deficiencies; No Further Notice Required per April 9, 2018 Memo.
Case-Laws - AT : Principles of natural justice - refund of SAD - The discrepancies in the refund claim were noticed by the Deficiency Memo dated 09.04.2018 itself. The said Memo has been mentioned in the Orders-in-Original which got merged with the Orders-in-Appeal as have been challenged before this Tribunal. It is the same Deficiency Memo which has been mentioned in the impugned Final Order dated 21.08.2021. Hence, there was no need of serving another notice to the appellants prior rejecting their appeals for want of removal of those deficiencies. - AT
Indian Laws
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Supreme Court Upholds High Court: Auctions Must Be Transparent and Competitive for Fair Valuation and Pricing.
Case-Laws - SC : Auction - company declared as a sick company - HC has set aside the auction - The purpose of auction (open or close format) is to get the most remunerative price and giving opportunity to the intending bidders to participate and fetch higher realizable value of the property. If that path is cut down or closed, the possibility of fraud or to secure inadequate price or underbidding would loom large. - Order of HC sustained - SC
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Heroin Smuggling Case Falters: Appellants Acquitted as Prosecution Fails to Prove Possession or Transport Beyond Doubt.
Case-Laws - SC : Smuggling - Heroin - The case of the prosecution is not free from suspicion. The prosecution has not proved beyond a reasonable doubt that the appellants in these two appeals were in possession of the contraband or that they brought the contraband to the hotel room of the accused no.4 - the appellants are acquitted of the offences alleged against them - SC
PMLA
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Court Error in Denying Relief: Acquittal Misinterpreted as Compromise, No Scheduled Offence or Crime Proceeds Exist.
Case-Laws - HC : Money laundering - proceeds of crime - it is evident that upon closure of the criminal case and acquittal of appellant No. 1 on discharge, there is no scheduled offence against the appellants. In the absence of any crime, question of any proceeds of crime would not arise - learned Single Judge had erred in refusing to grant relief to the appellants by taking the view that acquittal of the appellants was on compromise and not on merit and relegating the appellants to the forum of the designated court. - HC
Service Tax
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Retrospective Service Tax Exemption Leads to Refund Credited to Consumer Welfare Fund Due to Unjust Enrichment Principles.
Case-Laws - AT : Refund of Service Tax - principles of unjust enrichment - Since the appellant have paid service tax in the routine course and subsequently when the service tax was made exempted retrospectively, the incidence of service tax stood passed on. Therefore, the lower authorities have rightly credited the refund amount in the Consumer Welfare Fund - AT
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Services Classified as Business Auxiliary for Foreign Agent Commissions; Exemption Granted Under Notification No. 14/2004.
Case-Laws - AT : Classification of services - business auxiliary service - commission paid to foreign agents - The liaising with customers and getting export orders is itself a ‘procurement of service’ within the meaning of (a) under Notification No. 14/2004 and the same would also amount to provision of service on behalf of the client as per (c) of the above Notification. - benefit of exemption under Notification No. 14/2004 allowed - AT
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Court Rules Appellant's Event Services Qualify as Mandap Keeper Services; Hotel and Restaurant Defense Rejected by Commissioner.
Case-Laws - AT : Classification of Services - mandap keeper service or not - ppellant provides services in relation to birthday parties, kitty parties and marriage parties - The defence taken by the appellant that it was operating hotels/ restaurant and serving food on per plate basis was not accepted by the Commissioner in view of the categorical statement of the manager (operations) and the director of the appellant, as also the records resumed by the investigating officers - AT
Central Excise
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Court Rules on RSP Valuation: No Violation of Rule 9; Appellant Entitled to Pro-Rata Duty Benefit.
Case-Laws - AT : Valuation of manufactured goods - Change in Retail Sale Price (RSP) - there is no doubt that the term ‘permanently’ ‘discontinuation’ or ‘commencement’ of retail sale price must be considered in a particular month and not otherwise - the terms ‘permanently’ in the 4th proviso to Rule 9 was not violated by the appellant. - The Revenue has not disputed the correctness of the stock in the appellant’s factory which was recorded in the records. Due to this procedural lapse, the benefit of pro-rata based duty in terms of 4th proviso read with 3rd proviso, cannot be denied. - AT
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