TMI Tax Updates - e-Newsletter
August 17, 2015
Case Laws in this Newsletter:
TMI SMS
News
Summary: The Ministry of Commerce and Industry, India, released a report outlining a strategy for economic integration with Cambodia, Laos, Myanmar, and Vietnam (CLMV). The report highlights factors like geographical proximity and economic dynamism that make this collaboration feasible. It identifies challenges such as information gaps and skill shortages and suggests focusing on sectors like agro-processing, pharmaceuticals, and IT. The report recommends setting up manufacturing units in CLMV to access Chinese markets and suggests aligning India-CLMV trade negotiations. The strategy supports India's Act East policy, aiming to strengthen economic ties in Southeast Asia.
Summary: The Wholesale Price Index (WPI) for all commodities in India decreased by 0.6% to 177.5 in July 2015 from June's 178.6. The annual inflation rate based on WPI was -4.05% in July 2015, compared to -2.40% in June and 5.41% in July 2014. Primary articles saw a 0.5% decline, with food articles dropping 0.6% and non-food articles 1.3%. The fuel and power index fell by 2.0%, while manufactured products decreased by 0.3%. The index for minerals rose by 3.0%. The inflation trends for various commodity groups are detailed in annexures.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 65.1225 on August 14, 2015, up from Rs. 64.9212 on August 13, 2015. Consequently, the exchange rates for the Euro, British Pound, and Japanese Yen against the Rupee were adjusted. On August 14, 2015, the rates were Rs. 72.5595 per Euro, Rs. 101.6171 per British Pound, and Rs. 52.35 per 100 Japanese Yen. These rates are determined based on the US Dollar reference rate and cross-currency quotes, with the SDR-Rupee rate also being influenced by these adjustments.
Notifications
Income Tax
1.
68/2015 - dated
13-8-2015
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IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies "Kerala Shops and Commercial Establishments Workers Welfare Fund Board", a Board established under the Kerala Shops and Commercial Establishments Workers’ Welfare Fund Act, 2006 (Act 24 of 2006) in respect of the certain specified income arising to the Board
Summary: The Central Government, under Section 10(46) of the Income-tax Act, 1961, has notified the "Kerala Shops and Commercial Establishments Workers Welfare Fund Board" regarding specific income exemptions. This includes amounts received in the Fund under the 2006 Act and interest earned on bank deposits. The notification applies retrospectively for the financial years 2013-2014 and 2014-2015, and prospectively for 2015-2016 to 2017-2018. The Board must not engage in commercial activities, maintain the specified income's nature, and file returns as per the Income-tax Act provisions for the notification to remain effective.
2.
67/2015 - dated
13-8-2015
-
IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies "Kerala Abkari Workers Welfare Fund Board", established by the Government of Kerala, in respect of the certain specified income arising to the said Board
Summary: The Central Government has notified the "Kerala Abkari Workers Welfare Fund Board," established by the Government of Kerala, under Section 10(46) of the Income-tax Act, 1961. This notification pertains to specific income types for the Board, including contributions from employers and employees and interest earned on bank deposits. The notification is effective from financial years 2014-15 to 2018-19, provided the Board does not engage in commercial activities, files income returns as required, and maintains the nature of its activities and income.
3.
65/2015 - dated
13-8-2015
-
IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies "Telangana State Electricity Regulatory Commission", a Commission constituted by the Government of Telangana in respect of the certain specified income arising to the said Commission
Summary: The Central Government has notified the "Telangana State Electricity Regulatory Commission" under Section 10(46) of the Income-tax Act, 1961, exempting specified income from taxation. The exempted income includes fees under the Electricity Act, 2003, grants and loans from the Telangana government, and interest on bank deposits. The Commission must not engage in commercial activities, must file income returns as per legal provisions, and maintain consistent activities and income nature. This notification applies to the financial years 2014-15 to 2018-19.
4.
64/2015 - dated
13-8-2015
-
IT
Section 10(46) of the Income-tax Act, 1961 – Central Government notifies "Karnataka State Rural Livelihood Promotion Society", a body constituted by the Government of Karnataka 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 "Karnataka State Rural Livelihood Promotion Society," a government-constituted body, regarding specific income exemptions. The exempted income includes grants from the Government of India, grants from the Government of Karnataka, and interest earned on bank deposits. This exemption is valid for financial years 2013-14 to 2017-18, provided the Society does not engage in commercial activities, maintains its income nature, and files income returns as per legal provisions.
5.
63/2015 - dated
12-8-2015
-
IT
Agreement between the Government of the Republic of India and the Government of the Republic of San Marino for the Exchange of Information with respect to taxes
Summary: The agreement between the Governments of India and San Marino, effective from August 29, 2014, facilitates the exchange of tax-related information. It aims to assist in the administration and enforcement of domestic tax laws by providing relevant information, including for tax determination, collection, and enforcement. The agreement covers all types of taxes imposed by the central and local governments of both countries and applies to future similar taxes. It ensures confidentiality and allows for mutual assistance in tax examinations. Either party can terminate the agreement after five years, with a six-month notice period.
Highlights / Catch Notes
Income Tax
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Appellant Denied Depreciation Claim on Machinery Due to Lack of Ownership from Andhra Pradesh State Electricity Board.
Case-Laws - SC : Depreciation on machinery purchased from Andhra Pradesh State Electricity Board - since the machinery was not purchased by the appellant, it never became the owner of the machinery and, therefore, could not claim any depreciation thereof. - SC
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Supreme Court dismisses appeal on agricultural land capital gain due to low tax effect, avoids ruling on merits.
Case-Laws - SC : Capital gain on transfer of aricultural land - apapeal by the assessee - Apex Court refuse to entertain the appeal and to decide the same on the merits on the ground of low tax effect - SC
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Sales Tax Rebate Not Eligible for Deduction as Profit u/s 80IC, Court Rules.
Case-Laws - HC : Deduction u/s 80IC - whether sales tax rebate to be included as profit derived from Industrial Undertaking and eligible as deduction u/s 80IC - Held No - HC
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Interest on late TDS payment stops if payee companies are assessed and found not liable for tax u/s 201(1A).
Case-Laws - HC : Interest payment under Section 201(1A) - when the assessment qua the payee companies was completed and it was held that both the companies were not liable to pay any tax, the liability to pay interest upon the late payment of TDS by assessee would stop running - HC
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High Court Dismisses Review Petitions on Deduction Claim u/s 35D; No Rectification by Assessing Officer Allowed.
Case-Laws - HC : Whether claim for deduction under Section 35D allowed in respect of expenses incurred in connection with private placement of equity shares is amenable to rectification by the Assessing Officer under Section 154? - review petitions dismissed with cost - HC
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High Court Confirms Seized Currency Adjustment Against Advance Tax and Interest Levy u/ss 132 and 234C.
Case-Laws - HC : Treatment of the currency seized during the search and seizure operations conducted u/s 132 - Adjustment with advance tax liability - levy of interest u/s 234C - at the stage of Section 132(5) of the Act, such liability in respect of the Assessee’s income for the Previous Year 1990-91 could not be specified under clause (iii) of Section 132(5) - levy of interest confirmed - HC
Customs
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Commission Returns Case for Non-Disclosure and Lack of Cooperation in Settlement Process to Original Authority for Legal Resolution.
Case-Laws - HC : Settlement of case – True and full Disclosure – lack of co-operation on part of petitioners for settlement of their case, Commission has rightly held that it was fit case for sending it back to original authority for disposal in accordance with law - HC
Service Tax
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Refund Denied: Employee Deputation to Sister Concern Not Considered Manpower Recruitment or Supply Service.
Case-Laws - AT : Denial of refund claim - deputation of employees to their own sister concern and recovering cost from them, would not amount to rendering of Manpower Recruitment or Supply Agency Service - AT
Central Excise
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Court Rules Nylon & Leather Belts Lose Plastic Identity in Manufacturing Process for Central Excise Classification.
Case-Laws - SC : Classification of goods - manufacture of nylon and leather belt, nylon and rubber belt and nylon and textile belt - Not only the products manufactured are wholly from the plastics, after the manufacture it lost its identity as plastic insofar as and has not known in the market any longer - SC
VAT
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High Court Rules Against VAT on 'Deemed Sale Price' for Non-Completed Transactions Under Delhi VAT Framework.
Case-Laws - HC : Levy of tax on ‘deemed sale price’ – DVAT - subject of tax not goods or goods sold, but transaction of “sale of goods” – Addition of Explanation 2 was to permit levy of VAT on sale price of transaction which is yet to take place and to that extent such levy cannot be sustained in law - HC
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