TMI Tax Updates - e-Newsletter
September 22, 2015
Case Laws in this Newsletter:
TMI SMS
Articles
By: CA Madhav Kalani
Summary: Service tax is applicable to services provided by the government or local authorities unless they fall under the negative list specified in Section 66D of the Act. Exemptions include postal services, services related to aircraft or vessels, and transport services. Services provided to business entities, not covered under specific exemptions, are taxable. The reverse charge mechanism applies, where the service receiver, typically a business entity, pays the tax. Amendments are pending, and confusion persists regarding the tax's applicability to certain services, such as Provident Fund Administration Charges. Definitions for "Government" and "Local authority" are provided in the Act.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: A collective mark, as defined by the Trade Marks Act, 1999, distinguishes goods or services of an association's members from others. Governed by Sections 61-68 of the Act and Part II of the Trade Mark Rules, 2002, collective marks must comply with specific registration and regulation requirements. Registration is denied if the mark is misleading or not perceived as a collective mark. Applications must include regulations detailing authorized users, membership conditions, and sanctions for misuse. The Registrar examines applications and regulations, allowing public inspection. Infringement suits consider losses to authorized users, and registration can be removed if the mark misleads or regulations are not observed.
News
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 65.7531 on September 21, 2015, down from Rs. 66.9255 on September 18, 2015. Consequently, the exchange rates for the Euro, British Pound, and Japanese Yen against the Rupee were adjusted. On September 21, 2015, 1 Euro equaled Rs. 74.3799, 1 British Pound equaled Rs. 102.1672, and 100 Japanese Yen equaled Rs. 54.83. The SDR-Rupee rate is determined based on this reference rate.
Summary: The Finance Minister held meetings with major foreign investors and companies during his visit to Hong Kong, emphasizing the Indian government's commitment to economic reforms and fiscal deficit targets. He highlighted the priority of implementing GST and discussed enhancing trade and investment relations with China and Hong Kong. The potential for collaboration in developing smart cities was noted, alongside Hong Kong's role as a gateway for Indian exports to China. The Finance Minister acknowledged the contributions of overseas Indians in promoting trade and investment. He planned further engagements with investors and officials before concluding his visit.
Circulars / Instructions / Orders
VAT - Delhi
1.
No. F. 9(24) Ex/Estt/07/Vol-I/639 - dated
16-9-2015
The posting of Excise inspectors is ordered as under with immediate effect
Summary: The Government of the National Capital Territory of Delhi has ordered the immediate posting of several Excise inspectors. The assignments are as follows: one inspector is assigned to Confiscation/Enforcement, two inspectors and one sub-inspector to Enforcement, and one sub-inspector to the Permit branch. This directive has been issued with the approval of the Competent Authority by the Assistant Commissioner of Administration.
Income Tax
2.
12/2015 - dated
17-9-2015
Custody of Refund Vouchers
Summary: Instruction No. 12/2015, dated 17-9-2015, restricts the issuance of manual income tax refunds by Assessing Officers, except in exceptional circumstances. Manual refunds up to Rs. 1 lakh require approval from the Range Head, while those exceeding Rs. 1 lakh need approval from the Pr.CIT/CIT. Refund Vouchers must be securely kept by the respective Range Heads, who are responsible for their safekeeping and proper use. This directive is to be communicated to all officers for strict compliance.
DGFT
3.
37/2015-20 - dated
21-9-2015
Amendment in Para 2.63 of HBP, 2015-20.
Summary: The amendment to Paragraph 2.63(a) of the Handbook of Procedures, 2015-20, allows for the import and export of exhibits, including construction and decorative materials for temporary stands at exhibitions, fairs, or similar events, without requiring an Authorisation. Previously, both a bond/security to Customs and an ATA Carnet were needed. The revised regulation permits the submission of either a bond/security to Customs or an ATA Carnet, simplifying the process for temporary import/export of such exhibits for a period of six months on a re-export/re-import basis.
Highlights / Catch Notes
Income Tax
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Court Upholds Charitable Exemption u/s 10(23C)(iv) After Misinterpretation of Donation Types by DGIT(E.
Case-Laws - HC : Withdrawal of exemption granted u/s 10(23C)(iv) - DGIT(E) erroneously drew a distinction between corpus and non-corpus donations made by it to HNF - Hamdard’s is not carrying on a business of the nature envisaged in condition (c) of the order of exemption/seventh proviso to Section 10(23C) - Hamdard’s dominant purpose is charitable in nature, and it is not guided by the motive of profit-making - Exemption cannot be denied - HC
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Taxpayer's Attempt to Change Stock Valuation Method Denied as Afterthought to Reduce Taxable Income.
Case-Laws - AT : Addition to the closing stock - consequent to search action, the assessee wanted to change the method of stock valuation for the first time, which is nothing but an after-thought so as to reduce the income which cannot be permitted at this point of time - AT
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Voluntary Refund of Excess Salary by Academic Avoids Additional Tax Due to Incorrect Pay Fixation.
Case-Laws - AT : Addition on account of excess salary paid by the employer in the earlier years but recovered during the present year - The fact that the assessee, on her own, refunded the amount of excess salary received due to wrong pay fixation, was a gracious gesture, which is hallmark of academic fraternity anyway, on her part - No addition - AT
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Interest Calculation u/s 234C: Starts from Cheque Presentation Date, If Cheque is Honored.
Case-Laws - AT : Interest u/s 234C - Date of presentation of cheque - Cheques issued have not been dishonored - nterest u/s 234C of the Act should be computed from the date of presentation of the cheque of tax payment. - AT
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City Development as Public Utility Qualifies for Tax Benefits u/s 11 and Section 2(15) of Income Tax Act.
Case-Laws - AT : Charitable activity - The planned development of cities and towns is an object of general public utility, and that is an object consistently followed by the assessee in all its activities - , the benefit of Section 11 read with Section 2 (15) cannot be declined - AT
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Acquiring Exclusive Vendor Status Considered Capital Expenditure, Transaction Nomenclature Deemed Irrelevant in Assessment Reopening.
Case-Laws - AT : Reopening of assessment - Nomenclature of a transaction is immaterial while deciding the true nature of the transaction. Thus no hesitation to hold that the expenditure incurred by the assessee company in acquiring exclusive vendor status in terms of the agreement entered into by it is nothing but capital expenditure - AT
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Assessee's House Property Income Addition Overturned Due to Lack of Evidence; Based on Unsustainable Assumptions by Assessing Officer.
Case-Laws - AT : Addition for 'income from house property' - there is no evidence which can substantiate that the assessee actually earned rental income from the said property during the previous year - addition made by the AO on the basis of surmises and conjectures cannot be held as sustainable - AT
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Taxpayer's Book Entries Acknowledge Debt Under Income Tax Act, Extending Liability Period Per Limitation Act Section 18.
Case-Laws - AT : Invoking Section 41(1) - entries in the books of account of the assessee would amount to an acknowledgment of the liability within the meaning of section 18 of the Limitation Act, 1963, and extend the period of limitation for the discharge of the liability as debt - not a case of cessation of liability - AT
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Construction Costs for Storage Structures Classified as Revenue Expenditure, Deductible from Taxable Income per Case Law.
Case-Laws - AT : Expenditure incurred on improvement/additions to leasehold property - The expenditure incurred by the assessee on construction of storage structure etc. has to be allowed as revenue expenditure - AT
Customs
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Exemption for Clove Imports from Comoros Maintained Despite Exporter's Failure to Certify Origin Properly.
Case-Laws - AT : Import of Comoros Cloves - origin was not certified by the exporter from the exporting country - the benefit of exemption cannot be denied only for the procedural discrepancies - AT
Service Tax
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Cenvat Credit Allowed for Outward Transportation as Charges Included in Assessable Value, Goods Delivered to Buyer Location.
Case-Laws - AT : Appellant is entitled to take Cenvat credit on outward transportation service as the transportation charges have formed part of the assessable value and goods are to be delivered at the place of the buyers. - AT
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Court Rules Service Tax Inapplicable Without Actual Performance of Steamer Agent Duties at Port.
Case-Laws - AT : Steamer agent services - port service - unless the appellant was actually rendering steamer agent service, there was no question of levying Service Tax under this heading. - AT
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Appellant's Refund Claim for Export Services Initially Denied Due to Procedure, Ultimately Approved Under Notification No.41/07-ST.
Case-Laws - AT : Denial of refund claim - Notification No.41/07-ST - services used for export purposes - Refund was denied to the Appellant mainly on various procedural grounds - refund allowed - AT
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Pre-deposit of penalty required only if challenging penalty order; composite orders cause undue hardship otherwise.
Case-Laws - HC : Pre-deposit of the penalty amount would be required only when the order of the penalty alone is under challenge. But when there is composite order namely assessment order of the tax component along with interest and also penalty as in the present case, direction for pre-deposit of any portion of the penalty amount would result in injustice as well as hardship. - HC
Central Excise
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Court Enforces Strict Prohibition on Unauthorized Domestic Sales by 100% Export Oriented Units in DTA.
Case-Laws - HC : 100% EOU - Clandestine removal of goods - DTA clearances -Once there is an absolute prohibition against the sale of goods manufactured by the appellant in the DTA, the question of making any classification or distinction of the goods or purchases in the DTA, does not arise - HC
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Court Rules Government Must Return Excess Duty Paid; Reversal in CENVAT Credit Account Justified.
Case-Laws - HC : Denial of refund claim - amount paid in excess of duty at the above effective rate - Refund allowed by way of reversal in CENVAT Credit account - Government cannot retain the amount paid without any authority of law. - HC
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Goods Classification Case: Revenue Lacks Evidence for Ceramic Tile Classification; No Demand Against Respondent.
Case-Laws - AT : Classification of goods - ceramic tile - smaller pieces ( cubes of various sizes and shapes) manufactured and affixed to a sheet (craft paper) - No material found from Revenue to show as to whether the goods of respondent were technically tested by any recognized laboratory or national institute to hold that the goods were ceramic - No demand - AT
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Misapplication of Power Consumption Norms Leads to Duty Evasion Dispute in Manual Rolling Mill Case.
Case-Laws - AT : Duty evasion - Clandestine removal of goods - There is absolutely no justification for adopting power consumption norm of M/s.SSSRM to the unit of the respondent as while the rolling mills of M/s.SSSRM is automatic rolling mills, the respondent's rolling mill is manual - AT
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