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05.08.2015 - Voice of CA presents - Updates
Wednesday, August 5, 2015

  I. Headlines Today:    

  1. FinMin to issue more FAQs on black money  (Click for detail)
  2. Tax evaders may soon have to pay for past sins  (Click for detail)
  3. In a First, CBDT Inks `Rollback' Transfer Pricing Deal with MNC  (Click for detail)
  4. Customs Noti.: Amends the notification no. 12/2012 – Custom, dated 17th March, 2012 vide the original notification the Central Government has extended the benefit of reduced custom duty and additional duty payable on import of certain component / parts / items. Vide the notification no. 43/2015 – Custom, the Central Government has added few more items to the original list meaning thereby the benefit is extended to include few other component / parts / items as prescribed in the notification  (Click for detail)
  5. RBI govt in talks to review FII limit in domestic debt  (Click for detail)
  6. Rajan OK with No Veto for RBI Guv on Rates  (Click for detail)
  7. Self-employed? Here are some ways to claim your tax breaks   (Click for detail)


II.  Useful Presentation:

Taxation of E-commerce Companies

(Please click here for detail)  

[Contribution by CA. Sanjay Agarwal, Founder - Voice of CA]


III.  Direct Taxes Case Laws:

1. CIT Vs.  DLF Commercial Project Corporation, I.T.A. No. 507/2013, Date of Order: 15.07.2015, High Court of Delhi

Whether non-deduction of TDS on reimbursement expenses would lead to disallowance of such reimbursement expenditure?

Held: No

Brief facts of the case: The assessee entered in an agreement with M/s DLF Land Ltd. to carry out activities like maintenance of books of accounts and getting the accounts audited, maintenance of secretarial records, filing with various statutory authorities etc. for which M/s DLF Land Ltd. was entitled to receive service charges @ 5% of such expenditure. During the year, assessee reimbursed the company for expenditure incurred on its behalf and also paid service charges @ 5% on it. Assessee duly deducted TDS on amount paid to M/s DLF Land Ltd. However, the Ld. AO disallowed such reimbursement of expenditure u/s 40(a)(ia) for non-deduction of TDS. The Ld. AO contended that the assessee ought to have deducted TDS on the total amount reimbursed by it to M/s DLF Land Ltd., and the TDS actually deducted on service charge does not suffice.

Hon’ble Delhi high court held that neither provision (194C & 194J) obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of expenses, other than what is defined as “income”. The court relied on its ruling in Industrial Engineering Projects Pvt. Ltd 202 ITR 1014 (Delhi) where it was specifically held that “reimbursement of expenses can, under no circumstances, be regarded as revenue receipt” and therefore, it is not liable to income tax. Further, the court also relied upon the Supreme Court’s decision in CIT v. Tejaji Farasram Kharawalla Ltd., [1968] 67 ITR 95 (SC), where it was held by the apex court that it is only the amount that exceeds the expenditure incurred by the agent that would be liable to tax.

In the result assessee’s appeal is allowed.

(Please click here for judgment)


2.  CIT Vs. M/s Dalmia Dyechem Industries, I.T.A. No. 1396/2013, Date of Order: 06.07.2015, High Court of Bombay

Penalty u/s 271(1)(C) of the Income Tax Act, 1961 cannot be levied merely because the claim of the assessee is found to be incorrect unless it is confirmed that the assessee had any mala fide intention.

Brief facts of the case: The Ld. AO disallowed proportionate interest out of the interest paid for the borrowed funds and interest free advances given to sister concern. The matter was upheld by CIT(A) but restored back to the LD. AO by Hon’ble ITAT. Upon remand, the Assessing Officer again disallowed the proportionate interest, penalty u/s 271(1)(c) is also levied but no notice issued to the assessee for such penalty.

Hon’ble high court held that penalty can be imposed if the authority is satisfied that any person has concealed particulars of his income or furnished inaccurate particular of such income. The Ld. AO while imposing penalty has not rendered a conclusive finding that there was an active concealment or deliberated furnishing of inaccurate particulars. Hon’ble High Court placed reliance on the decision of Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. [2012] 322 ITR 158, where it was held that “the plain language of provision shows that, in order to be covered by this provision there has to be concealment and that the assessee must have furnished inaccurate particulars. The Apex Court held that by no stretch of imagination making an incorrect claim in law, would amount to furnishing inaccurate particulars”

In the result the appeal of revenue is dismissed.

(Please click here for judgment)

IV.  Indirect Taxes Case Law:

1.  M/s Inox Air Products Ltd. Vs. Commissioner of Central Excise, Appeal No.: ST/680/2012-Mum., Date Of Decision: 21.11.2014, CESTAT - Mumbai

Issue: Whether where the CENVAT credit is availed on the basis of invoices which were either in the name of HO or other related units, do CENVAT credit is allowed if person is not registered as Input Service Distributor (ISD)?

Held: Yes

The appellant is engaged in the manufacture of natural gases. They have a unit in various places include units at Patalganga unit. The Patalganga unit has taken CENVAT credit on the basis of invoice which were either in the name of their head office or in the name of their other unit at Thane. The demand was confirmed on the ground that the appellant should have been registered for Input Service Distributor (ISD) registration to enable distribution of credit to their respective units. Department’s contention was mere payment is not enough to claim the credit but material evidence should be brought on record that the said services are utilized in the Patalganga unit for claiming credit in such manner.

On appeal before CESTAT, the Ho’ble CESTAT held that the only basis for denying credit has been that invoices are either in the name of another unit of the appellant or in the name of their Head Office. No instances have been brought on record by the department to show that the services were actually not received at all. Therefore, there being no allegation of the services have not been received, the credit stands to be allowed.

(Please click here for judgment)

V.  Company Law & Other Matters:

1.  Kannada Grahakara Koota Vs. Karnataka Film Chamber of Commerce (KFCC), Case No. 58 of 2012 , Date of Order: 27.07.2015, Competition Commission of India

With regard to penalty under section 27 of the Act, This is a case of continuous violation of the provisions of the Act and of complete disregard to the competition law principles by OP-1. Having regard to the nature of anti-competitive conduct and its recurrence, the Commission is of the opinion that it would be appropriate to impose a penalty on OP-1 at the rate of 10% of their income based on the financial statements filed by them.

(Please click here for judgment)


 Golden Rules:

  "If you never taste a bad apple,
you would never appreciate a good apple.
Sometimes we need to experience bitterness of life
to understand the value of its sweetness"


  Thanks & Regards


Voice of CA

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