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20.05.2016 - Voice of CA presents - Updates
Friday, May 20, 2016

I. Headlines Today    

  1. Service Tax Cir.: Clarification regarding leviability of service tax in respect of services provided by arbitral tribunal and members of such tribunal  (Click for detail)
  2. Central Excise Cir.: Imposition of Central Excise duty on Jewellery  (Click for detail)
  3. Avail of tax amnesty scheme despite high levy  (Click for detail)
  4. Smaller banks' bad debt picture remains hazy  (Click for detail)
  5. Sebi tightens P-note norms  (Click for detail)
II.  Direct Taxes Case Laws: 

1. Tata Teleservices Limited Vs. Central Board of Direct Taxes & Anr, W.P. (C) 12304/2015 & CM 32604/2015, Date of Judgment: 11.05.2016, High Court of Delhi

Whether the assessee can be denied refund in pursuance of CBDT Instruction No. 1 dated 13th January, 2015 issued to clarify the provisions of Section 143(1D) of the Income Tax Act, 1961?


Brief Facts:
The assessee is engaged in the business of providing telecom services. The assessee is also an eligible undertaking u/s 80IA(2A) and is eligible for 100% deduction under that section. The assessee has accumulated losses for A.Y. 2012-13 to 2015-16 and it had claimed refund on account of the Tax deducted at source and deposited with the Government by the Payers. The assessee was eligible for grant of refund u/s 143(1)(e) of the Act which states that the amount of refund due to the Assessee determined in accordance with other provisions of Section 143(1) shall be granted to the Assessee. However, the refunds were declined to the assessee for the reason that the case was pending for scrutiny and as such covered by the provisions of section 143(1D) of the Act stating that processing of return shall not be necessary where notice u/s 143(2) was issued to assessee. The CBDT Instruction No. 1 of 2015, inter alia, states the legislative intent is to prevent the issue of refund after processing as scrutiny proceedings may result in demand for taxes on finalisation of the assessment subsequently.

It was held that the impugned CBDT Instruction No. 1 of 2015 dated 13th January 2015 is unsustainable in law and it is hereby quashed. It was further observed that section 119 of the Act enables the CBDT to issue orders, instructions and directions to the income tax authorities for the proper administration of this Act. However, this power has certain limitations which includes that the same should not be prejudicial to the assessees. It was directed that the said Instruction shall not hereafter be relied upon to deny refunds to the Assessees in whose cases notices might have been issued u/s 143(2) of the Act. The question whether such return should be processed will have to be decided by the AO concerned exercising his discretion in terms of Section 143(1D) of the Act. 

(Please click here for judgment)


2.  M/s Hanjin Shipping Company Ltd. Vs. Deputy Director of Income Tax, I.T.A. No. 5277/M/2014, Date of Pronouncement: 13.05.2016, ITAT - Mumbai

Whether the amount of service tax collected during the year would form part of the Gross Receipts for the purpose of the computation of Income under presumptive basis u/s 44B of the Income Tax Act, 1961?


Brief Facts:
The assessee is a foreign company incorporated under the law of Korea. It has opted for presumptive basis of taxation at the rate of 7.5% of the aggregate amount of income from operation of shipping under section 44B of the Income Tax Act. The AO contented that the gross receipts for determining the presumptive profit should be taken inclusive of the Service Tax collected by the assessee. The AO placed reliance on judgments of the Delhi bench of the Hon’ble Tribunal in DDIT (International Taxation) vs. Technip Offshore Contracting BE (ITA No. 4613/Del/2007) and Authority of Advance Ruling in SIem Offshore Inc ((2011) 337 ITR 027). CIT (A) upheld the decision of AO. Aggrieved by which assessee appealed before the Tribunal.

The hon’ble Tribunal, in the light of the judgment of Delhi High Court in the case of DIT vs. Mitchell Drilling International Pvt. Ltd. (2015) 62 24 (Delhi), held that the service tax was collected by the assessee on the behalf of the Government and is a statutory liability to be paid to the Government and does not involve any element of profit and hence it cannot be included in the Total receipts for determining the income on presumptive basis under Section 44B.     
The appeal of the assessee is allowed.

(Please click here for judgment)    

III. Useful Articles:

1.  Effective Rate of Service Tax under Abatement, Reverse Charge and Valuation Rules after introduction of KKC

(Please click here for detail)

2.  Finance Bill, 2016 enacted: Significant changes in Service Tax, effective from May 14, 2016

(Please click here for detail)

3.  Finance Bill, 2016 enacted: Significant changes in Service Tax effective from June 1, 2016

(Please click here for detail)

4. Video Presentation: Open Issues on Changes in Service Tax, Excise, Customs Duty vide Union Budget 2016

(Please click here for detail)   

(Please Click for its Video)


(Contribution by CA. Bimal Jain and contributor is available at eMail-id:

 Golden Rules:

  "Difficulties are of Amazing Nature.
For some these are Speed Breakers and
for others these are Opportunities to Jump"


  Thanks & Regards


Voice of CA 

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