Vacancy for Chartered Accoutant in NSE

Job Profile-Asst Manager (Operations)

Designation	Asst. Manager
Department	Operations
Criteria	CA/CS/CWA/MBA (Fin. - 2 yrs full time) with 0-4 Years of Experience
Education	Qualified Chartered Accountant
Experience Required	0- 3 years
Type of Experience	Banking,Financial Services (Operations )

Recent Delhi HC decisions

Name of the Party	Appeal No.	Date of decision	Authority/Court	In favour of	Issue Involved
C&C Construction Pvt. Ltd.	ITA No. 118/11	25.11.2011	Delhi HC	Revenue	The Court held that a contention/ issue, which is not raised, dealt with or answered by the Tribunal, cannot be raised before the High Court for the first time in an appeal under Section 260A of the Act. A contention/question raised and answered by the Tribunal or dealt with by the tribunal suo motu and a question/issue which was raised, but not answered/decided by the Tribunal, can be made subject matter of an appeal under Section 260A of the Act. Therefore, a contention/issue, which is not raised and not decided by the Tribunal, cannot form subject matter of an appeal before the High Court.
Maruti Suzuki India Limited	WP© No. 2252/11	25.11.2011	Delhi HC	Assessee	The Court, on the facts of the case, held that: Word ‘Recovery’ is comprehensive and includes both coercive steps to recover the demand and adjustment of refund to recover the demand. Adjustment under Section 245 of the Act is a form/method of recovery. When and in what cases, adjustment under Section 245 of the Act should be stayed would depend upon facts and circumstances of each case. The discretion is to be exercised judiciously. Nature of addition resulting in the demand is a relevant consideration. Normally, if the same addition/disallowance/issue has already been decided in favour of the assessee by the appellate authority, the Revenue should not be permitted to adjust and recover the demand on the same ground. In exceptional cases, which include the parameters stated in Section 241 of the Act, adjustment can be permitted/allowed by the ITAT.

--

by,

 

Rohit Garg

 

C&C construction_ no new plea before HC if not before Tribunal.pdf

maruti stay.pdf

AICPA NEXT 15 YEARS-10 KEY INSIGHTS

10 key insights emerged into how we, as a profession, will conduct business, serve clients and employers, attract and retain employees and new business, and remain competitive in the marketplace throughout the next 15 years. These are:
Technology: Understanding and leveraging relevant technology in conjunction with core CPA competencies to deliver superior services.
Pre-certification and Lifelong Learning: Evolving the educational framework to keep pace with the changing dynamics of business, government and our profession.
Worldwide Profession: Positioning the CPA as a premier designation of the accounting and finance profession throughout the world.
Pride in the Profession: Encouraging pride among CPAs in the CPA profession and in the value CPAs create throughout society.
Trusted Attester: Preserving the role of the CPA as the trusted attester of financial and other information.
Trusted Advisor: Promoting the CPA as the trusted advisor who, in addition to providing core CPA services, develops solutions to complex problems by integrating knowledge, expertise and resources from multiple disciplines.
Market Permissions: Leveraging the strengths of the profession to take on new specializations and adapt to the needs of clients, employers and business.
Demographic Shifts: Continuing to offer opportunities that enhance the appeal of the profession and being proactive in addressing both U.S. and global demographic shifts.
Marketplace: Addressing continual changes in the marketplace, economy, businesses and regulations.
Value Proposition: Increasing the visibility of the profession's value proposition by demonstrating the profession's core values in multiple areas of business and society.

Rectification Application rejected on the ground of limitation provided in secti

Rectification Application rejected on the ground of limitation provided in section 154(8)—CIT not passing rectification order within the specified time limit

Sub-section (8) of section 154 that enjoins a duty upon the income-tax authority to make an order on an application for rectification within six months from the end of the month in which the application is received by it, is directory, and not mandatory, Therefore, application cannot be rejected on the ground of limitation. –V ide State Bank of India v. CIT(TDS) (2011) 42 (I) ITCL 191 (Pat-HC)


SERVICE TAX

Cenvat credit―Credit availed of after one year ― Allowability of

Original authority denied Cenvat credit on the input services on the grounds that they were not availed immediately as required by the rule 4(1) of the Cenvat credit Rules, 2004. The Tribunal observed that the said Rules does not stipulate any time period for availment of Cenvat credit :―In re: TATA Steel Limited (Commr. Appl.) Order in Appeal No. VSK/1-2/M-v/2010, dated 15-1-2010

SIMULTANEOUS PENALTY U/S 76 AND 78 IN SERVICE TAX

SIMULTANEOUS PENALTY U/S 76 AND 78 IN SERVICE TAX

Under service tax provisions, penalty for non payment of service tax is contained in section 76.  Accordingly,  any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made under this Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax amount in accordance with the provisions  of section 75, a penalty which shall not be less than [one hundred rupees] for every day during which such failure continues or at the rate of [one per cent.] of such tax, per months, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax. This penalty is however, restricted to fifty percent of the tax payable. 

Section 78 contains penal provisions in situations where any service tax has not been paid or has been short paid by reasons of fraud, collusion, willful mis- statement or suppression of facts.

There is a controversy as to whether both the penal provisions u/s 76 and 78 can be invoked for the same offence. The department is now a days issuing notice for levy of both penalties for the period prior to May 2008. It is felt that on the principle of equity, it should not be done. The legislative intention also suggests this. Moreover, there are number of judicial pronouncement which confirm that both the penalties could not be levied simultaneously though there are some decisions to the contrary also. An attempt has bee made to analyse this dichotomy.

Legislative Intention

Amendment made by Finance Act, 2008 convey the legislative intent which cannot be ignored

Notes on Clauses to Finance Act, 2008 explain the amendment made in section 78 as under-

"Sub-clause (F) seeks to amend section 78 of the said Act so as to provide that where penalty for suppressing value of taxable service under section 78 is imposed, the penalty for failure to pay service tax under section 76 shall not be applicable."

CBEC Letter No. 334/1/2008-TRU dated 29.2.2008 explaining the Finance Bill, 2008 changes clarify as under –

"Penalty for delayed payment of service tax is levied under Section 76. Penalty under Section 78 is levied for failure to pay service tax on account of fraud, mis-declaration etc. Section 78 is being amended so as to provide that penalty for failure to pay service tax under Section 76 shall not apply where penalty is leviable under Section 78."

In Balwant Singh v. Jagdish Singh 2010 -TMI - 204330 - SUPREME COURT OF INDIA it was held that provisions of statute including every word should be given full effect keeping legislative intent in mind to ensure to achieve projected object. No provision is treatable as enacted purposelessly. Courts cannot give interpretation to provisions to render them ineffective or odious.

The court while interpreting the provisions of a statute must look at the purpose and if the purpose of a particular provision is easily discernible from the whole scheme of the Act then bear that purpose in mind.

The principle of purposive interpretation stipulates that a purposive construction of an enactment is on which gives effect to the legislative purpose by following the literal meaning of the enactment where such meaning is in accordance with the legislative purpose, or by applying a strained meaning where the literal meaning is not in accordance with the legislative purpose. Apex court applied this principle in National Insurance Co. Ltd. v. Laxmi Narain Co. Ltd. (1987) 1 SCC 424 where it was held that interpretation must depend on the text and the Context. They are the basis of interpretation. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place.

A statutory provision is to be interpreted in its context and also to advance the true intention and purpose of law [CCE, Indore v. Lloyd Insulation (India) Ltd. 2007 -TMI - 49055 - CESTAT, PRINCIPAL BENCH, NEW DELHI]

In any event, once penalty is imposed under Section 78 of the Act, no penalty can be imposed under Section 76 of the Act since failure to pay tax cannot once again be subjected to penalty under Section 78 of the Act which is specifically in respect of penalty for intention to evade payment of service tax or suppression or concealment of the value of taxable services or for furnishing inaccurate value of services. Finance Act, 2007 had inserted a proviso in section 78 w.e.f. 10.05.2008 to the effect that if the penalty is payable under section 78, the provision of section 76 shall not apply. Since no tax liability arises, the question of levy of any of the penalties in question would not arise.

Kerala High Court Adverse Ruling

On the other hand, Kerala High Court in Asstt. Commissioner of Central Excise v. Krishna Podwal 2005 -TMI - 75949 - Kerala High Court has given an advise ruling. The aforesaid judgment of Kerala High Court, however, is not applicable as it was in the different context and the revenue filed the writ petitions under article 226 of the Constitution of India. It was held that once the period of limitation has run itself out and the appellate authority does not have power to condone the delay in filing the appeals beyond the maximum period prescribed under the Act, the remedies of the appellants come to an end just like in the case of a time barred suit and the respondents cannot, by invoking the discretionary remedy under the extraordinary jurisdiction of this court under Article 226 of the Constitution of India, resurrect their unenforceable cause of action and require this court to consider their contentions against the original orders on merit. That would amount to defeating the very law of limitation which we are not expected to do under Article 226.

The attention is drawn to the following extract in para 11 of the said order which reads as under –

"….Perhaps invoking powers under Section 80 of the Finance

Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. ….The cumulative result of the above findings would be that the writ petitions are liable to be dismissed and we do so. However, we do not make any order as to costs."

Judgments supporting only one levy of penalty

Hon'ble Tribunal in the Opus Media & Entertainment vs CCE, Jaipur (2007 -TMI - 2921 - CESTAT, NEW DELHI) and The Financers vs CCE, Jaipur (2008 -TMI - 4599 - CESTAT, NEW DELHI) has been very clearly held that cases in which penalty are imposed under Section 78 cannot fall in respect of the same service tax evaded under Section 76. There is no scope for imposing double penalty, both under Sections 76 and 78 for the same offence. It has to fall either under Section 76 or 78 and mens rea will have to be proved Levy of penalties u/s 76 and 78 is contrary to the statutory provisions.

In CCE v. First Flight courier Ltd. 2011 -TMI - 202397 - High Court of Punjab and Haryana High Court held that penalty u/s 76 is not justified if penalty under section 78 is imposed. It held, thus as under section 76 provides for penalty for failure to pay the amount while Section 78 provides for penalty for sup­pressing the taxable value. Section 78 is, thus, more comprehensive and provides for higher amount. Even if technically, the scope of Sections 76 and 78 is differ­ent, penalty under Section 76 may not be justified if penalty had already been imposed under Section 78. The matter was considered by this Court in STA No. 13 of 2010 (Commissioner of Central Excise v. Mis. Pannu Property Dealers, Ludhiana 2010 -TMI - 78899 - PUNJAB AND HARYANA HIGH COURT) decided on 12-7-2010, wherein it was observed:

"We are of the view that even if technically, scope of sections 76 and 78 of the Act may be different, as submitted on behalf of the revenue, the fact that penalty has been levied under section 78 could be taken into account for levying or not levying penalty under section 76 of the Act. In such situation, even if reasoning given by the appellate authority that if penalty under section 78 of the Act was imposed, penalty under section 76 of the Act could never be imposed may not be correct, the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time.".

Punjab & Haryana High Court in CCE v. Pannu Property Dealers, Ludhiana (2011) 24 STR 173 (P&H) it was held that on facts, non-imposition of penalty under section 76 was found to be proper as penalty equal to Service Tax was imposed under section 78. It was more so as impugned amount was small and it was in consonance with 2008 amendment to section 78 of the Finance Act, 1994 that if penalty was imposed under section 78, then no penalty can be imposed under section 76. The revenue appeal was, therefore, dismissed by high court (DB). In the instant case, while the revenue based its arguments on the basis of judgment of Kerala High Court in Asstt. Commissioner of Central Excise v. Krishna Podwal 2005 -TMI - 75949 - Kerala High Court, the court considered the legislative intention to avoid double penalty under sections 76 and 78. The following extracts from the judgment are relevant –

"We are of the view that even if technically, scope of Sections 76 and 78 of the Act may be different, as submitted on behalf of the revenue, the fact that penalty has been levied under Section 78 could be taken into account for levying or not levying penalty under Section 76 of the Act. In such situation even if reasoning given by the appellate authority that if penalty under Section 78 of the Act was imposed, penalty under Section 76 of the Act could never be imposed may not be correct, the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under Section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time. Moreover, the amount involved is Rs. 51026/- only."

In CCE v. First Flight courier Ltd. 2011 -TMI - 202397 - High Court of Punjab and Haryana, high court held that even for the period prior to 10.5.2008, penalties u/s 76 and 78 are not simultaneously imposable. Section 78 provides for higher amount of penalty and is more comprehensive. Penalty under 76 is not justified if penalty is already imposed u/s 78. No question of law arises and as such revenue appeal was dismissed. Following extract is reproduced from Order dated 28.1.2011.

"4. Only point which has been urged by learned counsel for the appellant is that after 10.05.2008, there is an amendment providing that penalty under Section 76 could not be levied if penalty under Section 78 has been levied but for the period prior thereto, penalty could be levied under both sections. The Commissioner (Appeals) as well as the Tribunal erred in deleting the penalty under Section 76 by assuming that simultaneously penalty under both the provisions could not be levied for the period in dispute.

5. We are unable to accept the submission. Section 76 provides for penalty for failure to pay the amount while Section 78 provides for penalty for suppressing the taxable value. Section 78 is, thus, more comprehensive and provides for higher amount. Even if technically, the scope of Sections 76 and 78 is different, penalty under Section 76 may not be justified if penalty had already been imposed under Section 78. The matter was considered by this Court in STA No.  13 of 2010 (Commissioner of Central Excise v. Mis. Pannu Property Dealers, Ludhiana 2010 -TMI - 78899 - PUNJAB AND HARYANA HIGH COURT) decided on 12.7.2010, wherein it was observed:-

"We are of the view that even if technically, scope of sections 76 and 78 of the Act may be different, as submitted on behalf of the revenue, the fact that penalty has been levied under section 78 could be taken into account for levying or not levying penalty under section 76 of the Act. In such situation, even if reasoning given by the appellate authority that if penalty under section 78 of the Act was imposed, penalty under section 76 of the Act could never be imposed may not be correct, the appellate authority was within its jurisdiction not to levy penalty under section 76 of the Act having regard to the fact that penalty equal to service tax had already been imposed under section 78 of the Act. This thinking was also in consonance with the amendment now incorporated though the said amendment may not have been applicable at the relevant time."

In CCE, Chandigarh v. City Motors 2010 -TMI - 77182 - PUNJAB & HARYANA HIGH COURT, high court held that penalty imposed under section 78 was sufficient to cover default of Service Tax and that two penalties for same default are not imposable. In the instant case, the respondent was levied penalty under Section 76 and Section 78 of the Act for the same cause of action by the adjudicating authority. In appeal, the Commissioner reduced the penalty under Section 78 of the Act and set aside the penalty under Section 76 of the Act. The Revenue challenged the order passed by the Commissioner (Appeals) which was dismissed. The revenue appeal had no merit and same was dismissed in limine.

To Conclude

In view of the aforementioned judgments, particularly of Punjab & Haryana high court which have been pronounced in 2010-11 after the Kerala High court pronouncement, it can be said that both the penalties should not be imposed for the same default.

= = = = = = =

By: Dr. Sanjiv Agarwal
Dated: - November 30, 2011

Provisions to curb black money a recap Part –I

Provisions to curb black money a recap Part –I


We find several provisions in the Income-tax Act, 1961 (The Act) designed to achieve the purpose of putting checks on black money- that is income  on which tax has not been paid. These provisions go behind the documents and in case the document is not genuine, a sum of money which is claimed to be a capital receipt or tax free receipt can be brought to tax. Here in this write-up we intend to have a fresh look on the provisions and therefore relevant provisions as they stand now are reproduced with highlights of key word for an easy recap of the matter. Footnotes for changes made more than ten years ago or simply to substitute designation of ITO with AO and insignificant amendments are not given. In this write-up provisions of search and survey are not covered. Any judgments are also not covered. In subsequent articles in this series these will be covered. Readers can search provisions, amendments from time to time which took place and section wise judgments on this website.

[Expenses or payments not deductible in certain circumstances.

40A. (1) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head "Profits and gains of business or profession".

(2) xxx

[(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.

(3A) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees:

Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3) and this subsection where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors.]

[Provided further that in the case of payment made for plying, hiring or leasing goods carriages, the provisions of sub-sections (3) and (3A) shall have effect as if for the words "twenty thousand rupees", the words "thirty-five thousand rupees" had been substituted.]

(4) Notwithstanding anything contained in any other law for the time being in force or in any contract, where any payment in respect of any expenditure has to be made by 16[an account payee cheque drawn on a bank or account payee bank draft] in order that such expenditure may not be disallowed as a deduction under sub-section (3), then the payment may be made by such cheque or draft; and where the payment is so made or tendered, no person shall be allowed to raise, in any suit or other proceeding, a plea based on the ground that the payment was not made or tendered in cash or in any other manner.]

1[Special provision for full value of consideration in certain cases.

50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted 2[or assessed or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted 2[or assessed or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

(2) Without prejudice to the provisions of sub-section (1), where—

(a) the assessee claims before any Assessing Officer that the value adopted 2[or assessed or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;

(b) the value so adopted 2[or assessed or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.

Explanation 1..— For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).

3[Explanation 2.— For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.]

(3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted 2[or assessed or assessable] by the stamp valuation authority referred to in sub-section (1), the value so adopted 2[or assessed or assessable] by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.]

Income from other sources.

56.

xxx

(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :—   

6[(v) where any sum of money exceeding twenty-five thousand rupees is received without consideration by an individual or a Hindu undivided family from any person on or after the 1st day of September, 2004 7[but before the 1st day of April, 2006], the whole of such sum :

            Provided that this clause shall not apply to any sum of money received—

                    (a) from any relative; or

                    (b) on the occasion of the marriage of the individual; or

                    (c) under a will or by way of inheritance; or

                    (d) in contemplation of death of the payer; or

                    8[(e) from any local authority as defined in the Explanation to clause (20) of section 10; or

                    (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

                    (g) from any trust or institution registered under section 12AA.]

            Explanation.—For the purposes of this clause, "relative" means—

                          (i) spouse of the individual;

                          (ii) brother or sister of the individual;

                          (iii) brother or sister of the spouse of the individual;

                          (iv) brother or sister of either of the parents of the individual;

                          (v) any lineal ascendant or descendant of the individual;

                          (vi) any lineal ascendant or descendant of the spouse of the individual;

                          (vii) spouse of the person referred to in clauses (ii) to (vi);]

        9[(vi) where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or a Hindu undivided family, in any previous year from any person or persons on or after the 1st day of April, 2006 10[but before the 1st day of October, 2009], the whole of the aggregate value of such sum:

                Provided that this clause shall not apply to any sum of money received—

                    (a) from any relative; or

                    (b) on the occasion of the marriage of the individual; or

                    (c) under a will or by way of inheritance; or

                    (d) in contemplation of death of the payer; or

                    (e) from any local authority as defined in the Explanation to clause (20) of section 10; or

                    (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

                    (g) from any trust or institution registered under section 12AA.

                  Explanation.—For the purposes of this clause, "relative" means—

                          (i) spouse of the individual;

                          (ii) brother or sister of the individual;

                          (iii) brother or sister of the spouse of the individual;

                          (iv) brother or sister of either of the parents of the individual;

                          (v) any lineal ascendant or descendant of the individual;

                          (vi) any lineal ascendant or descendant of the spouse of the individual;

                          (vii) spouse of the person referred to in clauses (ii) to (vi).]

        11[(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,—

                (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

                13[(b) any immovable property, without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;]

                (c) any property, other than immovable property,—

                        (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

                        (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:

                Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections:

                Provided further that this clause shall not apply to any sum of money or any property received—

                        (a) from any relative; or

                        (b) on the occasion of the marriage of the individual; or

                        (c) under a will or by way of inheritance; or

                        (d) in contemplation of death of the payer or donor, as the case may be; or

                        (e) from any local authority as defined in the Explanation to clause (20) of section 10; or

                        (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

                        (g) from any trust or institution registered under section12AA.

                Explanation.—For the purposes of this clause,—

                        (a) "assessable" shall have the meaning assigned to it in Explanation 2 to sub-section (2) of section 50C;

                        (b) "fair market value" of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed;

                        (c) "jewellery" shall have the meaning assigned to it in the Explanation to sub-clause (ii) of clause (14) of section 2;

                        (d) "property" 14[means the following capital asset of the assessee, namely:—]

                                (i) immovable property being land or building or both;

                                (ii) shares and securities;

                                (iii) jewellery;

                                (iv) archaeological collections;

                                (v) drawings;

                                (vi) paintings;

                                (vii) sculptures; 15[***]

                                (viii) any work of art; 16[or]

                                17[(ix) bullion;]

                        (e) "relative" shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of this section;

                        (f) "stamp duty value" means the value adopted or assessed orassessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property;]

        18[(viia) where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010, any property, being shares of a company not being a company in which the public are substantially interested,—

                (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

                (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration:

              Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47.

                Explanation.—For the purposes of this clause, "fair market value" of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in the Explanation to clause (vii);]

        12[(viii) income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A.]

----------------------------------------

Notes :-

6. Inserted by the Finance (No. 2) Act, 2004, w.e.f. 1-4-2005.

7. Inserted by the Taxation Laws (Amendment) Act, 2006, w.r.e.f.1-4-2006.

8. Substituted by the Finance Act, 2007, w.r.e.f.1-4-2005. Earlier clauses (e) to (f) were inserted by the Taxation Laws (Amendment) Act, 2006, w.e.f.13-7-2006.

9. Inserted by the Taxation Laws (Amendment) Act, 2006, w.e.f.1-4-2007.

10. Inserted vide Finance (No. 2) Act, 2009, w.e.f. 1-10-2009

11. Inserted vide Finance (No. 2) Act, 2009, w.e.f. 1-10-2009

12. Inserted vide Finance (No. 2) Act, 2009, w.e.f. 1-4-2010

13. in clause (vii), For sub-clause (b), the following sub-clause has been substituted and shall be deemed to have been substituted with effect from the 1st day of October, 2009, vide Finance Act, 2010 before this it was read as, " (b) any immovable property,—

                        (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

                        (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration".

14. In the Explanation, in clause (d),  in the opening portion, for the word "means—", the words "means the following capital asset of the assessee, namely:—" has been substituted and shall be deemed to have been substituted with effect from the 1st day of October, 2009 vide Finance Act, 2010.

15. In sub-clause (vii), the word "or" has been omitted with effect from the 1st day of June, 2010 vide Finance Act, 2010.

16. In sub-clause (viii), the word "or" has been inserted at the end with effect from the 1st day of June, 2010 vide Finance Act, 2010.

17. After sub-clause (viii), the following sub-clause has been inserted with effect from the 1st day of June, 2010 vide Finance Act, 2010.

18. After clause (vii), the clause (viia) has been inserted with effect from the 1st day of June, 2010 vide Finance Act, 2010.

Cash credits.

68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the 1[Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.

Unexplained investments.

69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the 1[Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.

Unexplained money, etc.

69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.]

Amount of investments, etc., not fully disclosed in books of account.

69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the 2[Assessing] Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the 3[Assessing] Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.]

Unexplained expenditure, etc.

69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :]

Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.]

Amount borrowed or repaid on hundi.

69D. Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be :

Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount.

Explanation.—For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.]

1[CHAPTER XX-B

REQUIREMENT AS TO MODE OF 2[ACCEPTANCE, PAYMENT OR] REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX

3[Mode of taking or accepting certain loans and deposits.

269SS.  No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—

(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or

(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or

(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),  is 4[twenty] thousand rupees or more :

Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,—

(a) Government ;

(b) any banking company, post office savings bank or co-operative bank ;

(c) any corporation established by a Central, State or Provincial Act ;

(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ;

(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notifyin this behalf in the Official Gazette :

5[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.]

Explanation.—For the purposes of this section,—

6[(i) "banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act ;]

(ii) "co-operative bank" shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;

(iii) "loan or deposit" means loan or deposit of money.]

---------------

Notes :-

1. Chapter XX-B inserted by the Income-tax (Second Amendment) Act, 1981, w.e.f. 11-7-1981.

2. Inserted by the Finance Act, 1984, w.e.f. 1-4-1984.

3. Inserted by the Finance Act, 1984, w.e.f. 1-4-1984.

4. Substituted for "ten" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

5. Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

6. Substituted by the Finance Act, 1985, w.e.f. 1-4-1986.

[Mode of repayment of certain loans or deposits.

269T. No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if—

(a) the amount of the loan or deposit together with the interest, if any, payable thereon, or

(b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees or more:

Provided that where the repayment is by a branch of a banking company or co-operative bank, such repayment may also be made by crediting the amount of such loan or deposit to the savings bank account or the current account (if any) with such branch of the person to whom such loan or deposit has to be repaid :

2[Provided further that nothing contained in this section shall apply to repayment of any loan or deposit taken or accepted from—

(i) Government;

(ii) any banking company, post office savings bank or co-operative bank;

(iii) any corporation established by a Central, State or Provincial Act;

(iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);

(v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette.]

Explanation.—For the purposes of this section,—

(i) "banking company" shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS;

(ii) "co-operative bank" shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);

(iii) "loan or deposit" means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature.]

-----------------

Notes :-

1. Substituted by the Finance Act, 2002, w.e.f. 1-6-2002. Prior to its substitution, section 269T was inserted by the Income-tax (Second Amendment) Act, 1981, w.e.f. 11-7-1981 and later on amended by the Finance Act, 1984, w.e.f. 1-4-1984, Finance Act, 1985, w.e.f. 1-4-1986 and Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

2. Inserted by the Finance Act, 2003, w.r.e.f. 1-6-2002.

Two parties in deals but one party who make compliance is caught :

On reading of the above provisions we find that though in each transaction there are at least two parties. However, the provision try to deal with only one party and not the other party. By applying the provision as a means to enquire about other party and tracing the other party the revenue can  really curb the black money. However, unfortunately the parties who are genuine party and have recorded transaction in the books of account is caught and other party is usually left un-assessed (unless he has made voluntary compliance of tax payment). For example in case of cash payments exceeding prescribed limit duly recorded in books of account, there is no concealment of income so far person who paid money is concerned – he has paid his disclosed money. However, in his hands expenses are disallowed, and the party who received money in cash generally is not enquired. Similarly in case of cash credit, person who has credited the sum of money in his books is caught whereas the person who paid or invested money is not enquired about- he may have made undisclosed investment. In case of loan or deposit received or repaid otherwise than a/c payee cheque or draft, the party who has recorded transaction is caught and the other party is not effected, even if he has recorded transaction in his books of account, though the ground reality is that many times payment is made in cash on request  or insistence of loan creditor / depositor.This shows that there is possible misuse of provisions, where unintended deeming provisions to levy tax are applied,

By: C.A. DEV KUMAR KOTHARI
Dated: - November 29, 2011

SERVICE TAX ON REAL ESTATE AGENT

Service Tax had been imposed on real estate agents and real estate consultants with effect from 16th October, 1998 vide Notification No. 53/98-ST, dated 7th October, 1998. The gross amount charged or total consideration received by such real estate agency or consultant from the client for such services rendered shall be chargeable to service tax.

Meaning of Real Estate Agent

Section 65(88) defines `real estate agent' as under —

"real estate agent" means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant.

According to Section 65(88), real estate agent has been defined to mean a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting of real estate. Thus, an agent should be a person, who deals in real estate and provide services relating to real estate and include—

(i) Sale,

(ii) Purchase,

(iii) Leasing, or

(iv) Renting or hiring of such estate.

It also includes real estate consultant meaning thereby that a consultant is also an agent and a service provider providing consultancy or advice in the above mentioned areas, which constitutes a taxable service.

Real estate agent should satisfy the following basic tests —

(i) He should be a person (i.e. natural or juristic).

(ii) He should be engaged in or render services to his clients.

(iii) Such services may relate to sale, purchase, lease or rentals.

(iv) Rendering of service should be of any real estate.

(v) Real estate consultant is also included.

Meaning of Real Estate Consultant

Section 65(89) defines `real estate consultant' as under —

"real estate consultant" means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate.

As per Section 65(89), real estate consultant has been defined to mean a person who renders in any manner, directly or indirectly, advice, consultancy or technical assistance in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate.

Thus, a real estate consultant—

(i) should be a person,

(ii) should render service in any manner,

(iii) rendering of service may be direct or indirect,

(iv) such service should include any—

(a) advice,

(b) consultancy, or

(c) technical assistance,

(v) service shall relate to following specific areas —

(a) evaluation

(b) conception

(c) designing

(d) development

(e) construction

(f) implementation

(g) supervision

(h) maintenance

(i) marketing

(j) acquisition

(k) disposal

(l) erection

(m) transfer

(n) leasing or hiring

(o) management, etc.

(vi) service shall be in connection with real estate.

The coverage of the definition is wide enough to cover all possible types of services rendered by real estate consultants in relation to real estate. It shall cover all persons giving advice, consultancy or technical assistance with regard to real estates, but shall not cover the persons actually carrying out the advises.

Persons engaged in advising on the mode of finance for the acquisition of real estate will be covered under `Real Estate Consultant'.

Firms engaged in evaluation of real estate projects will be covered under the definition of real estate consultants. Hence, they will be liable for payment of service tax. However, if the credit rating agency undertakes such work, they will be liable for payment of service tax under the category of Credit Rating Agency and not under this category.

Taxable Service

Section 65(105)(v) defines `taxable service' as under —

"taxable service" means any service provided or to be provided to any person, by a real estate agent in relation to real estate.

In case of real estate agency/consultants, taxable service would mean and include services rendered by real estate agents and/or consultants in relation to real estate rendered in any manner, whether directly or indirectly such as providing advice, technical assistance or consultancy or any other service in relation to such real estate. It will cover evaluation, conception, design making, development construction, implementation, supervision, maintenance, marketing acquisition disposal or management.

It may be noted that some international reality concerns, such as, Richard Ellis, Colliers and Jardine etc. have opened shop in India and they are providing comprehensive reality services. Apart from the traditional services in respect of sale/purchase/leasing of real estate, such concern are inter alia, providing services to real estate developers and promoters in respect of evaluation of a proposed real estate scheme/project by conducting techno-economic studies, providing feasibility reports and by even helping in marketing real estate projects. Such services shall also attract service tax. It would include comprehensive really services provided by international realty concerns, who are providing such services in India. However, it is clarified that activity of actual construction of any building carried out by builders/developers does not attract service tax levy as it is not a service within the meaning of the term real estate agent or real estate consultant. (Source : Letter No. F. No. B. 11/1/98-TRU, dated 7-10-1998)

The Finance Act, 2004 had imposed service tax on construction services; i.e., services provided in relation to commercial or industrial construction and civil structures. Finance Act 2005 had levied service tax on construction of complex services. Real estate agency services will not include such services or activities.

Real estate and property management services shall cover comprehensive or integrated solutions in real estate segment which includes multiple areas of real estate related services irrespective of the location or size of the property or the size of the transactions.

Such services covers —

— Advisory and consultancy — advice on new investments (type, location, value etc.), on disposition or best use option.

— Transaction management — execution of purchase, sale, lease of property.

— Project management — management of construction and interior fitout (however, construction and interior decoration are covered under separate categories).

— Facility management — Operation & maintenance or facilities in the buildings/offices/business parks.

Following points are relevant for a taxable service in relation to real estate —

(a) services should be provided by real estate agent/consultant.

(b) services should be provided to a client (upto 15-5-2008) and to any person (w.e.f. 16-5-2008).

(c) services should be in relation to real estate.

(d) consultancy services in relation to real estate shall also be covered.

Replacement of `client with any person' (w.e.f. 16.5.2008)

Finance Act, 2008 has substituted the words `to any person' for the word `to a client' (w.e.f. 16.5.2008) as the service tax is levied on service and status of recipient of taxable service should not determine the tax treatment of a given service.

Some Issues Relating to Taxability

Person engaged in leasing or renting of agricultural land is providing services in relation to leasing or renting of real estate. There is no exemption given for services provided in relation to agricultural land. Hence, he is liable for service tax.

Persons providing services for valuation of property are doing the valuation of property as per the prescribed methods used by them. They are providing the information about value of the property, which is factual information. Hence, they are not liable for service tax.

The civil contractors are engaged in the execution of job. They do not provide any services in relation to advice, consultancy or technical assistance. Hence, they are not liable for service tax. However, if the civil contractors also provide advice or consultancy then they will be liable for service tax to the extent of remuneration received for such advice or consultancy.

Persons providing any advice or consultancy for the marketing of real estate property are services in connection with selling of property, hence covered under the category of `Real Estate Agents', and will be liable for payment of service tax.

In Indus Tubes Ltd. v. CCE, Ghaziabad 2007 -TMI - 1453 - CESTAT, NEW DELHI, it was held that real estate agent services includes real estate consultant. Commission received for order procurement for construction of houses and payment were covered in the scope of real estate services.

In CST v. Poonam Grover Associates 2008 -TMI - 30573 - CESTAT, AHMEDABAD, where assessee was engaged in job making furniture as per customer's specifications, it was held that demand was not sustainable under real estate agent's services and revenue's stand at second stage appeal for interior decorator's service was held to be non sustainable.

In Prem Steels Pvt Ltd v. CCE, Meerut 2009 -TMI - 32717 - CESTAT, NEW DELHI, where assessee introduced prospective buyer of plot and arranged the sale thereof and received commission for the same, it was held that arranging sale of plot would be covered in real estate agent's services.

In Orissa Industrial Infrastructure Development Corporation v. CCE, C & ST (BBSR-I 2010 -TMI - 78157 - CESTAT, KOLKATA where assessee corporation was acquiring land for its own use, since ownership of land was with assessee, it was held that assessee had not provided any service directly or indirectly of consultancy or technical assistance for acquisition of real estate.

Value of Taxable Service

Value of taxable service shall include the gross amount by way of fees, brokerage, commission, remuneration, etc and would not mean the value of capitalised billings. Expenses relating to a particular job or client may relate to advertisements, conveyance, travelling costs, hotel expenses, communication expenses etc and shall not be subject to service tax if billed separately subject to verification by the tax authority. It will be necessary for the agents to maintain proper documentary evidences for expenses claimed and billed to clients.

In case, the real estate agent receives the brokerage from another real estate agent, he becomes sub-real estate agent of other agent. However, the sub-agent should ensure that the main agent has paid the service tax on the commission received by him. W.e.f. 16-8-2002, input credit provisions shall apply.

In Prem Steels Pvt Ltd v. CCE, Meerut 2009 -TMI - 32717 - CESTAT, NEW DELHI, it was held that commission received by assessee for introducing prospective buyers of plot and arranging sale thereof would be covered for service tax.

Person Liable

Every real estate agent or consultant who raises a bill for services rendered to a client or customer shall be liable to pay service tax and shall be treated as an assessee for service tax purposes.

= = = = = =

By: Dr. Sanjiv Agarwal

Dated: - November 29, 2011

SANOFI’S SHANTHA BUYOUT TO ATTRACT CAP GAINS TAX

SANOFI'S SHANTHA BUYOUT TO ATTRACT CAP GAINS TAXCompanies and tax professionals tracking Vodafones $2-billion dispute with the Indian tax authorities may make a mental note of a similar case relating to Shantha Biotech, a Hyderabad-based pharma company. On Monday, the Authority for Advance Rulings (AAR) a quasi-judicial authority ruled the French company that sold its controlling interest in Shantha Biotech to another French company will have to pay capital gains tax to the Indian government, even though the deal was cut outside India. The AAR bench took a view that since the assets and businesses of Shantha are based in India, tax cannot be avoided, though the shares and money changed hands abroad. French company Merieux Alliance (MA) held majority stake in Shantha through a subsidiary, ShanH, incorporated outside India. Groupe Industrial Massel Dass Ault (GIMD), another French company, also had a stake in ShanH. In 2009, both MA and GIMD sold their stakes in ShanH to Sanofi, another French company, for.Rs.2, 500 crore. With this, Sanofi took control of Shantha from MA and GIMD, as the offshore entity (ShanH) holding Shantha shares was bought over by Sanofi. The transaction closely resembles British company Vodafones acquisition of a controlling interest in Indian telecom major Hutch-Essar from Hong Kong-based Hutchison International. Here, as in the Shantha deal, the buyer and seller were both nonresidents. But the Income-Tax Department insisted that tax was payable in India because the ownership of an Indian company passed from one hand to another. The matter is pending before the Supreme Court. The AAR has ruled that the Shantha transaction was simply aimed at avoiding tax in India. The AAR decision will have a bearing on similar crossborder transactions, said Sanjay Sanghvi, partner at Khaitan & Co, a law firm. The question that crops up is: do the French companies MA and GIMD pay the tax in India or France Both MA and GIMD approached the AAR, asking it to decide whether capital gains tax was payable in France or India. According to the French companies, tax should ideally be paid in France as both companies are incorporated in France. Under the provisions of the Indian Income-Tax Act and Double Tax Avoidance Agreement (DTAA) between India and France, the companies were not required to pay tax in India, the French companies had claimed. They had also argued that the Indian Income-Tax Act cannot be invoked in this case, as the transaction was outside its territorial jurisdiction. But, the Income-Tax Department held that the whole transaction was part of a scheme to avoid tax in India. Since the capital gains arose in India, such gains were taxable in India under the India-France DTAA, it said. The French companies had argued that all parties involved in the transaction held valid Tax Residency Certificates issued by the French Tax Office, and thus the transaction was not a mechanism for avoiding tax in India. The AAR on Monday said, On a look at the series of transactions from the commencement of the ShanH, it appears to be a preordained scheme to produce a given result, viz. to deal with assets to control ShanH without actually dealing with the shares of Shantha or its assets and business. The scheme adopted has to be seen as one for avoiding payment of capital gains which would otherwise arise if the shares of the Indian company had been transferred, leading to the same result as now achieved. - www.economictimes.indiatimes.com

DTAA: DENMARK, FINLAND GIVE INFO

DTAA: DENMARK, FINLAND GIVE INFOIndia has received information on 1,500 transactions from Denmark and Finland under Double Tax Avoidance Agreements with these countries. Minister of State for Finance S S Palanimanickam said the government also received information about Indians with accounts in a Switzerland-based bank. - www.business-standard.com

SEBI REVISES AUDIT RULES FOR EXCHANGES

SEBI REVISES AUDIT RULES FOR EXCHANGESThe Securities and Exchange Board of India (Sebi) has released a new set of rules for audit of the information technology systems of exchanges and depositories. The regulator has described detailed terms of reference under various heads such as Data centres, software change control, network controls, access policy, business continuity etc. "The (audit) report should have specific compliance/non-compliance issues, observations for minor deviations as well as qualitative comments for scope for improvement. It should also take previous audit reports in consideration and cover any open items therein," a Sebi circular said. It also laid down the selection process for the auditors. - www.business-standard.com

ICAI-Important Message - Peak Filing of Balance Sheet and Annual Return Novem

ICAI-Important Message - Peak Filing of Balance Sheet and Annual Return


November, 30th 2011
IMPORTANT MESSAGE
Madam/ Dear Sir,

As you are aware it is time of peak filing of Balance Sheet & Annual Return under the Companies Act, 1956. It has been brought to the Institutes notice that during October, 2011, filing of Balance Sheet and Annual Return is less as compared to last year during the same time. You are therefore kindly requested to motivate the corporates to file their Balance Sheet and Annual Return to avoid last minute rush and system congestion in MCA21.


As partner in nation building and a responsible member, we are quite sure that you might have already taken steps in advising corporate to file returns at an early date to facilitate the Ministry in achieving its desired objective under MCA 21.


Secretary, ICAI

ICAI examining violation of Chartered Accountants Act: Government

ICAI examining violation of Chartered Accountants Act: Government


November, 30th 2011
Accounting regulator ICAI is examining violation of certain clauses of the Chartered Accountants Act by multinational audit firms, Parliament was informed today.

"Some instances of violations have come to the notice of the Institute of Chartered Accountants of India (ICAI) which is examining the same," Corporate Affairs Minister Veerappa Moily told the Rajya Sabha in a written reply to the query whether some multinational firms have violated certain clauses of the Chartered Accountants Act.

S. 260A: High Court has no power to consider issue not raised before Tribunal

C& C Construction Pvt Ltd vs. CIT (Delhi High Court)

S. 260A: High Court has no power to consider issue not raised before Tribunal

The assessee filed an appeal before the Tribunal in which it argued that it had constructed a "temporary construction" which was eligible for 100% depreciation. This was rejected by the Tribunal on the basis that the construction was permanent. Before the High Court, the assessee argued for the first time that the expenditure was "revenue" in nature and admissible as business expenditure. HELD not permitting the assessee to raise the plea:

A contention/ issue, which is not raised, dealt with or answered by the Tribunal, cannot be raised before the High Court for the first time in an appeal u/s 260A. Though s. 260A(6) empowers the High Court to "determine any issue which has not been determined by the Appellate Tribunal", the word "determined" means that the issue is not dealt with, though it was raised before the Tribunal. The word "determined" presupposes an issue was raised or argued but there is failure of the Tribunal to decide or adjudicated the same. However, as the issue whether the expenditure is capital or revenue was not raised before the Tribunal, it does not arise from the order of the Tribunal and cannot be entertained (Mahalakshmi Textile Mills 66 ITR 710 (SC) distinguished)



Related Judgements
CIT vs. Splender Construction (Delhi High Court) The Tribunal has side tracked the main issue. It was obvious that conversion of the land into investment just before the sale of the property was made to avoid payment of full taxes. Though the AO accepted the conversion, the assessee's claim that the gains was a LTCG …
Manori Properties Pvt Ltd vs. ITO (ITAT Mumbai) The claim regarding "business loss" cannot be entertained because, though the CIT (A) has dealt with the issue, there is no specific ground. The claim is also not maintainable under Rule 27 since that applies only to a Respondent in the appeal
CIT vs. M/s Varindera Construction Co (P&H High Court – Full Bench) Circular dated 15.5.2008 laying down monetary limit controls the filing of the appeals and not their hearing. Appeals filed as per applicable limit at the time of filing cannot be governed by circular applicable at the time of hearing. The object of the Circular u/s 268A is only to…

Extension of date for VAT ANNUAL RETURN

Annual return filing date has been extended upto 31:12:2011

CCD 30(7)

CONSOLIDATED COMMERCIAL DIGEST (CCD)
Volume 30 : Part 7 (Issue dated : 1-12-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Corporate law

Indian Competition Act: thresholds of combination--Souvik Chatterji, Asst. Professor and Harshit Anand, National Law University, Jodhpur

The competition agencies all across the world have generally three broad responsibilities - addressing anti-competitive agreements, abuse of dominance and anti-competitive combinations. With that amount of work load it is not possible on the part of these agencies to bring every combination under their scanner. Competition Commission of India is also no exception. In India, section 5 of the Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, has created thresholds crossing which the combining entities are supposed to compulsorily notify the combination to the Competition Commission of India. This article examines the thresholds and the efficacy of having such thresholds under the Indian Competition Act. P. 510



Digest of recent decisions

Central Excise & Customs

Customs duty --Does the writ court have jurisdiction to adjudicate issues relating to quantum of penalty imposed and the rationale behind imposition of such penalty when the Settlement Commission had not contravened any law or its order was in any way perverse, arbitrary or without jurisdiction?-- Marshal Power and Telcom (India) Ltd. v. Customs and Central Excise Settlement Commission [2011] 10 GSTR 70 (Mad). P. 530

Customs duty --Confiscation of duty--Where the Settlement Commission, after affording adequate opportunity and after considering the evidence had arrived at certain conclusions, could the High Court re-appreciate the evidence and come to a different conclusion in the absence of any concrete material to believe otherwise?-- Decent Enterprises v. Union of India [2011] 10 GSTR 166 (Mad). P. 531

Excise duty --Exemption--Would lifting water from well to overhead tank with the aid of electric motor, which activity was integral to the process of conversion of raw material to finished goods, amount to manufacturing with the aid of power and render the assessee in-eligible to claim nil rate of duty under Sub-Heading 3805.19?-- CCE v. Gurukripa Resins P. Ltd. [2011] 10 GSTR 1 (SC). P. 532

Excise duty --Short-payment of duty--Would restrictions imposed on an assessee by the authorities for a limited period because of the assessee's violation and subsequent payment of duty when confronted with a scrutiny, which showed a conscious attempt to gain an undue advantage, amount to arbitrary exercise of power?-- Reil Electricals India Ltd. v. Member (Central Excise), Central Board of Excise and Customs [2011] 10 GSTR 89 (Mad). P. 533

Corporate Law

Interlocutory applications --Is it necessary to issue notice of an application to parties who were already contesting in pending proceedings and represented by advocate?-- Official Liquidator of Murudeshwara Foods and Exports Ltd. (in liquidation) v. K. Ananda Shetty [2011] 167 Comp Cas 422 (Karn). P. 534

Offences and prosecution --Is a complaint of violation of section 295 of the Companies Act, 1956, filed in 2010 for offences committed in 2008 barred by limitation?-- Sanjay Somani v. Registrar of Companies, West Bengal [2011] 167 Comp Cas 367 (Cal). P. 535

Scheme of amalgamation --Where no meeting of unsecured creditors had been convened to consider a scheme of amalgamation, could the court decide on how their interest is to be taken care of under the scheme?-- UB Nizam Breweries P. Ltd., In re [2011] 167 Comp Cas 562 (Karn). P. 536

Winding up --Where liability was admitted but was not discharged by a profit-making company, could a petition for winding up be filed against it on the ground of its inability to pay the debt?-- Hoe Leong Corporation Ltd. v. Vaishnovi Infrastructure Engineering P. Ltd. [2011] 167 Comp Cas 324 (Mad). P. 536

Income-tax

Business expenditure --Accounting--Can the assessee make provision for future losses in accordance with the Accounting Standards, for possible defects in the different project works undertaken by it? Where the company followed completed-contract method of accounting, would the provision for losses be an allowable deduction?-- CIT v. Triveni Engineering and Industries Ltd. [2011] 336 ITR 374 (Delhi). P. 537

Company --Book profits--Under section 115JB is an assessee entitled to set off of brought-forward losses when such brought forward losses were adjusted during the year through a reduction of share capital?-- CIT v. Sumi Motherson Innovative Engineering Ltd. [2011] 336 ITR 321 (Delhi). P. 539

Depreciation --Is shuttering material used in construction an integrated component forming a plant eligible for 100 per cent. depreciation under the first proviso to section 32(1)(ii) of the Income-tax Act, 1961?-- CIT v. Vijaya Enterprises [2011] 243 CTR (AP) 488. P. 540

Firm --Status--Where the Assessing Officer treated the assessee as an association of persons since the partnership deed had not been filed along with the return, and, hence, disallowed the claim of deduction on account of salary and interest paid to the partners under section 40(b) of the Income-tax Act, 1961, would the fact that the deed was filed during assessment proceedings be sufficient compliance with procedural requirements?-- CIT v. Nand Lal Labhu Ram [2011] 336 ITR 303 (P&H). P. 540

Income from house property --Annual letting value--Where the assessee-landlord had taken a large amount of security deposit disproportionate to the monthly rent charged, can a notional interest charged on the security deposit be treated as income from house property under section 23 of the Income-tax Act, 1961?-- CIT v. K. Streetlite Electric Corporation [2011] 336 ITR 348 (P&H). P. 541

Penalty --Concealment of income--Where the assessee was unable to point out that she had disclosed the surrendered amount in the return or that there was no concealment or that full particulars had been disclosed by her, could levy of penalty under section 271(1)(c) of the Act be justified?-- Shveta Nanda v. CIT [2011] 336 ITR 298 (P&H). P. 542

Unexplained income --Firm--Where the assessee-firm failed to explain the lower gross profit in the impugned year and the amount of alleged gifts received in that year was almost equal to difference in declared gross profit, can the gifts supposedly received from non-resident Indians by the partners of the firm be treated as the undisclosed income of the firm?-- CIT v. Deepak Iron and Steel Rolling Mills [2011] 336 ITR 307 (P&H). P. 543

Intellectual Property Rights

Trademark --Infringement--Where a person's trademark is a common word but has become world renowned in respect of certain products, would injunction be granted against another who deals in completely different products and uses that word as part of its corporate name though not as a trademark? Would one's registration of a generic name or a common word as trademark for a product that he does not deal in, confer ipso facto exclusivity over that mark so as to prevent others from using the mark or word in respect of that product?-- Shell Brands International AG v. Pradeep Jain Proprietor Shell Exports 2011 (47) PTC 175 (Delhi). P. 545

Labour Law

Doctors --Strike--Is it permissible for doctors and others connected with the AIIMS to go on strike in view of the significance attached to health under article 21 of the Constitution of India?-- Scheduled Castes and Scheduled Tribes Medical Association, Delhi v. Union of India 2011 IV LLJ 237 (Delhi). P. 545

E. S. I. liability --Limitation--Is proceedings under section 45-A of the Employees' State Insurance Act, 1948 subject to the limitation prescribed under section 77(1-A)(b) of the Act?-- Syndicate Printers (rep. by its proprietor), V. Chockalingam v. Regional Director, ESI Corporation 2011 IV LLJ 149 (Mad). P. 546

Minimum wages --Can claim for minimum wages be made and entertained in an application under section 33-C(2) of the Industrial Disputes Act, 1947?-- Commissioner, Kadambathur Panchayat Union, Kadambathur v. Loganayahi 2011 IV LLJ 97 (Mad). P. 546

Transferee company --Liability--Would a transferee of an industrial unit be liable to pay the provident fund contributions of the transferor company under section 17-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 when the transfer was by operation of law and the transferee carried on an entirely different manufacturing activity?-- Tayal Energy Ltd., Goindwal Sahib, District Tarn Taran v. Regional Provident Fund Commissioner, Employees' Provident Fund Organisation, Amritsar 2011 IV LLJ 298 (P&H). P. 547

Sales tax and VAT

Dealer --Is the sale of un-serviceable machinery and spare parts by a dealer engaged in manufacture and sale of iron and steel products taxable under Orissa Sales Tax Act, 1947?-- State of Orissa v. Steel Authority of India Ltd. [2011] 44 VST 50 (Orissa). P. 548

Entry tax --Is a dealer in automobiles importing vehicles into State for sale entitled to refund of excess of entry tax paid over sales tax under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990?-- Commercial Tax Officer, Peelamedu South Assessment Circle, Coimbatore v. Coimbatore Auto Carage (P.) Ltd. [2011] 45 VST 69 (Mad). P. 549

Reassessment --Would initiation of reassessment proceedings for an earlier year merely on the basis of inference from certain material available for a subsequent year be justified?-- Swadeshi Udyog v. Trade Tax Officer, Kanpur [2011] 45 VST 111 (All). P. 549

Taxable turnover --Can transportation charges incurred by a dealer and reimbursed to him by his customers be deducted from the dealer's turnover to arrive at his taxable turnover?-- APCO Concrete Block and Allied Products v. Deputy Commissioner of Commercial Taxes, Audit 1, DVO, Bangalore [2011] 44 VST 312 (Karn). P. 550

Works contract --Would processing exposed photographic film rolls into negatives and converting the negatives to photographs amount to works contract under the Assam General Sales Tax Act, 1993?-- S. S. Photographic Lab Pvt. Ltd. v. State of Assam [2011] 44 VST 39 (Gauhati). P. 551

Service tax

Appeal --Pre-deposit--Where a contract nowhere stated that the prices of the supplies supplied by the service recipient would be recovered from the bills payable, would waiver of pre-deposit be granted on a question whether the cost of the supplies would be included in the taxable value of services or not?-- VPR Mining Infra Pvt. Ltd. v. Union of India [2011] 45 VST 229 (AP). P. 552

CENVAT credit --Could CENVAT credit of central excise duty paid on cement, TMT bars used in the construction of warehouses be availed of by an assessee who was rendering storage and warehousing services under rule 2(k) and (l) of the CENVAT Credit Rules, 2004? Could penalty be levied under rule 15(2) of the CENVAT Credit Rules, 2004 when there was no finding with regard to suppression of fact and irregular claim of CENVAT credit by the assessee?-- CCE, Visakhapatnam II v. Sai Samhita Storages (P.) Ltd. [2011] 45 VST 467 (AP). P. 553

Miscellaneous

Court-fee --Where more than one person have joined hands in filing a single petition to seek relief on distinct and separate causes of action, should each of the petitioners be required to make payment of court-fees separately?-- Rakesh Gautam v. State of M. P. [2011] AIR 2011 MP 170. P. 554

Public document --Could an unregistered and unstamped partition deed which has been marked as an exhibit in a suit be considered as a public document under section 74 of the Evidence Act, 1872, and be admissible as an evidence in another suit for a collateral purpose?-- Smt. Mamta Awasthy v. Ajay Kumar Shrivastava [2011] AIR 2011 MP 166. P. 554



Digest of decisions of Tribunal and other Forums

Central Excise & Customs

Excise duty --Exemption--Could the extended period of limitation be invoked in a case where the assessee, a manufacturer of portland cement, used the brand name of another cement company but had claimed exemption under Notification No. 1/93-CE, dated February 28, 1993 as amended by Notification No. 16/97-CE, dated April 1, 1997?-- CCE v. Pratap Continental P. Ltd. [2011] 10 GSTR 498 (CESTAT-New Delhi). P. 556

Excise duty --MODVAT credit--Could an adjudication order with regard to wrongful availment of MODVAT credit be set aside owing to non-observance of the Tribunal's direction to permit cross-examination of a witness, which direction had become final owing to non-challenge by the Department?-- Krishna Steel Industries v. CCE [2011] 11 GSTR 112 (CESTAT-Mumbai). P. 557

Income-tax

Business expenditure --Would the expenditure incurred on payment of keyman insurance premium for two of the working directors of the assessee-company be disallowed when the services of the directors had significant effect on the smooth functioning and profitability of the assessee's business and there was no dispute with regard to receipt of the maturity amount which was offered for taxation?-- ITO v. Radha Raj Ispat P. Ltd. [2011] 11 ITR (Trib) 243 (Delhi). P. 558

Capital or revenue expenditure --Where an assessee, engaged in the business of rendering software services to its clients, had availed the services of another company in the course of its business, would the expenditure incurred on engaging such services, which was incurred wholly and exclusively for the purpose of the assessee's business be treated as revenue expenditure when the assessee had neither acquired any capital asset nor any benefit of enduring nature?-- Deputy CIT v. Lifetree Cyberworks P. Ltd. [2011] 11 ITR (Trib) 294 (Delhi). P. 558

Charitable purposes --Would the accumulation of surplus in the hands of the assessee-trust, created for the purpose of promoting educational interests among the Christian community, lead to a conclusion that such institutions exist for the purpose of making profits and not for educational purposes and, hence, not liable for registration?-- St. Mary's Christian Charitable Trust v. ITO [2011] 11 ITR (Trib) 205 (Chennai). P. 559

Exemption --Export--What are all the conditions to be fulfilled for the purpose of claiming exemption under section 10B of the Income-tax Act? Where software developed by an assessee with the help of the infrastructure and equipment provided by another company were exported by the assessee and the sale proceeds was received in convertible foreign exchange, would the assessee be eligible for exemption under section 10B of the Income-tax Act?-- ITO v. Techdrive (India) P. Ltd. [2011] 11 ITR (Trib) 298 (Delhi). P. 561

Rectification of mistake --Does the amendment to section 143(1) of the Income-tax Act with effect from June 1, 1999 empower the Assessing Officer the authority to rectify the intimation issued to the assessee under section 143(1) for the purpose of re-determining the income shown by the assessee in its return of income?-- Anshul Singal v. Asst. CIT [2011] 11 ITR (Trib) 143 (Delhi). P. 562

Service tax

Liability --Services received from outside India--Where an assessee had paid technical know-how fees and royalty charges to its group companies situated outside India between September 2004 and December 2005, would it be liable to service tax when the provisions of section 66A providing for payment of service tax by the recipient of services rendered by a non-resident were included in the Finance Act, 1994, with effect from April 18, 2006?-- ABB Ltd. v. CCE, Bangalore [2011] 45 VST 89 (CESTAT-Bangalore). P. 562

Penalty --Where the question of liability to pay service tax on the service of transportation of petroleum products rendered by truck owners for the assessee-petroleum corporation was pending clarification before the Board, would the assessee, which immediately on being informed of its liability got itself registered and paid the service tax dues, be liable to penalty?-- Hindustan Petroleum Corporation Limited v. CCE, Mumbai-II [2011] 45 VST 86 (CESTAT-Mumbai). P. 563

Port services --Where the assessee-port trust entered into an agreement with a company for operation and management of its container terminal and received royalty charges from a portion of gross revenue earned by the company, licence fees for use and occupation of project site, upfront charges for permitting container handling operations and for transfer of assessee's equipment, rentals for letting out jetties and estate rentals for the use of its land, building, sheds and godowns owned by it in the port area in terms of the agreement, would the assessee be liable to service tax under the head "port services"?-- Cochin Port Trust v. CCE, Cochin [2011] 45 VST 106 (CESTAT-Bang). P. 564

Consumer Disputes

Ba nking and financial institutions services --Where due to a technical fault the ATM card issued by a bank did not allow a customer to withdraw money despite her having sufficient funds, would the bank be liable for deficiency in service?-- Jasmine W. Surendra v. Canara Bank IV [2011] CPJ 179 (NC). P. 565

Cable services --Where, as per the terms and conditions of the cable television service, the customer was obliged to request the channel package for choice of channels, would the service provider be liable for deficiency in service for not granting a special package automatically?-- Kishore Kumar Deshmukh v. Tata Sky Ltd. IV [2011] CPJ 15 (SCDRC) P. 566

Manufacturing defect --Where invoice issued did not contain any warranty or manufacturer's details, is a complaint after eight months of purchase of the product maintainable on grounds of manufacturing defect?-- Sandeep Bhalla v. Ashoka Electronics IV [2011] CPJ 138 (NC). P. 566