Daily Tax & Corporate Law Digest
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Today’s newsletter analytically summarizes today’s top Tax & Corporate Law stories reported at?taxmann.com , in a unique section-wise format.
INCOME TAX
SECTION 9 OF THE INCOME-TAX ACT, 1961 - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA
Royalties/Fee for technical services - Make available: Where assessee-company had only availed professional services of non-residents in connection with tax compliances and technical knowledge had not been made available, since the make available clause failed, impugned payments could not be taxed as a fee for included services under article 12 of OECD Model convention - Honeywell Technology Solutions Lab (P.) Ltd. v. Joint Commissioner of Income-tax - [2022] 143 taxmann.com 352 (Bangalore - Trib.)
SECTION 35 OF THE INCOME-TAX ACT, 1961 - SCIENTIFIC RESEARCH EXPENDITURE
Donation: Where the assessee, acting upon a valid registration granted to an institution, made a certain amount of donation to it and claimed the same as a deduction, such deduction could not be disallowed if at a later point in time registration of the institution was cancelled with retrospective effect and, thus, impugned disallowance made under section 35(1)(ii) was to be deleted - Assistant Commissioner of Income-tax v. Praveen Sushil Kanda - [2022] 143 taxmann.com 331 (Raipur - Trib.)
Approval of expenditure: Where the assessee had made an application for certification of R&D expenditure incurred by it in respect of all its R&D units and the application was accompanied by an auditor's report, DSIR was statutorily bound to issue Form 3CL within 120 days in accordance with rule 6(7A)(ba), certifying expenditure incurred by the assessee on its in-house R&D units - SRF Ltd. v. Union of India - [2022] 143 taxmann.com 332 (Delhi)
SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINESS EXPENDITURE - ALLOWABILITY OF
Lease rentals: Where the assessee obtained marine containers on lease and sublet them to others, lease rentals paid by the assessee were to be allowed as revenue expenditure under section 37(1) - Tristar Container Services (Asia) (P.) Ltd. v. ACIT - [2022] 143 taxmann.com 324 (Chennai - Trib.)
SECTION 40A(2) OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - EXCESSIVE OR UNREASONABLE PAYMENTS
Salary: Where Assessing Officer made disallowance under section 40A(2) on account of salary paid by the assessee to its related parties for availing their services on the ground that such payment was excessive however failed to opine as to what as per him was the fair market value of these services, impugned disallowance was to be vacated - Assistant Commissioner of Income-tax v. Praveen Sushil Kanda - [2022] 143 taxmann.com 331 (Raipur - Trib.)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDIT
Opportunity of hearing: Where Assessing Officer passed an assessment order making additions to the income of the assessee on account of time deposits of a certain amount without considering reply as well as documents submitted by the assessee in response to reopening notice issued upon it on the departmental portal within the stipulated period and without giving the opportunity of personal hearing to the assessee, the impugned final assessment order was to be set aside - Parthasarathy Chitra v. Income-tax Officer - [2022] 143 taxmann.com 329 (Madras)
SECTION 69A OF THE INCOME-TAX ACT, 1961 - UNEXPLAINED MONEYS
Immovable property: Where the Assessing Officer made an addition in hands of the assessee-company on basis of a draft sale deed of property between the assessee-company and a developer on purchase of the property being reported less/short by it since said draft deed was never signed by assessee and application filed by the developer before Settlement Commission admitting to having invested a certain amount of unaccounted income was not provided to the assessee for confrontation, impugned additions were to be - Rajvee Tractors (P.) Ltd. v. ACIT - [2022] 143 taxmann.com 330 (Ahmedabad - Trib.)
SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE
Comparables - Factors to Determine - Abnormal events: A company having extraordinary events during the year had to be excluded as a comparable - Honeywell Technology Solutions Lab (P.) Ltd. v. Joint Commissioner of Income-tax - [2022] 143 taxmann.com 352 (Bangalore - Trib.)
Comparables, functional similarity - Information technology enabled services (ITESs): A company engaged in the business of software testing, verification and validation of software at the time of implementation and data centre management activities was incomparable to ITES provider - Honeywell Technology Solutions Lab (P.) Ltd. v. Joint Commissioner of Income-tax - [2022] 143 taxmann.com 352 (Bangalore - Trib.)
Comparables, functional similarity - Information technology enabled services (ITESs): A company engaged in software testing, verification and validation of software and KPO services had to be excluded as comparable to ITES provider - Honeywell Technology Solutions Lab (P.) Ltd. v. Joint Commissioner of Income-tax - [2022] 143 taxmann.com 352 (Bangalore - Trib.)
Comparability factors - Related party transactions: Where the RPT filter applied by TPO was 25 per cent but the RPT turnover ratio of the company worked out to 49.60 per cent, it could not be selected as comparable - Honeywell Technology Solutions Lab (P.) Ltd. v. Joint Commissioner of Income-tax - [2022] 143 taxmann.com 352 (Bangalore - Trib.)
Comparables, functional similarity - Other: Where the selected company had been accepted by TPO as comparable while calculating the PLI of the assessee-company but said the company had not been considered in the final set of comparable for computation, then the Assessing Officer/TPO should consider it as comparable - Honeywell Technology Solutions Lab (P.) Ltd. v. Joint Commissioner of Income-tax - [2022] 143 taxmann.com 352 (Bangalore - Trib.)
SECTION 127 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - POWER TO TRANSFER CASES
Opportunity of hearing: Where Commissioner by an order passed under section 127 transferred the case of the assessee-company from Udaipur to Delhi without providing the opportunity of hearing and without setting up a case as to why it was not possible to provide the opportunity of hearing to the assessee, impugned transfer order deserved to be set aside - Murliwala Agrotech (P.) Ltd. v. Union of India - [2022] 143 taxmann.com 327 (Rajasthan)
SECTION 148A OF THE INCOME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - CONDUCTING INQUIRY, PROVIDING OPPORTUNITY BEFORE ISSUE OF NOTICE
Writ remedy: Where assessee challenged the order passed under section 148A(d) claiming that said order was passed on grounds which were beyond the subject matter of show cause notice issued under section 148A(b), since the impugned order was at a stage prior to the issuance of reopening notice and assessee could raise its contentions in reply to reopening notice, no interference of Writ Court was called for at this stage - Yellaiah Setty v. Assistant Commissioner of Income-tax - [2022] 143 taxmann.com 326 (Telangana)
SECTION 253 OF THE INCOME TAX ACT, 1961 - APPELLATE TRIBUNAL - APPEALS TO
ITAT cannot refuse to follow the Hon'ble jurisdictional HC's decision merely because SC has admitted SLP against the decision - Luxora Infrastructure (P.) Ltd. v. Deputy Commissioner of Income-tax, Central Circle 2(1) - [2022] 144 taxmann.com 93 (Mumbai - Trib.)
GOODS AND SERVICES TAX LAWS
CLASSIFICATION OF SERVICES
Works contract service: Construction service provided to APHSL is not eligible for concessional rate of 12% GST as APHSL is a government entity with business interest and service provided will be used by employees of APHSL; Said service attracts GST at rate of 18% - Siddartha Constructions, In re - [2022] 144 taxmann.com 96 (AAR - ANDHRA PRADESH)
SECTION 4 OF THE CENTRAL EXCISE ACT, 1944 - VALUATION OF EXCISABLE GOODS FOR PURPOSES OF CHARGING OF DUTY OF EXCISE
Valuation of own manufactured goods along with bought out items sold after packing in one carton would be in terms of Rule 11 of Central Excise Valuation Rules, 2000 i.e. sale price of both - Raychem RPG Ltd. v. Commissioner of Central Excise - [2022] 144 taxmann.com 99 (SC)
SECTION 11A OF THE CENTRAL EXCISE ACT, 1944 - RECOVERY OF DUTIES NOT LEVIED OR NOT PAID OR SHORT-LEVIED OR SHORT-PAID OR ERRONEOUSLY REFUNDED
The extended period of limitation was not invocable when the entire issue was in the knowledge of the department - Raychem RPG Ltd. v. Commissioner of Central Excise - [2022] 144 taxmann.com 99 (SC)
SECTION 50 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - PAYMENT OF TAX - INTEREST ON DELAYED PAYMENT
High Court rejects writ petition on the ground of availability of appellate remedy where one of issues involved is interest liability on net cash liability - Balaji Enamil Industry v. Assistant Commissioner (ST) - [2022] 144 taxmann.com 94 (Andhra Pradesh)
SECTION 54 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - REFUND - TAX, REFUND OF
Where a refund of excess credit was rejected, however, the website was showing sanction of refund and mistake in order not rectified, rejection order was to be set aside and the matter was to be remanded for fresh decision - RK Infracorp (P.) Ltd. v. Assistant Commissioner - [2022] 144 taxmann.com 98 (Andhra Pradesh)
SECTION 65(105) OF THE FINANCE ACT, 1994 - TAXABLE SERVICE
Notice was issued to decide on the question as to whether salary paid on secondment of employees is taxable under section 65(105) of Finance Act, 1994 - Commissioner of GST and Central Excise, Chennai v. Komatsu India (P.) Ltd. - [2022] 144 taxmann.com 91 (SC)
SECTION 103 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - ADVANCE RULING - APPLICABILITY OF
Assessment order based on the advance ruling is not valid as it is binding only on the applicant and officer concerned; High Court grants interim relief by staying recovery of tax - Reliance Builders v. Chief Commissioner Of State Tax - [2022] 144 taxmann.com 95 (Andhra Pradesh)
SECTION 107 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - APPELLATE AUTHORITY - APPEALS TO
GST Appeal filed on 21-4-2021 after a delay of more than one month, is not time-barred in view of SC's COVID Relief order under Article 141 - Supernova Engineers Ltd. v. Union of India - [2022] 144 taxmann.com 92 (Gujarat)
领英推荐
SECTION 132 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - OFFENCES - PUNISHMENTS FOR CERTAIN OFFENCES
High Court granted bail on grounds that the accused allegedly involved in ITC fraud was in jail for 5 months, had no criminal history, the investigation had been completed and trail was yet to commence - Sunil Mahlawat v. Central Goods and Services Tax - [2022] 144 taxmann.com 97 (Punjab & Haryana)
COMPANY AND SEBI LAWS
NOTIFICATION NO. S.O. 5160E, DATED 04-11-2022
Govt. specifies provisions of Cos Act, 2013, which would be applicable to financial products services Institutions at IFSCs
Editorial Note: Central Government has specified provisions of the Companies Act, 2013 which shall apply with such exceptions, modifications and adaptations as specified to financial products, financial services or financial institutions in an International Financial Services Centre.
FEMA BANKING AND INSURANCE LAWS
PRESS RELEASE: 2022-2023/1154, DATED 04-11-2022
Sovereign Gold Bonds 2017 – 18 (Series Vl) can be redeemed prematurely at Rs. 5049 per unit: RBI
Editorial Note: The redemption price for premature redemption due on November 05, 2022 (November 06, 2022, being a Sunday) shall be `5049/- (Rupees Five thousand forty-nine only) per unit of SGB based on the simple average of closing gold price for three business days i.e., November 02, 03 and 04, 2022. the redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption as published by the IBJA.
INSOLVENCY AND BANKRUPTCY CODE
SECTION 5(6) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - DISPUTE
Where the corporate debtor had neither disputed existence of 'debt' nor was there anything on record showing any pre-existing dispute raised prior to the issuance of demand notice under section 8(1), the impugned order passed by NCLT admitting application under section 9 did not require any interference - Arun Mittal v. Sun Control Systems - [2022] 144 taxmann.com 18 (NCLAT- New Delhi)
SECTION 5(20) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - OPERATIONAL CREDITOR
Where petitioner had filed a petition for initiation of CIRP, however, during said proceedings, the petitioner expired intestate leaving behind five legal heirs and four legal heirs executed a relinquishment deed in favour of the applicant, the applicant had stepped into the shoes of the petitioner and, thus, an instant application filed, to substitute the name of the petitioner and allow her to continue proceedings in section 9 petition was to be allowed - Vijender Kumar Jain v. Atlas Cycles (Haryana) Ltd. - [2022] 144 taxmann.com 16 (NCLT-Chd.)
SECTION 5(22) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS
Personal guarantor: A personal guarantor who has given a guarantee to a corporate debtor cannot escape from his liability under the guarantee deed only for reason that he has after execution of the guarantee deed obtained citizenship of a foreign country - Sudip Dutta @ Sudip Bijoy Dutta v. State Bank of India - [2022] 143 taxmann.com 366 (NCLAT- New Delhi)
SECTION 10 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - INITIATION BY CORPORATE APPLICANT
Where the corporate debtor was not carrying any business and also had huge losses, NCLT had rightly passed impugned order in admitting the application filed by the corporate debtor under section 10 to initiate the corporate insolvency resolution process - Bihar State Construction Corporation Ltd. Employee Union, In re - [2022] 144 taxmann.com 20 (NCLAT- New Delhi)
SECTION 60 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE PERSON'S ADJUDICATING AUTHORITIES - ADJUDICATING AUTHORITY
Where there were no grounds for review of judgment and order, review petition was to be disposed of against order of Supreme Court that section 7(5)(a) confers discretionary power on Adjudicating Authority to admit an application of a financial creditor under section 7 for initiation of CIRP - Axis Bank Ltd. v. Vidarbha Industries Power Ltd. - [2022] 144 taxmann.com 15 (SC)
ACCOUNTS AND AUDIT
Presentation of movement in a non-current financial asset in the Cash Flow Statement
Editorial Note: (Ind AS) 115, ‘Revenue from Contracts with Customers’ states that the consideration received or receivable by the Company is a right to a financial asset. And, Operating activities are the principal revenue-producing activities of the entity, and other activities that are not investing or financing activities. Thus, the change in operating receivables should be adjusted as ‘changes in operating receivables’ to determine the cash flow from operating activities under the indirect method.
OPINIONS
Opening of Pandora Box or long-awaited Resolution: Apex court take on Charity and Educational Institutions - Navneet Singal, International Tax Expert - [2022] 144 taxmann.com 89 (Article)
That’s it from us for today! Stay Tuned for more updates from?Taxmann.com
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