Daily Tax & Corporate Laws Digest – Editorial Team
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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 6 OF THE INCOME-TAX ACT, 1961 - RESIDENTIAL STATUS
Where assessee-employee was treated as ‘Resident’ for having stayed in India for 182 days during relevant previous year as per section 6(1)(a) but assessee claimed that he was on foreign water for a total period of 184 days and his residential status should have been taken as ‘Non-Resident’, since assessee’s employer had calculated his stay in India for 182 days and had deducted tax at source under section 192, and assessee failed to produce certificate of his employer to justify his stay on foreign water for period in question, assessee was to be treated as resident - Tapas Kumar Basak v. Assistant Director of Income-tax, International Taxation-II - [2021] 132 taxmann.com 186 (Calcutta)
SECTIONS 12A OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - REGISTRATION OF
Declining registration under section 12AA to assessee-trust, established for medical research, on ground that medical research to be carried out in hospital of settler company would convert charitable activities into commercial activities was mere surmises, and hence, not sustainable in eyes of law - Artemis Education & Research Foundation v. Commissioner of Income-tax (Exemptions) - [2021] 132 taxmann.com 277 (Delhi - Trib.)
SECTION 43B OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT
Taxes: Where assessee set-off/adjusted sales tax liability that arose at time of purchase of raw materials against sales tax collected at time of sale of finished goods, such amount of sales tax liability set off/adjusted, by legal fiction, was deemed to be an actual payment of tax liability and was deductible under section 43B - Merck Ltd. v. Dy. Commissioner of Income-tax, Range-3, Mumbai - [2021] 132 taxmann.com 174 (Bombay)
SECTION 92C OF THE INCOME TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE
When finished goods are purchased by the assessee from its AE ready to be sold in market without any value addition, Resale Price Method (RPM) is the most appropriate method (MAM) to benchmark international transactions even if the assessee also performs certain additional functions including purchase order, warehousing and inventory control, quality control to purchasing and forecasting, pricing and sales and marketing services and assumes considerable risk in the form of market risk, credit risk, inventory risk, foreign exchange risk, contract risk, service liability risk and manpower risk - Fujitsu India (P.) Ltd. v. Assistant Commissioner of Income-tax, Circle-9(2) - [2021] 132 taxmann.com 279 (Delhi - Trib.)
GOODS AND SERVICES TAX LAWS
CLASSIFICATION OF GOODS
Fly ash bricks: Fly ash bricks with ash content of 60% are liable to GST of 18%, however, GST rate of 5% for such goods is applicable only if ash content is 90% or more - Dipakkumar Ramjibhai Patel, In re - [2021] 132 taxmann.com 180 (AAAR-GUJARAT)
CLASSIFICATION OF SERVICES
Works contract services involving laying of electric power lines : Where applicant, a Government Entity, supplied works contract services involving laying of electric power lines to Greater Hyderabad Municipal Corporation (GHMC) and it engaged a private contractor on back to back arrangement for executing works for GHMC, supply of service by applicant to GHMC is covered by Service Code 9954 23 and is taxable at rate of 18 per cent - Transmission Corporation of Telangana Ltd., In re - [2021] 132 taxmann.com 191 (AAR- TELANGANA)
Construction of electricity transmission infrastructure to pumping stations : Where applicant, a Government Entity, made construction of electricity transmission infrastructure to pumping stations under various lift irrigation schemes and State Government sanctions grants to applicant for this purpose and applicant engaged a private turnkey contractor on back to back arrangement for purpose of executing contracts to I & CAD department, applicant is eligible for exemption from tax vide Entry 9(c) of Notification No. 31/2017 - Central Tax (Rate), dated 13-10-2017 - Transmission Corporation of Telangana Ltd., In re - [2021] 132 taxmann.com 191 (AAR- TELANGANA)
Works contract services to South Central Railways : Where applicant, a Government Entity, is supplying works contract services to South Central Railways under General Construction service for long-distance underground/overland/submarine pipe lines, communication and electric power lines (cables) and it engaged a private turnkey contractor on a back to back arrangement to execute contract for South Central Railways, supply of services by applicant to South Central Railways is taxable at rate of 18 per cent as per Entry at Sl. No. 3(xii) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 - Transmission Corporation of Telangana Ltd., In re - [2021] 132 taxmann.com 191 (AAR- TELANGANA)
SECTION 65(25) OF THE FINANCE ACT, 1994 - CLEARING AND FORWARDING AGENT
Sub-contractors are liable to discharge Service Tax irrespective of main contractor having discharged Service tax liability on amount received from clients - Vinoth Shipping Services v. Commissioner of Central Excise & Service Tax - [2021] 132 taxmann.com 275 (Chennai - CESTAT)
SECTION 65(101) OF THE FINANCE ACT, 1994 - STOCK-BROKER
NSE/BSE transaction charges and SEBI turnover fees paid by stock brokers and subsequently recovered from their clients, not liable to Service Tax - Monarch Research & Brokerage (P.) Ltd. v. Commissioner of Service Tax & Service Tax, Ahmedabad - [2021] 132 taxmann.com 274 (Ahmedabad - CESTAT)
领英推荐
SECTION 73 OF THE FINANCE ACT, 1994 - RECOVERY OF SERVICE TAX NOT LEVIED OR PAID OR SHORT-LEVIED OR SHORT-PAID OR ERRONEOUSLY REFUNDED
No allegation of wilful suppression of facts being made, extended period of limitation for claiming demand cannot be invoked - Vinoth Shipping Services v. Commissioner of Central Excise & Service Tax - [2021] 132 taxmann.com 275 (Chennai - CESTAT)
COMPANY AND SEBI LAWS
LETTER REF NO. SEBI/HO/IMD/DF1/OW/P/2021/32411/1, DATED 12-11-2021
SEBI registered investment adviser can’t provide services of creating or rebalancing ‘basket of foreign securities’, clarifies SEBI
Editorial Note: The securities market regulator, SEBI in an interpretative letter as clarified that services of creation or rebalancing of foreign stacks by a SEBI registered Investment adviser doesn’t come under purview of SEBI (Investment advisers) regulations, and therefore, can’t provide services of an creating or rebalancing of stacks in capacity of an Investment adviser.
FEMA BANKING AND INSURANCE LAWS
SECTION 17 OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - APPLICATION AGAINST MEASURES TO RECOVER SECURED DEBTS
When a secured creditor adopts a measure under section 13(4), any person aggrieved by same should approach jurisdictional DRT and it was incumbent on DRT to deal with matter and, upon DRT coming to a conclusion that creditor had no debt to pursue, it would lose further authority over matter; however, Civil Court's doors remain open to receive an action, not only to completely undo mischief done to person aggrieved but also to consider a claim in damages - Electrosteel Castings Ltd. v. UV Asset Reconstruction Company Ltd. - [2021] 132 taxmann.com 187 (Madras)
SECTION 34 OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - CIVIL COURT NOT TO HAVE JURISDICTION
Bar under section 34 SARFAESI Act on filing civil suit is attracted if allegations of 'fraud' are made without any particulars - Electrosteel Castings Ltd. v. UV Asset Reconstruction Co. Ltd. - [2021] 132 taxmann.com 278 (SC)
ACCOUNTS AND AUDIT
Creation of 'Regulatory Deferral Accounts' for the difference between depreciation charged and allowed
Editorial Note: A regulatory asset should be recognized in the books when it is probable that there is a reasonable assurance that future economic benefits will flow to the entity as a result of the actual or expected actions of the regulator under the applicable regulatory framework and the amount can be measured reliably also the resulting cost incurred due to construction or generation of resulting asset is recoverable from the customers in future through tariffs.
OPINIONS
Interesting decisions making certain amendments retrospective/prospective
V. K. Subramani, CA - [2021] 132 taxmann.com 266 (Article)
Madras HC in Platinum Holdings - Paving clarity on the contentious issue of SEZ Refunds
S. Rahul Jain, Director, Lakshmikumaran & Sridharan - [2021] 132 taxmann.com 276 (Article)
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