Transfer pricing- CBDT defines wholesale Trading; Keeps tolerable limit for ALP unchanged
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
NOTIFICATION NO. 45/2014 , DATED 23-9-2014
New Delhi, the 23rd September, 2014
In exercise of the powers conferred by the second proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that where the variation between the arm's length price determined under section 92C and the price of which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the latter in respect of wholesale trading and three percent of the latter. In all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm's length price for assessment year 20 14-15.
Explanation.—For the purposes of this notification, "wholesale trading" means an international transaction or specified domestic transaction of trading in goods, which fulfils the following conditions, namely :—
(i) purchase cost of finished goods is eighty percent or more of the total cost pertaining to such trading activities; and
(ii) average monthly closing inventory of such goods is ten percent or less of sales pertaining to such trading activities.
[F.NO.500/1/2014-APA-II]
Govt. notifies comprehensive DTAA with Colombia
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No. 44/2014 Income Tax, Dated- 23.09.2014
S.O. _____ (E).—Whereas, an Agreement between the Government of the Republic of India and the Republic of Colombia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed in India on the 13th day of May, 2011 (hereinafter referred to as the Agreement);
And whereas, the said Agreement entered into force on the 7th day of July, 2014, being the date of the later of the notifications of the completion of the procedures required by the respective laws for entry into force of the Agreement, in accordance with paragraph 2 of Article 30 of the Agreement;
And whereas, sub-paragraph (a) of paragraph 3 of Article 30 of the said Agreement provides that the provisions of the Agreement shall have effect in India in respect of income derived in any fiscal year beginning on or after the first day of April following the calendar year in which the Agreement enters into force and in all other matters, as of the date on which the Agreement enters into force;
Now, therefore, in exercise of the powers conferred by sub-section (1) of section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that all the provisions of the said Agreement, as annexed hereto, shall be given effect to in the Union of India.
F.No. 501/3/99-FTD-II
RAJAT BANSAL
Joint Secretary to the Government of India
AGREEMENT
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND
THE REPUBLIC OF COLOMBIA
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND
THE REPUBLIC OF COLOMBIA
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of India and the Republic of Colombia, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic cooperation between the two countries, have-agreed as follows:
Receipt of additional compensation on compulsory acquisition of capital assets is to be taxed in year of receipt
IT: Additional compensation on compulsory acquisition is to be taxed in year of receipt instead of in year of transfer of capital asset
Sec. 2(22)(e): Lending-Co. advancing loan only to assessee couldn't claim to be having substantial business of lending
IT: Where lending companies advanced loans only to assessee and not to others, lending companies could not be said to have substantial part of business in money lending and thus loans and advances given to assessee were deemed dividend in light of provisions of section 2(22)(e)
Cenvat Credit on plastic crates used for safe transportation of finished goods is allowable
The Cenvat Credit on plastic crates were used for safe transportation of finished goods is allowable even it is not being used in or in relation to the manufacture of final products
CCE, Noida Vs. Denso India Ltd. & Another [2014 (9) TMI 635 – Allahabad High Court]
Denso India Ltd. & Another (the Respondent) was engaged in the manufacture of Auto Electric Parts falling under Chapter 85 of Central Excise Tariff Act, 1985 (the Excise Tariff Act). The Respondent had availed Cenvat credit on plastic crates used for the packing material of the final products.
The Adjudicating Officer refused to allow the claim of the Respondent by observing that plastic crates are not being used in or in relation to the manufacture of final products and hence not entitled for Cenvat credit.
However, both the Appellate Authorities allowed the claim of Cenvat Credit of Rs. 4,96,015/-. The revenue filed an appeal before the Hon'ble Allahabad High Court.
The Hon'ble Allahabad High Court held that plastic crates were being used for the safe transportation of the finished goods from the place of the manufacture to the place of consignee and the cost of plastic crates is included on pro-rata basis in the assessable value of the finished excisable goods on which duty was being discharged. Further, it was observed that the Department had also allowed Cenvat Credit of packing material in earlier Assessment year to the Respondent. Therefore, the order passed by the Appellate authority was upheld.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)
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