AUTONEUM NITTOKU SOUND PROOF PRODUCTS INDIA P LTD. vs.ASSISTANT COMMISSIONER OF INCOME TAX
CHENNAI TRIBUNAL
Appeals—Reference to dispute resolution panel—Assessee company engaged in the business of manufacturing automatic sound proof and heat proof products filed its return of income—Subsequently the case was taken up for scrutiny and assessment was made u/s 143(3) r.w.s 144C—Dispute Resolution Panel directed TPO and AO to determine the design charges paid by the assessee company as Rs.1,90,72,196 against the actual payment of Rs.3,49,10,547—Held, method of computation adapted by both the assessee and Revenue was erroneous and not in accordance with the provisions of the Act—It was apparent from the order of the TPO and DRP that the prescribed method for determining ALP under rule 10B had been lost sight off by the Revenue as well as by the assessee and they had proceeded to compute the ALP by apportioning the cost on the basis of estimated sales—Tribunal had rightly remitted the matter back to the file of TPO to compute the ALP for the product development expenses incurred by the assessee by following the provisions of the Act and by considering the issue afresh
CHENNAI TRIBUNAL
Appeals—Reference to dispute resolution panel—Assessee company engaged in the business of manufacturing automatic sound proof and heat proof products filed its return of income—Subsequently the case was taken up for scrutiny and assessment was made u/s 143(3) r.w.s 144C—Dispute Resolution Panel directed TPO and AO to determine the design charges paid by the assessee company as Rs.1,90,72,196 against the actual payment of Rs.3,49,10,547—Held, method of computation adapted by both the assessee and Revenue was erroneous and not in accordance with the provisions of the Act—It was apparent from the order of the TPO and DRP that the prescribed method for determining ALP under rule 10B had been lost sight off by the Revenue as well as by the assessee and they had proceeded to compute the ALP by apportioning the cost on the basis of estimated sales—Tribunal had rightly remitted the matter back to the file of TPO to compute the ALP for the product development expenses incurred by the assessee by following the provisions of the Act and by considering the issue afresh
DISTRICT COOPERATIVE BANK LTD. vs.DEPUTY COMMISSIONER OF INCOME TAX
HIGH COURT OF ALLAHABAD
Reassessment—Issue of notice of reassessment—Validity of—Assessee filed return declaring a net loss of Rs. 7,48,180—Return was processed u/s 148(1), but subsequently, the case was taken under scrutiny and a notice u/s 148(2) was issued along with a questionnaire— Petitioner assessee filed its reply along with supporting documents—AO examined the profit and loss account from the books of account and other documents and thereafter, made an assessment declaring a net loss of Rs. 66,70,410—Thereafter, AO issued a notice u/s 154 alleging that an error had occurred in the assessment order which was apparent on the face of the record—On an objection being filed, the proceedings were dropped and thereafter, a notice was issued u/s 148 contending that the internal Revenue Audit Party in its report had submitted that the petitioner had debited an amount which was not allowable u/s 36(1)(viia) and therefore, the revenue had "reasons to believe" that an income of specified amount had escaped assessment—Petitioner filed his objection contending that reassessment proceedings were patently erroneous and that reasons to believe were nothing but a change of opinion on which no reassessment proceedings could be initiated—Objection of the petitioner was rejected—Held, In the instant case, it was found that there had been an assessment u/s 143(3)—Books of account were produced and the same were scrutinized—Profit and loss account was checked and only thereafter net loss of Rs.66,70,410 was determined—Merely because the audit report had opined that certain expenses were not allowable u/s 36(1)(viia), it does not entitle the AO to issue a notice u/s 148—It was found from a perusal of the reasons to believe that the AO had not applied its own mind and had not considered as to what would be the effect of the audit report nor had come to any conclusion as per which he could reasonably believe that an income had escaped assessment—Consequently, merely on the basis of the opinion rendered by the audit party, the ITO could not assume jurisdiction to issue a notice u/s 148—AO must, on its own wisdom, come to a conclusion and hold a belief that an income had escaped assessment to tax for issuing a notice u/s 148—Since this belief was not recorded by the AO, the issuance of the notice was done mechanically without any application of mind—Such action amounted to change of opinion, which was not permissible—Since the foundational requirement for issuance of a notice was lacking and the condition precedent for initiating a valid reassessment proceedings were not existing, it was held that the impugned notice issued u/s 148 initiating reassessment proceeding for the A/Y 2007-08 could not be sustained and was quashed—Writ petition was allowed
HIGH COURT OF ALLAHABAD
Reassessment—Issue of notice of reassessment—Validity of—Assessee filed return declaring a net loss of Rs. 7,48,180—Return was processed u/s 148(1), but subsequently, the case was taken under scrutiny and a notice u/s 148(2) was issued along with a questionnaire— Petitioner assessee filed its reply along with supporting documents—AO examined the profit and loss account from the books of account and other documents and thereafter, made an assessment declaring a net loss of Rs. 66,70,410—Thereafter, AO issued a notice u/s 154 alleging that an error had occurred in the assessment order which was apparent on the face of the record—On an objection being filed, the proceedings were dropped and thereafter, a notice was issued u/s 148 contending that the internal Revenue Audit Party in its report had submitted that the petitioner had debited an amount which was not allowable u/s 36(1)(viia) and therefore, the revenue had "reasons to believe" that an income of specified amount had escaped assessment—Petitioner filed his objection contending that reassessment proceedings were patently erroneous and that reasons to believe were nothing but a change of opinion on which no reassessment proceedings could be initiated—Objection of the petitioner was rejected—Held, In the instant case, it was found that there had been an assessment u/s 143(3)—Books of account were produced and the same were scrutinized—Profit and loss account was checked and only thereafter net loss of Rs.66,70,410 was determined—Merely because the audit report had opined that certain expenses were not allowable u/s 36(1)(viia), it does not entitle the AO to issue a notice u/s 148—It was found from a perusal of the reasons to believe that the AO had not applied its own mind and had not considered as to what would be the effect of the audit report nor had come to any conclusion as per which he could reasonably believe that an income had escaped assessment—Consequently, merely on the basis of the opinion rendered by the audit party, the ITO could not assume jurisdiction to issue a notice u/s 148—AO must, on its own wisdom, come to a conclusion and hold a belief that an income had escaped assessment to tax for issuing a notice u/s 148—Since this belief was not recorded by the AO, the issuance of the notice was done mechanically without any application of mind—Such action amounted to change of opinion, which was not permissible—Since the foundational requirement for issuance of a notice was lacking and the condition precedent for initiating a valid reassessment proceedings were not existing, it was held that the impugned notice issued u/s 148 initiating reassessment proceeding for the A/Y 2007-08 could not be sustained and was quashed—Writ petition was allowed
[2015] 62 taxmann.com 26 (Karnataka)
HIGH COURT OF KARNATAKA
Wipro Ltd.
v.
Deputy Commissioner of Income-tax Central Circle 1(3), Bangalore
Circular No.186/5/2015 dated 5-10-2015
Service tax levy on services provided by a Goods Transport Agency
F. No. 354/98/20015-TRU
The All India Transport Welfare Association (AITWA) has represented regarding the difficulties being faced by the Goods Transport Agencies (GTAs) in respect of service tax levy on the services of goods transport. Doubts has been raised by the All India Motor Transport Congress (AIMTC) regarding treatment given to various services provided by GTAs in the course of transportation of goods by road.
2. The issue has been examined. Since July 1, 2012, service tax has shifted to a negative list regime, by which all the services except those covered in negative list as mentioned in section 66D of the Finance Act, 1994 or those exempted by notification are chargeable to service tax.
3. Goods Transport Agency (GTA) has been defined to mean any person who provides service to a person in relation to transport of goods by road and issues consignment note, by whatever name called. The service provided is a composite service which may include various ancillary services such as loading/ unloading, packing/unpacking, transshipment, temporary storage etc., which are provided in the course of transportation of goods by road. These ancillary services may be provided by GTA himself or may be sub-contracted by the GTA. In either case, for the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of ancillary services provided in the course of transportation of goods by road. These services are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of goods by road.
4. A single composite service need not be broken into its components and considered as constituting separate services, if it is provided as such in the ordinary course of business. Thus, a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The interpretation of specified descriptions of services in such cases shall be based on the principle of interpretation enumerated in section 66 F of the Finance Act, 1994. Thus, if ancillary services are provided in the course of transportation of goods by road and the charges for such services are included in the invoice issued by the GTA, and not by any other person, such services would form part of GTA service and, therefore, the abatement of 70%, presently applicable to GTA service, would be available on it.
5. It is also clarified that transportation of goods by road by a GTA, in cases where GTA undertakes to reach/deliver the goods at destination within a stipulated time, should be considered as 'services of goods transport agency in relation to transportation of goods' for the purpose of notification No. 26/2012-ST dated 20.06.2012, serial number 7, so long as (a) the entire transportation of goods is by road; and (b) the GTA issues a consignment note, by whatever name called.
6. Pending disputes on the above issues may accordingly be decided expeditiously
CREDAI moves CCI against cement firms; IPR policy in 2 months; RBI initiates action against IOB
CREDAI moves CCI against cement firms; IPR policy in 2 months; RBI initiates action against IOB
Here's how to make sense of jargon in insurance contracts
By Preeti Kulkarni, ET Bureau
Read the terms and conditions carefully. That is what you are told while buying an insurance policy. However, even after hours of poring over the contract, chances are you would not be any better informed. The reason being insurance contracts are replete with legalese.
In recent years, the regulator and insurers have taken steps to reduce ambiguity in insurance contracts. You too, need to dissect the clauses to avoid shocks at the time of claim settlement.
LIFE INSURANCE
Indisputability
A clause meant to protect the interest of policyholders. It prevents insurers from calling a life policy into question after the first three years, on any grounds. Till that time, insurers can raise queries in case of frauds. In such cases, the insurer will have to give in writing the grounds on which it has based its allegation. You can prevent claim rejection if you can prove that you did not knowingly make a wrong statement or suppress facts.
Free-look
You have the option of returning the policy within a fortnight of receiving the document. If you are not happy with the cover you have been sold, you can return the policy and get a refund. Remember, the period starts from the day you receive the policy documents and not the date of issue. However, while your premium will be refunded, charges for medical tests, stamp duty and proportionate risk premium will be deducted.
HEALTH INSURANCE
Renewability
Insurers have to compulsorily renew policies except on grounds of fraud, moral hazard or misrepresentation. Likewise, insurers cannot arbitrarily hike renewal premiums on the basis of claims made in the previous year. Premiums can be raised only on the basis of overall age-wise and ailment-wise claims experience, among other factors.
Reasonability
This clause decrees that only 'reasonably and necessarily' incurred expenses will be eligible for claim, leaving room for interpretation. "This is one of the grey areas and give rise to disputes with customers at the time of claim settlement," says Sanjay Datta, Chief, Underwriting and Claims, ICICI Lombard. The clause is aimed at ensuring "fair billing" by hospitals known to inflate bills for patients covered under health insurance.
"Reasonable charges are arrived at by insurers by comparing the standard billing charged by a hospital and comparing the same with the prevailing charges in the same geographical area for similar or identical services," says Subrahmanyam B, Senior VP and Head, Health, Commercial Lines and Product Development, Bharti-AXA General Insurance.
In other words, if your hospital has charged Rs1 lakh for a treatment procedure whose 'reasonable' cost is deemed to be Rs 70,000, you will be entitled to the latter amount. Health insurance regulations, however, have narrowed down the scope for interpretation. The insurer needs to justify the reason in writing. Therefore, make sure you question the company's decision if you find it to be unfair.
Exclusions and sub-limits
Insurance policies exclude or impose sublimits on certain conditions or expenses. So, focus on checking what is not covered. The IRDAI issued a list of 199 exclusions in 2013. You also need to keep an eye on the waiting periods for various claims. For example, all claims except the ones related to accidents are not eligible for payout during the the initial 30 days from policy inception.
Sub-limits refer to caps on individual expense categories, within the overall sum insured. Even if your total claim has not exhausted the cover, you will still have to shell out some amount from your pocket. Generally, they are imposed on hospital room rent, doctor's fees, operation theatre charges and so on.
Do not make the mistake of assuming that the amount that you will have to pay will be small—the sub-limit on room rent, for instance, can scale down your entire claim, as all other charges, including doctor's fees, will be reduced proportionately. If the clause makes you uncomfortable, buy premium variants that do not carry any sub-limits. On the other hand, if you do choose a policy with such restrictions, ensure that you choose a room that fits the bill.
Co-payment clause
Like sub-limits, co-payment clause too is meant to restrict the insurer's liability. This clause puts the onus of paying a small part of the admissible claim on the policyholders— the insurer then takes care of the balance amount. The clause comes into play primarily in case of senior citizens' policies or in case policyholders choose to get treated at hospitals that are not part of the insurer's cashless network.
Some insurers also offer product variants that charge a lower premium if policyholders voluntarily opt for copayment. Make sure you go through this clause carefully—the percentage of claimsharing is mentioned clearly in the policy documents—before signing up for the policy.
Read the terms and conditions carefully. That is what you are told while buying an insurance policy. However, even after hours of poring over the contract, chances are you would not be any better informed. The reason being insurance contracts are replete with legalese.
In recent years, the regulator and insurers have taken steps to reduce ambiguity in insurance contracts. You too, need to dissect the clauses to avoid shocks at the time of claim settlement.
LIFE INSURANCE
Indisputability
A clause meant to protect the interest of policyholders. It prevents insurers from calling a life policy into question after the first three years, on any grounds. Till that time, insurers can raise queries in case of frauds. In such cases, the insurer will have to give in writing the grounds on which it has based its allegation. You can prevent claim rejection if you can prove that you did not knowingly make a wrong statement or suppress facts.
Free-look
You have the option of returning the policy within a fortnight of receiving the document. If you are not happy with the cover you have been sold, you can return the policy and get a refund. Remember, the period starts from the day you receive the policy documents and not the date of issue. However, while your premium will be refunded, charges for medical tests, stamp duty and proportionate risk premium will be deducted.
 |
Nomination
The amended insurance Act has introduced the concept of beneficial nominees—parents, spouse and children. Even if other legal heirs lay claim to insurance proceeds, the insurance company can hand over the proceeds to the beneficial nominees. The policyholder is allowed to specify multiple beneficial nominees and share that each is entitled to.HEALTH INSURANCE
Renewability
Insurers have to compulsorily renew policies except on grounds of fraud, moral hazard or misrepresentation. Likewise, insurers cannot arbitrarily hike renewal premiums on the basis of claims made in the previous year. Premiums can be raised only on the basis of overall age-wise and ailment-wise claims experience, among other factors.
Reasonability
This clause decrees that only 'reasonably and necessarily' incurred expenses will be eligible for claim, leaving room for interpretation. "This is one of the grey areas and give rise to disputes with customers at the time of claim settlement," says Sanjay Datta, Chief, Underwriting and Claims, ICICI Lombard. The clause is aimed at ensuring "fair billing" by hospitals known to inflate bills for patients covered under health insurance.
"Reasonable charges are arrived at by insurers by comparing the standard billing charged by a hospital and comparing the same with the prevailing charges in the same geographical area for similar or identical services," says Subrahmanyam B, Senior VP and Head, Health, Commercial Lines and Product Development, Bharti-AXA General Insurance.
In other words, if your hospital has charged Rs1 lakh for a treatment procedure whose 'reasonable' cost is deemed to be Rs 70,000, you will be entitled to the latter amount. Health insurance regulations, however, have narrowed down the scope for interpretation. The insurer needs to justify the reason in writing. Therefore, make sure you question the company's decision if you find it to be unfair.
Exclusions and sub-limits
Insurance policies exclude or impose sublimits on certain conditions or expenses. So, focus on checking what is not covered. The IRDAI issued a list of 199 exclusions in 2013. You also need to keep an eye on the waiting periods for various claims. For example, all claims except the ones related to accidents are not eligible for payout during the the initial 30 days from policy inception.
Sub-limits refer to caps on individual expense categories, within the overall sum insured. Even if your total claim has not exhausted the cover, you will still have to shell out some amount from your pocket. Generally, they are imposed on hospital room rent, doctor's fees, operation theatre charges and so on.
Do not make the mistake of assuming that the amount that you will have to pay will be small—the sub-limit on room rent, for instance, can scale down your entire claim, as all other charges, including doctor's fees, will be reduced proportionately. If the clause makes you uncomfortable, buy premium variants that do not carry any sub-limits. On the other hand, if you do choose a policy with such restrictions, ensure that you choose a room that fits the bill.
Co-payment clause
Like sub-limits, co-payment clause too is meant to restrict the insurer's liability. This clause puts the onus of paying a small part of the admissible claim on the policyholders— the insurer then takes care of the balance amount. The clause comes into play primarily in case of senior citizens' policies or in case policyholders choose to get treated at hospitals that are not part of the insurer's cashless network.
Some insurers also offer product variants that charge a lower premium if policyholders voluntarily opt for copayment. Make sure you go through this clause carefully—the percentage of claimsharing is mentioned clearly in the policy documents—before signing up for the policy.
LLPs receiving FDI shall submit Annual Return on Foreign Liabilities & Assets
RBI amends Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations; States that all LLPs which have received FDI in the previous year(s) including current year shall submit to RBI, on or before 15th day of July of each year, a report titled 'Annual Return on Foreign Liabilities and Assets' as specified from time to time.
Click here to read more.
RBI clarifies on FEMA proceedings against foreign-asset holder vis-a-vis Black Money Law
With an objective of effectively dealing with assets held abroad by persons resident in India in violation of FEMA for which declarations have been made and taxes / penalties have been paid under Black Money Act, RBI had issued requisite directions; RBI clarifies: (i) No proceedings shall lie under FEMA against declarant w.r.t. an asset held abroad for which taxes and penalties under Black Money Act have been paid, (ii) No permission under FEMA will be required to dispose of the asset so declared and bring back the proceeds to India through banking channels within 180 days from declaration date, (iii) Where declarant wishes to hold the asset so declared, she/ he may apply to RBI India within 180 days from date of declaration, if such permission is necessary. Cases where permission is not granted, asset will have to be disposed of within 180 days from date of receipt of the communication from RBI conveying refusal of permission and proceeds brought back to India immediately through banking channel: RBI
Click here to read more.
Govt. allows 100% FDI in White-Label ATM operations under Automatic route, prescribes riders
Govt. reviews extant FDI Policy, and allows FDI upto 100% in White Label ATM (WLA) operations under automatic route, prescribes riders; Riders include: (i) Any non-banking entity intending to set up WLA should have minimum net worth of Rs. 100 crore, to be maintained at all times, (ii) In case the entity is also engaged in any other 18 NBFC activities, then foreign investment in company setting up WLA, it shall have to comply with minimum capitalization norms: DIPP
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Unpaid salary a 'debt', confirms employee's locus as 'creditor' to file winding-up petition
Full Bench of Madhya Pradesh HC rules that employee/workman of Company has locus to file winding-up petition u/s 433/434 of Cos Act, 1956 ('the Act') in respect of its unpaid wages/salary, overturns jurisdictional Company Court ruling in Pawan Kumar Khullar vs. Kaushal Leather Board Limited; Rejects respondent co's contention that unpaid salary can't be equated to 'debt', observes that in absence of any specific definition of 'debt' under the Act, no distinction can be made between remuneration due to be recovered and sum which is to be recovered as price of goods purchased on credit; Holds that, "No provision of any statute much less of the Companies Act has been brought to our notice, which expressly or impliedly excludes the dues to be received by the employee – be it, in service or former employee – from the character of a debt to be paid by the Company"; Rejects respondent's reliance on Sec 529 (which defines 'workmen's dues') and Sec 529A (provides for overriding Preferential Payments in respect of workmen's dues) to contend that in view of overriding preferential status given to payment of workman's dues, workmen / employees should be excluded from pursuing remedy u/s 433 / 434; Observes that preference in payment of workmen's dues does not mean that the workmen are excluded from the term "creditors" and holds, "The fact that no specific reference is made to the dues of employees in Section 529A unlike workmen's dues, to be paid as overriding preferential payments, does not mean that the amount receivable by the employees, who may not be workmen as such, is not a debt or that they are excluded from the term "creditors" in any manner"; Relies on SC ruling in Kesoram Industries and Cotton Mills Ltd. vs CWT, foreign ruling in DPP v. Turner, AP HC rulings in Capt. B.S. Demogray vs. VIF Airways Ltd, Delhi HC ruling in Argha Sen & Another Vs. Interra Information Technologies (India) Pvt. Ltd, P. Ramanatha Aiyar's Advanced Law Lexicon, rejects respondent's reliance on SC ruling in Supreme Court in National Textile Workers' Union & IBA Health (India) Private Limited, distinguishable on facts & issues:Madhya Pradesh HC
The ruling was delivered by Chief Justice A.M. Khanwilkar, Justice Shantanu Kemkar and Justice J.K.Maheshwari.
Advocate Vijayesh Atri argued on behalf of petitioner, while respondent was represented by Advocate Kapil Jain.
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