CASES
2015-TIOL-2385-HC-MAD-VAT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTA0
Ravi Timber Agency Vs Assistant Commissioner (CT)
Whether when assessee has filed its objections, but it has been specifically stated by the AO that no objections had been filed and the ACCT without considering the detailed objections had passed the orders, then the same are liable to be quashed - YES: HC - Matter remanded : MADRAS HIGH COURT
MIXED BUZZ
Niti Aayog CM's Sub Group suggests Centre & States may issue Swachh Bharat Bonds http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24942
CCEA approves one-time fund infusion to revive languishing highway projects http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24941
2015-TIOL-1638-ITAT-DEL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTAz
Beautex (India) Pvt Ltd Vs ITO
Whether penalty u/s 271(1)(c) was wrongly imposed when there was consistent findings of 3 separate forums upheld by the categoric findings of the High Court that the claim was "bogus". -Case remanded : DELHI ITAT
2015-TIOL-1637-ITAT-MAD http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTAy
Sri Balaji Educational And Charitable Public Trust Vs ACIT
Whether penalty u/s 271(1)(c) is leviable where assessee had submitted a detailed explanation before the Assessing Officer and had neither concealed the income nor filed inaccurate particulars. -Assessee's Appeal allowed : CHENNAI ITAT
CENTRAL EXCISE SECTION
2015-TIOL-2200-CESTAT-KOL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTA3 + Story http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24939
A P Electricals Pvt Ltd And Others Vs CCE
CX - In a case where demands are proposed to be confirmed only on the basis of few statements, it is incumbent upon the adjudicating authority to extend cross examination of the relied upon witnesses before deciding the issue – Matter remanded: CESTAT [para 4] - Matter remanded : KOLKATA CESTAT
2015-TIOL-2199-CESTAT-MUM http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTA2
Om Sairam Steels And Alloys Pvt Ltd Vs CCE
CX - Clandestine clearance - Investigation was conducted in factory of one M/s. Rutuja Ispat Pvt. Ltd. (RIPL), wherein some incriminating documents and nine pen-drives were recovered, which shows that RIPL has clandestinely cleared TMT/MS bars and clandestinely received the raw material, i.e. MS ingots/MS billets, without payment of duty from main appellant - No incriminating documents have been recovered from appellants - Some information from pen drive indicating clandestine purchase of inputs and sale of outputs was recovered from 'RIPL' - Whole case of Revenue is prima facie based on statements of Directors and employees of RIPL - On the basis of statements and recovered data, Directors of appellants were confronted and they have admitted to some extent - By denial of opportunity to cross-examine, there have been gross violation of principles of natural justice - Adjudication of RIPL, arising out of same search and investigation is pending, which will have a bearing on appellant's case and Director of RIPL have disputed recovery of pen-drives from their premises during search and have also retracted his statements vide affidavit dated 4.6.2011 - Thus, cross-examination of Directors and employees of RIPL is desirable for ends of justice - Out of total duty in dispute of Rs.5.65 crores, appellant have already deposited Rs. 1.2 crore approximately, which works out to 22% of duty in dispute, amount of pre-deposit already made is sufficient for purpose of hearing of appeals on merits - No further pre-deposit is required and that impugned order is fit to be set aside and matter be remanded back to Adjudicating authority for re-adjudication afresh after granting opportunity to cross-examine the witnesses whose statements have been relied upon to make out allegations against appellants, and to provide reasonable opportunity of hearing: CESTAT by Majority - Case remanded : MUMBAI CESTAT
CUSTOMS SECTION
2015-TIOL-2198-CESTAT-MAD http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTA1
Magick Woods Exports Pvt Ltd Vs CC
Customs - Amendment of BE - appellants being an EOU imported machineries and cleared goods as per the procurement certificate and subsequently sought amendment of the invoice under section 149 of the Customs Act, 1962 - The adjudicating authority rejected their request; on appeal, the Commissioner (Appeals) had remanded the case to the adjudicating authority - The adjudicating authority in the denovo order dated 17.9.2010, not only rejected their request for amendment under section 149 but confirmed the differential duty; confiscated the goods and imposed redemption fine along with penalty - In the second round of litigation, Commissioner (Appeals) dismissed the appeal for non-compliance of predeposit - Tribunal remanded the case to the Commissioner (Appeals) to decide the case on merit, who upheld the denovo order of the adjudicating authority, now agitated herein. - Appeal allowed : CHENNAI CESTAT
PCIT ARRESTED
CBI ARRESTS A PRINCIPAL COMMISSIONER OF INCOME TAX AND AN INCOME TAX OFFICER IN AN ALLEGED BRIBERY CASE OF Rs.10 LAKH
Press Release
New Delhi, 15.10.2015
The Central Bureau of Investigation has today arrested a Principal Commissioner of Income Tax, Thiruvananthapuram and an Income Tax Officer, Thiruvananthapuram in an alleged bribery case of Rs.10 lakh (approx ).
A case was registered U/s 120-B of IPC r/w 7, 12, 13(2) r/w 13(1)(d) of PC Act, 1988 against Principal Commissioner of Income Tax, Kottayam; an Income Tax Officer working in the office of CCIT, Thiruvananthapuram; a Chartered Accountant, Kottayam; a Proprietor of Kottayam based private Jewellery Company & a Managing Partner of company at Kottayam and unknown others in an alleged bribery of Rs.10 Lakh.
It was alleged that the Principal Commissioner of Income Tax, Thiruvananthapuram & also holding charge of PCIT, Kottayam had demanded Rs.10 lakh to give a favourable report on the Income Tax survey conducted on a jewellery shop based in Kottayam. The amount was to be delivered by the Chartered Accountant of the said shop to the Principal Commissioner of Income Tax through the partner of a construction company. CBI conducted searches and recovered Rs.10 lakh (approx) from the partner of the construction company.
Further, searches are being conducted at 9 places including Kottayam, Thiruvananthpuram & also few places outside Kerala at the office & residence of accused persons which led to recovery of several incriminating documents, files relating to the Assessments, computers, laptops, cellphones and cash of Rs. 12.5 lakh (approx).
The arrested accused were produced today before the Designated Court, Thiruvananthapuram (Kerala) and remanded to three days Police Custody
Qua Seat
The Court relied upon an earlier decision of a Division Bench of the Supreme Court of India ("Supreme Court") in Atlas Exports Industries v. Kotak & Company2 http://nsh.getresponse.co.in/misc/pages/link/url:~Y2EuYmh1cGVuZHJhc2hhaEB5YWhvby5jby5pbn4xNDQ0NzM0NTY0fm5zaF8xMDZ+MjAxNTEwflQ@~http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view.html?no_cache=1#c2 ("Atlas Exports") wherein the Supreme Court, under the Arbitration Act, 1940 ("1940 Act"), had held that it was not against the public policy of India when two Indian parties contract to have a foreign-seated arbitration.
Whilst this judgment provides certain answers in the longstanding and yet inconclusive debate on the issue of whether two Indian parties can seat their arbitration abroad, it also throws up larger questions.
FACTUAL MATRIX Sasan Power entered into an association agreement with North American Coal Corporation-US ("NACC-US") in 2007 ("Agreement"). The Agreement, inter alia, provided for resolution of disputes by way of arbitration to be administered by ICC in London, England, under laws of the United Kingdom. In 2011, NACC-US assigned its rights, liabilities and obligations under the Agreement to the Respondent - North America Coal Corporation India Pvt Ltd. ("NACC-India") by way of an Assignment Agreement. Interestingly, whilst an assignment to NACC-India was conducted, it appears that the obligations and liabilities of NACC-US under the Agreement continued.
In 2014, NACC-India terminated the Agreement and filed a request for arbitration claiming compensation of INR 1,82,59,301. Sasan Power filed its objection to this request for arbitration. Sasan Power, thereafter, filed a suit before the District Court and sought an anti-arbitration injunction. The injunction was granted by the District Court.
A second request for arbitration was filed by NACC-US before the ICC. Sasan Power filed a second suit challenging the request for arbitration filed by NACC-US.
NACC-India filed applications for rejection of plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 ("Code") read with Section 45 of the Arbitration & Conciliation Act, 1996 ("Act") and vacation of the anti-arbitration injunction granted by District Court ("Applications"), before the District Court. The District Court allowed the Applications moved by NACC-India and dismissed the suit filed by Sasan Power. Consequently, Sasan Power filed this appeal under Section 96 of the Code.
ISSUES The Court, amongst other things, considered:
1. Whether the appeal filed by Sasan Power was maintainable in light of Section 50 of the Act?
2. Whether two Indian parties could choose to seat their arbitration in a foreign country?
GIST OF ARGUMENTS Sasan Power contended that TDM Infrastructure did not permit two Indian parties to derogate from Indian law by agreeing to conduct arbitration with a foreign seat and a foreign substantive law. Further, reliance on Atlas Exports was erroneous since it was a judgment under the 1940 Act and only the Act would be applicable to the present case. The mandate of Section 45 of the Act would not be attracted since an arbitration clause contemplating a foreign seated arbitration between two Indian parties was invalid; hence Applications based on such a void, null and inoperative arbitration clause would not be maintainable.
NACC-India argued that that no appeal laid against an order passed under Section 45 of the Act. Further, it was argued that TDM Infrastructure was limited in scope to appointment of an arbitrator during proceedings under Section 11(6) of the Act, where the seat of arbitration was India. The provisions of Section 28(1) of the Act were not applicable in the present situation since the seat of arbitration was England. Atlas Exports, wherein it was stated that by virtue of the Exception 1 to Section 28 of the Contract Act, two Indian parties could have a foreign seated arbitration; would apply. Given that Atlas Exports was passed by a two-judge bench, it would be considered precedent even assuming TDM Infrastructure were to apply not only in cases related to Section 11(6) of the Act .
HIGHLIGHTS OF THE JUDGMENT The Court saw no reason to interfere with the impugned judgment which referred the parties to arbitration under Section 45 of the Act and dismissed the appeal, while providing the following reasons:
The Court observed that only orders refusing to refer parties to arbitration could be appealed as per Section 50 of the Act. The Court, while, placing reliance on the judgment in Atlas Exports, observed that Section 28 of the Indian Contract Act, 1872 read with the Exception 1 would not be a bar to a foreign seated arbitration. Further, it was observed that when two Indian parties had willingly entered into an agreement in relation to arbitration, the contention that a foreign seated arbitration would be opposed to Indian public policy was untenable. The Court stated that the principle laid down in Atlas Exports (that was by a larger bench than TDM Infrastructure) would, in light of the decision in Fuerst Day Lawson Ltdv. Jindal Exports3 http://nsh.getresponse.co.in/misc/pages/link/url:~Y2EuYmh1cGVuZHJhc2hhaEB5YWhvby5jby5pbn4xNDQ0NzM0NTY0fm5zaF8xMDZ+MjAxNTEwflQ@~http://www.nishithdesai.com/#3, wherein it was observed by the Supreme Court that there was not much difference between provisions of the Act and 1940 Act; be binding precedent in relation to the issue at hand. The Court noted that in TDM Infrastructure the Supreme Court had clarified by way of an Official Corrigendum that:
"It is, however, made clear that any findings/observations made hereinbefore were only for the purpose of determining the jurisdiction of this Court as envisaged under Section 11 of the 1996 Act and not for any other purpose."
The Court observed that the scheme of the Act indicated that the classification of an arbitration as an international commercial arbitration depended only on the nationality of the parties, which is only relevant for the appointment arbitrators as contemplated under Section 11 of the Act. The Court opined that the nationality of the parties would not influence the applicability of Part II of the Act, the applicability of which would flow depending on the seat of arbitration. The Court, relying upon Enercon (India) Private Limited v. Enercon GMBH4 http://nsh.getresponse.co.in/misc/pages/link/url:~Y2EuYmh1cGVuZHJhc2hhaEB5YWhvby5jby5pbn4xNDQ0NzM0NTY0fm5zaF8xMDZ+MjAxNTEwflQ@~http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view.html?no_cache=1#c4 and Chatterjee Petroleum v. Haldia Petro Chemicals5 http://nsh.getresponse.co.in/misc/pages/link/url:~Y2EuYmh1cGVuZHJhc2hhaEB5YWhvby5jby5pbn4xNDQ0NzM0NTY0fm5zaF8xMDZ+MjAxNTEwflQ@~http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view.html?no_cache=1#c5, was of the opinion that where the parties had agreed to resolve their disputes through arbitration, the courts were to give effect to the intention of the parties and interfere only when the agreement was null or void or inoperative. The Court observed that once parties by mutual agreement had agreed to resolve their disputes by a foreign-seated arbitration, Part I of the Act would not apply. Further where the agreement fulfilled the requirements of Section 44, provisions of Part II of the Act would apply. It was held that a court, under Section 45, would have to refer parties to arbitration where it was found that the agreement was not null or void or inoperative. ANALYSIS This judgment interprets the scheme of the Act, whereby it clarifies that applicability of Part II of the Act is not based on the nationality of the parties but on the basis of where the arbitration is "seated". If arbitration is seated outside India, irrespective of the nationality of the parties involved, it will be considered to be a "foreign award".
The issue before the court was whether two Indian parties could seat an arbitration in a foreign country with foreign law as the substantive law governing the dispute. The concern with allowing the same has been the permissibility for Indian parties to be governed by laws other than the laws of India. The consequence of such an act, allowing Indian parties to expressly contract out of Indian law, being arguably against Indian public policy; is a matter of concern since it would impact the enforceability of the award.
The present judgment applies Atlas Exports, while restricting the applicability of TDM Infrastructure to issues related to Section 11(6) of the Act, to reiterate the legality of two Indian parties choosing to seat their arbitration in foreign country. An argument was raised that such arbitrations would be limited by the restriction contained in Section 28(1) of the Act and parties would not be permitted to choose a foreign substantive law when only parties having Indian nationality were involved. The court clarified the same stating that when the seat of arbitration is outside India, the conflict of law rules of the country in which the arbitration takes place would have to be applied and it would not be an arbitration under Part I of the Act.
That being said, the restrictive interpretation of TDM Infrastructure adopted by the Court may, in effect, be a reading down of a judgment that categorically states that Indian parties cannot derogate from Indian law, as a matter of public policy. The resultant issues that it raises, needing further consideration, are (i) whether Indian parties would be allowed to choose a foreign substantive law; and (ii) whether, as held in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc6 http://nsh.getresponse.co.in/misc/pages/link/url:~Y2EuYmh1cGVuZHJhc2hhaEB5YWhvby5jby5pbn4xNDQ0NzM0NTY0fm5zaF8xMDZ+MjAxNTEwflQ@~http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view.html?no_cache=1#c6, by choosing a foreign seat the non- derogable substantive provisions of Part 1 would not be available to parties, thereby denying access to Indian courts.
This issue may require greater clarity from the Supreme Court in light of a recent decision of the Bombay High Court in M/s Addhar Mercantile Private Limited v. Shree Jagdamba Agrico Exports Pvt Ltd7 http://nsh.getresponse.co.in/misc/pages/link/url:~Y2EuYmh1cGVuZHJhc2hhaEB5YWhvby5jby5pbn4xNDQ0NzM0NTY0fm5zaF8xMDZ+MjAxNTEwflQ@~http://www.nishithdesai.com/#7 which interpreted a vague arbitration clause which provided for "Arbitration in India or Singapore and English law to be apply" between two Indian parties. The court found that the clause to mean arbitration in India with Indian law applicable taking a view that arbitration would have to be conducted in India and making English law applicable would make the clause pathological. However, the Court also noted that position was qualified with a statement that "if the seat of arbitration would have been at Singapore, certainly English law will have to be applied". It is pertinent to note that this was in relation to an application for appointment of arbitrators under Section 11, therefore, the Bombay High Court was bound by the decision of the Supreme Court in TDM Infrastructure.
Should this judgment be upheld, another potential issue that may arise is that since the arbitrability of a dispute is determined by the law of the seat, it would not be unimaginable for Indian parties to refer disputes, which would otherwise not be arbitrable in India, to binding arbitration merely by choosing foreign seat.
In the meanwhile, this judgment would come as some relief for Indian companies (especially subsidiaries of foreign companies) that may have unwittingly entered into arbitration agreements providing for a foreign seat and a foreign substantive law, with other Indian parties; perhaps unaware of the complexities surrounding this issue. At the very least, enforcement of such award still remains untested and may prove to be a challenge. In light of the contentious point of law and the various issues, it is expected that this matter may find its way before the Supreme Court in due course. The judgment of the Supreme Court is eagerly awaited in this respect.
1 First Appeal 310 of 2015
2 (1999) 7 SCC 61
3 (2011) 8 SCC 333
4 2014 (5) SCC 1
5 2013 ARBLR 456 (SC)
6 (2012) 9 SCC 552
7 Arbitration Application 197 of 2014
beps
An insight into Final Report of BEPS - Part 1 (Action Plan 1 to 4)
Alok Pareek
CA, CS, LLB
This is first article on our series on Final Report of BEPS. Next article in this series will cover other BEPS Action plans.
Introduction
1. In an increasingly interconnected world national tax laws have not always kept pace with those in global corporations, fluid movement of capital and the rise of the digital economy, leaving gaps and mismatches that can be exploited to generate double non-taxation. This undermines the fairness and integrity of tax systems.
Base Erosion and Profit Shifting ('BEPS&# 39;)
2. It refers to tax planning strategies that exploit these gaps and mismatches in tax rules to artificially shift profits to low or no-tax jurisdictions where there is little or no economic activity, resulting in little or no overall corporate tax being paid. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from Multinational Enterprises (MNEs).
Research done since 2013 confirms the potential magnitude of the BEPS problem. Estimates conservatively indicate annual losses of anywhere from 4 - 10% of global corporate income-tax (CIT) revenues, i.e., USD 100 to 240 billion annually.
BEPS is a global problem which requires global solutions. For the first time ever in tax matters, OECD and G20 countries worked together on an equal footing. More than a dozen developing countries have participated directly in the work. More than 80 non-OECD, non-G20 jurisdictions have provided inputs.
2.1 Fifteen actions equip Governments with the domestic and international instruments needed to tackle BEPS: The final BEPS package gives countries the tools they need to ensure that profits are taxed where economic activities generating the profits are performed and where value is created. At the same time these give business greater certainty by reducing disputes over the application of international tax rules and standardizing compliance requirements.
The following are the fifteen action plans envisaged to curb the base erosion and shifting of profits from one tax jurisdiction to others:
Action 1 Addressing the Tax Challenges of the Digital Economy Action 2 Neutralising the Effects of Hybrid Mismatch Arrangements Action 3 Designing Effective Controlled Foreign Company Rules Action 4 Limiting Base Erosion Involving Interest Deductions and Other Financial Payments Action 5 Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance Action 6 Preventing the Granting of Treaty Benefits in Inappropriate Circumstances Action 7 Preventing the Artificial Avoidance of Permanent Establishment Status Actions 8-10 Aligning Transfer Pricing Outcomes with Value Creation Action 11 Measuring and Monitoring BEPS Action 12 Mandatory Disclosure Rules Action 13 Transfer Pricing Documentation and Country-by-Country Reporting Action 14 Making Dispute Resolution Mechanisms More Effective Action 15 Developing a Multilateral Instrument to Modify Bilateral Tax Treaties 2.1.1 Action 1 - Tax Challenges of the Digital Economy: Multinational enterprises (MNEs) make use of gaps in the interaction of different tax systems to artificially reduce taxable income or shift profits to low-tax jurisdictions in which little or no economic activity is performed.
The digital economy is increasingly becoming the economy itself. It would be difficult to ring-fence the digital economy from the rest of the economy for tax purposes.
2.1.1.1 KEY FEATURES OF DIGITAL ECONOMY RELEVANT FOR TAX PURPOSE: Mobility, reliance on data, network effects, the spread of multi-sided business models, a tendency towards monopoly or oligopoly and volatility.
2.1.1.2 KEY BUSINESS MODELS OF DIGITAL ECONOMY: Varieties of e-commerce, app stores, online advertising, cloud computing, participative networked platforms, high speed trading and online payment services.
The digital economy has also accelerated and changed the spread of global value chains in which MNEs integrate their worldwide operations.
2.1.1.3 TABULAR REPRESENTATION:
BEPS Issues Next Steps/ Recommendations The Permanent Establishment challenge
A. The preparatory and auxiliary character of activities
Modify the list of exceptions to the definition of PE to ensure that the exceptions included therein are restricted to activities that are otherwise of a "preparatory or auxiliary" character;
To introduce a new anti-fragmentation rule to ensure that it is not possible to benefit from exceptions to definition of PE through the fragmentation of business activities among closely related enterprises.
Example - The maintenance of a very large local warehouse in which a significant number of employees work for purpose of storing and delivering goods sold online to customers by an online seller of physical products (whose business model relies on the proximity to customers and the need for quick delivery to clients) would constitute a permanent establishment for that seller under the new standard.
B. Artificial arrangements for conclusion of contracts outside a jurisdiction
Modify the definition of PE to address circumstances in which artificial arrangements relating to the sale of goods or services of one company in a multinational group effectively result in the conclusion of contracts, such that the sales should be treated as if they had been made by that company in a different tax jurisdiction.
Example - Where the sales force of a local subsidiary of an online seller of tangible products or an online provider of advertising services habitually plays the principal role in the conclusion of contracts with prospective large clients for those products or services, and these contracts are routinely concluded without material modification by the parent company, this activity would result in a permanent establishment for the parent company.
The Transfer Pricing guidance on return from intangibles
The revised transfer pricing guidance (Actions 8 to 10) makes it clear that legal ownership alone does not necessarily generate a right to all of the return that is generated by the exploitation of the intangible (limiting the current mobility of Digital Economy profits), but that the group companies performing the important functions, contributing to the important assets and controlling economically significant risks, as determined through the accurate delineation of the actual transaction will be entitled to an appropriate return.
This guidance will subject a greater share of Digital Economy profits to market country taxation.
Design of effective Controlled Foreign Company ('CFC' ) Rules
Defining the CFC income - The recommendations on the design of effective CFC rules include defining the CFC income that would subject income that is typically earned in the Digital Economy to taxation in the jurisdiction of the ultimate parent company.
The VAT/ GST issue
The collection of VAT/GST on cross-border transactions, particularly those between businesses and consumers, is an important issue. Thus it is recommended to apply the principles of the International VAT/GST Guidelines and consider the introduction of the collection mechanisms included therein.
2.1.2 Action 2 - Neutralising the Effects of Hybrid Mismatch Arrangements: Hybrid mismatch arrangements exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions to achieve double non-taxation, including long-term deferral. These types of arrangements are widespread and result in a substantial erosion of the taxable bases of the countries concerned. They have an overall negative impact on competition, efficiency, transparency and fairness.
The OECD report sets out those recommendations for changes to:
(A) The domestic laws; and
(B) The OECD Model Tax Convention.
Post-implementation of the recommended changes to domestic tax laws and the tax treaties, the hybrid mismatches will neutralize, inter alia, by:
• Putting an end to multiple deductions for a single expense.
• Deductions without corresponding taxation.
• Generation of multiple foreign tax credits for one amount of foreign tax paid.
• Neutralising the mismatch in tax outcomes.
These rules will prevent these arrangements from being used as a tool for BEPS without adversely impacting cross-border trade and investment.
2.1.2.1 TABULAR REPRESENTATION
BEPS Issues Next Steps/ Recommendations Payments made under a hybrid financial instrument or payments made to or by a hybrid entity
The OECD has recommended following Rules to address it:
(A) Mismatches in tax outcomes arising in respect of payments made under a hybrid financial instrument.
(B) Indirect mismatches that arise when the effects of a hybrid mismatch arrangement are imported into a third jurisdiction.
The recommendations:
Linking rules that align the tax treatment of an instrument or entity in a tax jurisdiction with the tax treatment in the counter-party jurisdiction which otherwise do not disturb the commercial outcomes.
The rules have to apply automatically and in the order in the form of a primary rule and a secondary/ defensive rule.
It would prevent more than one country applying the rule to the same arrangement and would also avoid double taxation.
The Primary rule- Countries to deny deduction for a payment to the extent it is not included in the taxable income of the recipient in the counter-party jurisdiction or it is also deductible in the counter-party jurisdiction.
The Secondary rule - If the primary rule is not applied, then the counter-party jurisdiction can generally apply a defensive rule, requiring the deductible payment to be included in income or denying the duplicate deduction, depending on the nature of the mismatch.
Use of hybrid instruments/ entities/ dual resident entities to obtain undue benefits of tax treaties
A. Dual resident entities
As per Action 6 of BEPS action plan cases of dual residence under a tax treaty would be solved on a case-by-case basis, rather than on the basis of the current rule based on the place of effective management of entities.
Recommend changes in domestic law to address other avoidance strategies involving dual residence.
B. Application of tax treaties to hybrid entities
Hybrid entities are not treated as taxpayers by either or both States that have entered into a tax treaty (such as partnerships in many countries).
The measures propose to include a new provision in the OECD Model Tax Convention (OECD, 2010) and detailed Commentary that will ensure that:
(A) Benefits of tax treaties are granted in appropriate cases to the income of these entities;
(B) Benefits are not granted where neither State treats, the income of such an entity under its domestic law as the income of one of its residents.
C. The tax treaty issues related to the recommended Rules
For the Rules (as mentioned above) that would result in denial of a deduction or would require the inclusion of a payment in ordinary income - The tax treaties would generally not prevent the application of these rules.
The report describes possible treaty changes that would address these problems arising in the case of bilateral tax treaties that provide for the application of the exemption method with respect to dividends received from foreign companies
2.1.3 Action 3 - Designing Effective Foreign Company Rules: Controlled foreign company ('CFC' ) rules respond to the risk that taxpayers with a controlling interest in a foreign subsidiary can strip the base of their country of residence and in some cases of other countries by shifting income into a CFC.
Without such rules CFCs provide opportunities for profit shifting and long-term deferral of taxation. The rules will effectively prevent taxpayers from shifting income to foreign subsidiaries.
2.1.3.1 TABULAR REPRESENTATION
BEPS Issues Next Steps/ Recommendations Definition of a CFC
CFC rules generally apply to foreign companies that are controlled by shareholders in the parent jurisdiction.
Recommendations:
Determining a company as CFC when shareholders have sufficient influence over a foreign company.
Bringing income of non-corporate entities within the CFC rules.
CFC exemptions and threshold requirements
Existing CFC rules often apply after the application of provisions such as tax rate exemptions, anti-avoidance requirements and de minimis thresholds.
Recommendation - CFC rules only apply to controlled foreign companies that are subject to effective tax rates that are meaningfully lower than those applied in the parent jurisdiction.
Definition of income
Some countries under the existing CFC rules treat all the income of a CFC as "CFC income" that is attributed to shareholders in the parent jurisdiction; many CFC rules only apply to certain types of income.
Recommendation - CFC rules are to include a definition of CFC income and to set out an exhaustive list of approaches or combination of approaches that CFC rules could use for such a definition.
Computation of income
CFC rules use the rules of the parent jurisdiction to compute the CFC income to be attributed to shareholders.
Recommendation - It is recommends that CFC losses should only be offset against the profits of the same CFC or other CFCs in the same jurisdiction.
Attribution of income
Recommendation–Depending on situation, the attribution threshold should be tied to the control threshold and that the amount of income to be attributed should be calculated by reference to the proportionate ownership or influence.
Prevention and elimination of double taxation
On ensuring that the CFC rules do not lead to double taxation.
Recommendation:
Jurisdictions with CFC rules allow credit for foreign taxes actually paid, including any tax assessed on intermediate parent companies under a CFC regime.
Countries are to consider relief from double taxation on dividends on and gains arising from the disposal of CFC shares where the income of the CFC has previously been subject to taxation under a CFC regime.
2.1.4 Action 4 - Limiting Base Erosion Involving Interest Deductions and Other Financial Payments: Multinational groups easily multiply the level of debt at the level of individual group entities via intra-group financing and achieve favourable tax results.
Financial instruments are used to make payments which are economically equivalent to interest but have a different legal form, therefore, escape restrictions on the deductibility of interest.
Base Erosion and Profit Shifting (BEPS) risks in this area may arise in following three basic scenarios:
• Groups placing higher levels of third party debt in high tax countries.
• Groups using intra-group loans to generate interest deductions in excess of the group's actual third party interest expense.
• Groups using third party or intra-group financing to fund the generation of tax exempt income.
A coordinated implementation of the recommended approach will successfully impact the ability of multinational groups to use debt to achieve BEPS outcomes.
2.1.4.1 TABULAR REPRESENTATION
BEPS Issues Next Steps/ Recommendations Base erosion through the use of interest expense
To prevent the base erosion through the use of interest expense the OECD has recommended a combination of rules comprising of fixed ratio rule and group ratio rule. The fixed ratio rule is a default application rule and the country is free to choose a group ratio rule.
Fixed ratio rule
For entities in Multinational Group a limit on an entity's net deductions for interest and payments economically equivalent to interest to a percentage of its earnings before interest, taxes, depreciation and amortisation (EBITDA).
Ratios between 10% and 30% are recommended, based on certain factors.
It would ensure that an entity's net interest deductions are directly linked to the taxable income generated by its economic activities and would limit an entity's net interest deductions (i.e., interest expense in excess of interest income).
The rule does not restrict the ability of multinational groups to raise third party debt centrally in the country which is most efficient, taking into account non-tax factors such as credit rating, currency and access to capital markets, and then the borrowed funds within the group where it is used to fund the group's economic activities.
Group ratio rule
For groups that are highly leveraged with third party debt for non-tax reasons.
This would allow an entity with net interest expense above a country' s fixed ratio to deduct interest up to the level of the net interest/EBITDA ratio of its worldwide group.
Countries may also apply an uplift of up to 10% to the group's net third party interest expense to prevent double taxation.
Different group ratio rules
The earnings-based worldwide group ratio rule can also be replaced by different group ratio rules, such as the "equity escape" rule (which compares an entity's level of equity and assets to those held by its group) currently in place in some countries.
A country not choosing any group ratio rule
If a country does not introduce a group ratio rule, it should apply the fixed ratio rule to entities in multinational and domestic groups without improper discrimination.
Countries may supplement the fixed ratio rule and group ratio rule with other provisions
In order to reduce the impact of the rules on entities or situations which pose less BEPS risk the countries may supplement the above said rules with other provisions such as:
• Threshold, which carves-out entities which have a low level of net interest expense
Where a group has more than one entity in a country, the threshold may be applied to the total net interest expense of the local group.
• Exclusion for interest paid to third party lenders on loans used to fund public-benefit projects
An entity may be highly leveraged. Due to the nature of the projects and the close link to the public sector, the BEPS risk is reduced.
• Allowing carry forward of disallowed interest expense and/or unused interest capacity
Where an entity's actual net interest deductions are below the maximum permitted, an allowability for such carry forward for use in future years.
Reduce the impact of earnings volatility on the ability of an entity to deduct interest expense.
Help entities which incur interest expenses on long-term investments that are expected to generate taxable income only in later years, and will allow entities with losses to claim interest deductions when they show profit.
Rules for banking and insurance sector
As the banking and insurance sectors have specific features, suitable rules should be developed for these sectors which would address the BEPS risks in these sectors.
Whether the payment of interest by banks to the State Industrial Development Authorities requires any deduction of tax at source in terms of section 194A(3)(iii)(f). - Revenue's appeal dismissed : DELHI ITAT
2015-TIOL-2397-HC-KERALA-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTMx
DCIT Vs Vasco Sales And Marketing Corporation
Whether when the order u/s 119 (2)(b) is passed in a improper manner, the correct consequential order that should be passed by the High Court should be for remand of the case instead of granting condonation of delay in respect of a return filed in response to a notice u/s 148 - YES: HC -Revenue's appeal dismissed : KERALA HIGH COURT
2015-TIOL-2396-HC-KOL-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTMw
Jalan Distributors Pvt Ltd Vs CIT
Whether a residential property can be claimed as used for the purpose of assessee's business as a commercial asset, on the basis of mere claim of a letter stating that the said property was used for commercial purpose - NO: HC - Assessee's appeal dismissed : CALCUTTA HIGH COURT
2015-TIOL-2395-HC-MAD-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTI5
MGM India Benefit Fund Vs DCIT
Whether if Revenue has issued yet another notice u/s 148 in respect of same assessment year assuming jurisdiction again in terms of Section 147 calling for the return of income in order to reassess the income for the said AY, it is obligatory on the part of assessee to file reply to such notice- YES: HC - Assessee's writ dismissed : MADRAS HIGH COURT
2015-TIOL-2394-HC-AHM-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTI4
Raj Corporation Vs ITO
Whether when the order which was subject-matter of challenge before the Tribunal is no longer in existence as the same has merged with the subsequent order passed by CIT(A), the Tribunal can recall the previous order passed by it on the appeal preferred by the assessee confirming the previous order passed by the CIT(A) - NO: HC - Assessee's appeal allowed : GUJARAT HIGH COURT
2015-TIOL-2393-HC-MUM-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTI3
CIT Vs Trend Electronics
Whether an order passed in reassessment proceedings are bad in law in the absence of reasons recorded for issuing a reopening notice u/s 148 being furnished to the assessee when sought for - YES: HC - Revenue's appeal dismissed : BOMBAY HIGH COURT
2015-TIOL-2392-HC-AHM-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTI2
CIT Vs Shaifali Steel Ltd
Whether when the assessee has made payment of provident fund contribution before the due date of filing the return of income for the year, can it be held that the payment of P.F. amount is an allowable expenditure - Revenue's appeal dismissed : GUJARAT HIGH COURT
2015-TIOL-2391-HC-AHM-IT http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTI1
PR CIT Vs Vijay Pataka Synthetics
Whether in case there is transformation in the basic synthetic fabric on which embroidery has been carried out resulting into a new article which is commercially known as another article, the work of embroidery carried on by the assessee would fall within the ambit of definition of "manufacture" as envisaged u/s 2(29BA) - YES: HC
Whether if the activity carried on by the assessee falls within the ambit of manufacturing activity, the assessee is entitled to avail the additional depreciation under section 32(1)(iia) in relation to the machinery installed by it - YES: HC - Revenue's appeal dismissed : GUJARAT HIGH COURT
SERVICE TAX SECTION
NOTIFICATION
stnot15_019 http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg2NDI=
Service Tax - CBEC grants Sec 11C benefits to MTSO agents in relation to remittance of forex from outside India for disputed period
CASE LAWS
2015-TIOL-2398-HC-SIKKIM -ST http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQz + Story http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24947
M/s Future Gaming And Hotel Services (Pvt) Ltd Vs UoI
ST - Lottery distributors and selling agents strike gold again - 2015 Budgetary amendments fail to produce the desired effect - buying and selling lottery tickets is not rendering service -since, by the Explanation, the scope of Section 66D, which is the main provision, is to be expanded, it would be ultra vires the Finance Act, 1994 and is accordingly struck down - TRU letter 334/5/2015-TRU dated 19.05.2015 also quashed: High Court - Petitions allowed : SIKKIM HIGH COURT
2015-TIOL-2209-CESTAT-KOL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQx
Eastern Transport Agency Vs CCE & ST
ST - Assessee engaged in providing loading and un-loading of materials and their transportation within factory premises of M/s Tata Steel Ltd - Charges in respect of loading and un-loading of materials and internal transportation, are shown separately in agreement - As per M/s Jai Jawan Coal Carriers Pvt. Ltd. 2014-TIOL-727-CESTAT-DEL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTM0OTQ=, when activity of loading of materials into trucks and its subsequent un-loading is clearly identified from transportation of materials within factory, then ST would not be chargeable on amount charged towards transportation of materials - Assessee has made out a prima-facie case for complete waiver of confirmed dues: CESTAT - Stay granted : KOLKATA CESTAT
2015-TIOL-2208-CESTAT-AHM http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQw
Biossom Industries Ltd Vs CCE, C & ST
ST – BAS - Manufacture of Alcoholic Beverages on job work basis was included in service tax net w.e.f 1.9.2009 - Appellants had challenged the constitutional validity of levy of the Service Tax before the Bombay High Court - High Court by Order dtd 14.10.2010 admitted the WP and observed that the Revenue would be at liberty to proceed with the Show Cause Notice – Adjudicating authority confirmed demand of service Tax of Rs 28,60,30,676/- along with interest and penalty – appellant have paid the tax of Rs 17,66,51,082/- alongwith interest of Rs 3,27,50,955/- - Appeal before Tribunal.
Held: Reimbursable expenses paid to the appellant insofar as cost and expenditure as stipulated under Rule 5(i) ST Valuation Rules, 2006 cannot be included in the taxable value - despite the fact that Writ Petition is pending before the High Court, the appellant paid tax with interest and there is reasonable cause to invoke Section 80 for waiver of the penalty under Section 76 & 78 of the Act - order is modified to the extent that the taxable value would be computed by excluding the amount of surplus/profit returned to the Brand Owner and the other reimbursable expenses paid to the appellant, covered under Rule 5(i) of the ST Valuation Rules - Adjudicating authority directed to re-determine demand of tax alongwith interest - penalty imposed u/s 77 is upheld but other penalties imposed u/s 76 & 78 are set aside: CESTAT [para 11, 14, 15] - Appeal partly allowed :AHMEDABAD CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-240-SC-CX http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQ3
UoI Vs M/s DSCL Sugar Ltd
CX– Bagasse emerging as residue/waste of sugarcane - Deeming fiction introduced by insertion of Explanation to section 2(d) of the CEA, 1944 by the Finance Act, 2008 - before the aforesaid fiction is to be applied, it is necessary that the process should fall within the definition of "manufacture" as contained in Section 2(f) of the Act - it could not be pointed out by Revenue as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter note - In the absence thereof, the deeming provision u/s 2(f)(ii) of CEA, 1944 cannot be attracted - Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process - Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and in the absence of manufacture, there cannot be any excise duty - Since it is not a manufacture, obviously Rule 6 of the Cenvat Credit Rules, 2004, shall have no application as rightly held by the High Court – Appeals dismissed: Supreme Court
Cenvat Credit in respect of electricity was denied only on the premise that Bagasse attracts excise duty and consequently Rule 6 of the Cenvat Credit Rules is applicable - Since this action of the appellant is found to be erroneous, all these appeals of the Revenue also stand dismissed: Supreme Court - Appeals dismissed : SUPREME COURT OF INDIA
2015-TIOL-2211-CESTAT-AHM-LB http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQ2 + Story http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24948
M/s Krap Chem Pvt Ltd Vs CCE & ST
Central Excise - the process carried out by the assessee amounts to manufacture. The impugned goods Guar Dal Powder would be classifiable under Heading 1301: The seed of Guar plant in powder form known as Guar Dal Powder, was received by the assessee. The assessee had undertaken a process of the said powder added with other product and TKP. It is also mixed with Methonol and Glycol in a minimum quantity. There is a chemical reaction during mixing of these items and the viscosity of the final product ranges from 0 to 5000 CPH as per requirement of end use of the product. The chemical reaction in the Blender is expressing the magnitude of internal friction in a fluid and there is a change of properties as per end use of the goods. Thus, there is a change of character of the impugned product. The assessee received Guar Dal Powder and after due process, it was sold as Guar Dal Powder/Guar Gum. There is no dispute that the said product was known in trade as Guar Gum. So, there is a change of character, identity and use of the goods. There is change of character of the goods of different properties as per viscosity used in various industries. Revenue's argument that the product was covered under Heading 13.01 of the Excise Tariff has more merit.
No extended period as there were contrary decisions: It is seen from the records that the Appellant filed declaration under Rule 174 of erstwhile Rules from the year 1997-98. The Appellant had specifically mentioned the description of the goods as Guar Dal Powder, with the process of manufacture by the Declaration dt.29.09.1997. In any event, there were contrary decisions of the co-ordinate Benches of the Tribunal on this issue. It is noticed that the appellant's own case, the Tribunal in earlier occasion, observed that the impugned goods are NIL rate of duty under Chapter 11 of CETA. So, the ingredients in proviso to Section 11 A (1) of Central Excise Act, 1944 cannot be involved. - Appeal partly allowed on limitation : AHMEDABAD CESTAT (LARGER BENCH)
2015-TIOL-2206-CESTAT-DEL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTM4
Shreyans Industries Ltd Vs CCE
CX - A specific plea has been made by assessee that no penalty is imposable inasmuch as Commissioner (A)'s order had been passed in respect of review appeal filed by Revenue against Assistant Commissioner's order and in Revenue's appeal there was no prayer for imposition of penalty - Moreover, this is not the case of wilful mis-statement or suppression of facts - When different views were expressed at different stages by Tribunal and High Courts, application of extended limitation period under proviso to section 11A1 and penalty under section 11AC would not be justified - No penalty would be imposable on assessee for non-payment of duty of dharmada charges - By the final order dated 5/2/2014 only part Commissioner (A)'s order confirming duty demand on dharmada charges has been upheld and part of order confirming duty demand on freight and transit insurance and imposing penalty on assessee is set aside: CESTAT - ROM disposed of : DELHI CESTAT
2015-TIOL-2205-CESTAT-KOL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTM3
Tml Drivelines Ltd Vs CCE
CX - Assessee engaged in manufacture of H.V. Gear Box and cleared said goods to M/s. Tata Motors Ltd., their holding company, by discharging duty on transaction value between assessee and M/s. Tata Motors Ltd as per Sec.4(1)(a) of CEA, 1944 - Certain elements of cost, like quality control, packaging cost and administrative heads are bone of contention between department and assessee - They have placed the opinion of M/s. Mani & Co., Cost Accountant, who had certified method of arriving at the cost of product by them as correct - Assessee submits that they have not incurred any packing cost in transferring finished goods from assessee company to holding company - Stay granted: CESTAT - Stay granted : KOLKATA CESTAT
2015-TIOL-2204-CESTAT-KOL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTM2
CCE & ST Vs International Auto Ltd
CX - CENVAT - Respondent had sold their sheet metal division to M/s Caparo - A demand notice was issued to them alleging that they had availed irregular cenvat credit amounting to Rs.17,41,586/- inasmuch as in the month of February, 2008, after sale of the sheet metal division to M/s Caparo, the Applicants were not in a possession of the said capital goods, therefore, balance 50% of the credit was not admissible to them - Commissioner(A) allowed the cenvat credit on capital goods of Rs.11,77,897/- - Revenue in appeal before CESTAT. Held: There is no appeal filed by the assessee against the restriction of credit - In support of the fact that they have availed cenvat credit on capital goods, which were used in their non-sheet metal division and do not relate to the sheet metal division sold to M/s Caparo, the respondent produced a Chartered Engineer's Certificate dated 18th March, 2015 and wherein the amount shown is Rs.12,07,565/- - since the cenvat credit figures appearing in the Commissioner's (Appeals) order, are different, therefore, the Chartered Engineer's Certificate needs to be scrutinized by the adjudicating authority - both sides agree for a remand - order set aside and matter remanded: CESTAT [para 7] - Matter remanded : KOLKATA CESTAT
2015-TIOL-2203-CESTAT-KOL http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTM1
Tinplate Company Of India Ltd Vs CCE & ST
CX - Place of removal - Demand of cenvat credit confirmed on the ground that services availed in Port area, on which ST had been paid, are not eligible to cenvat credit, as such services do not satisfy definition of "input services" prescribed under Rule 2(l) of CCR, 2004 - Assessee contends that confirmation of demand is the out come of an erroneous interpretation of expression of "place of removal" - As per Honest Bio-vet Pvt. Ltd. 2014-TIOL-2286-CESTAT-AHM-LB http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTczOTg=, assessee could able to make out a prima facie case for total waiver of pre deposit of dues - Stay granted: CESTAT - Stay granted : KOLKATA CESTAT
2015-TIOL-2202-CESTAT-MUM http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTM0
S S Dyes And Chemicals Vs CC
CX - Appellant paid an amount of Rs.30,53,905/- at the time of investigation and which payment was confirmed as duty and amount was appropriated in o-in-o dated 01.05.1996 - therefore, there is no doubt that what has been paid by appellant has been adjusted towards duty and it is not a mere pre-deposit as canvassed by Revenue - further while passing refund order, adjudicating authority had considered the applicablity of unjust enrichment and only thereafter, granted refund which also shows that what was sanctioned as refund was only duty paid in excess - therefore, question of payment of interest on delayed refund would automatically arise - appellant had filed refund application on 12.09.1994, therefore, provisions of section 27A of CA, 1962 is clearly attracted and said section provides for payment of interest on expiry of three months from the date of refund application till date of grant of refund irrespective of when the order for refund was actually passed - since s.27A itself came into force in May 1995 and appellant claimed interest for period from 01.12.1995 onwards, appellant is rightly entitled for interest at applicable rates from 01.12.1995 till the date of actual payment of refund - appeal allowed with consequential relief: CESTAT [para 5] - Appeal allowed : MUMBAI CESTAT
CUSTOMS SECTION
2015-TIOL-2400-HC-MUM-CUS http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQ1 + Story http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24946
Bharmpal Panchal Vs UoI
Cus - Section 28AB of the CA, 1962 left the statute book on 08.04.2011 - if this be so, Settlement Commission was in error in rejecting Applications filed on 26.08.2013 on the ground that the Petitioners had failed to pay the interest due u/s 28AB as stipulated under section 127B - interest, penalty or fine is only payable if there is a substantive provision in the Act for payment of the same. In the absence of any statutory provisions, an authority would be acting without jurisdiction in demanding the payment of interest where otherwise no interest is payable - Orders set aside and matter remanded for de novo consideration - Petitioners shall be obliged to pay interest u/s 28AA before their Applications are de novo considered: High Court
Cus - 3rd SCN dated 29/31.01.2013 has not been adjudicated at all and in view of the facts culled by the petitioner the Settlement Commission was totally in error in coming to the conclusion that the Petitioners' Settlement Applications could not be entertained because an Appeal was pending before the CESTAT: High Court - Matter remanded : BOMBAY HIGH COURT
2015-TIOL-2399-HC-DEL-CUS http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTQ0 + Story http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24944
CCE & ST Vs Havells India Ltd
Cus – Notf. 34/97-Cus, 96/2004-Cus – There is no condition in the said notifications that the debits made in the DEPB issued under a particular FTP alone would be eligible for CENVAT credit and that debits in a DEPB issued under a previous FTP would not be eligible for credit – Revenue appeals dismissed: High Court [para 6, 8] - Appeals dismissed : DELHI HIGH COURT
2015-TIOL-2201-CESTAT-MAD http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA3NTMz
S Tomy Corera Vs CC
Customs - Penalty - Smt. S. Josephine Sudarsan was the owner of the barge which was managed by her husband Shri S. Tomy Corera - The barge was let out and that was anchored in the sea - Revenue detected the removal of oil from barge and loading thereof into the tanker lorry - Penalties under Section 112 (b) of the Customs Act, 1962 adjudicated on the individuals and agitated herein.
Held: The barge was let out; thus gone out of control of the owner, to the persons concerned, who operated the barge thereafter - Accordingly, there shall be no penalty on Smt. Josephine Sudarsan (barge owner) - However, her husband Shri Tomy Corera was managing the barge and that was under his control even though that was let out - fact on record that the barge was carrying fuel and that fuel was removed from barge for loading into the tanker lorry for the purpose of moving outside the Customs area, bringing Shri Tomy Corera into the fold of law to explain the reason for removal of fuel - When his explanation was unsatisfactory and without any logical reason, it was held that there was smuggling activity - Shri Tomy Corera has to face penalty - It is established from record that Shri L. Anand Morais was the mastermind of the offence committed and cannot detach himself from the offence alleged - penalty imposed on him is conformed [Para 5, 6] - Appeals disposed of : CHENNAI CESTAT
IT: While computing exemption under section 54, actual sale consideration is to be taken into consideration and not stamp duty valuation under section 50C
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[2015] 61 taxmann.com 271 (Jaipur - Trib.)
IN THE ITAT JAIPUR BENCH
Nand Lal Sharma
194j
IT: Any expenditure which is excluded from export turnover will have to be excluded from total turnover as well for computing deduction under section 10A
■■■
[2015] 61 taxmann.com 234 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'B'
Assistant Commissioner of Income-tax
v.
Torry Harris Business Solutions (P.) Ltd
AD HOC
■■■
[2015] 61 taxmann.com 84 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Kohinoor Foods Ltd
■■■
[2015] 61 taxmann.com 295 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'E'
Vasantraj Birawat
148
■■■
[2015] 62 taxmann.com 50 (Bombay)
HIGH COURT OF BOMBAY
Mavany Brothers
144c
■■■
[2015] 62 taxmann.com 48 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'K'
Lionbridge Technologies (P.) Ltd.
CONTEMPT
■■■
[2015] 62 taxmann.com 39 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
SHIP
• Provisions of Article 24 of Indo - Singapore DTAA can only be triggered when twin conditions of treaty protection viz., low or no taxability in the source jurisdiction and taxability on receipt basis in residence jurisdiction, are fulfilled.
■■■
[2015] 62 taxmann.com 185 (Rajkot - Trib.)
IN THE ITAT RAJKOT
RTI
HC dismisses petitioner's special civil application for providing IT returns of private parties under the Right to Information Act, 2005 ('RTI Act'); Petitioner sought the requested information for his own personal interest in view of ongoing litigation with those parties; Relies on SC ruling in Girish Ramchandra Deshpande to hold that IT-returns fall under the ambit of 'personal information', thus exempt from disclosure u/s 8(1)(j) of the RTI Act unless involving larger public interest; Further, quashes petitioner's stand that since order of appellate authority i.e. Central Information Commissioner ('CIC') dismissing petitioner's RTI application was merely a liner, it should be quashed as being an unreasoned order; Noting that CIC's order categorically stated no larger interest involved in petitioner's case, HC remarks that "It is the vitality of the reasons supplied, and not the verbosity in the reasons narrated, that matters" : Gujarat HC
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