Quashes SAT order; Broker's annual 'turnover' includes transactions on behalf of clients | SC quashes SAT order wherein it was held that 'annual turnover' (under Explanation after paragraph 3 of Schedule III to Stock Brokers & Sub-brokers Regulations, 1992) for purpose of stock broker registration fee does not include value of stocks under transaction but only value of brokerage earned by stock brokers; Holds that earning by way of brokerage represents only part of price of securities received by stock broker on his own account, more significant part of 'annual turnover' is aggregate of sale and purchase prices of securities, received or receivable by stock broker on account of his clients; Observes that, "The view taken by the SAT that since in the wholesale debt market segment the broker has a limited role as per the RBI circular and since the broker does not receive the sale or purchase price because the payment is directly made to the seller, the broker will be saved from inclusion of the sale and purchase prices in his annual turnover, suffers from an apparent error"; Observes that sale and purchase price receivable by stock broker on account of his clients goes directly to seller "is of no significance", states that even if such sale and purchase price had actually been received by stock broker, it could not belong to broker and had to be passed on to seller; Further observes that SAT erred in not considering the legislative history behind insertion of clause in Schedule III whereby transactions in Government securities, bonds issued by any public sector undertaking and the units, traded in a similar manner were placed in a separate category for which the fee was kept at a much lower rate of 1000th of 1% of the turnover (as per Bhatt Committee Recommendations); Rejects stock broker's reference to Regulation 16G of Schedule IV (which governs fees to be paid by Trading/Clearing Member), states both Schedules (Schedule III & Schedule IV) relate to different subjects, and in instant case, term 'annual turnover' has to be understood only in light of Schedule III; Refers to SC ruling in B.S.E. Brokers' Forum v. Securities & Exchange Board of India:SC |
The ruling was delivered by Justice Vikramajit Sen and Justice Shiva Kirti Singh. Senior Counsel C.U. Singh argued on behalf of appellant, while respondent was represented by Senior Advocate Jayant Bhushan. |
In view of the provisions of the Act i.e. section 145A of the Act, we find no merit in the plea of the assessee in not recognizing the VAT attributable to its sales as part of the sale consideration of the goods while computing its Profit & Loss Account. The mandatory provisions of Central Act i.e. section 145A of the Act supersedes the provisions of any State Act i.e. Maharashtra Value Added Tax Act, 2002. Once the assessee recognized the VAT amount as part of the sale consideration, it tantamount to the said entry being routed through the Profit & Loss Account, especially in the cases where the assessee is following mercantile system of accounting
Munaf Ibrahim Memon vs. ITO (ITAT Pune)
The assessee collected VAT but did not pay it over to the Government. The assessee claimed that a disallowance u/s 43B cannot be made as the amount of VAT was not routed through the Profit & Loss Account and no deduction had been claimed. The assessee also claimed that under the Maharashtra Value Added Tax Act, 2002, the sale price shall not include the tax paid or payable to a seller in respect of such sale and hence, there was no requirement for the assessee to recognize the VAT account in its Profit & Loss Account. The assessee also relied on
Circular No.372 issued on 08.12.1983 and submitted that the intention of introduction of section 43B of the Act was to curb the practice of claiming deduction on account of statutory liabilities on the ground that they were maintaining the accounts on mercantile or accrual basis. Reference was also made to Circular No.772 dated 23.12.1998 issued by CBDT explaining the provisions of section 145A of the Act. HELD by the Tribunal dismissing the appeal:
(i) In respect of first aspect of the issue that whether the assessee is correct in not recognizing the VAT relatable to its sales as part of the sale consideration in view of the Maharashtra Value Added Tax Act, 2002, we are of the view that the Centre by way of Finance (No.2) Act, 1998 had proposed the introduction of a new section 145A of the Act. Under the said provision, it is provided that valuation of purchase, sale and inventory shall be made in accordance with method of accounting regularly employed by the assessee and such valuation shall further be increased to include the amount of any tax, duties, cess or fees, by whatever name called, actually paid or incurred by the assessee, in the valuation of the goods. In view of the provisions of the Act i.e. section 145A of the Act, we find no merit in the plea of the assessee in not recognizing the VAT attributable to its sales as part of the sale consideration of the goods while computing its Profit & Loss Account. The mandatory provisions of Central Act i.e. section 145A of the Act supersedes the provisions of any State Act i.e. Maharashtra Value Added Tax Act, 2002. Once the assessee recognized the VAT amount as part of the sale consideration, it tantamount to the said entry being routed through the Profit & Loss Account, especially in the cases where the assessee is following mercantile system of accounting. Admittedly, in the facts of the present case, the assessee was following mercantile system of accounting.
(ii) Now, coming to second aspect of the issue that, where the assessee had not recognized the amount of VAT payable / paid in its Profit & Loss Account and had only made entries in the Balance Sheet, are the provisions of section 43B of the Act attracted in the case? The said section was introduced in order to provide the deduction on account of statutory liabilities to be allowed only on payment basis, irrespective of the year to which it relates. The said section starts with a non-obstacle clause that notwithstanding anything contained in the Act, where the deduction which is otherwise allowable under the Act in respect of any amount payable by an assessee, by way of tax, duties, cess or fees, by whatever name called, under any law for the time being in force, shall be allowed as a deduction in the year of payment, irrespective of previous year to which said liability relates and this is also irrespective of method of accounting regularly employed by the assessee. In view of the cumulative provisions of sections 145A and 43B of the Act, the assessee is entitled to claim the deduction on account of such tax, duties, cess or fees, by whatever name called and the same is to be allowed only on payments and once the payment has not been made in the year to which said liability relates, then said amount is to be added back as income of the assessee for the relevant year.
Related Judgements
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The book profits as contemplated in section 115JB means the net profit, which has been shown/credited in the profit & loss account as prepared under the relevant provisions of the Companies Act. The concept of indexation while computing the Long term capital gain cannot be imported to the computation…
- The Solapur District Central Co-op. Bank Ltd vs. ACIT (ITAT Pune)
While constructing its Profit & Loss Account to arrive at its net Profit or Loss, a Co-operative Society is required to show interest accrued/accruing on amounts of Overdue Loans separately. This is precisely what has been done by the assessee…Read more ›
- DDIT vs. Serum Institute of India Limited (ITAT Pune)
Section 206AA of the Act is not a charging section but is a part of a procedural provisions dealing with collection and deduction of tax at source. Therefore, where the tax has been deducted on the strength of the beneficial provisions of section DTAAs, the provisions of section 206AA…
- Vishay Components India Pvt. Ltd vs. ACIT (ITAT Pune)
The deduction under s. 10A has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of s.72 which deals with the carry forward and set off of business losses. A distinction has been…
- CIT vs. Mahalaxmi Glass (Bombay High Court)
To give effect to s. 145A, if there is any change in the closing stock at the end of the year then there must necessarily be a corresponding adjustment made in the opening stock of that year. This does not amount to giving double benefit to the assessee and…
Mere non-intimation of the amendments in the Trust Deed to the Department cannot ipso-facto lead to cancellation of registration because the statutory requirement of cancellation of registration contained in section 12AA(3) of the Act prescribe that the cancellation of registration cannot be effectuated unless a case is made out that the new objects do not fit-in with the existing objects (i.e. new objects are 'non-charitable' in nature) or that the activities are in-genuine
ITO vs. Bhansali Trust (ITAT Mumbai)
(i) There is no denying the fact that so far as the objects contained in the original Trust Deed dated 19/3/1969 are concerned, they are charitable in nature because not only assessee was granted registration under section 12A of the Act on 27/11/1973 but it has also been allowed exemption under section 11/12 of the Act. The moot question is as to whether assessee can be said to be a charitable institution even after the amendment to the Trust Deed dated 20/3/1975 and 19/7/1979. The aforesaid point is relevant because in the impugned order of assessment there is no finding by the Assessing Officer that the activities added in 1975 and 1979 do not fall within the purview of charitable purpose. In fact the only basis for the Assessing Officer to have denied the exemption under section 11/12 of the Act is the failure of the assessee to intimate the amendments of 1975 and 1979 and re-register with the DIT(Exemption) for the purposes of section 12A of the Act. The registration granted to the assessee under section 12A of the Act can be cancelled only as per the statutory requirements, which prescribe that either the activities being carried out are not genuine or that they are not being carried out in accordance with the objects, meaning thereby that the amended objects being pursued are non-charitable.
(ii) Mere non-intimation of the amendments in the Trust Deed to the Department cannot ipso-facto lead to cancellation of registration because the statutory requirement of cancellation of registration contained in section 12AA(3) of the Act prescribe that the cancellation of registration cannot be effectuated unless a case is made out that the new objects do not fit-in with the existing objects (i.e. new objects are 'non-charitable' in nature) or that the activities are in-genuine.
(iii) There is no change in the tone and tenor of the objects pursued by the assessee in a real sense. In fact, our aforesaid analysis of the changes in the Trust deed, do not reflect that the objects of the assessee Trust has undergone changes but the amendments are merely enabling clauses which provide only 'means' or 'power' to achieve objects in the Trust Deed. In our considered opinion, having regard to the aforesaid fact situation, it would be inappropriate to construe the amendments of 1957 and 1979 as insertions of any new objects of the assessee Trust, rather the amendments only seek to provide enabling powers to the Trust to accomplish its original objects which are in the fields of educational purpose, medical purpose, relief of poverty and objects of general public utility not involving carrying on any activity for profit.
(iv) The Hon'ble Bombay High Court in the case of Deccan Gymkhana vs. CIT, 262 ITR 459 (Bom) as well as the judgment of Hon'ble Supreme Court in the case of PHD Chamber of Commerce & Industry vs. DIT 130 ITR 186 (SC) has laid down that a distinction has to be made between the 'purpose' of a Trust and the 'powers' conferred upon the Trustees as being incidental to accomplish the purpose of the Trust. In our considered opinion, the amendments in 1975 & 1979, which have been noticed above only seek to enable the Trustees to carry out activities for accomplishing the purpose of the Trust which we have found earlier to be for a 'charitable purpose' as per original Trust deed.
(Board of Control for Cricket in India. vs. ITO, 22 taxamann.com 29 (Mum) and Allahabad Agricultural Institute & Another vs. Union of India And Others,291 ITR 116 (All) distinguished)
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The expression "such purposes" in s. 11 clearly refers to the purposes for which the property is held in Trust. Both the conditions i.e. the income should be derived from the property held in Trust for charitable or religious purposes and the condition that the income is applied for…
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The decision of the Hon'ble Supreme Court in A.L.N Rao Charitable Trust reported in 216 ITR 697(SC) clearly held that there is a blanket exemption with regard to the 25% (now 15%) of gross receipts as per second part of Section 11(1)(a) of the Income Tax Act. This exemption…
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The fact that a surplus incidentally arises from the activities of the assessee does not disentitle an assessee of the benefit of s. 10(23C). The third proviso to s. 10(23C) which permits accumulation of surplus up to limits shows that the generation of surplus is per se not a…
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CBDT Invites Suggestions From Public On Issues In ICDS Requiring Guidance And Clarification
The CBDT has issued a press release dated 26.11.2015 pointing out that after notification of ICDS, it has been brought to the notice of the CBDT by the stakeholders that certain provisions of ICDS may need further clarification/ guidance for proper implementation. These implementation issues raised by the stakeholders have been referred to an expert committee comprising of departmental officers and professionals and the committee is currently examining these issues. The CBDT has stated that in order to issue a comprehensive guidance/clarification on this matter, the stake holders and general public are requested to bring out issues/points which in their opinion would require further clarification/guidance for proper implementation of the provisions of the ICDS. These issues/points may be submitted by 15th December, 2015 at the email address (
dirtpl3@nic.in) or by post at the stated address.
Rejects belated knowledge defence of UB group for share pledge invocation disclosure delay | SEBI imposes penalty of Rs. 15 lacs on United Breweries (Holdings) Ltd. ('UBHL') for failure to make disclosures relating to creation / invocation / release of pledged shares of United Spirits Ltd. (USL) within time prescribed under Takeover Regulations; Peruses stock exchange ('SE') communication, holds that consolidated disclosures made by UBHL to SEs are not correct as they related only to 'release' and 'creation' and not 'invocation'; Rejects UBHL's contention it came to know about pledge invocation on March 28, 2012 (which actually took place on March 24, and 26, 2012) when Depository Participant informed, peruses Reg. 31(3), holds "regulation clearly stipulates mandatory requirement of disclosures to be made from day of creation / invocation / release of pledge and does not leave any scope of "knowledge / intimation" as prior condition for the person who is required to make such disclosures"; States "had 'knowledge / intimation' been the intent of statute then, it would have been very well incorporated in the SAST Regulations itself"; States that while making / creating share pledge by borrower, certain condition and timeline of share-pledge invocation are pre-fixed, holds "if such timeline towards pledged shares are there, then, borrower is supposed to know the last day after which invocation of pledged share may take place by lender upon breach of payment"; Peruses Reg. 58 of Depositories and Participants, Regulations, states that it is Depository's duty towards Participant and in turn Participants towards pledger / pledgee, to immediately inform about such invocation; SEBI interprets DP Regulations, states "intent of statute in respect of word "immediately" should be construed in its true sense meaning thereby that it should be informed immediately or within the same day itself" and opines that had statute's intent was different, then, it would have been otherwise incorporated in DP Regulation; W.r.t. Kingfisher Finvest India Ltd.'s (KFIL) share-pledge innovation, SEBI notes 1-day delay relating to 10,000 shares, wherein intimation was made to Bangalore SE within prescribed time, also notes non-repetitive nature of irregularities, and accordingly does not impose any penalty on KFIL:SEBI |
Order was passed by Ms. Rachna Anand, SEBI, Adjudicating Officer. |
CBDT signs more APAs; total goes up to 31 By TIOL News Service
NEW DELHI, NOV 27, 2015: IN a major push towards providing certainty to foreign investors in the arena of transfer pricing, the Central Board of Direct Taxes has entered into 11 more unilateral Advance Pricing Agreements (APAs). These APAs were signed with Indian subsidiaries of foreign companies operating in various segments of the economy like investment advisory services, engineering design services, marine products, contract R&D, software development services, IT enabled services, cargo handling support services, etc.
While seven of these APAs have rollback provisions contained in them, the other four are Agreements for future five years. APAs with rollback provisions can cover a maximum period of nine years in total. With this round of signing, CBDT has so far entered into 31 APAs (30 unilateral and one bilateral).
The APA programme was introduced in the Income-tax Act, 1961 in 2012 vide the Finance Act, 2012. 5 APAs were concluded in the first year and 4 APAs got signed in the second year. The pace of negotiations has picked up in the current year. This year has already witnessed the conclusion of 22 APAs. It is the aim of the CBDT to finalise another 30 to 40 APAs before the end of this fiscal to provide stability and confidence to foreign enterprises operating in India.
Bogus purchases: Manner of computing profits in the case of bogus purchases by an assessee who is not a dealer in the goods but has consumed the goods in his business explained
As per our considered view, since the purchases so made were not sold by the assessee, the AO was not justified in estimating 15% profit on such bogus purchases. However, such bogus purchases/expenses were going to reduce the assessee's profits by the equal amount of such expenses and not only by 15% as taken by the AO. It was not a case where purchases so made were actually sold by the assessee. Where assessee is found to have sold the goods out of the bogus purchases, under those circumstances it is reasonable to estimate profit out of such sales so as to make appropriate addition. However, in the instant case the assessee was engaged in the business of hotel wherein the expenditure alleged to be incurred on plumbing, electrical items, furniture, printing and stationary etc appears to have reduced directly the profit earned by assessee
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Reliance on statements of third party without giving the assessee the right of cross-examination results in breach of principles of natural justice
There has been a breach of principles of natural justice in as much as the Assessing Officer has in his order placed reliance upon the statements of representatives of M/s Inorbit and M/s Nupur to come to the conclusion that claim for expenditure made by the appellant is not genuine. Thus the appellant was entitled to cross examine them before any reliance could be placed upon them to the extent it is adverse to the appellant
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S. 40(a)(ia): The obligation to deduct TDS is only with respect to "income". As amounts paid as "reimbursement of expenses" do not have the character of income, there is no obligation to deduct TDS
Section 194C (TDS for "work") and Section 194J (TDS of income from "professional services"- the latter expression defined expansively by Section 194J (3) Explanation (a)). Neither provision obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of expenses, other than what is defined as "income". The law thus obliges only amounts which fulfil the character of "income" to be subject to TDS in such cases; for other payments towards expenses, the deduction to those entitled (to be made by the payeee) the obligation to carry out TDS is upon the recipient or payee of the amounts
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Transfer Pricing: Important principles on benchmarking transactions of advances/ credit period tp AEs reiterated
Since sale price of the product or service was always influenced by the credit period allowed by the seller, the transaction of sale to the AE and credit period allowed in realization of sale proceeds are closely linked and the price determined for such sale is after consideration of the credit period provided by the seller. Further, it was also held that for the purpose of determining the ALP of sale transaction, the transaction of excess credit period provided by the seller to the AE is required to be aggregated with the sale transaction by the seller to the AE and cannot be benchmarked separately
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Transfer Pricing: For the purpose of benchmarking the international transactions, the effect of underutilization of capacity/excess fixed costs has to be eliminated while computing the operating margins of the assessee
Under-utilization of production capacity in the initial years is a vital factor which has been ignored by the authorities below while determining the ALP cost. The TPO should have made allowance for the higher overhead expenditure during the initial period of production. The claim of the assessee with respect to idle capacity adjustment during the relevant period while determining the ALP cost. Economic adjustment on account of under capacity utilization when the assessee was in start up phase has to be considered
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Entire law on taxability of "fees for technical services" under the "make available" clause of the DTAA explained
Services can be said to 'make available' technical knowledge etc, where such technical knowledge is transferred to the person utilizing the service (i.e. the appellant in the instant case) and such person is able to make use of the technical knowledge etc, by himself in his business or for his own benefit and without recourse to the performer of services (i.e OlofGranlund) in the future. The mere fact that provision of service may require technical knowledge by the person providing the service would not per se mean that knowledge has been made available
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S. 55A: If the AO is not satisfied with the valuation made by the assessee's valuer, he must refer the issue to the DVO. He cannot reject the assessee's valuation without any basis
The Assessing Officer, if was not satisfied with the report of the Registered Valuer, could have made a reference to the Departmental Valuation Officer under section 55A of the Act for the purpose of computing income from capital gains. The Assessing Officer has thus, not acted in accordance with law and without any basis or evidence in his possession, did not accept report of the Registered Valuer. In the absence of any material on record, Assessing Officer should not have made his own calculation for the purpose of computing the capital gains
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Extension of last date for filing of form MGT-7 (Annual Return); AOC-4 for Financial Statements ended on 31.03.2015 under the Companies Act, 2013
Extension of last date for filing of form MGT-7 (Annual Return); AOC-4 for Financial Statements ended on 31.03.2015 under the Companies Act, 2013
MCA vide Circular No.14/2015 on 28.10.2015 has extended the last date of filing of AOC-4 ( XBRL and Non XBRL) and MGT-7 upto 30.11.2015 without any additionsl fee. This is in furtherance to early extension of date on July 13, 2015, vide General Circular No. 10/2015 upto 31.10.2015 for E- filing of Form MGT-7 and AOC-4 without additional fee.
Now for CFS, AOC -4 and MGT -7 for both XBRL and Non XBRL last date without additional fee is same i.e 30.11.2015
MCA General circular No. 15 2015
SEBI Listing Regulations effective from today, CCI monitoring e-commerce; Patent applications pending due to manpower shortage | SEBI Listing Regulations effective from today, CCI monitoring e-commerce; Patent applications pending due to manpower shortage |
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RBI keeps Repo rate unchanged; Rise in net FDI/ECB flows
RBI releases its fifth Bi-monthly Monetary Policy Statement, 2015-16 whereby repo rate and cash reserve ratio remain unchanged at 6.75 % and 4.0 % respectively; States that net FDI, ECB and accretions to non-resident deposits have risen in relation to last year; However, portfolio outflows from both debt and equity segments rose in Nov. and during 2015-16 (up to Nov. 20), there has been an accretion of USD 10.8 billion to foreign exchange reserves; States that RBI will shortly finalise the methodology for determining base rate based on marginal cost of funds, which all banks will move to; Also states that Government is examining linking small savings interest rates to market interest rates which would help transmission of policy rates into lending rates and on-going clean-up of bank balance sheets will help create room for fresh lending : RBI
Various steps taken for FDI liberalization & improving ease of doing business: Sitharaman | Minister of Commerce & Industry, Smt Nirmala Sitharaman, in a written reply in Lok Sabha states that during last 18 months, Govt has taken various steps to bring investment in the country like opening FDI in several sectors, liberalising FDI norms, improving ease of doing business in India; Further states that during Prime Minister's visit to the UK in November, 2015, commercial deals of over 9 billion pounds between India and the UK were announced; Also points out that city of London shall play an important role in channelling investment into infrastructure projects in India including railway sector : PIB |
100% automatic FDI route permitted for B2B e-commerce cos., states Sitharaman |
Smt. Nirmala Sitharaman in Lok Sabha states that FDI upto 100% under automatic route is permitted in companies engaged in e-commerce provided that such cos. would engage only in business to business (B2B) e-commerce; Further states that an Indian manufacturer is permitted to sell its own single brand products through e-commerce retail; Also states that to simplify FDI policy and to ensure that India remains investor friendly investment destination, Govt is undertaking stakeholder consultations with concerned Ministries, Apex Industries Chambers and other organisations : PIB |
Govt has simplified FDI policy in mining sector, states Shri Vishnu Deo |
Minister of State, Shri Vishnu Deo Sai, to a question on FDI in mining replies that Govt has simplified FDI in mining sector; States that FDI inflow in mining during current year (April to September) was 516.65 million US$; Further mentions that there is no data maintained centrally in regard to specific benefits to local population : PIB |
FDI in petroleum sector supplements domestic investment & technological capabilities : Shri Pradhan |
Minister of State for Petroleum and Natural Gas, Shri. Dharmendra Pradhan, informed the Lok Sabha in a written reply that Govt is encouraging FDI in order to supplement domestic investment & technological capabilities in petroleum sector; States that current FDI policy for petroleum & natural gas sector allows 100% automatic route for exploration, production, refining by pvt. Cos., marketing of petroleum products etc; Mentions that FDI inflow in petroleum sector during current year (April to September) was Rs. 302.62 crores : PIB |
S. 271(1)(c): Law on levy of penalty in a case where satisfaction is recorded in s. 153C/153D assessments by AO who is common to the searched party and the assessee explained
The attempt at the end of the assessee is that there should be a straight jacket system, whereby the satisfaction recorded even by the same AO then, that should be placed in the file of searched person and if it is placed in some other cupboard in his room by the AO then, there cannot be any satisfaction, we fail to appreciate that technical approach at the end of the assessee. The law does not require the manner and the procedure of keeping the files. The section only requires that a satisfaction be recorded and it should be during the period propounded by Hon'ble S.C. in
CIT vs. Calcutta Knitwears 362 ITR 673
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S. 271D: Section 269SS does not apply to non-monetary book entry transactions of loans and advances
Section 269SS indicates that it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debit or a liability arises on account of book entries
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S. 254(2A) third proviso cannot be interpreted to mean that extension of stay of demand should be denied beyond 365 days even when the assesseee is not at fault. ITAT should make efforts to decide stay granted appeals expeditiously
One cannot lost sight of the fact that there may be number of reasons due to which the learned Tribunal is not in a position to decide and dispose of the appeals within the maximum period of 365 days despite their best efforts. Some of the reasons due to which the learned Tribunal despite its best efforts is not in a position to dispose of the appeal/appeals at the earliest are stated herein above. There cannot be a legislative intent to punish a person/ assessee though there is no fault of the assessee and/or appellant
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S. 153A: There is no requirement to issue a notice u/s 143(2) before making an assessment u/s 153A
There is no specific provision in the Act requiring the assessment made under section 153A to be after issue of notice under section 143(2) of the Act. Learned counsel for the assessee places heavy reliance on the judgment of the Hon‟ble Supreme Court in
Hotel Blue Moon v. DCIT 321 ITR 362 (SC) wherein it was held that the where an assessment has to be completed under section 143(3) read with section 158BC, notice under section 143 (2) must be issued and omission to do so cannot be a procedural irregularity and the same is not curable. It is to be noted that the above said judgment was in the context of Section 158BC. Clause (b) of Section 158BC expressly provides that "the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of Section 142, sub sections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply. This is not the position under section 153A. The law laid down in
Hotel Blue Moon, is thus not applicable to the facts of the present case
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S. 115JB: In computing the "book profits" the entire capital gains have to be included without computing the benefits of indexation
The book profits as contemplated in section 115JB means the net profit, which has been shown/credited in the profit & loss account as prepared under the relevant provisions of the Companies Act. The concept of indexation while computing the Long term capital gain cannot be imported to the computation of book profit u/s. 115JB as per the expressed provisions of the said section itself which is a complete code in itself
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by Santosh Kumar Agarwal S. 271(1)(c): A penalty notice u/s 274 which does not strike out the irrelevant portion & which does not specify whether the penalty is for "concealment" or for "furnishing inaccurate particulars" renders the penalty order void
The next argument that the show cause notice u/s.274 of the Act which is in a printed form does not strike out as to whether the penalty is sought to be levied on the for "furnishing inaccurate particulars of income" or "concealing particulars of such income". On this aspect we find that in the show cause notice u/s.274 of the Act the AO has not struck out the irrelevant part. It is therefore not spelt out as to whether the penalty proceedings are sought to be levied for "furnishing inaccurate particulars of income" or "concealing particulars of such income"
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Entire law on transfer pricing implications of (i) allowing excess credit to AE's on account of sale of goods and (ii) issue of corporate guarantee to AEs (after insertion of Explanation i(c) to s. 92B by FA 2012) explained
If the international transaction of exports of goods which has been benchmarked on TNMM basis is duly accepted by the TPO, making an adjustment for interest on excess credit allowed on sales to AEs will vitiate the picture, inasmuch as what has already been factored in the TNMM analysis, by taking operating profit figure which incorporate financial impact of the excess credit period allowed, will be adjusted again separately as well because the interest levy for late realization of debtors is inextricably connected with the sales and is also part of operating income. When such an interest is includible in operating income and the operating income itself has been accepted as reasonable under the TNMM, there cannot be an occasion to make adjustment for notional interest on delayed realization of debtors
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by Santosh Kumar Agarwal S. 68 (bogus share capital): Despite statement of Mukesh C. Choksi & Jayesh Sampat admitting bogus share capital, addition cannot be made in assessee-company's hands
If the share application money is received by the assessee company from alleged bogus share holders who's name are given to the AO then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company
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Centre's 'SETU' to support start-up businesses; Microsoft to incubate 500 start-ups; NSE, LSE partnership for GIFT City | Centre's 'SETU' to support start-up businesses; Microsoft to incubate 500 start-ups; NSE, LSE partnership for GIFT City |
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SEBI issues norms for governing outsourcing by Depositories, restricts outsourcing of core activities | Based on the recommendation of Depository System Review Committee ('DSRC'), SEBI directs Depositories to formulate and document an outsourcing policy duly approved by its board of directors; States that the core and critical activities of Depositories shall not be outsourced, prescribes the list of such activities (which includes processing of applications for admission of DPs, RTAs, facilitating Issuers/RTAs to execute Corporate Actions, Allotting ISINs for securities, Maintenance and safekeeping of Beneficial Owner's data, Execution of settlement and other incidental activities for pay-in/ payout of securities, etc.); Clarifies that Core Information Technology support infrastructure / activities for running the depositories' core activities shall not be outsourced; States that Depositories shall conduct appropriate due diligence in selecting third party to whom activity is proposed to be outsourced and ensure that only reputed entities having proven high delivery standards are selected; States that Outsourcing Policy Document shall act as reference for audit of outsourced activities: SEBI |
SEBI issues Concept Paper for issuance of Green Bonds, seeks public comments |
SEBI issues Concept Paper for issuance of Green Bonds, seeks public comments by December 18, 2015; States that Green Bond is like any other bond where debt instrument is issued by an entity for raising funds from investors, proceeds from issuance of Green Bond are 'ear-marked' for use towards financing 'green' projects; States that Green Bonds issuance does not require any amendment to existing Regulations, SEBI (Issue and Listing of Debt Securities) Regulations, 2008, as the provisions relating to issue, listing and disclosure requirements will continue to be applicable, like any regular corporate bond issuance; However, clarifies that for designating an issue of corporate bonds as 'green bonds', in addition to the compliance of Regulations, issuer company is required to disclose in offer document additional information about Green Bonds (which are based on Green Bond Principles, 2015), relating to use of proceeds, project evaluation and selection, management of proceeds and reporting: SEBI |
SEBI reviews Annual Custody Charges & Issuer Charges |
SEBI reviews the Annual Custody / Issuer Charges, revises per folio charges from Rs 8/- to Rs. 11/- to be collected by Depositories from the issuers in prescribes, subject to minimum of nominal value of admitted securities; States that methodology for calculating number of folios remains same as prescribed in SEBI Circular dated April 24, 2011, however clarifies that temporary ISIN shall not be considered for the purpose of computing Annual Issuer Charges; For compensating Depository Participants ('DP') towards cost of opening and maintaining Basic Services Demat Accounts ('BSDA'), Depositories shall pay an incentive of Rs. 100/- for every new BSDA opened by their Participants; States that for incentivizing DPs to promote holdings in BSDA, Depositories may pay Rs. 2 per folio per ISIN to respective DP, in respect of ISIN positions held in BSDA and the incentive may be provided with respect to all BSDA in Depository system: SEBI |
SEBI floats Consultation Paper on primary market debt offering on electronic book |
SEBI floats Consultation Paper on primary market debt offering through private placement on electronic book, seeks public comments byDecember 18, 2015; States that presently e-book may be provided as an alternative to existing mechanism and depending on performance/ acceptability, e-book could be made mandatory for all issuers for issuance of privately placed Non-Convertible Debentures; Proposes that the regulated market infrastructure institutions (i.e. recognized stock exchange(s) / depositories) and Merchant Bankers – Category I (having minimum networth of Rs. 100 crores) would be eligible to act as Electronic Book Provider" (EBP); Prescribes conditions for acting as EBP, Bidding framework of the proposed e-Book: SEBI |
SEBI advises Commodity Derivative Exchanges to submit Monthly Development Report |
SEBI advises Commodity Derivative Exchanges to submit Monthly Development Report, in prescribed format, from April, 2015 onwards: SEBI |
Dear Patrons,
In the patent case between
F Hoffman-La Roche and Cipla Ltd. [LSI-832-HC-2015-(DEL)], a division bench of Delhi High Court vide a 106 pages judgement dated November 27, 2015, held that Cipla had infringed Roche's cancer drug patent. However, recently, on December 8, 2015 the division bench passed a
corrective order expunging the first few paragraphs of their judgement as they were verbatim copy of an Article, and offered an apology to the authors of the Article.
Shamnad Basheer, founder of SpicyIP,
states that this is "
A rather remarkable development in the Indian legal space!"
Click here to read this IP Corner Story – "
Corrective (Anti) Copying Action in Roche vs Cipla".
Best Regards
LSI Team
Penalises Alkem & Druggist Association for NOC condition on stockists' appointment, influencing medicines supply | CCI levies penalty of 10% & 3% respectively on the income of Alkem Laboratories Ltd. and All Kerala Chemists and Druggists Association (opposite parties, 'OPs'), for requiring NOC on appointment of stockists and exercising influence on medicines supply by allocating geographical markets; Rejects OPs' challenge to CCI's jurisdiction contending that the concerned statutory authority was 'State Drug Control Dept.', thus appropriate remedy was available under special law, i.e. 'Drug (Prices Control) Order, 2013'; Peruses Sec. 60 and 62 of Competition Act ('the Act') and observes that the Act has effect notwithstanding anything inconsistent contained in any other law and proceedings under the Act are not in derogation of but in addition to provisions of any other law; CCI relies on DG report and email conversation between parties, observes that stockists' appointments were being made with approval of OPs' district/ State units, and holds that OPs have been exercising influence and controlling medicine supply by way of geographic market allocations or number of stockists in market by of boycotts; Peruses complaint copies submitted by stockist to Drug Controller regarding holding of stocks partly/ non-supply of medicines by OP even after receipt of payment, concludes that OP has been indulging in practice of mandatory NOC/ clearance certificate before appointment of any new stockist, observes that OP has been threatening pharmaceutical cos. to follow its diktats by threatening them that it would boycott the products of non-complying pharmaceutical cos.; Relies on its own ruling in Varca Drugs & Chemists & Ors. v. Chemists & Druggists Association Goa, M/s Santuka Associates Pvt. Ltd. v. All India Organization of Chemists and Druggists and Ors., wherein it was held that imposing NOC requirement for appointment of chemists/ druggists/ stockists/ super stockists and/ or imposition of PIS charges is anti-competitive:CCI |
The Order was passed by Shri. Ashok Chawla (Chairperson), Shri. S. L. Bunker, Shri. Sudhir Mital, Shri. Augustine Peter, Shri. U. C. Nahta, Shri. M.S. Sahoo (Members). Advocate Rashmi Nanda Kumar argued for Informant while Advocates Manas Chaudhari, Sagardeep Rathi , Vibha Dutta Makhija, Sajith P. Warrier, A. N. Mohana Kurup represented Opposite parties |
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RBI eases norms for manner of payment for imports into India |
RBI amends Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000; Amends provisions relating to manner of payment in foreign exchange for imports into India; Permits payment in any other mode in accordance with RBI directions to Authorised Dealers from time to time: RBI |
RBI permits exchanges to offer cross-currency futures contracts and exchange-traded option contracts |
RBI notes that presently certain market participants, (i.e. residents and eligible non-resident market participants) are permitted to trade in US Dollar (USD) - Indian Rupee (INR), Euro (EUR)-INR, Pound Sterling (GBP)-INR and Japanese Yen (JPY)-INR currency futures contracts and USD-INR currency option contract in recognized stock exchanges; With an objective of enabling direct hedging of exposures in foreign currencies and facilitating execution of cross-currency strategies by market participants, RBI permits recognized stock exchanges to offer cross-currency futures contracts and exchange traded option contracts in currency pairs of EUR-USD, GBP-USD and USD-JPY; States that stock exchanges are also permitted to offer exchange traded currency option contracts in EUR-INR, GBP-INR and JPY-INR in addition to the existing USD-INR option contract, with immediate effect: RBI |
RBI proposes to intervene in exchange-traded Currency Derivatives segment |
RBI vide Press Release states that it intervenes in domestic foreign exchange market, as and when required, for managing excessive volatility and maintaining orderly conditions in the market; RBI proposes to intervene in Exchange Traded Currency Derivatives ('ETCD') segment, if required; States that data for the ETCD intervention will be published in RBI's monthly Bulletin as in the case of Over-the-Counter (OTC) intervention: RBI
