Wednesday, December 31, 2014
[aaykarbhavan] REVISING MVAT REFUND APPLLICATION
Dear Friends,
one of my client has made a mistake as under:
1. after filing vat report for mar12, they found few pur bills not entered in QR
jun11
2. they revised vat ret for 1st QR asking for refund in that QR only
3. how ever in the return instead of asking for refund, they entered the amount
in the column of c/o to the next period.
4. filed 501 for whole year
the STO has issued notice u/s 301 , now my question is:
1. can we revise our 501 application for only QR june11?
2, can we revise our vat ret showing claim of refund in same period(this option i
think is not available).
3. can we ask STO to rectify our mistake and allow us to claim refund in the
QR only by way of an application?
4. can we revise return for whole year u/s 20(4)(c )? and claim refund as a
whole year?
would request learned members to throw light on this issue so that refund of abt Rs.11000 can be claimed.
thanks in advance
wishing every one happy new year.
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Posted by: moizjaorawala@yahoo.com
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[aaykarbhavan] Important Verdict On Transfer Pricing Law By ITAT Delhi
Dear Subscriber,
The following important judgement is available for download at itatonline.org.
Wrigley India Pvt Ltd vs. ACIT (ITAT Delhi) (Transfer Pricing)
Transfer pricing: To apply the "Cost Plus Method", there must be a "comparable uncontrolled transaction". The fact that the same product is sold by the assessee to its AEs as well as to third parties does not mean that the two sets of transactions are comparable if the business model, marketing, sales promotion etc is different
The assessee, an Indian company, manufactured chewing gum etc which were sold to the associated enterprises (AEs) and also to independent enterprises (non AEs).The distinction in respect of these transactions with AEs and non AEs is that while the transactions with the AEs are in the capacity as limited risk contract manufacturer, its transactions with the domestic independent enterprises is a business transaction with regular entrepreneurship risks. The assessee applied TNMM to claim that the transactions with the AEs are at arms' length (the TP study report has been criticized by the ITAT as reported here). The TPO rejected TNMM and adopted the "Cost Plus Method" with gross mark up on costs as the profit level indicator, and adopted the internal comparable as gross mark up realized on the domestic sales. In other words, the TPO held that the arm's length price of the products exported to the AEs can be arrived at by adopting the same mark up on costs of such products as was achieved on the domestic sales. This was upheld by the CIT(A). On appeal by the assessee to the Tribunal HELD:
(i) The fundamental input for application of CPM method, next only to ascertainment of historical costs, is ascertainment of the normal mark-up of profit over aggregate of such direct costs and indirect costs in respect of same or similar property or services in a "comparable uncontrolled transaction" or, of course, a number of such "comparable uncontrolled transactions". When compared with CUP method, as against the "price" of a comparable uncontrolled transaction, one has to find out "normal mark up of profit" in a comparable uncontrolled transaction. Whether it is "price" or "normal mark up of profit", the starting point of both these exercises in the CUP and the CPM is finding a "comparable uncontrolled transaction". In order for such comparisons to be useful, the economically relevant characteristics of the situations being compared must be sufficiently comparable. It is only elementary, as is also noted in the OECD Transfer Pricing Guidelines, that "to be comparable means that none of the differences (if any) between the situations being compared could materially affect the condition being examined in the methodology (e.g. price or margin), or that reasonably accurate adjustments can be made to eliminate the effect of any such differences";
(ii) The question that arises is whether the transactions with the AEs can be compared with the sales of similar product to distributors or other entities in the domestic market and particularly in a situation in which not only the market is geographically different but also entire business model is different vis -à-vis transactions with the AEs, inasmuch as the sales in domestic market necessitates substantial expenditure by the assessee for marketing support and sales promotion strategy. In other words, whether "export price of product simplictor, without any marketing support in the related market" can have a "comparable uncontrolled transaction" in "domestic sale price of a product in a situation in which entire marketing function and sales promotion is seller's responsibility". The answer has to be an emphatic 'No'. The two situations, i.e. sale simplictor of a FMCG product for an overseas AE without any costs being incurred on the marketing and sales promotion amongst the end users, and sale of a FMCG product to a domestic independent enterprises with full responsibilities for marketing and sales promotion amongst the end users, are not 'comparable transactions' in the sense that profitability in the latter cannot be a proper benchmark for profitability in the former. It is not only in the marketing and sales promotion that the difference lies, but it extends to the fundamental business model itself particularly as the sale is not to an end user, such as in the cases of plant and equipment etc, but to an intermediary who, in turn, has to sell it to, through yet another tier or tiers of intermediaries, the end user. The sale of products to the non-resident AEs is more akin to contract manufacturing arrangement, while the sale of products to independent enterprises domestically is a regular business entrepreneurial venture. Whether contract manufacturing or not, as long as the business models of sales to AEs and sales to non AEs are different, the transactions under these business models cannot be "comparable transactions" for the purposes of transfer pricing. In the first business model, creation of market in the end users is not the responsibility of the vendor, but in the second business model, it is job of the vendor to create and maintain the market of end users as well. The product may be the same but the FAR profile is materially different and it is this FAR profile which governs the profitability. The basic notions of transfer pricing recognize the impact of FAR profiling on the profitability. When profitability levels in two business situations, due to significant differences in FAR profiles of two situations, are expected to be different, such transactions cease to be comparable transactions for the purposes of transfer pricing analysis;
(iii) On facts, the comparability analysis has been confined to the first segment itself, i.e. characteristic of the property transferred. Undoubtedly, the product comparability is an important factor but its certainly not the sole or decisive factor. The assessee was producing the same products for its AEs as it was producing for independent enterprises but that was all so far as similarities were concerned. The FAR profile was not the same, the contract terms were not the same, the economic circumstances were not the same and the business strategies were not the same. Viewed thus, necessary precondition for application of CPM, i.e. finding normal mark up of profit in comparable uncontrolled transactions, could not have been fulfilled. When uncontrolled transactions were not comparable, the normal mark up on profit on such transactions could not have been relevant either. Accordingly, the authorities below were not justified in holding that the cost plus method was the most appropriate method on the facts of this case. One of the necessary ingredient for application of CPM, i.e. normal mark up of profit in the comparable uncontrolled transactions- whether internal or external, was not available as no comparable uncontrolled transactions were brought on record by the authorities below. What was brought on record as an internal comparable uncontrolled transaction, i.e. manufacturing for the domestic independent enterprises, was uncomparable as the FAR profile was significantly different. Undoubtedly, direct methods of determining ALP, including cost plus method, have an inherent edge over the indirect methods, such as TNMM, but such a preference can come into play only when appropriate comparable uncontrolled transactions can be identified and analysed accordingly. That has not been done in the present case. There is, therefore, no good reason to disturb the TNMM method adopted by the assessee.
Regards,
Editor,
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Latest:Wrigley India Pvt Ltd vs. ACIT (ITAT Delhi)
The Transfer Pricing study and certification by the CA does not inspire any confidence. The level of professionalism is "pathetic". No purpose is served by relying on such reports
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Posted by: "editor@itatonline.org" <itatonline.org@gmail.com>
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[aaykarbhavan] Urgent::Appeal & Greetings & Invitation to become members of our group
Dear Professional Colleges
1)"Today is the is the 1st blank page of 365 page book.Write a good one.Wish you a inspiring New Year 2015!!
2) However, Signing petition on wrong report of CAG is more important than greetings, as it has adversely affected public image of CA Fraternity. Appeal to get signed by your partners, staffs, friends by sending through mobile, social media, phone calls.
3) In protest of wrong report of CAG on CAs , we have filled a petition at change.org. Report is expected to contain errors & wrong presentation of facts.CAG has been expected to report without reading/knowing the provision of limit of CA Act also & has been expected to reported negligently
4
) Just go to the link below & sign petition by filling name email id etc
:5
)kindly sign petition & show unity among CAs. Please sign to restore the goodwill of CA profession, which has caused due to inflated % of 17% mentioned in report.
Name, membership no, address, mobile, phone, email id
7
) It will take one minute only. Some elected members appears to have been signed in capacity as "CA" i.e. ca members.
("Fight for CAs",a Group of CAs )
Email: fightforca@gmail.com
Disclaimer: Neither moderator nor sender nor any other person takes any responsibility, liability of any nature. Readers are requested to verify the genuineness of each & every information including any appeal, from own source.
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Posted by: Nitesh More <moreassociate@gmail.com>
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[aaykarbhavan] Happy New Year & Updates that Matter (UTM # 18)
Wishing You A Very Happy New Year 2015
Wishing You and Your Family a Very Happy and Prosperous New Year 2015. May this Year be full of Joy, Happiness, Peace and Prosperity for You and Your Family.
Please find below the “Updates that Matter (UTM # 18)”,
Ø DVAT – Sale of Used Cars is exempt from Sales Tax – Delhi HC Ø Service Tax: - Reformation of Delhi Commissionerate. Know Your Jurisdiction. Ø Central Excise:- The excise duty cuts on consumer durables, cars etc ends on 31.12.2014 | Ø Customs: - Amendment in Deemed Export Invoice Authentication Ø VAT :- Hon’ble SC held that Cell Phone Charger is not integral part of Cell Phone Ø CBEC :- CBEC allows transfer of cases admitted in Set-Com to "call-book" | Ø Misc: - Government for Smoother Real Estate Investment Trust (REIT) Investment Norms. Ø VAT :- Supply of Stents and valves for heart surgery not liable to VAT / Service Tax – All. HC Ø Service Tax :- Supreme Court Stayed Delhi HC Judgement regarding Service Tax Audit |
a) DVAT – The Hon’ble Delhi High Court has in case of Anand Decors Vs. Commissioner Of Trade And Taxes (Delhi High Court) vide order dated 23rd December,2014 held that sale of used cars (subject to condition and facts of the case) shall be exempt from sales tax pursuant to section 6(3) of Delhi Value Added Tax,2004.
b) ST: Directorate of Data Management, Central Excise and Customs had issued F. No - DDM/3105/2014/S.T./16 dated 15-10-2014 to allot Commissionerate codes, location codes of the division and ranges of Delhi service tax Commissionerate. But jurisdiction of service tax divisions and ranges of Commissionerate were not released before. Now, the jurisdiction and the base for classification of range have also been released by the service tax department. The jurisdiction is divided on the basis of name of the assessee which was previously based on the services. However, the system is yet to be updated with the new jurisdiction and also as of now addresses of new divisions have not been released
c) CE: The previous government in its interim budget in February 2014 had announced 2% cut in excise duty on consumer durables and fixed the rate as 10% till 31st July, 2014 (Notification No. 4/2014-Central excise, dated 17 February, 2014). While the current government, further extend this reduced rate for six months which will end on December 31, 2014. The reduced rate has not been extended further. Hence higher excise duty shall apply in the said cases.
d) Customs: - Circular has proposed that the endorsement of superintendent of Central excise shall bear dated signature.
“Such endorsement shall bear the dated signature of the Superintendent of Central Excise. Further, where the recipient unit is operating under the procedure prescribed vide Circular no. 19/2007-Cus dated 03.05.2007, the Superintendent of Central Excise shall, as is specified in that Circular, provide an attested true photocopy of the original ARE-3.”
Customs Circular No. 17 / 2014 – dated 18.12.2014
e) VAT:- VAT on cell phone battery charger - It cannot be held that charger is an integral part of the mobile phone making it a composite good – Hon’ble Supreme Court
State of Punjab & Others Versus Nokia India Pvt. Ltd. 2014 (12) TMI 836 - SUPREME COURT
f) CBEC : - CBEC allows cases admitted by the Settlement Commission may be transferred to the Call-book, as it is already covered under Category “(ii) cases where injunction has been issued by the Supreme Court/High Court/CEGAT etc.” mentioned in Circular dated 14.12.1995
Circular No. 992/16/2014-CX dated 26.12.2014
g) Misc: - To remove any regulatory hurdle coming in way of foreign investors putting money in the newly created Real Estate Investment Trust (REIT) structure, the government has proposed allowing overseas investments in this space within FEMA regulations.
h) VAT : - Hon’ble Allahabad HC in case of M/s International Hospital (P) Ltd. V. State of UP {2014} 48 taxmann.com 159/47 GST 335 has held that use of stents or valves during the performance of hear procedure on patients at hospital is not a case of sale and hence not liable to tax under UP VAT Act,2008.
Note :- Sl. No. 2 of Mega Exemption Notification 25/2012-ST exempts healthcare services provided by clinical establishments from service tax.
i) ST:- In the appeal filed by Union of India against M/s TRAVELITE (INDIA) – the Hon’ble SC stayed the order of High Court regarding power to conduct service tax audit & Validity of Rule 5A of Service Tax Rules, 1994
UNION OF INDIA AND ORS Versus M/s TRAVELITE (INDIA) 2014 (12) TMI 1099
--
Regards,
CA.Ankit Gulgulia (Jain)|B.COM(H), C.A, C.IFRS, C.B.V, LLB*
Direct|+9811653975 |011-27356431|011-23642055|
Email| ankitgulgulia@gmail.com
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Posted by: "Ankit Gulgulia" <ankitgulgulia@gmail.com>
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[aaykarbhavan] ITAT Hauls Up CA Firm For "Pathetic Level Of Professionalism"
Dear Subscriber,
The following important judgement is available for download at itatonline.org.
Wrigley India Pvt Ltd vs. ACIT (ITAT Delhi)
The Transfer Pricing study and certification by the CA does not inspire any confidence. The level of professionalism is "pathetic". No purpose is served by relying on such reports
The transfer pricing reports with respect to the impugned determination of ALP leave a lot to be desired. Just because the action of the authorities below, in adopting cost plus method in the above manner, is legally unsustainable, the ALP determination by the assessee cannot be taken as correct. These TP reports as also certifications by the chartered accounts inspire no confidence and, quite to the contrary, raise doubts about efficacy of the built in checks and balances in transfer pricing regulations. It is somewhat fashionable to criticize the revenue authorities for their lack of objectivity or even inefficiency but what in the world can justify such a pathetic level of professional work relied upon by even the large corporate entities. If the tax judicial system is clogged by frivolous litigation today and if the tax finality still takes decades to reach, these saviours of taxpayers are as much to be blamed for this situation as anybody else. No purpose can be served in reporting by a chartered accountant when such reports do not even point out glaring infirmities in taxpayer's approach vis -à-vis the transfer regulation, in a comparison of budgeted profits margin with actual profit margins realized by the comparables which is stated to be ascertainment of ALP on the basis of the TNMM. It appears that in an alarming number cases, these audit reports, rather than painting a true and fair picture of the relevant facts, tend to epitomize the art of constant hedging and manoeuvring by the professionals so as they stay within the confines of permissible professional conduct and are yet able to sidestep the inconvenient realities. Of course, it will be much worse a situation if they are actually so naïve as to be oblivious of simple provisions of law, of their onerous responsibilities or of the legitimate public expectations. It is not to belittle the brilliant work being done by many a professionals but it is just to point out the dilemma of those who explore the possibilities of relying upon such audit reports and certifications, and also the inertia of those who can do something to salvage this situation and, to thus avoid an inevitable systemic rejection of the ritualistic certifications. We are particularly pained today as the financial period before us is mostly even more than a decade old and yet since the TP reports and certifications before us are, in our considered view, are so much devoid of credibility that, instead of deciding the things one way or the other, we have no choice except to remit the matter to the file of the TPO for fresh ascertainment of ALP on the basis of residuary method, i.e. TNMM.
Note 1: The Ld. Accountant Member who authored the order is a FCA
Note 2: When the ITAT first sounded a warning in Vijay V Meghani vs. DCIT, the ICAI, instead of taking the criticism in the right spirit and taking remedial steps, adopted a belligerent stand and called the ITAT's observations "sweeping" and "unwarranted". It also promised that it would take steps to get the ITAT's observations "expunged". Thereafter, the CAG made the shocking revelation of the utterly careless manner in which CAs have issued audit reports and caused a revenue loss of several thousands of crores. Now, the present judgement also exposes serious short-comings in the functioning of CAs. It requires to be seen what remedial steps, if any, the ICAI adopts now to salvage the noble profession
Regards,
Editor,
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Latest:Monthly (August 2014) + Consolidated (Jan to August 2014) Digest Of Imp Case Laws
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Posted by: "editor@itatonline.org" <itatonline.org@gmail.com>
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