CBDT Directive On Scope Of Disallowance U/s 40(a)(i) For Failure To Deduct TDS U/s 195 On Payment To Non-Residents

CBDT Directive On Scope Of Disallowance U/s 40(a)(i) For Failure To Deduct TDS U/s 195 On Payment To Non-Residents

The CBDT has issued a letter dated 26.10.2016 in which it has drawn attention to its Circular No 3/2015 dated 12.2.2015. In the said Circular it was clarified that for the purpose of making disallowance of “other sums chargeable” under Section 40(a)(i) of the Income-tax Act, 1961, in the case of non-residents, the appropriate portion of the sum chargeable to tax under the Act, i.e. income component therein shall form the basis of such disallowance. The CBDT has noted that this Circular is not being kept in view by administrative Commissioners & Commissioners (Appeal) while filing further appeals and while deciding cases. Further, the Circular is not kept in view by departmental representatives in ongoing litigation cases, who still take a position that the disallowance should be based on the gross amount of offshore payments such as purchases. The CBDT has directed the departmental officers including representatives of the department in litigation before ITAT/Courts etc. to be sensitized to the content of this circular

Extension of last date for filing AOC-4, AOC-4 (XBRL), AOC-4 (CFS) and MGT-7

Extension of last date for filing AOC-4, AOC-4 (XBRL), AOC-4 (CFS) and MGT-7 eforms under the Companies Act, 2013 till 29th November, 2016.

http://mca.gov.in/Ministry/pdf/Generalcircular12_28102016.pdf

CBEC ON EPCG

CBEC Instructions for Rationalization of procedures reg. handling exporters obligations under EPCG authorizations

The CBEC has instructed to further rationalize the procedures reg. handling exporters obligations under EPCG authorizations to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Also CBEC has reiterated to ensure credibility and transparency in the Bond cancellation process by making the process speedier and that the exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.

CBEC Instructions dt. 14 Oct. 2016 F.No.605/71/2015-DBK 

1. The undersigned is directed to say that as a part of further rationalizing procedures and avoiding duplication of work based on feedback on outcomes of applying extant procedures, taking into account the conditions prescribed in the Foreign Trade Policy and Customs notifications, the Board reviewed certain aspects of the directions given to field formations in Circular No. 5/2010-Cus, Instruction No. 609/119/2010-DBK dated 18.01.2011 and Circular No. 14/2015-Cus insofar as they relate to EPCG scheme. The details are given in succeeding paragraphs.

2. At present the correctness of the installation certificates issued by Chartered Engineers are to be verified on random basis in at least 5% cases through the Central Excise Division. The Board has decided that this verification be restricted to 5% cases.

3A. In the Circular of 2010 it was prescribed that first block EO (export obligation) should be verified in detail and if it has been found satisfactory then EODC issued at end of second block should be accepted without further verification. The Instruction of 2011 confirmed that this is to be implemented; however, for past cases where exporter had not come forward for first block verification but had submitted the EODC, the EODC may be accepted subject to random verification of at least 5% of EODCs issued in such past cases. It further directed that the Customs check, in detail, at least 5% EODCs. In this connection, it was noted that not meeting the block-wise EO attracts composition fees or payment of duty with interest and this find mention in HBP and is also referred in Customs notifications.

3B. On consultation, the DGFT has informed that the provisions of para 5.14 of HBP 2015-20 that provides

"5.14(c)HBP: Where EO of the first block is not fulfilled in terms of the above proportions, except in cases where the EO prescribed for first block is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block",

and the similar provisions in previous FTP/HBP 2009-14 and 2004-09 are strictly followed by Regional Authorities before issuing EODC/redemption/closure letters; and also that cases of condoning / delay in fulfillment of block-wise EO are considered by Regional Authorities only when exporter has obtained relaxation in terms of DGFT's powers under the FTP. The DGFT has also advised its Regional Authorities to ensure that these provisions are strictly followed in respect of all unredeemed EPCG authorization issued during the FTP 2004-09, 2009-14 and 2015-20.

3C. In the light of this, Board has decided that Customs authorities need not replicate the verification of export obligation of the first block that is being conducted by Regional Authorities and that the EODCs received under EPCG Scheme in terms of FTP/HBP 2004-09, 2009-14 and 2015-20 be normally accepted without further verification, except in 5% cases where they be verified in detail before acceptance.

4. The foregoing aspects remain subject to detailed verification of EODC when there is such a need suggested by specific intelligence. Further, if Regional Authorities endorse verification of shipping bills/other documents on an EODC, such verification shall be carried out. Moreover, it remains mandatory to verify genuineness of non-EDI shipping bills/bills of export on which an EODC may be based.

5. The guidelines issued in the past on the subject shall be modified to the above extent. It should be noted that monitoring of progress of block-wise EO fulfillment is to continue and as clarified in Circular No. 14/2015-Cus the field formations can view the EPCG authorization-wise all India export details in EDI.

6. The Commissioners are also directed to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Credibility and transparency may be brought into the Bond cancellation process which may be made speedier. The exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.

To view or download pdf copy of CBEC Instructions in this regard, please refer the link below:

CBEC Instructions dt. 14 Oct. 2016 Procedures reg. Exporters obligations under EPCG au

          

Form 68

Form No. 68 notified to get immunity from penalty for underreporting and misreporting of income

October 7, 2016

INCOME-TAX (TWENTY FIFTH AMENDMENT) RULES, 2016 - INSERTION OF RULE 129 AND FORM NO.68

NOTIFICATION NO. SO 3150(E) [NO.90/2016 (F.NO.370142/26/2016-TPL)], DATED 5-10-2016

In exercise of the powers conferred by section 295 read with sub-section (2) of section 270AA of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (25th Amendment) Rules, 2016.

(2) They shall come into force on the 1st day of April, 2017.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), after rule 128, following rule shall be inserted, namely:—

"129. Form of application under section 270AA.— An application to the Assessing Officer to grant immunity from imposition of penalty under section 270A and from initiation of proceedings under section 276C or section 276CC shall be made in Form No.68.".

3. In the said rules, in Appendix-II, after Form No.67, the following form shall be inserted, namely:—

"FORM No. 68 Form of application under section 270AA(2) of the Income-tax Act, 1961

Withdrawal of two ICAI Guidance Notes on Accounting (07-10-2016)

Withdrawal of two ICAI Guidance Notes on Accounting (07-10-2016)

The same are no longer relevant in the present day context:

GN(A) 9 (Issued 1994) – Guidance Note on Availability of Revaluation Reserve for Issue of Bonus Shares

GN(A) 20 (Issued 2005) - Guidance Notes on Accounting for Fringe Benefits Tax

ST Arrest Guidelines

Revised Guidelines of CBEC for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944

The CBEC has issued revised guidelines for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944, while emphasizing careful examination of the legal and factual aspects  before proceeding with arrest, as under:

CBEC Circular No. 201/11/2016-Service Tax dt. 30 Sept. 2016 F.No. 137/47/2013-Service Tax

1. I am directed to draw your attention to the fact that the arrest provisions in Service Tax were introduced with effect from 10.05.2013 vide sub-sections (J) and (K) of section 103 of the Finance Act, 2013 which introduced sections 90 and 91 in the Finance Act, 1994 and also amended section 89 of the Finance Act 1994. Vide sections 155, 156 and 157 of the Finance Act 2016, with effect from 14.05.2016, sections 89, 90 and 91 of the Finance Act, 1994 have been amended. As a consequence of these amendments, the power of arrest in Service Tax is available only if a person collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond the period of six months from the date on which such payment becomes due and the amount exceeds rupees two crore.

2.0 Vide paragraph 2 of Board Circular F.No. 137/47/2013-Service Tax dated 17.09.2013 certain conditions precedent to carrying out arrests were indicated. These were:

2.1 Careful exercise of this power since arrest impinges on the personal liberty of an individual.

2.2 The reason to believe that a person has committed the specified offence which is rendering the person liable for arrest must be based on credible material which will stand judicial scrutiny.

2.3 The relevant factors before deciding to arrest a person must be, apart from fulfillment of the legal requirements, the need to ensure proper investigation and prevention of the possibility of tampering with evidence or intimidating or influencing witnesses.

3.0 In the context of the legislative amendments vide the Finance Act 2016 and the single offence for which the power of arrest exists, it is necessary to again emphasize and indicate the factors which must invariably be kept in mind before arresting a person:

4.0 Conditions precedent- Legal 

4.1. At the outset there must be clear and unambiguous notings in the file, bringing out how all the ingredients of the offence have been established. The notings must specifically refer to evidence relating to-

4.1.1 Amount collected as service tax: Collection of an amount as service tax should be clear and self-evident from the invoices, bills, contracts, etc. An amount should be clearly indicated as service tax. The copies of sample invoices /bills, contracts, etc. which cover the period being investigated should be in the file.

4.1.2 Amount should exceed Rs 2 crore.

4.1.3 Failure to pay the amount so collected to the credit of the Central Government:

The 8T3 return filed by the assessee for the relevant period, showing the self-assessed value of taxable services and service tax paid should be available in file. Where no such return has been filed, an observation to this effect should be made since this will make the departmental case stronger.

4.1.4 Such a failure should be beyond the period of six months from the date on which such payment becomes due: Fulfillment of the condition relating to the time period must be verified carefully, and a month wise abstract of the invoice numbers, due date of payment of service tax and date when the six month period was completed must be kept ready.

4.2 The suggestions in the preceding paragraph are intended at bringing uniformity in the approach to such matters and ensuring that evidence relating to the alleged offence is readily available for perusal by a judicial body, when necessitated.

5.0 Conditions precedent- factual 

5.1 Even if all the legal conditions precedent mentioned in paragraph 4.1 to 4.2 are fulfilled, that will not, ipso facto, mean that an arrest must be made. Once the legal ingredients of the offence are made out, the Commissioner must then determine if the answer to the following questions is in the affirmative

5.1.1 Is the alleged offender likely to hamper the course of further investigation by his unrestricted movement?

5.1.2 Is the alleged offender likely to tamper with evidence or intimidate or influence witnesses?

5.2 If the answer to both the questions is yes, then the decision to arrest can be made.

5.3 If the alleged offender is assisting in the investigation and has deposited at least half of the evaded tax, then the need to arrest may not arise.

6.0 The Guidelines issued vide Board Circular F.No. 137/47/2013-Service Tax dated 17.09.2013 may be referred to for the procedure for arrest, post-arrest formalities and the reporting system.

7.1. It has been decided to revise the monetary limits for arrests and prosecution in Central Excise to maintain uniformity of practice in Central Excise and Service Tax. It is directed that henceforth arrest and prosecution of a person in relation to offences specified under clause (a) to (d) of sub-section (1) of section 9 of the Central Excise Act, 1944 may be considered only in cases where evasion of Central Excise duty or misuse of CENVAT Credit is equal to or more than rupees two crore. Central Excise Circular No. 974/08/2013-CX dated 17.09.2013 and 1009/ 16/2015-CX dated 23.10.2015 stand amended accordingly. Circular No. 1010/ 17/2015-CX dated 23.10.2015 is rescinded in View of the revision of monetary limits prescribed by this circular. It is again reiterated that arrest and prosecution should not be resorted to in cases of technical nature i.e. where the additional demand of duty/tax is based totally on a difference of opinion regarding interpretation of law.

7.2 Transitional provisions as prescribed in para 11 of the Circular No. 1009/ 16/2015-CX dated 23.10.2015 shall apply mutatis-mutandis i.e. all cases where sanction for prosecution is examined and accorded after the issue of this circular, shall be dealt in accordance with the provisions of this circular, irrespective of the date of the offence. Cases where prosecution was sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the enhanced monetary limit and sanction withdrawn for cases where evasion of Central Excise duty or misuse of CENVAT Credit is below the revised monetary limit of rupees two crore.

8.0 It is emphasized once again that since an arrest impinges on the personal liberty of an individual, this power should be exercised with great responsibility and caution and only after a careful examination of the legal and factual aspects indicated in the preceding paragraphs.

CBEC Circular No. 201/11/2016-Service Tax dt. 30 Sept. 2016 | View

CBDT notifies ICDS

CBDT notifies ICDS to be applicable w.e.f. AY 2017-18 for all assesses other than individual & HUF (who are not under audit u/s 44AB) following mercantile system of accounting.

It also amends Form 3CD w.e.f. 1st April 2017 to incorporate compliance of ICDS.