CBDT instructions no.3

CBDT instructions no.3 dated 05-07-2013 issued regarding procedure to be followed in receipt and disposal of rectification application u/s 154 of the Income Tax Act.

Circular on Writing of Arrears of Excise,Customs & ST

Circular No.  971/5 /2013

F.No.296/10/2009-CX-9(Pt.)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Customs & Excise

New Delhi, the 29th May, 2013

To

            All Chief Commissioners

            All Directors General

           

Sub:     Writing off of arrears of Central Excise duty, Customs duty and Service Tax - Constitution of Committees to advise the authority for writing off of arrears-reg.

Sir,

I am directed to refer to the Circular No. 946/07/2011 dated 01.06.2011 issued from this file number on the subject and to say that certain amendments have been made in the Delegation of Financial Power Rules, 1978 vide S.O. 3624 dated 14.12.2012. A copy of the said notification is enclosed.

2.         With this amendment, the authorities competent to write-off the arrears of Central Excise and the Commissioner of Service Tax are also delegated powers to write-off the arrears of Service Tax as well. Consequently, the constitution of the Committees for examining the proposals for write-off of irrecoverable arrears and recommending deserving cases to the authority competent to order such write-off, also requires modification.  Hence, para 4 & 5 of the Circular No. 946/07/2011 be substituted by the following:-

"4.        The constitution of the Committees and the powers to write off, delegated to the competent authorities are as under:-

S. No.	Competent Authority	Constitution of the Committee	Powers delegated
1.	Chief Commissioner of  Customs & Central Excise/ Central Excise/ Customs	Committee of two Chief Commissioners of  Customs & Central Excise/ Central Excise/ Customs and the Chief Commissioner (TAR)	(a) Full powers for abandonment of irrecoverable amounts of fines and penalties imposed under the Customs Act, 1962, the Central Excise Act, 1944, the Gold Control Act, 1968 and the Finance Act, 1994; and  (b) To write off irrecoverable amounts of Customs or Central Excise duty or Service Tax upto Rs. 15 lakhs subject to a report to the Board.
2.	Commissioner of  Customs & Central Excise / Commissioner of Customs / Commissioner of Central Excise/ Commissioner of Service Tax	Committee of two Commissioners of  Customs & Central Excise/ Central Excise/ Customs/ Service Tax and one Commissioner (TAR) nominated by CC(TAR))	(a) Full powers for abandonment of irrecoverable amounts of fines and penalties imposed under the Customs Act, 1962, the Central Excise Act, 1944, the Gold Control Act, 1968 and the Finance Act, 1994; and   (b) To write off irrecoverable amounts of Customs or Central Excise duty or Service Tax upto Rs. 10 lakhs subject to a report to the Chief Commissioner.

5.         As regards write off of interest amount, it is clarified that once duty/ tax involved is written off, the interest due thereon would get automatically written off.  It is also clarified that the duty/ tax involved in the case would determine the level of authority/Committee competent to write off the amount involved."

Click here for : Notification  |   Circular No. 946/07/2011 dated 01.06.2011

Yours faithfully,

(Surendra Singh)

Under Secretary to the Govt. of India

Tel: 2309 2413

ICAI cannot be deemed to be pursuing commercial activities by

CBDT Instructions On S. 143(1) Intimations And S. 154 Rectifications

July 5th, 2013

The CBDT has issued Instruction No. 03/2013 dated 05.07.2013 with regard to the the directive issued by the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273 on the procedure to be followed on the receipt and disposal of rectification applications filed u/s 154 of the Act. The CBDT has set out a detailed procedure on where applications should be received, the maintenance of registers and their disposal.
 The CBDT has also issued Instruction No. 04/2013 dated 05.07.2013 with regard to the directive issued by the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273 that the demand should not be enforced in cases where no intimation u/s 143(1) was sent by the field authorities in respect of returns which were processed prior to 31.03.2010.

ICAI cannot be deemed to be pursuing commercial activities by coaching classes

ICAI cannot be deemed to be pursuing commercial activities by taking coaching classes or campus placements for a fee exemption under 10(23C)(iv) cannot be denied to ICAI on account of fees received by it for providing coaching classes and campus placement for its students. [ ICAI v/s Director General of Income-tax (exemptions) [2013] 35 taxmann.com 140 (Delhi)].

For exemption under sec 54F

For exemption under sec 54F, deposit in capital gains A/c scheme by due date of filing ITR under sec 139(4). [CIT, Rohtak v/s Shri J S Chawla, HC, Punjab and Haryana].

Kerala HC on ST on AC Restuarants

Kerala HC rules service tax on AC restaurants invalid

The Kerala High Court on Wednesday held that the Centre's decision to impose service tax on food and beverages supplied by air-conditioned restaurants with licences to serve alcoholic beverages in the 2011-12 budget was beyond the legislative competence of Parliament.

Justice A.M. Shaffique passed the verdict while allowing a batch of writ petitions filed by Kerala Bar Hotels Association and certain bar hoteliers.

The service tax was imposed on air-conditioned restaurants with licence to serve alcoholic beverages in the 2011-12 Union Budget. A service tax of 12.36 per cent applicable on 30 per cent of the bill had been imposed on such restaurants, which came into effect on April 1 last year.

The petitioners contended that Article 366 Section 29 (f) of the Constitution defined supply of food and drinks in hotels as 'deemed sales' and empowered the State governments to collect sales tax on the total value of sales. Therefore, the Centre has no authority or power to collect such service tax.

The court observed that the every purpose of incorporating the definition of tax on sale or purchase of goods in Article 366 was to empower the State government to impose tax on the supply, whether it was by way of or as part of any service of goods either being food or any other article for human consumption or any drink, intoxicating or not.

The Constitution permitted sale of goods during service as taxable. Necessarily, service formed part of sale of goods. Therefore, the State government alone has the legislative competence to enact a law imposing a tax on service elements forming part of sales of goods, the court ruled.

The court also ordered that if the petitioners had made any payments on the basis of the impugned clauses, they were entitled to seek refund of the amount.

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ICAI clarified regarding deferment of SCA norms

ICAI clarified regarding deferment of SCA norms (Regarding DISA Requirement) of PSB’s by one year i.e. the norms will be effective from the year 2014-15 and bank audit fees increase clarification.

Books of account pre-requisites to tax unexplained cash credit

Books of account pre-requisites to tax unexplained cash credit, no additions for deposit in bank account in absence of books.[ CIT(A) – ITO vs kamal kumar mishra [2013] 33 taxmann.com 610 (Lucknow - Tribunal)].

Service tax department has issued notification

Service tax department has issued notification no. 12/2013-ST dated 01-07-2013 along with forms A-1, A-2, A-3 and A-4 regarding exemption on services provided to SEZ authorised operations.

Central board of direct tax withdraws circular

Central board of direct tax withdraws circular no.2 dated 26-03-2013 on profit split method (PSM) for transfer pricing, circular no. 05/2013 of 29-06-2013.

No penalty under section 76 was leviable if service tax was paid belatedly

No penalty under section 76 was leviable if service tax was paid belatedly with interest prior to issue of show cause notice – [professional couriers vs commissioner of customs, central excise & service tax[2013] 34 taxmann.com 120 (Bangalore - CESTAT)].

Breather for IT firms as CBDT withdraws controversial tax circular

Breather for IT firms as CBDT withdraws controversial tax circular

In a major relief to the IT industry, the Central Board of Direct Taxes (CBDT) today announced the withdrawal of a controversial circular that could have adversely impacted the tax spend for this industry.

The CBDT also modified another circular relating to taxation of R&D centres that also has a crucial role in software development.

The circular (No 2 of 2013) that has been withdrawn related to the adoption of Profit Split Method (PSM) as a preferred mode for computation of tax liability. The decisions were taken following representation from the industry for clarity on two circulars concerning global taxation of transfer pricing.

Tax experts hailed the latest announcements stating that compliance cost will come down and chances of double taxation may be reduced.

"The rescinding of Circular No. 2 is very good news for the industry. This is a positive move and would certainly improve the sentiments of foreign investors who were shying away from investing in R&D in India," said Vijay Iyer, National Transfer Pricing Leader, Ernst & Young India

Safe harbour rules

The Finance Ministry also said that CBDT would soon issue safe harbour rules. Such a move would bring further certainty in assessment of development centres that are engaged in providing contract R&D services.

Safe harbour rules have been defined as circumstances in which the income-tax authorities shall accept the transfer price declared by the assessee.

The Income Tax Department by withdrawing Circular No 2 has made sure that profit-split method, which could lead to higher taxation, will not be the preferred mode.

Besides this method, there are five other methods for computing tax liability under the transfer pricing rules. These include resale price method, cost plus method, comparable uncontrolled price method and transactional net margin method.

Retention money is not an income

Retention money is not an income of contractor if it has got no rights on it till satisfactory completion of work. [DIT (International taxation) vs. Ballast Nedam International [2013] 34 taxmann.com 270 (Gujarat)].

Standardizing the process of filing application under section 10(46)

Ministry of Finance, Central Board of Direct Tax issued [Notification no. F.NO. 196/6/2013- ITA.1 by dated 24-06-2013], regarding standardizing the process of filing application under section 10(46) of the Income Tax Act, 1961.

Remuneration for branch audit work of the bank

Remuneration for branch audit work of the bank. Category of bank branch on the basis of quantum of advances. Rates of audit fees:-
Up to 10 crore-Rs. 40,250/-
Above 10 crore up to 20 crore- Rs. 57,500/-
Above 20 crore up to 30 crore- Rs. 79,350/-
Above 30 crore up to 50 crore- Rs. 1,20,750/-
Above 50 crore up to 75 crore- Rs. 1,38,000/-.

The soft ITR 5 for the assessment

The soft ITR 5 for the assessment year 2013-14 is now available at Income Tax department website.

RBI has increased the bank audit fees

RBI has increased the bank audit fees payable form financial year 2012-13 as per [RBI Notification no. DBS.ARS.No.BC. 08/ 08.92.001/ 2012-13 dated 25-06- 2013].

Lower Deduction Certificate

Lower Deduction Certificate to a unit enough to cover other units of assessee even if separate TANs. [CIT Chandigarh Vs Parle Biscuits. High Court of Punjab & Haryana].

Right to collect toll is an intangible asset

Right to collect toll is an intangible asset within the purview of sec. 32(1)(ii) of the Income Tax Act and is eligible for depreciation. [ACIT Vs. Ashoka Infraways (P.) Limited, 2013] 33 taxmann.com 499 (Pune - Tribunal)].

demerger abundant

Resultant Company can file appeal after demerger abundant caution appeal by demerged Company dismissed to avoid duplicity. [Cairn Energy Gujarat BV Vs. ADIT [2013] 34 taxmann.com 281 (Ahmedabad - Tribunal)]

No violation of Sec 269SS

No violation of Sec 269SS for cash loan from relative if assessee unable to get it in cheque or DD for some valid reason. [CIT-I Vs M.Yesodha, Chennai High Court].

Stridhan of a lady

Stridhan of a lady seized from her ex-husband’s premises during search of Income Tax must be handed over to her. [High Court Of Gujarat at Ahmedabad Renuka R Modi].

Commodity Transaction Tax

Chapter VII of Finance Act, 2013 on Commodity Transaction Tax effective from July 1, 2013

SECTION 115 OF THE FINANCE ACT, 2013 - COMMODITIES TRANSACTION TAX – NOTIFIED DATE FOR ENFORCEMENT OF CHAPTER VII OF FINANCE ACT, 2013

NOTIFICATION NO. 45/2013 [F.NO.142/09/2013-TPL]/SO 1768(E), DATED 19-6-2013

In exercise of the powers conferred by sub-section (2) of section 115 of the Finance Act, 2013 (17 of 2013), the Central Government hereby appoints the 1st day of July, 2013 as the date on which Chapter VII of the said Act shall come into force.

Valuation loss is allowable

Valuation loss is allowable even if stock-in-trade shown as investment in compliance of RBI guidelines. [Karnataka Bank Ltd. Vs. ACIT [2013] 34 taxmann.com 150 (Karnataka).]

Addition on the basis of seized material

Addition on the basis of seized material was unjustified if assessee was able to show that the admissions made during survey were incorrect. [Acit V. Maya Trading Co.( 2013) 34 taxmann.com 144 (Agra – Trib)].

No disallowance of expenditure u/s. 40(a)(ia)

No disallowance of expenditure u/s. 40(a)(ia) for default of short-deduction of TDS under Income Tax Act.[Income Tax Appellate Tribunal Mumbai].

Rejection of Books of account

• Mere rejection of Books of account and estimation of profit cannot be ground for concealment penalty under Income Tax Act. [High Court of Gujarat Whitelene Chemicals].

SC on S. 194C TDS does not apply to contract manufacturing agreements

CIT vs. Silver Oak Laboratories P. Ltd (Supreme Court) S. 194C TDS does not apply to contract manufacturing agreements  The assessee, a manufacturer of pharmaceutical products, entered into agreements with various manufacturers who manufactured the said items according to the specifications provided by the assessee. The AO held that the transaction between the assessee and the manufacturer was in the nature of a "works contract" and fell within the purview of s. 194C and that the assessee ought to have deducted TDS thereon. The assessee was held to be in default and liable to pay the tax and interest u/s 201(1) & 201(1A). On appeal by the assessee, the Tribunal held that the transaction was one of sale simplicitor and was not in the nature of a work contract and that the assessee was not liable to deduct TDS u/s 194C. The department's appeal to the High Court was dismissed by following Reebok India 306 ITR 124 (Del). On appeal by the department to the Supreme Court, HELD dismissing the SLP:  On examining the terms and conditions, invoices, purchase orders and challans indicating payment of excise duty, there is no material on record to indicate that the transaction in question is a "contract for carrying out works". Hence, s. 194C is not attracted. S. 194C has been amended by the Finance (No.2) Act, 2009, w.e.f. 1.10.2009 to provide that "work" includes manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. It is clarified that the definition of the word "work" will not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer.  This impliedly approves the view taken in Glenmark Pharmaceuticals 324 ITR 199 (Bom)

Double taxation agreement with Monaco

Double taxation agreement with Monaco [Notification no. 43/2013 dated 12/06/2013 SO 924(E)].

Conversion of company into LLP

On conversion of company into LLP, Auditor of the company deemed to be auditor of LLP. [Circular of Ministry of Corporate Affairs].

E-filing of form 3CEB

E-filing of form 3CEB for specified domestic transactions mandatory besides for foreign transactions. [New Rules and Revised Form. Income Tax 6th Amendment Rules, 2013] .

Statement of the assessee in survey operations

Statement of the assessee in survey operations not conclusive piece of evidence under Section 133A of the Income Tax Act. [CIT Vs P. Bala Subramanian, 2013, 354ITR 116 (Madras)].

Periodic legal audit and reverification of title deeds

Periodic legal audit and reverification of title deeds by banks for credit exposures of 5 crore and above till the loan stands fully repaid.[ RBI Circular of 07-06-2013].

Penalty u/s 271 (1)(c)

Penalty u/s 271 (1)(c) of the Income Tax Act cannot be levied in respect of an addition made u/s 50C.[Commissioner of Income Tax Vs Madan Theatres Limited (Calcutta High Court)].

ITR- IV Soft form no. 4

ITR- IV Soft form no. 4 for the assessment year 2013-14 is now available on Income Tax Site.

Home loan prepayment fee

Home loan prepayment fee/foreclosure charges are eligible for deduction under head Income from house property. [Case of Windermere Properties, ITAT Mumbai].

Income Tax Return for assessment year 2013-14

Central Board of Direct Taxes notifies Income Tax Return for assessment year 2013-14 (Financial year 2012-13), IncomeTax (Third Amendment) Rules, 2013 – Amendment in Rule 12 and substitution of Forms Sahaj (ITR-1), ITR-2, ITR-3, Sugam (ITR-4S), ITR-4 and ITR-V notification no, 34/2013 [F.NO.142/5/2013-TPL]/SO 1111(E), dated 01-05-2013.

Concurrent audit for Central Bank

Concurrent audit for Central Bank link to apply online ishttp://119.82.71.21/caudit/con_audit_details.aspx or visit website of Central Bankwww.centralbankofindia.co.in. Last date to apply is 13/06/2013.

Cost Inflation Index-2013-14- 939

SECTION 48, EXPLANATION (v) OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - COMPUTATION OF - NOTIFIED COST INFLATION INDEX FOR FINANCIAL YEAR 2013-14

NOTIFICATION NO. 40/2013 [F. NO. 142/7/2013-TPL]/SO 1464(E), DATED 6-6-2013

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, published in the Gazette of India, number S.O. 709 (E), dated the 20th August, 1998, namely:—

In the said notification, in the Table, after serial number 32 and the entries relating thereto, the following serial number and entries shall be inserted, namely :-

Sl. No.	Financial Year	Cost Inflation Index
(1)	(2)	(3)
"33	2013-14	939"

Transfer pricing law

Transfer pricing law not applies to share investment transactions under Income Tax Act. In the Income Tax Appellate Tribunal Hyderabad Bench M/s Vijai Electricals Limited.

TDS on Poperty

Buyer of property to download and issue to seller, TDS certificate in form 16B in 15 days from due date of deposit of TDS. (22 days from end of month of Sale).

E-payment of TDS

E-payment of TDS on sale of property in challan cum statement in Form 26QB in 7 days from end of month in which deduction made. Income Tax 5th Amendment Rules, 31-05-2013.

TDS on immovable proprty

The Finance Act, 2013 had provided that purchaser of an immovable property (other than agricultural land) worth over Rs 50 lacs is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor. The rate at which tax is to be cut is 1%, but it would go up to as high as 20% if the seller does not disclose his permanent account number. This amendment is effective from 01-06- 2013.

No penalty for mere change in head

No penalty for mere change in head of income under Income Tax Act. [ITAT Bench, Ahmedabad, M/s.Crown Tradelink Pvt. Ltd].

Acknowledgement to be given by banks to their customers at the time of submission of Form 15G/15H. [RBI Notification of 31-05-2013].

Canara Bank empanelment

Canara Bank invites applications from the eligible/interested Individuals / Firms / Companies for empanelment as concurrent auditors for conducting concurrent audit in the identified 615 branches / units for the period from 01.07.2013 to 30.06.2014.

Form 15 G Ack by Banks

Date: May 31, 2013 Acknowledgement by banks at the time of submission of Form 15-G / 15-H RBI/2012-13/516 DBOD.No.Leg.BC.100/09.07.005/2012-13 May 31, 2013 All Scheduled Commercial Banks (excluding RRBs) Dear Sir/Madam, Acknowledgement by banks at the time of submission of Form 15-G / 15-H As you are aware banks are not required to deduct TDS from depositors who submit declaration in Form 15-G/15-H under Income Tax Rules, 1962. However, it has been brought to our notice that despite submission of Form 15-G/15-H by customers, banks are deducting tax at source, at times, causing inconvenience to customers resulting in a number of complaints.  Such instances arise because either the forms are misplaced or a track is not kept of forms received in the branches. 2. The matter has been examined by us in consultation with Indian Banks' Association (IBA). With a view to protect interest of the depositors and for rendering better customer service, banks are advised to give an acknowledgment at the time of receipt of Form 15-G/15-H. This will help in building a system of accountability and customers will not be put to inconvenience due to any omission on part of the banks. Yours faithfully, (Rajesh Verma) Chief General Manager  Top

MCA Circular on Declaration

Circular No: 11/2013 File No. 17/118/2012 CL V Government of India Ministry of Corporate Affairs 5th Floor, Shastri Bhawan Rajendra Prasad Road New Delhi – 110001 Dated: 29th May, 2013 To All Regional Directors All Registrar of Companies Sub: Power of ROCs to obtain declaration/ affidavits from subscribers/first directors at the time of incorporation. Sir, The matter of protection of interest of investors, including depositors, is very important to ensure healthy corporate capital market environment in the country. The recent instances of raising of monies by companies in a manner which is opaque/convoluted, non-accountable and which does not protect interests of depositors have been taken note of by the Ministry seriously. Keeping in view the need to protect the interest of investors and ensure that companies raise monies in accordance with the provisions of the Companies Act/Deposit Rules, it is clarified that in exercise of the powers under the Companies Act, the Registrar of Companies may obtain declaration/affidavits from subscribers/first directors first at the time of incorporation and from directors, subsequently whenever company changes its objects, to the effect that company/directors shall not accept deposits unless compliance with the applicable provisions ofCompanies Act, 1956, RBI Act, 1934 and SEBI Act, 1992 and rules/directions/regulations made there under are duly complied and filed with the concerned authorities. Yours faithfully (Sanjay Shorey) Joint Director 23389622

I

Section 2(22)(e) not applies to amount advanced for investment

Section 2(22)(e) not applies to amount advanced for investment on behalf of company under Income tax act. [ITAT DELHI BENCH Adarsh Kapoor]

No penalty merely because claim of the assessee was disallowed

No penalty merely because claim of the assessee was disallowed u/s.40(a)(ia) under Income tax act. [ITAT MUMBAI Tanushree Basu]