Chinmay Tutorials [9929277130]Tax Amendments

CS Factory..

CS Professional Amendment and Important Case Laws For Dec. 2016

Part-A Direct Tax Laws

  1. Company [Section 6(3)[Amendment by Finance Act, 2015, w.e.f. 01-04-2016 i.e. AY 2016-17 ] : A company is said to be resident in India in any previous year if-

a)It is an Indian company ;or

b)Its place of effective management, in that year is in India.

Place of effective management [Explanation]: “Place of effective management” means a place where key management and commercial decision that are necessary for the conduct of the business of an entity as a whole, are in substance made.

Deductions

  • Deduction u/s 80C : list is being increased to include subscription to SukanyaSamriddhi Scheme in the name of individual or any girl child of the individual or girl child for whom individual is the guardian .
  • Deduction u/s 80CCC: limit is being increased to 1,50,000 instead of 1,00,000.
  • Deduction u/s 80CCD : in addition to 1,00,000 in relation to national pension fund additional deduction of 50000 will be allowed if contribution is made to national pension scheme
  • Deduction u/s 80CCE :

Limit 1,50,000OR

80C

+ 80CCC

+ 80CCD

W.E.L

Add employer contribution

Add employee contribution to national pension scheme (upto 50000)

  • Deduction u/s 80D

Limit of 15000 is extended to 25000 in both the cases. However limit for senior citizen is same additional 5000.

  • Deduction u/s 80DD

Limit of 50,000 is extended to 75,000 and for sever disability limit of 1,00,000 is extended to 1,25,000

  • Deduction u/s 80DDB :

For normal person :40000

For senior citizen : 40000 + 20000

For very senior citizen (80 years or more ): 40000+40000

  • Deduction u/s 80G

List of donation eligible to 100% deduction without limit is extended to include :

The swachhbharatkosh

Clean ganga fund

National fund for control of drug abuse

To Calculate the Book Profit [Amended by FA,2015]

Additional points to be added or deducted

Add: The amount or amounts of expenditure relatable to income, being share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with Section 86 / Xxx
Add: The amount or amounts of expenditure relatable to income accruing or arising to an assessee, being a foreign company from –
a)The capital gains arising on transactions in securities; or
b)The interest royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII,
If the income tax payable thereon in accordance with the provisions of this act, other than the provisions of this chapter, is at a rate less than the rate specified in under section 115JB(1); or / Xxx
Add: The amount representing-
a)Notional loss on transfer of a capital asset, being share of a special purpose vehicle, to a business trust in exchange of units allotted by the trust referred to in Section 47(xvii); or
b)The amount representing notional loss resulting from any change in carrying amount of said units; or
c)The amount of loss on transfer of units referred to in Section 47(xvii); or / Xxx
Add: the amount of gain on transfer of units referred to in Section 47(xvii) computed by taking into account the cost of the shares exchanged with units or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through profit or loss account, as the case may be;
Less: The amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of Section 86, if any, such amount is credited to the profit and loss account; or / Xxx
Less: The amount of income accruing or arising to an assessee, being a foreign company, from –
a)The capital gains arising on transaction in securities; or
b)The interest, royalty or fees for technical services chargeable to tax at the rate or rates specified in Chapter XII,
If such income is credited to the profit and loss account and the income tax payable thereon in accordance with the provisions of this Act, other than the provision of this Chapter, is at a rate less than the rate specified in Section 115JB(1); or / Xxx
Less: The amount representing-
a)Notional gain on transfer of a capital asset, being share of special purpose vehicle to a business trust in exchange of units allotted by that trust referred to in clause (xvii) of Section 47; or
b)Notional gain resulting from any change in carrying amount of said units or
c)Gain on transfer of units referred to in clause (xvii) of Section 47,
If any credited to the profit and loss account; or / Xxx
Less: The amount of loss on transfer of units referred to in Section 47(xvii) computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through profit or loss account, as the case may be;

Mandatory filing of return by Investment fund [Section 139(4F)] [Amended by Finance Act, 2015 w.e.f. 1-4-2016 i.e. AY 2016-2017]: Every investment fund referred to in section 115UB, which is not required to furnish return of income or loss under any other provisions of this section shall furnish the return of income in respect of its income or loss in every previous year and all the provisions of this Act shall. So far as may be, apply as if it were a return required to be furnished under section 139(1).

Procedure for appeal by revenue when an identical question of law is pending before Supreme Court [Section 158AA] [Inserted by Finance Act 2015 w.e.f. 01-06-2015]:

i)Appeal not to be filed by the revenue in Appellate Tribunal when identical question of law is pending in Supreme Court: Notwithstanding anything contained in the Act where any question of law arising in the case of an assessee for any assessment year is identical with a question of law arising in his case for another assessment year which is pending before the supreme court, in an appeal or in a special leave petition under Article 136 of the Constitution filed by the revenue, against the order of the High court in favour of the assessee, the Commissioner or Principal Commissioner may, instead of directing the Assessing officer to appeal to the Appellate Tribunal under section 253(2) or section 253(2A), direct the Assessing Officer to make an application to the Appellate Tribunal in the prescribed form within 60 days from the date of receipt of order of the Commissioner (Appeals) stating that an appeal on the question of law arising in the relevant case may be filed when the decision on the question of law becomes final in the earlier case.

ii)Appeal not to be filed only when acceptance is received from assessee regarding pendency of identical question: The Commissioner or Principal Commissioner shall direct the Assessing officer to make an application under section 158AA(1) only if an acceptance is received from the assessee to the effect that the question of law in the other case is identical to that arising in the relevant case.

iii)Appeal to be filed within 60 days of communication of the judgment of Supreme Court : Where the order of the Commissioner (appeal) is not in conformity with the final decision on the question of law in the other case (if the Supreme Court decides the earlier case in favour of the Department), the Commissioner or Principal commissioner.

Penalties

Penalty for failure to furnish statement or information or document by an eligible investment fund.
If any eligible investment fund which is required to furnish a statement or any information or document, as required under Section 9A(5) fails to furnish such statement or information or document within 90 days from the end of financial year. / Rs. 5,00,000
[Bold portion inserted by finance Act, 2015 w.e.f. 1-4-2016-17]
Penalty for failure to furnish information or document under section 285A.
If any Indian concern, fails to furnish any information or document which is required to be furnished under section 285A.[Inserted by Finance act 2015 w.e.f. 1-4-2016 i.e. A.Y. 2016-17] / The prescribe income tax authority may direct that such India concern shall pay, by way of penalty-
a)A sum equal to 2% of the value of the transaction in respect of which such failure has taken place, in a case where such transaction had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern:
b)A sum of Rs. 5,00,000 in any other case.
Penalty for failure to furnish information or furnishing inaccurate information under section 195.
If a person, who is required to furnish information under section 195(6) fails to furnish such information or furnishes inaccurate information, / The assessing officer may direct that such person shall pay by way of penalty a sum of Rs. 1,00,000. [Inserted by Finance Act 2015 w.e.f. 01-06-2015]

Mode of taking or accepting certain loans, deposits and specified sum[Section 269SS]: [Amended by FA, 2015]

a)Restrictions relating to acceptance of loans or deposits or specified sum in cash: No person shall take or accept from any other person (herein referred to as the depositor) any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, if-

i)The amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or

ii)On the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or

iii)The amount or the aggregate amount referred to in (i) together with the amount or the aggregate amount referred to in (ii),

Is Rs. 20,000 or more.

“Loan or deposit” means loan or deposit of money.

“Specified sum” means any sum of money receivable whether as advance or otherwise in relation to transfer of an immovable property, whether or not the transfer takes place’.

b)Non Applicability: The aforesaid provisions shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sm taken or accepted by-

i)Government;

ii)Banking company, post office savings bank or co-operative bank,

iii)Corporation established under a Central, State or Provincial Act;

iv)Government company as defined under Section 2(45) of the Companies Act, 2013;

v)Any other institution, association or body or class of institutions, associations or bodies, which the Central Government may notify in the Official Gazette.

Part-B Indirect Taxes 70 Marks

Chapter-1

1. Teekays interior Solutions (Pvt.) Ltd. V. CCEx. [2014] (SC):

Work station, Partitions, Wall paneling etc. Formed at site and fixed to wall and earth results in immovable, property. The same are not excisable as furniture and are not liable to excise duty.

2. CCEx. v. SundaramCalyton Ltd. [2015] (Mad.):

The aluminium castings that emerged as intermediate product during manufacture of the final product, for vehicles factory run by the Ministry of Defence, under an agreement that prevented the assessee from selling or marketing the castings or passing on any information about the castings, to any other persons; the aluminium castings cannot be said to be marketable and hence not dutiable

.

3. Amrit Bottlers Pvt. Ltd. v. CCEx. [2014]:

Aerated water drained on account of badly crowned bottles or due to under/over filling of bottles, was not ‘marketable’ and was not liable to excise duty.

Details of the ‘finished product’ found marketable and liable to duty only is required to be entered in the RG-1 register.

4. Satnam Overseas Ltd. v. CCEx.[2015](SC):

The process of addition of dehydrated vegetables and certain spices to the raw rice does not amount to manufacture.

Mere addition in the value, after the original product has undergone certain process, would not bring it within the definition of ‘manufacture’ unless its original identity also undergoes transformation and it becomes a distinctive and new product.

5. CCEx. v. Indian Additives Ltd. [2014](Mad.):

The activities of labeling and re-labelling performed by the assessee on the imported goods with a view to comply with the Indian laws and not for purpose of marketing in India, would not amount to deemed manufacture under Section 2(f) of the Central Excise Act, 1944 read with Notes 5 of Chapter 38 of the CETA Schedule.

6. Friends Auto Industries v. CESTAT [2014](P&H):

The activity of grinding/polishing and packing of valve seats to make them fully finished and marketable according to size and specification required by customers amounts to manufacture and is liable to excise duty.

7. MMTC –Pamp India Pvt. Ltd. v. CCEx.[2013](A.A.R.):

Articles of precious metals like medallions, coins and some articles of jewellery like pendants of various shapes and sizes made according to the specifications and designs of teh customers, involved application of various complex processes on raw precious metals (bullion form). Such processes therefore, amounted to ‘Manufacture’ as teh resultant product has its own distinct character, identity and use.

Even if the said processes were undertaken on job work basis it was regarded as “manufacture”.

8. CC v. Variety Lumbers Pvt. Ltd. [2014] 302 ELT 519 (Guj.) :

The process of cutting of imported raw logs or timber into smaller pieces by sawing before selling them in the open market in India does not amount to manufacture.

No new article comes into existence as no fundamental as no fundamental change in teh indentify of the goods takes place. Such cutting into smaller pieces is only due to a requirement of law of RTO rules which does not permit transportation of timber longer than 40 feet.

9. Sidharth Optical Disc Pvt. Ltd. v. UOI [2013](Del.):

Considering the question whether the blank CD/DVD/VCD emerged as an intermediate product in course of manufacture of pre-recorded audio CD/DVD/VCD, the process of manufacture and transfer of data takes place simultaneously and therefore, at no point of time there emerges blank CD/DVD/VCD as excisable goods. Thus, blank CD/DVD/VCD cannot be regarded as intermediate goods and hence not liable to excise duty.

10. CC. v. Posco India Delhi Steel Processing Centre P. Ltd. [2014] (Guj.) : Process of cutting and slitting of steel does not amount to manufacture:

The activity of cutting and slitting of steel does not change the identity of the steel. Since the original character of the product is not lost in such activities, the process does not amount to manufacture under section 2(f) of the Central Excise Act, 1944.

If due to any process the tariff head of a product changes, that would not be called as emergence of a new product with distinct name, character or use.

11. Win Enterprises v. CCEx. [2014]:

The process of cutting of carpet rolls into smaller sizes and then putting such cut sizes to the process of stitching linings at the edges will not result into manufacture. No new independent commodity that is liable to duty as per section 2(f) of the Central Excise act, 1944, comes into existence.

12. ELG India (P.) Ltd. [2014](AAR):

Process of transformation of the metal scrap of assorted sizes, grades, composition, etc. Into metal scrap of specific grades i.e. ‘blended metal scrap’ amounts to manufacture.

13. CCEx. v. Ranbaxy Laboratory Ltd. [2015](SC):

Reprocessing of returned defective goods not manufacture:

Where the goods are returned back to original unit as defective, and are reprocessed, such reprocessing of the defective goods does not amount to manufacture and therefore no fresh duty is leviable thereon.

14. CCEx. v. Hindustan Petroleum Corporation Ltd.[2015](SC):

Blending of duty paid unleaded motor spirit and HSD with multi functional additives does not amount to manufacture as there is no change in characteristic and use of resultant product as per section 2(f) of Central Excise Act, 1944.

15. Hindalco Industries Limited v. UOI [2015](Bom.)

Goods do not become excisable goods merely on satisfying the condition of marketability, they need to be manufactured as well.

Dross and skimming of aluminium, zinc or other non-ferrous metal which emerged as by-product during manufacture of aluminum/non-ferrous sheets/ foils and other products are “not manufactured goods” and hence not liable to excise duty.

16. CCEx. v. MorarjeeBrembana Ltd. [2015](SC):

If EOU makes clearances in domestic tariff area, sale price charged in India cannot be considered as price in course of International trade, the valuation of such goods must be in accordance with the provisions of the Customs Act, 1962.

17. BalrampurChini mills Ltd. Vs. Union of India (2014)

Bagasse which is marketable product but not manufactured product, not liable to Excise Duty.

18. CCEx. Vs. Hindustan Coca Cola Beverages (Pvt) Ltd.(2012)

The treatment of borewell water/ municipal water, does not amount to bringing into existence a new and commercially different commodity. It merely improves the quality, does not provide new marketability to water. Therefore, it does not amount to manufacture.

19. Excise duty not includible in valuation of closing stock. [CIT Vs. Dynavision Ltd.(2012)]

20.Virgo Industries (Engineers) Pvt. Ltd. v. CCEx.[2015] 320 ELT 695(Mad)

The question of fact that came up in this case was whether the signage’s which erected at various petrol, bunks are immovable so as to be non- eligible?

Held that, “complete signage is movable and is installed by fixing it on a concrete foundation, it can be detached and shifted to another location without being damaged. Signage is fixed to earth and is completed before fixing on the concrete platform, hence, they do not emerge as an immovable property on assembly or erection and are excisable goods.

21. Virgo Industries (Engineers) Pvt. Ltd. v. CCEx. [2015]

Signages erected at various petrol bunks- Movable and liable to excise duty:

The question of fact that came up in this case was whether the signage’s which are erected at various petrol bunks are immovable so as to be non-eligible?

Held that, “complete signage is movable and is installed by fixing it on a concrete foundation, it can be detached and shifted to another location without being damaged. Signage is fixed to earth and is complete before fixing on the concrete platform, hence, they do not emerge as an immovable property on assembly or erection and are excisable goods.

22. Cast Metal industries (P) Ltd. v. CCEx. [2015] (SC)

Door handles and hinges, specifically manufactured on the specifications and designs given by the original equipment manufacturers of motor vehicles, are specific purpose goods and cannot be treated at par with general purpose furniture fittings and accessories.

Test of commercial identity say that they are confined to be used only in a motor vehicle, so they are classifiable under Heading 8708 as “Parts and accessories of Motor Vehicles”.

23. CCEx. v. Inacro Ltd. [2015] (SC)

Where any excisable goods are made of more than one material or substance, the classification is to be determined on basis of ‘essential characteristic test’. Blended marble vinyI flooring was to be classified under tariff heading 6807 since the essential characteristics of such tiles was derived from lime stone and cement falling under heading 6807 of the CETA and not by plastic materials falling under heading 3918.