Fwd: TaxGuru.in : Legal & Tax Updates

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From: LEGAL & FINANCIAL UPDATES FROM TAX GURU <info@taxguru.in>
Date: Wed, Feb 23, 2011 at 9:37 AM
Subject: TaxGuru.in : Legal & Tax Updates
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TaxGuru.in : Legal & Tax Updates

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• Scope of appeal under section 248 can never be beyond scope of examination of nature of obligation under section 195(2) cast on a resident payer
• Indo-UAE Tax Treaty- Aggregation of time spent on different projects can only arise for `connected' projects
• Proceedings u/s 163 are only intended to ensure that a person can be regarded as a representative assessee only on existence of certain conditions
• Every claim made against an insurance company in respect of a loss, would be a claim within purview of claims "requiring to be paid or settled" under section 64UM(2) of Insurance Act
• There is no provision in section 148(1) stating that after objection is received, a detailed order of rejection has to be passed before passing final order of reassessment
• Section 127 mandates that assessee must be given a reasonable opportunity of being heard while exercising power to transfer cases
• Cenvat Credit – To avail credit lawfully, raw material, on which same is sought to be availed, must be utilized in manufacture of final dutiable product and credit earned thereon should also be utilized for payment of duty on final product
• Making a wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty under section 271(1)(c)
• India-Singapore DTAA- Technical services provided offshore do not require any deduction of tax at source
• Even if MOA of an trust contains varied objects, so long as record demonstrates that assessee only conducts educational institutions, it must be regarded as existing solely for purpose of education
• FERA- Where interest received by revenue was relatable to seized amounts from petitioners, which were invested in fixed deposits by revenue, petitioners would be entitled to accrued interest on such seized amounts
• Appellate Forums while reversing orders of AO are legally bound to dwell upon specific reasons assigned by AO for not accepting explanation of assessee that statement made by him u/s 132(4) was obtained under coercion and duress
• Doctrine of mutuality does not apply in case business activities of an assessee-firm is not restricted to partners only
• Cenvat credit – Conditions for availing benefit under Notification No. 8/2003-CE dated 1-3-2003
• Canvat Credit – Valuation of goods transferred by manufacturer to its sister concerns without any invoice
• Court should provide its own grounds and reasons for rejecting claim/prayer of a party
• On invocation of action under section 13 of Securitisation Act by secured creditor, reference before BIFR would abate by virtue of third proviso to section 15(1) of SICA
• Special Auditor, to whom work is assigned, is very much at liberty, to insist upon payment of such fee/remuneration as he may deem adequate for work assigned to him
• Imposition of penalty-If claim made by assessee besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to his disadvantage
• Rectification of computational error- A simple computational error can be resolved by rectifying an order of assessment under Section 154(1)
• A low rate of gross profit, in absence of any material pointing towards falsehood of accounts books, cannot by itself be a ground to reject account books under section 145(3)
• Space-selling service- Any services provided by any person to any other person in relation to sale of space would be taxable from 1-5-2006 and not prior to that date
• Before invoking provisions of section 153A it would be necessary to comply with provisions contained under section 132(1
• Income from other sources- Investment or expenditure made in a company where there is no hope of earning profit shall not be covered by section 57(iii)
• Assessee not entitled to depreciation on a plant which is not in operation since its capitalization

Scope of appeal under section 248 can never be beyond scope of examination of nature of obligation under section 195(2) cast on a resident payer Posted: 20 Feb 2011 09:06 PM PST In an appeal under section 248 the dispute relating to the chargability alone can be subject matter and not a possibility of assessing the income of the non-resident in the hands of the resident payer. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Indo-UAE Tax Treaty- Aggregation of time spent on different projects can only arise for `connected' projects Posted: 20 Feb 2011 07:41 PM PST The word `connected' is not defined anywhere in the India-UAE Tax Treaty but, contextual meaning of that term would include connection in terms of the nature of work carried out; the connection would not arise only because these are carried out at... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Proceedings u/s 163 are only intended to ensure that a person can be regarded as a representative assessee only on existence of certain conditions Posted: 20 Feb 2011 07:39 PM PST The fact that the Agent has deducted tax under section 195 will not be a bar to proceed and pass an order under section 163 against the agent. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Every claim made against an insurance company in respect of a loss, would be a claim within purview of claims "requiring to be paid or settled" under section 64UM(2) of Insurance Act Posted: 20 Feb 2011 07:23 PM PST Under the proviso to sub-section (2) of section 64UM it is not open to the Insurance company to repudiate the claim once it has appointed the surveyors and the surveyors have given an assessment of the loss. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

There is no provision in section 148(1) stating that after objection is received, a detailed order of rejection has to be passed before passing final order of reassessment Posted: 20 Feb 2011 07:19 PM PST Even if there is any lacuna in the procedure followed by the Assessing Authority while rejecting the objections raised by the assessee against the notices issued under sections 147 and 148(1), it is not as if the assessee is left in lurch and... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Section 127 mandates that assessee must be given a reasonable opportunity of being heard while exercising power to transfer cases Posted: 20 Feb 2011 07:16 PM PST Where the assessee was not provided with any opportunity of being heard in the matter, the reasons assigned in the order which was "administrative convenience and for co-ordinating effective investigation" also could not be said to be the reasons as... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Cenvat Credit – To avail credit lawfully, raw material, on which same is sought to be availed, must be utilized in manufacture of final dutiable product and credit earned thereon should also be utilized for payment of duty on final product Posted: 20 Feb 2011 07:14 PM PST Till and until both the credit earned and the product on which the credit is earned are lawfully utilized, it cannot be said that the credit has been lawfully and completely utilized; of course, the utilization of credit and utilization of input may... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Making a wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty under section 271(1)(c) Posted: 20 Feb 2011 07:08 PM PST In order to apply the provisions of section 271(1)(c), there has to be concealment of particulars of the income of the assessee; the assessee must have furnished inaccurate particulars of his income. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

India-Singapore DTAA- Technical services provided offshore do not require any deduction of tax at source Posted: 20 Feb 2011 07:05 PM PST Rendering of services and utilization should be both in India and Explanation to section 9(2) does not dilute such requirements. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Even if MOA of an trust contains varied objects, so long as record demonstrates that assessee only conducts educational institutions, it must be regarded as existing solely for purpose of education Posted: 20 Feb 2011 07:03 PM PST The fact that a surplus may incidentally arise from the activities of the trust, after meeting the expenditure incurred for conducting educational activities, would not disentitle the trust of the benefit of the provisions of Section 10(23C). [[ This is a content summary only. Visit www.taxguru.in for full article ]]

FERA- Where interest received by revenue was relatable to seized amounts from petitioners, which were invested in fixed deposits by revenue, petitioners would be entitled to accrued interest on such seized amounts Posted: 20 Feb 2011 06:59 PM PST There is no justification on the part of the revenue in retaining the amount of interest earned on the seized amount especially, on the touchstone of the doctrine of accretion. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Appellate Forums while reversing orders of AO are legally bound to dwell upon specific reasons assigned by AO for not accepting explanation of assessee that statement made by him u/s 132(4) was obtained under coercion and duress Posted: 20 Feb 2011 06:56 PM PST Where the AO has assigned cogent reasons for not accepting the retraction of the statement under section 132(4) by the assessee, but the Appellate Forums, without meeting the reasoning of the AO for not accepting the explanation of the assessee,... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Doctrine of mutuality does not apply in case business activities of an assessee-firm is not restricted to partners only Posted: 20 Feb 2011 06:53 PM PST Where an Association or Company trades with its members only and the surplus out of the common fund is distributable among the members, there is mutuality and the surplus is not assessable to tax as profit. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Cenvat credit – Conditions for availing benefit under Notification No. 8/2003-CE dated 1-3-2003 Posted: 20 Feb 2011 06:50 PM PST Cenvat credit : Manufacturers are not debarred from availing benefit under Notification No. 8/2003-CE dated 1-3-2003 in relation to goods other than goods which are excluded from benefit of said notification while simultaneously seeking to avail... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Canvat Credit – Valuation of goods transferred by manufacturer to its sister concerns without any invoice Posted: 20 Feb 2011 06:46 PM PST The Explanation given by the CBEC vide its Circular No. 643/34/2002-CX dated 1-7-2002 cannot apply in the cases where the transaction value of the concerned goods is available on record; to ignore such value on the record and to take resort to the... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Court should provide its own grounds and reasons for rejecting claim/prayer of a party Posted: 20 Feb 2011 06:43 PM PST Recording of reasons: Despite heavy quantum of cases in Courts, it would neither be permissible nor possible to state as a principle of law, that while exercising power of judicial review on administrative action and more particularly judgment of... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

On invocation of action under section 13 of Securitisation Act by secured creditor, reference before BIFR would abate by virtue of third proviso to section 15(1) of SICA Posted: 20 Feb 2011 06:38 PM PST The third proviso under section 15(1) of the SICA relieves the specified strength of secured creditors from shackle of taking consent of the BIFR and permits them to pursue their remedy under the provisions of Securitisation Act, which have been... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Special Auditor, to whom work is assigned, is very much at liberty, to insist upon payment of such fee/remuneration as he may deem adequate for work assigned to him Posted: 20 Feb 2011 06:34 PM PST If the remuneration demanded by the person proposed to be appointed as Special Auditor is not acceptable to the Chief Commissioner or the Commissioner, as the case may be, he may not assign the work to him; but, it would be difficult to accept that... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Imposition of penalty-If claim made by assessee besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to his disadvantage Posted: 20 Feb 2011 06:31 PM PST If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Rectification of computational error- A simple computational error can be resolved by rectifying an order of assessment under Section 154(1) Posted: 20 Feb 2011 08:08 AM PST It would be entirely arbitrary for the Assessing Officer to reopen the entire assessment under Section 147 to rectify an error or mistake which can be rectified under Section 154; an arbitrary exercise of power is certainly not a consequence which... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

A low rate of gross profit, in absence of any material pointing towards falsehood of accounts books, cannot by itself be a ground to reject account books under section 145(3) Posted: 20 Feb 2011 08:05 AM PST If the rate of gross profit declared by the assessee in a particular period is lower as compared to the gross profit declared by him in the preceding year, that may alert the Assessing Officer and serve as a warning to him, to look into the accounts... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Space-selling service- Any services provided by any person to any other person in relation to sale of space would be taxable from 1-5-2006 and not prior to that date Posted: 20 Feb 2011 08:02 AM PST After specific category is introduced as a taxable service in the statute from a specified date, the said activity cannot be a taxable entity or technical entry in any other services prior to that date. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Before invoking provisions of section 153A it would be necessary to comply with provisions contained under section 132(1 Posted: 20 Feb 2011 07:58 AM PST The mere issue of warrant of authorization without there being search of the premises mentioned in the warrant of authorization would be meaningless and would not serve the purpose of section 132; therefore, actual search shall have to be carried... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Income from other sources- Investment or expenditure made in a company where there is no hope of earning profit shall not be covered by section 57(iii) Posted: 20 Feb 2011 07:56 AM PST The question cropped up as to whether the amount invested by the assessee in sisters concerned running in loss since several years may be treated as investment made exclusively for the purpose of making or earning such income. Section 57(iii) of the... [[ This is a content summary only. Visit www.taxguru.in for full article ]]

Assessee not entitled to depreciation on a plant which is not in operation since its capitalization Posted: 20 Feb 2011 07:50 AM PST Even after introduction of concept of block assets, identity of the individual assets are not lost and the Assessing Officer can restrict the depreciation having regard to the usage of a plant. [[ This is a content summary only. Visit www.taxguru.in for full article ]]

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