OECD – New single global standard on automatic exchange of information

Offshore tax evasion remains a serious problem for countries and jurisdictions worldwide, with vast amounts of funds deposited abroad and sheltered from taxation when taxpayers fail to comply with obligations in their home countries. 

Responding to a mandate from G20 leaders to reinforce action against tax avoidance and evasion and inject greater trust and fairness into theinternational tax system, the OECD has unveiled today a new single global standard for the automatic exchange of information between tax authorities worldwide.

New Rules of Corporate Social Responsibility

Introduction: Corporate Social Responsibility (CSR) is attracting the attention of every Company andstakeholders. CSR activities are not new but it has been recently the mostly discussed or debated topic for the reason that companies Act has made it mandatory for certain companies to spend 2% of average net profits of 3 preceding financial years. Many companies consider CSR activities as philanthropic act towards society and do not want the Government to exert pressure on them to spend compulsorily 2% of average net profits of preceding 3 financial years. Finally Section 135 of Companies Act, 2013 (CA, 2013) and new CSR rules have been notified by the Ministry of Corporate affairs for implementation. This Article analyses the provisions of Section 135 and new rules framed under the CA 2013.

IMP - No sec. 41(1) addition even if debt remained due for certain years unless there was cessation of liability

IT: Where assessee in return of income for assessment year 2007-08 had shown certain amount by way of his debts and Assessing Officer applying provisions of section 41(1) added back said amount in income of assessee as deemed income, since there was nothing on record to suggest that there was remission or cessation of liability that too during assessment year 2007-08, above amount could not be added back in income of assessee

IT:Reply given by Income Tax Dep. in regard to difficulties in the system on 18 points

Sl. No.	Point discussed	Reply / comments of the Deptt.
1.	Credit for TDS when income is offered in the subsequent year following cash method of accounting.  This problem is not only arising in the case of professionals but also in the case of bank/post office interest on fixed depoists	W.e.f. 01.04.2014, DG (Systems) will introduce a system according to which an assessee will be required to mention TDS Certificate number and he may claim credit either fully or partly for a certificate or may not claim credit in that year. System will carry forward credit of TDS not claimed and same can be claimed in the subsequent year when the income is offered to tax.

Seized amount already disclosed in sec. 139 return can't be added back to income during block assessment

IT : Where prior to initiation of block assessment proceedings, assessee filed his return under section 139 wherein amount seized from him had already been disclosed, in view of provisions of clause (b) of sub-section (1) of section 158BB, amount so disclosed could not be added to assesse's undisclosed income while completing block assessment

Purchases by account-payee cheque held sufficient to allow claim even if recipient couldn't be produced

IT-I : Where assessee, a builder, purchased cement from one party by account payee cheques at rates which were reasonable as compared to rates paid to other parties, assessee's claim for deduction in respect of said expenses was to be allowed under section 37(1)

IT- II : Where assessee in support of payment of labour charges, brought on record documentary evidence such as election card, driving licence, ration card etc. of recipients, transactions in question being genuine in nature, assessee's claim for deduction of labour charged was to be allowed

Tribunal to consider notional tax effect in case of loss while examining maintainability of revenue's appeal

IT : In case of loss, if notional tax effect is above limit prescribed by CBDT, appeal would be maintainable

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[2014] 42 taxmann.com 7 (Allahabad)

HIGH COURT OF ALLAHABAD

Commissioner of Income-tax-II, Lucknow

v.

Siddhartha Construction Co. (P.) Ltd.*

Section 268A, read with section 260A of the Income-tax Act, 1961 - Filing of appeal or application for reference by income-tax authorities [Loss returns] - Assessment year 1998-99 - Whether merely because income of assessee is computed at negative (i.e., loss), appeal before Tribunal would not be barred - Held, yes - Whether in such cases, if notional tax effect is found to be above limit prescribed by CBDT at relevant time, appeal would be maintainable - Held, yes [In favour of revenue]

CENVAT - Sales Commission Services are not Input Services - If there is any conflict between jurisdictional High Court and CBEC circular, the decision of jurisdictional High Court is binding on department rather than CBEC circular: HC

Service Tax

CENVAT – Sales Commission Services are not Input Services - If there is any conflict between jurisdictional High Court and CBEC circular, the decision of jurisdictional High Court is binding on department rather than CBEC circular: HC

THE Respondents had availed CENVAT Credit on Sales Commission Services obtained by them.

The adjudicating denied this credit but the Commissioner (A) allowed the appeal of the assessee accepting their contention that sales commission paid is an activity relating to their business incurred before the clearance of goods and that on the basis of orders procured by the commission agent, clearances are made.

In appeal before the CESTAT, the Revenue submitted that the 'sales commission services' cannot fit into the definition of 'Input service' u/r 2(l) of CCR, 2004 in view of the Gujarat High Court decision in the case of M/s. Cadila Healthcare Ltd. - 2013-TIOL-12-HC-AHM-ST.

Know status of your PAN/ TAN on Phone

Interactive Voice Response (IVR) for knowing the status of your PAN/ TAN application is now available at TIN call centre (TCC) in Hindi/English language. You may call on 020- 27218080 to check the status of your application.

Investment of sales consideration provides sec. 54F relief even if construction isn't completed within 3 years

Where consideration received on transfer of property had been invested by assessee in construction of residential house, merely because construction was not completed in all respects within stipulated period, benefit of section 54F, could not be denied.

The Tribunal held in favour of assessee as under:

1)  It was clear from the order of the CIT (A) that the assessee had commenced construction of the building within a period of three years from the date of transfer of property. The construction, however, could not be completed by the assessee within three years;

2)  The Karnataka High Court in case of CIT v. Sambandam Udaykumar [2012] 19 taxmann.com 17 had taken a view that under the provisions of section 54F, the condition precedent was that the capital gain realized from sale of capital asset should have been parted by the assessee and invested in construction of a residential house;

3)  Benefit of section 54F couldn’t be denied to assessee if the money was invested in constructing the residential house, even if the construction was not completed in all respects and house was not in a condition to be occupied within the stipulated period;

4)  There is no particular stage of completion of construction that is contemplated by the provision. Therefore, the benefit of deduction under section 54F was to be allowed to the assessee – ITO v. Smt. B.S. Shanthakumari [2014] 41 taxmann.com 325 (Bangalore - Trib.)