Category Archives: GS – June 2014 Series

Updates in Direct Taxes – June 2014 Series

Shree Guru Kripa’s Institute of Management

“GyaanSmriti” – DIRECT TAX LAW UPDATES (Selected) –June 2014 Series

Updates in Direct Tax Law

1.           [2014] 45 taxmann.com 445 (Delhi)

CTCI Overseas Corporation Ltd. v. Director of Income-tax-I, International Taxation

Issue: Whether the consortium agreement between CTCI and CINDA constitute an AOP for the purpose of the Income Tax Act, 1961 to be assessed as an separate entity.

Decision: Advance Ruling was set aside by the High Court with a direction that constitution of AOP in this case was to be examined on basis of principles laid down by the Delhi High Court recently in the case of Linde AG, Linde Engineering Division v. Dy. DIT and the same was set aside and the matter is remitted to the said authority.

Reasoning: It is obvious that unless the facts lead to a conclusion that there is sufficient joint participation for a common enterprise, it would not be appropriate to treat two or more persons as an Association of Persons for the purposes of assessing them as a separate taxable entity.

 2.           [2014] 45 taxmann.com 400 (Delhi)

Council For The Indian School, Certificate Examinations v. Director General of Income-tax

Issue#1:- Whether generating surplus by a charitable society or educational institution itself removes the exemption u/s 10(23)(vi) of the Income Tax Act, 1961.

Decision:- Increase in the fees for generating surplus would not by itself exclude the petitioner from the ambit of section 10(23C)(vi) of the Act.

Reasoning:- Generation of profit or surplus by an organization cannot be construed to mean that the purpose of the organization is generation of profit/surplus, as long as the surpluses generated are accumulated /utilized only for educational purposes. The same would not disable the institution from claiming exemption under section 10(23C)(vi) of the Act.

Issue#2:- Whether inefficient utilization of funds by a educational institution or a charitable society would mean that funds are not utilized for the specific object.

Decision:- Merely, because the funds of the petitioner may not have been utilized in the best possible manner cannot lead to a conclusion that they have not been applied to the object for which the petitioner has been established.

Reasoning:- It is not essential that all decisions made by the management of a society yield optimum results. A management of a society which is either negligent or has not performed its functions diligently with the requisite skill may be guilty of mismanaging the affairs of the society.

But it would be quite another thing to state that the funds have not been deployed wholly and exclusively for its objects.

 3.           INSTRUCTION NO.11/2014 [F.NO.279/MISC,/M-115/2013-ITJ], DATED 16-5-2014

The Commissioner of Income Tax (CIT) may, either of his own motion or on an application made by the assessee, revise an order passed by an authority subordinate to him. The CIT may, before revising such, order, make enquiry or cause such enquiry to be made and subject to the provisions of the Act, pass such order which is not prejudicial to the assessee.

 4.           NOTIFICATION NO. 26/2014 [F.NO.142/15/2013-TPL]/SO 1297(E), DATED 16-5-2014

Form 49A – Application for allotment of Permanent Account Number   -  In the case of Indian citizens/Indian companies/entities incorporated in India/unincorporated entities formed in India.

Form 49AA – Application for allotment of Permanent Account Number – Individuals not being a citizen of India/entities incorporated outside India/unincorporated entities formed outside India.

Indirect Tax Updates – June 2014

Shree Guru Kripa’s Institute of Management

“GyaanSmriti” – INDIRECT TAX LAW UPDATES –June 2014 Series

Updates in Indirect Tax Law

 1.           Union of India and ORS Vs. Mahindra and Mahindra Ltd.)

 Valuation – Depot as a place of removal

Facts of the Case: The revenue demanded Excise duty on the basis of the higher price, at which the tractors were sold by the assessee from their depots whether on wholesale basis or retail under the law as it stood at that point of time.

Decision: The said question was answered in negative in favour of the assessee and the High Court set aside the show-cause notices. In the present case the assessee failed to bring the ascertainable price of the tractor, cost of transportation to depot, etc. to the notice of the High Court. The assessee simply challenged the show-cause notices on the ground that the amended Section 4 is not applicable. The High Court without looking into the relevant fact, only on the ground that sub-clause (iii) to Section 4(b) was subsequently added by amendment including ‘depot’, ‘premises of consignment agent’ or ‘any other place’ or ‘premises’ from where the excisable goods were to be sold after their clearance from the factory, declared the notices illegal and set aside the same. Even the matter was not remanded back to competent authority allowing the assessee to bring to its notice “normal price”, in course of wholesale trade, place of removal of tractors, transportation charges, etc.

 2.           Union of India and ORS vs M/s Hindustan Zinc Ltd

Inputs used in manufacture of dutiable and exempted final products

Rule 6 of the CCR: Inputs used in manufacture of dutiable and exempted final products – Payment of 8%/separate accounts not applicable for by-products: Sulphuric acid produced during manufacture of zinc is a by¬¬-product. Clearance of sulphuric acid without payment of duty for manufacture of fertilizers. There is no requirement of 8% or separate accounts. Sulphuric acid is indeed a byproduct. It is not as though some quantity of zinc ore concentrate has gone into the production of sulphuric acid, applicability of Rule 57 CC can be attracted. The entire quantity of zinc has indeed been used in the production of zinc and no part can be traced in the sulphuric acid. It is for this reason, the respondents maintained the inventory of zinc concentrate for the production of zinc and there was no necessity and indeed it is impossible, to maintain separate records for zinc concentrate used in the production of sulphuric acid. The mischief of recovery of 8% under Rule 57 CC on exempted sulphuric acid is not attracted.”

 

Statutory Compliance Chart – June 2014

DATE COMPLIANCE REQUIRED FORM NO. / CHALLAN NO.
JUNE 2014
5 EXCISE: PAYMENT OF EXCISE DUTY FOR MAY 2014 GAR 7
SERVICE TAX: PAYMENT OF SERVICE TAX FOR MAY 2014 BY CORPORATES
6 EXCISE: E-PAYMENT OF EXCISE DUTY FOR MAY 2014 GAR 7
NOTE: E-PAYMENT IS MANDATORY IF ED PAID>=10 LAKH IN FY 2013-14
SERVICE TAX: E-PAYMENT OF SERVICE TAX FOR MAY 2014 BY CORPORATES
NOTE: E-PAYMENT IS MANDATORY IF ST PAID>=1 LAKH IN FY 2013-14
7 INCOME TAX: DEPOSIT OF TDS/TCS COLLECTED DURING MAY 2014 281
10 EXCISE: MONTHLY RETURNS FOR PRODUCTION AND REMOVAL OF GOODS AND CENVAT CREDIT FOR MAY 2014 ER 1
EXCISE: MONTHLY RETURNS OF EXCISABLE GOODS MANUFACTURED & RECEIPT OF INPUTS & CAPITAL GOODS BY UNITS IN EOU, STP, HTP FOR MAY 2014 ER 2
EXCISE: MONTHLY RETURNS OF INFORMATIONS RELATING TO PRINCIPAL INPUTS FOR MAY 2014 BY MANUFACTURER OF SPECIFIED GOODS WHO PAID DUTY>=RS. 1 CRORE DURING FY 2013-14 BY PLA/CENVAT/BOTH ER 6
12 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING MAY 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER > RS. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY CASH/CHEQUE/DD FORM 1 / FORM I
14 INCOME TAX: DUE DATE FOR PAYMENT OF FIRST INSTALMENT OF ADVANCE INCOME TAX FOR CORPORATE ASSESSEES FOR FY 2014-15 280
CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING MAY 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER > RS. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY ELECTRONIC MODE FORM 1 / FORM I
16 EPF: PAYMENT OF EPF CONTRIBUTION FOR MAY 2014
EPF: CONSOLIDATED STATEMENTS OF DUES AND REMITTANCES UNDER EPF AND EDLI FOR MAY 2014 12A
EPF: MONTHLY RETURNS OF EMPLOYEES WHO JOINED/LEFT THE ORGANISATION IN MAY 2014 5/10
20 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING MAY 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER IS < Rs. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY CASH/CHEQUE/DD FORM 1 / FORM I
21 ESI: DEPOSIT OF ESI CONTRIBUTIONS AND COLLECTIONS FOR MAY 2014
22 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING MAY 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER IS < Rs. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY ELECTRONIC MODE FORM 1 / FORM I
30 COMPANIES ACT: APPLICATION TO CENTRAL GOVERNMENT FOR APPOINTMENT OF COST AUDITOR 23 C
INCOME TAX: RETURN FOR SECURITIES TRANSACTION TAX 1/2
INCOME TAX: SUBMISSION OF PARTICULARS ABOUT SMALL GOODS CARRIAGE OPERATORS U/S 194C 15 I
INCOME TAX: QUARTERLY RETURN OF NON-DEDUCTION OF TAX AT SOURCE U/S 206A FOR QUARTER ENDING MARCH 2014 BY BANKING COMPANY 26QAA