Tuesday, August 22, 2017


Find enclosed Compilation of FAQ’s on GST for your ready reference. This is only for educational and guidance purposes and do not hold any legal validity.

You can refer to https://cbec-gst.gov.in/ for further details.

For detailed booklet refer to:

Friday, June 16, 2017

Exemption to Cashflow Statement / IFCR for Small Companies

MCA amended notification dated 5 June 2015, granting certain exemption to certain categories of companies. Key additional exemptions for:
Private Companies
  • Exemption from presentation of cash flow statement for one person company, small company, dormant company and private company (if such private company is a start-up)  
  • Auditors’ reporting on internal financial control will not apply to (i) one person company, (ii) small company, or (iii) a private company having turnover less than INR 50 crores as per latest audited financial statement or having aggregate borrowing from banks or financial institution or any body corporate at any point of time during the financial year less than INR 25 crores

Notification is enclosed for your reference:


Monday, June 12, 2017

TDS on rent payment exceeding Rs. 50k by individuals / HUFs from FY 17-18

TDS on rent payment exceeding Rs. 50k by individuals / HUFs from FY 17-18
·         CBDT notifies operating rules and forms with respect to Sec. 194IB (inserted by Finance Act, 2017)  to provide for TDS on rent payment exceeding Rs. 50,000 for a month by individuals or HUF w.e.f June 1, 2017
·         Notifies new challan-cum-statement in Form No. 26QC to be furnished electronically by the deductor
·         Prescribes 30 days period (from the end of the month in which the deduction is made), for depositing TDS with Government and for furnishing Form 26QC
·         Notifies TDS certificate in Form No. 16C to be furnished to the payee within 15 days from the due date of furnishing Form No. 26QC
·         Amends Rules 30, 31 and 31A (relating to time and mode for - TDS deposit, TDS statements / TDS certificate furnishing)
Link to Notification & Format of Form 26QC is as follows:
Sec 194IB is enclosed for your ready reference:
Payment of rent by certain individuals or Hindu undivided family:
194-IB. (1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent of such income as income-tax thereon
(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier
(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section
(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be
Explanation.—For the purposes of this section, "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both

Sunday, May 21, 2017

GST Rates in Excel

Find enclosed GST Rates in excel for the following:

1. Goods
2. Services (Taxable, Exempted & Reverse Charge) 

Click the link to download - https://goo.gl/74HiEx 
Happy GST Implementation!!

Tuesday, November 4, 2014

Reimbursement of administrative and management support services costs - No Tax withholding Sec 195

S. 195: Reimbursement of share of costs towards administrative and management support services in connection with technology updates etc. is not taxable

DCIT vs. Ernst & Young Pvt. Ltd (ITAT Kolkata)

The assessee company is a member of the international organization of Ernst & Yound and its several associate concerns worldwide. Ernst & Young Global Services LLP and Ernst Young UK LLP provide administrative and management support services in connection with technology updates, system and methodology and upgrades, training through webs etc. to the assessee and to other associate concerns of the Group.

The assessee and its other associate concerns share the costs. A sum of Rs.6,88,12,554 was reimbursed to Ernst & Young Global Services LLP and a sum of Rs.23,78,781 to Ernst & Young UK LLP by the assessee during the current assessment year on account of its share of costs for such services. The said concerns were set up by member firms of Ernst & Young for providing resources to obtain best methodologies at a lower cost which in the present days of globalisation was imperative for any professional firm. Development of such methods by anyone concern would have been cost prohibitive apart from lacking uniformity and mutual compatibility.

Accordingly, arrangement was arrived at for such services to be developed in pool by the said two concerns to which the member firms would have access to it and reimbursing their respective shares of cost incurred therefor. Such reimbursement was agreed on the basis of respective turnover of the member firms. These facts are not denied by revenue even now before us and these are reimbursement of expenses.

Once these are reimbursement of expenses the assessee is not liable to deduct TDS u/s. 195 of the Act.

Sunday, October 12, 2014

Vodafone Transfer Pricing Verdict: High Court Mocks Dept’s ‘Unique’ Interpreta​tion Of Law

Vodafone India Services Pvt. Ltd vs. UOI (Bombay High Court)

The assessee, an Indian company, issued equity shares at the premium of Rs.8591 per share aggregating Rs.246.38 crores to its holding company. Though the transaction was reported as an “international transaction” in Form 3 CEB, the assessee claimed that the transfer pricing provisions did not apply as there was no income arising to it. The AO referred the issue to the TPO without dealing with the preliminary objection. The TPO held that he could not go into the issue whether income had arisen or not because his jurisdiction was limited to determine the ALP. He held that the assessee ought to have charged the NAV of the share (Rs. 53,775) and that the difference between the NAV and the issue price was a deemed loan from the assessee to the holding company for which the assessee ought to have received 13.5% interest. He accordingly computed the adjustment for the shares premium at Rs. 1308 crore and the interest thereon at Rs. 88 crore. The AO passed a draft assessment order u/s 144C(1) in which he held that he was bound u/s 92-CA(4) with the TPO’s determination and could not consider the contention whether the transfer pricing provisions applied. The assessee filed a Writ Petition challenging the jurisdiction of the TPO/AO to make the adjustment. The High Court directed the DRP to decide the assessee’s objection regarding chargeability of alleged shortfall in share premium as a preliminary issue. Upon the DRP’s decision, the assessee filed another Writ Petition. HELD by the High Court allowing the Petition:

(1) A plain reading of Section 92(1) of the Act very clearly brings out that income arising from a International Transaction is a condition precedent for application of Chapter X of the Act.

(2) The word income for the purpose of the Act has a well understood meaning as defined in s. 2(24) of the Act. The amounts received on issue of share capital including the premium is undoubtedly on capital account. Share premium have been made taxable by a legal fiction u/s 56(2)(viib) of the Act and the same is enumerated as Income in s. 2(24)(xvi) of the Act. However, what is bought into the ambit of income is the premium received from a resident in excess of the fair market value of the shares. In this case what is being sought to be taxed is capital not received from a non-resident i.e. premium allegedly not received on application of ALP. Therefore, absent express legislation, no amount received, accrued or arising on capital account transaction can be subjected to tax as Income (Cadell Weaving Mill Co. vs. CIT 249 ITR 265 approved in CIT vs. D.P. Sandu Bros 273 ITR 1 followed);

(3) In case of taxing statutes, in the absence of the provision by itself being susceptible to two or more meanings, it is not permissible to forgo the strict rules of interpretation while construing it. It was not open to the DRP to seek aid of the supposed intent of the Legislature to give a wider meaning to the word ‘Income';

(4) The other basis in the impugned order, namely that as a consequence of under valuation of shares, there is an impact on potential income and that if the ALP were received, the Petitioner would be able to invest the same and earn income, proceeds on a mere surmise/assumption. This cannot be the basis of taxation. In any case, the entire exercise of charging to tax the amounts allegedly not received as share premium fails, as no tax is being charged on the amount received as share premium.

(5) Chapter X is invoked to ensure that the transaction is charged to tax only on working out the income after arriving at the ALP of the transaction. This is only to ensure that there is no manipulation of prices/consideration between AEs. The entire consideration received would not be a subject-matter of taxation;

(6) The department’s method of interpretation indeed is a unique way of reading a provision i.e. to omit words in the Section. This manner of reading a provision by ignoring/rejecting certain words without any finding that in the absence of so rejecting, the provision would become unworkable, is certainly not a permitted mode of interpretation. It would lead to burial of the settled legal position that a provision should be read as a whole, without rejecting and/or adding words thereto. This rejecting of words in a statute to achieve a predetermined objective is not permissible. This would amount to redrafting the legislation which is beyond/outside the jurisdiction of Courts.

(7) In tax jurisprudence, it is well settled that following four factors are essential ingredients to a taxing statute:- (a) subject of tax; (b) person liable to pay the tax; (c) rate at which tax is to be paid, and (d) measure or value on which the rate is to be applied. Thus, there is difference between a charge to tax and the measure of tax (a) & (d) above;

(8) The contention that in view of Chapter X of the Act, the notional income is to be brought to tax and real income will have no place is not acceptable because the entire exercise of determining the ALP is only to arrive at the real income earned i.e. the correct price of the transaction, shorn of the price arrived at between the parties on account of their relationship viz. AEs. In this case, the revenue seems to be confusing the measure to a charge and calling the measure a notional income. We find that there is absence of any charge in the Act to subject issue of shares at a premium to tax.

(9) W.e.f. 1 April 2013, the definition of income u/s 2(24)(xvi) includes within its scope the provisions of s. 56(2) (vii-b) of the Act. This indicates the intent of the Parliament to tax issue of shares to a resident, when the issue price is above its fair market value. In the instant case, the Revenue’s case is that the issue price of equity share is below the fair market value of the shares issued to a non-resident. Thus Parliament has consciously not brought to tax amounts received from a non-resident for issue of shares, as it would discourage capital inflow from abroad.

(10) Consequently, the issue of shares at a premium by the Petitioner to its non resident holding company does not give rise to any income from an admitted International Transaction. Thus, no occasion to apply Chapter X of the Act can arise in such a case.

Friday, October 10, 2014

Microsoft case - Service provided to Principal situated in Singapore to market products in India - Is Export of Services

In the famous Microsoft case reported by us almost three years ago,due to divergent views of the Members constituting the Division Bench, the following was the difference of opinion framed for decision by the Third Member -
(i) Whether the impugned Business Auxiliary Service of promotion of market in India for foreign principal made in terms of Article 2 and 3 of the Agreement dated 01/07/2005 amounts to export of service considering Article 286 (1) (b) of the Constitution of India read with Apex decisions in the case of State of Kerala and Others Vs. The Cochin Coal Company Ltd. - (1961) 12 STC 1 (SC) , Burmah Shell Oil Storage and Distributing Co, of India Ltd. and Other Vs. Commercial Tax Officers and Others - 2002-TIOL-966-SC-CT-CB and the provisions of Export Service Rules, 2005 as well as Circular No. 141/10/2011 - TRU dated 13.05.2011 issued by CBE & C?
(ii) Whether the impugned Business Auxiliary Service of promotion of market in India for foreign principal made in terms of Article 2 and 3 of the Agreement dated 01/07/2005 was delivered outside India and used thereat and is immune from levy of service tax as export of service in terms of the provisions of Export Service Rules, 2005 read with circulars issued by CBE & C excluding Circular No.141/10/2011 - TRU dated 13.05.2011?
(iii) Whether the impugned Business Auxiliary Service provided in terms of Agreement dated 01/07/2005 is governed by the principles of equivalence and destination based consumption tax as well as law laid down by Apex Court in All India Federation of Tax Practitioners - 2007-TIOL-149-SC-STand Association of Leasing and Financial Services Companies Vs. UOI - 2010-TIOL-87-SC-ST-LB.
(iv) The Appeal in Appeal No. ST-828/2010 without being argued by both sides whether can be said to have involved the issue that output service was exported or conclusion is to be arrived at upon hearing both sides?
(v) Whether demand for the normal period sustains subject to grant of cum-tax benefit and CENVAT Credit?
We had reported this order as - 2011-TIOL-1508-CESTAT-DEL.
The Third Member has passed an order recently.
After hearing lengthy submissions by both sides, the Member (J) inter alia observed that in view of the Majority decision in Paul Merchants Ltd. - 2012-TIOL-1877-CESTAT-DEL it has to be held that services were being exported in terms of Export of Services Rules, 2005 and not liable to Service Tax.
The third Member also observed –
++ Even otherwise also, I find that the disputed service is the service being provided by the appellant to his principal located in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product on Indian soil. The transactions and activities between the appellant and Singapore principal company are the disputed activities. As such, the services are being provided by the appellant to Singapore recipient company and to be used by them at Singapore, may be for the purpose of the sale of their product in India, have to be held as export of services.
Noting that in the case of Larsen & Toubro - 2013-TIOL-1458-CESTAT-DEL it is held that a majority decision is Larger Bench decision having the same binding criteria as that of Larger Bench, the Member (J) opined that the majority decision in the case of Paul Merchants is required to be followed.
The third Member also adverted to the decisions in Gap International Sourcing (India) Pvt. Ltd.- 2014-TIOL-465-CESTAT-DEL, Vodafone Essar Cellular Ltd.- 2013-TIOL-566-CESTAT-MUM, Bayer Material Science Pvt. Ltd.- 2014-TIOL-1084-CESTAT-MUM to conclude that Business Auxiliary services provided by the appellant to their principal company located in Singapore is to be considered as export of services.
Observing that the Revenue representative had not brought to notice any decision which is contrary to the law declared in the above referred decisions, the third Member agreed with the findings of the Member (Technical) of the referral Bench.
Inasmuch as the services provided by the appellant are covered by the Export of Service Rules, 2005 and are not liable to service tax is the Majority view.
The Appeal was allowed.
Source: TIOL


Find enclosed Compilation of FAQ’s on GST for your ready reference. This is only for educational and guidance purposes and do not hold an...