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Archive: 19 May 2010

Posts in 19 May 2010

AAR ruling is binding on a taxpayer and the Tax Authority in relation to transaction in respect of which the AAR ruling was sought: Bombay HC

May 19, 2010 1808 Views 0 comment Print

Recently Bombay high court in the case of The Prudential Assurance Company Ltd. (Taxpayer) [AIT-2010-170-HC] on the binding nature of a ruling pronounced by the Authority for Advance Rulings (AAR), reiterated the relevant provisions of the Indian Tax Laws (ITL) and held that an AAR ruling is binding on a taxpayer and the Tax Authority, in relation to the transaction in respect of which the AAR ruling was sought.

Delhi High Court specified rules for claiming weighted deduction for in-house Research and Development

May 19, 2010 1585 Views 0 comment Print

In a recent ruling Delhi High Court in the case of Apollo Tyres Ltd. [2010-TIOL-279-HC-DEL-IT] considered the issue whether the Taxpayer, having an in-house R&D facility ‘recognized’ by the Department of Scientific and Industrial Research (DSIR), would be eligible for weighted deduction from a date prior to making application to DSIR for approval under Section 35(2AB)(Section) of the Indian Tax Law (ITL).

Credit entry in individual debtor’s account not necessary for bad debt write off deduction

May 19, 2010 1261 Views 0 comment Print

Recently Supreme Court in the case of Vijaya Bank (Taxpayer) [2010-TIOL-31-SC-IT] on the issue of whether a credit entry in individual debtor’s account is a prerequisite for allowing the amount as a deduction for write off as bad debts in terms of Section 36(1)(vii) (Section) of the Indian Tax Law (ITL). The Taxpayer had reduced the amount debited to the Profit and Loss Account (P&L) from the Loans and Advances/Debtors Account (Debtors A/c) on the assets side of the Balance Sheet.

Classification of rice parboiling machinery-reg

May 19, 2010 2467 Views 0 comment Print

It has been brought to the notice of the Board that classification of Rice parboiling machinery is being disputed in certain jurisdictions. Two tariff headings under consideration for its classification are 8419 or 8437. It has been represented by the Rice Mill Machinery Manufacturers Association that the practice so far followed by the department was not to charge excise duty for many years but suddenly it has been sought to charge duty on these machines by proposing classification under heading 8419. The matter has been examined by the Board.

Making incorrect claim does not amount to furnishing inaccurate particulars

May 19, 2010 1170 Views 0 comment Print

Recently Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (Taxpayer), [2010-TIOL-21-SC-IT] held that merely making a claim in the return of income which is not accepted by the Tax Authority or which is not sustainable under the ITL, in itself, does not amount to furnishing inaccurate particulars by the Taxpayer and, hence, is not liable to penalty.

Clarification regarding inclusion of cost of return fare of vehicles in assessable value

May 19, 2010 689 Views 0 comment Print

The Tribunal has in case of DCW Ltd. v. CCE [2007 (217) ELT 541 (Mad.)] held that “ where onward freight was not includible in the assessable value of the excisable goods, there was no question of return freight being included in the assessable value, whether or not the return freight was mentioned in the relevant invoices. The principle stated by the Tribunal in the cited decision is squarely applicable in respect of such return freight also”.

AAR rules no capital gains on Part IX conversion of firm to company

May 19, 2010 2526 Views 0 comment Print

This Tax Alert summarizes a recent ruling of the Authority for Advance Rulings (AAR) [A.A.R. No. 797 of 2009] in the case of M/s Umicore Finance Luxembourg (Applicant). There was a sale of shares of a company by its shareholders which had received such shares on conversion of a firm into the company, under the provisions of Part IX of the Indian Company Law (ICL).

Duration test’ for determining existence of ‘Construction PE’ need to be applied independently for each contract executed

May 19, 2010 807 Views 0 comment Print

Recently Mumbai Income Tax Appellate Tribunal in the case of Valentine Maritime Mauritius Ltd (Taxpayer), [2010-TIOL-195-ITAT-MUM] held that the number of days relating to each of the contracts cannot be aggregated to determine the ‘duration test’, as the activities carried out therein are not inextricably interconnected or interdependent and do not form a coherent whole in conjunction with each other.

India, US settled dispute over taxing profits of captive IT services units

May 19, 2010 618 Views 0 comment Print

India has settled a dispute over taxing profits of captive IT services units and research arms of US firms, bolstering New Delhi’s position as a preferred destination of such investments. The negotiated settlement between the tax authorities of the countries allows India to tax 17.5% of the profits earned by Indian subsidiaries of the US companies in 2004-05. India had sought to tax 25-30% of the profits.

SEBI panel to discuss select mutual fund products on May 31

May 19, 2010 294 Views 0 comment Print

A committee of market regulator SEBI will consider the issue of restricting mutual funds from selling an equity product that involves betting on future prices. The SEBI Mutual Fund Advisory Committee is concerned that this is not mutual funds’ core activity and may take a decision on May 31.

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