I.  Today's News:   

1. Copy of Finance Act, 2012, as assented by President  (Click for detail)

2. CBDT Inst. 4 - In all returns (ITR-1 to ITR-6), where the difference between the TDS claim and matching TDS amount reported in AS-26 data does not exceed Rs. Five thousands, the TDS claim may be accepted without verification  (Click for detail)

3. Co. Law - ICAI'S Guidance Note on Maintenance of Cost Accounting Records  (Click for detail)

4. Co. Law Notification - Companies (Director Identification Number) Amendment Rules, 2012  (Click for detail)

5. Vodafone to opt for international arbitration against Indian tax authorities  (Click for detail)

II.  Useful Case laws:

1.  Munjal Showa Ltd. Vs. Deputy Commissioner of Income Tax, W.P.(C) 4753/2011, Date of Decision: 14/05/2012, High Court of Delhi

Issue:

Whether the AO has power to issue a notice u/s 148 for reopening of assessment u/s 147 on the basis of reason to believe that income has escaped from assessment at the time of original assessment due to a wrong claim of capital expenditure as revenue expenditure?

Held:

The assessee had filed and furnished all details and particulars relating to the royalty payment including agreements, calculation and the approval before the Ld. AO during assessment proceedings. There was no failure on the part of the assessee to furnish true and correct all material facts. The facts were available before and were within the knowledge of the AO. The new AO as per the reasons recorded on the basis of the same facts, has observed that royalty payment should have been disallowed as it was capital in nature. This is a question of legal inference or interpretation which has been drawn from the same material facts on record. Therefore, the case falls in the category of change of opinion as at the time of original preceding the AO examined and gone into the question of royalty. Even if there was any legal error or illegality the same cannot be rectified and be made the subject matter of reassessment proceedings u/s 147/148 of the Act. The re-assessment order is also quashed.

(Please click here for judgment)

2.  Roxar Maximum Reservoir Performance WLL Vs. Authority of Advance Rulings (Income tax), A.A.R. No. 977 of 2010, Date of Pronouncement: 07/05/2012, New Delhi

Issues:

1. Whether the amounts received/receivable by the applicant from ONGC under Contract or offshore supply of 36 manometer gauges is chargeable to tax in India under the provisions of Income-tax Act, 1961. And if taxable then at what rate and at what portion of income arising from offshore supply of 36 manometer gauges would be taxable in India.

2. Whether the amounts received/receivable for installation, erection and commissioning of 36 manometer Gauges is chargeable under Section 44BB?

The Authority of Advance Rulings has relied on the pronouncement of the Supreme Court in Vodafone International Holdings BV Netherlands vs. Union of India and another (345 ITR 1 (SC). In which it was held that “it is the task of the Revenue / Court to ascertain the legal nature of the transaction and while doing so, it has to look at the transaction as a whole and not adopt a dissecting approach”.  Therefore, a contract has to be read as a whole. In present case, the contract is clearly not one for sale of equipment. Nor is it one for mere erection of the equipment. It is a composite contract for supply and erection at sites within the territory of India. The AAR Held that:

1. All payments received by the applicant under the composite contract with ONGC are income chargeable to tax in India under the Income-tax Act. The contract entered into by the applicant is a composite contract and cannot be treated as an independent one for offshore supply of 36 manometer gauges and another one for erection of it. Further, part of the payment towards price of the manometer gauges cannot be considered divorced from the payments received for the performance of entire obligations under the contract.

2.  The services for supply, installation and commissioning of 36 manometer gauges are rendered in connection with the prospecting and/extraction of oil by ONGC, thus the amount is chargeable to tax u/s 44BB.

(Please click here for judgment)

Key of Success :

"Life is like a FLUTE……
It may have many holes and emptiness,
But if you work on it carefully,
It can play….. MAGICAL MELODIES"   

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"Voice of CA"