29 April 2016
No penalty on ‘Aishwarya Rai’ for TDS default if she relied on her CA’s advice  68taxmann.com 324 (Mumbai - Trib.)
a) Assessee (Aishwarya Rai Bachchan) made payment of US $ 77,500 to a non-resident for development of website without deducting TDS under Section 195.
b) The Assessing Officer (AO) observed that payment made for development of website would fall within the meaning of 'fees for technical services' as per Explanation 2 to Section 9(1)(vii). Therefore, payment so made was taxable in India in hands of non-resident and, hence, assessee had made default for not deducting TDS while making such payment. Consequently, the AO imposed penalty under section 271C for not deducting the TDS.
c) Assessee submitted that she had not deducted TDS by relying upon advice of her CA. Therefore, penalty shouldn’t be imposed as there was no mala fide intension on her part.
d) CIT(A) confirmed the order of AO. Aggrieved by the order of CIT(A), assessee filed the instant appeal before the tribunal.
The tribunal held in favour of assessee as under-
1) Section 273B provides that no penalty under section 271C should be imposed if assessee proves that there was a reasonable cause for failure to deduct TDS.
2) It is a well-accepted fact that every citizen of the country is neither fully aware of nor is expected to know the technicalities of the Income Tax Act. Therefore, for discharging their statutory duties and obligations, they take assistance and advice of professionals who are well acquainted with the statutory provisions.
3) In the instant case, assessee's CA had issued a certificate opining that tax was not required to be deducted at source on said remittance. Therefore, assessee under a bonafide belief didn’t deduct TDS while making such remittance.
4) Therefore, failure on the part of the assessee to deduct tax at source was due to a reasonable cause. Hence, no penalty under Section 271C should be imposed-
 68taxmann.com 324 (Mumbai - Trib.)
26 April 2016
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
SERVICE TAX WING
1/2016-Service Tax, Dated: April 25, 2016
In exercise of the powers conferred by sub-rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st October 2015 to 31st March 2016, from 25th April 2016 to 29th April 2016.
The circumstances of a special nature, which have given rise to this extension of time, are as follows:
"Difficulties have been faced by assessees in accessing the ACES application on 25th April 2016"
Director (Service Tax)
Central Board of Excise and Customs
25 April 2016
24 April 2016
The impasse over levying service tax on Senior Advocates seems to have been resolved. According to our sources, Finance Minister Arun Jaitley has restored the "reverse charge" mechanism when it comes to service tax on senior advocates.
Speaking to Bar & Bench, SCBA President Dushyant Dave said,
"I believe the Finance Minister has restored the "reverse charge" position. And if the sources are correct, I would like to personally thank the Finance Minister Arun Jaitley on behalf of the Bar and the fraternity of Senior Advocates for this clarification."
With this clarification from the Finance Minister, Senior Advocates like other advocates and law firms would now be covered under reverse charge mechanism i.e. the clients would deposit the tax with government directly.
In this year's Budget, Finance Minister Jaitley had decided to tax the services offered by senior advocates to an advocate or a law firm on a forward charge basis. This meant that the senior counsel would have to collect the tax (at the rate of 14 per cent) and deposit this with the authorities.
23 April 2016
Institute of Chartered accountant has published a book on excise duty on Jewellery industry. Which answers 105 questions on excise law. It also includes format of records and documents to be maintained. It can be downloaded from following link
19 April 2016
SECTION 398 OF THE COMPANIES ACT, 2013 - PROVISIONS RELATING TO FILING OF APPLICATIONS, DOCUMENTS, INSPECTION, ETC., IN ELECTRONIC FORM - RELAXATION OF ADDITIONAL FEES AND EXTENSION OF LAST DATE OF FILING OF VARIOUS E-FORMS UNDER COMPANIES ACT
GENERAL CIRCULAR NO.3/2016 [F.NO.01/34/2013 CL-V], DATED 12-4-2016
This Ministry has launched V2R2 on 28th March, 2016, downtime was given to Infosys from 25th March, 2016 to 27th March, 2016. Since the launch of the system, a number of stakeholders have faced issues and representations have been received from stakeholders to resolve the issues including, for allowing waiver of additional fee till the new system stabilizes.
2. In view of the above, it has been decided to relax the additional fee payable on e-forms which are due for filing by companies between 25th March, 2016 to 30th April, 2016 as one time waiver of additional fee and it is also clarified to stakeholders that if such due e-forms are filed after 10-5-2016, no such relaxation shall be allowed.
3. This issues with the approval of the Competent Authority.
Deductions allowed for tax paid in foreign nations
To improve ease of doing business and reduce litigation, the Central Board of Direct Taxes (CBDT) on Monday issued draft rules that would allow resident tax payers to claim deduction or credit for taxes paid in foreign jurisdictions.
The draft rules have proposed that the foreign tax credit would applicable on income tax, surcharge and cesses as well as against tax payable under minimum alternate tax.
But, the credit will not be provided for other sums such as interest, fee or penalty or taxes under dispute.
The rules, once finalised will allow for foreign tax credit with all countries with which India has a double tax avoidance agreement as well as tax paid by Indian residents in other specified countries.
At present, such a facility is not available in the Income Tax Act, 1961 and the introduction of such rules was one of the key recommendations of the Tax Administration Reform Commission.
"A committee was set up by CBDT to suggest the methodology for grant of foreign tax credit after examining the various issues related to it. After due consideration of the issues raised by various stakeholders, the Committee submitted its report," said the CBDT, adding that all comments should be submitted by May 2.
The draft rules have also proposed that the credit will be available to the resident assessee in the year in which the income has been taxed or assessed in India.
Further, the credit will be calculated separately for each source of income and from each country. The amount of credit available will be lower of the tax payable under the Income Tax Act on such income and the foreign tax already paid and will be calculated based on the conversion rate on the day the foreign tax was paid.
Taxpayers will also have to furnish documentary evidence for availing the credit including a certificate for the tax department of the foreign company, acknowledgement of online tax payment or bank counter foil and a declaration that the amount is not under any dispute.
While welcoming the draft rules, analysts, however, said that they should have included other sums such as interest and penalty paid in a foreign country.
"They do not make any provisions for carry forward of excess foreign tax paid, neither do they address the issue of branch profits tax nor that of underlying tax credits for dividend income," said Rahul Jain, Partner, Nangia & Co.
To simplify the system, experts also suggested that taxpayers should be permitted to accumulate foreign tax credit from various countries and claim it together rather than individually for each source and country.
"Two points are noteworthy, namely, cess and surcharges in addition to tax will also be creditable and it will be available against MAT liability too," said Sudhir Kapadia, National Tax Leader, EY India.
13 April 2016
Notified IND-AS Schedule III - Emphasis on Statement of Changes in Equity
05 April 2016
1. What are the 'Panama Papers'?
The 'Panama Papers' are a set of confidential documents leaked from one of the biggest law firms of Panama - 'Mossack Fonseca'. The Panama Papers provide information about thousands of offshore entities, identities of their shareholders and directors. It listed various world leaders, public officials, billionaires, celebrities, sports stars and politicians.
2. How much data has been leaked and by whom?
a) The leaked data consists of 11.5 Million Documents in around 2,600 GB taken from the Mossack Fonseca's internal database by one of its employees.
b) These documents were obtained by Sueddeutsche Zeitung, a daily newspaper headquartered in Munich, Germany. Sueddeutsche shared the Panama Papers with the Washington-based International Consortium of Investigative Journalists (ICIJ) and other news outlets, including the BBC, the Guardian and the Indian Express.
c) Sueddeutsche mentioned that an employee at the law firm had leaked the data, telling the newspaper that he had risked his life in doing so.
3. What does the Panama Papers reveal?
a) The Panama Papers contain information on 2.15 lakhs offshore entities connected to people from more than 200 countries.
b) The leaked data covers nearly 40 years period from 1977 through the end of 2015.
c) It reveals the database of individuals who have set-up offshore entities through the Panama law firm.
d) These individuals are either holding direct ownership or indirect ownership (beneficial ownership) in the offshore entities.
e) Some of the Indians have also floated offshore entities at a time when foreign exchanges laws of India did not allow them to do so.
4. What is the authenticity of documents leaked?
Ramon Fonseca, one of the co-founder of the Mossack Fonseca, confirmed the authenticity of the papers being used in articles published by more than 100 news organizations around the world. He told to one of the Panama's news channel that the documents are real and were obtained illegally through a hacking method.
5. Who is 'Mossack Fonseca' and what is its role in this entire controversy?
a) Mossack Fonseca & Co. is a law firm and corporate service provider based in Panama with more than 40 offices worldwide.
b) It specializes in commercial law, trust services, investor advisory and international structures.
c) It provides services like incorporating companies in offshore jurisdictions, wealth management, private banking, accounting services, etc.
d) This law firm is one of the seven firms that collectively represent more than half of the companies incorporated in Panama.
e) It also provides assistance in transferring funds, buying property, setting-up trusts or signing agreements with entities.
f) Mossack Fonseca plays a crucial role in incorporating entities in tax havens. It had incorporated 14,658 active companies in Panama till August, 2013 out of which 4,646 companies were incorporated without providing any information about their shareholders.
6. How entities incorporated in Panama provide secrecy about the beneficial owners?
a) Panama offers the most favorable and most flexible company incorporation laws available in the world. Private Interest Foundations are also available, and are one of the most widely used estate planning structures in the world today.
b) Panama is the registered domicile for over 400,000 corporations & foundations, making it one of the most popular jurisdictions in the world to incorporate.
c) Panama does not impose any reporting requirements for non-resident Panamanian corporations.
d) Panama does not allow "piercing the corporate veil".
e) Panamanian corporations share certificates can be issued in Nominative or Bearer form (anonymous form of ownership), with or without par value.
f) Panamanian Companies can have directors, officers and shareholders of any nationality and resident of any country.
g) The offshore entity in Panama need not appoint natural persons as directors or have individuals as shareholders.
h) Neither the directors nor the officers of Panamanian corporations need to be shareholders. Meetings of directors, officers, and shareholders may be held in any country and accounting books may be kept in any country.
i) It is not necessary for the interested parties to be present in Panama for the purpose of establishing a corporation. Corporations conducting business outside of Panama do not require a commercial license for offshore business activities.
j) Registered Panamanian Agents offers its own executives to serve as shareholders or directors. Sometimes an intermediary law firm or a bank acts as a director or a nominee shareholder. So the real beneficiary remains hidden.
k) The registered agent provides an official overseas address, a mail box, etc., none of which traces back the entity to the beneficial owner.
7. What are the key advantages of incorporating a Panamanian Company?
a) The incorporation process is fast and can be achieved in 3 days.
b) The identity of the shareholders is not publicly available.
c) Nominee and bearer shares are allowed.
d) There are no currency restrictions although the US dollar is regularly used.
e) The transfer of shares can be done freely, which facilitates the transmission of assets in a confidential manner.
f) The shareholders, directors and officers can be of any nationality and residents of any country.
g) Meetings can be held in Panama or in any jurisdiction, subject to tax advice.
h) Accounts do not need to be held in Panama.
8. What are Panama foreign exchange rules?
a) Panama's circulating currency is the US Dollar, and Panama has no currency exchange controls or currency restrictions, so funds can flow in and out of the country freely.
b) Panama uses the U.S. dollar as its legal currency, instilling tremendous fiscal and monetary discipline while keeping inflation very low - under 2 percent for the last 40 years.
c) Panama has no restrictions on monetary remittances abroad, including dividends, interests, branch profits and royalties. No restrictions on funds flowing in or out of the country.
d) A dollar economy insulates Panama from global economic shocks. During the Asian monetary crisis of 1998, Panama became one of the healthiest economies in Latin America.
9. How secure is banking infrastructure of Panama?
a) Panama is one of the most secure offshore financial center - where privacy and confidentiality is vigorously protected by constitutional law.
b) Panama offers the best bank secrecy and corporate book secrecy laws in the world.
c) Panama has no provision for "piercing the corporate veil".
d) Revealing banking information to third parties is a crime, punishable by prison.
e) Panama has no mutual legal assistance treaties (MLAT's) for sharing of banking information with any other nation and does not recognize court rulings from other countries.
f) Panama City is home to the second largest international banking center in the world next to Switzerland. Panama has the most modern and successful international banking center in Latin America, with more than 150 banks from 35 different countries.
g) Approximately 150 international banks are located in Panama. Total assets in Panamanian banks are over US$150 billion.
h) Some of the banks present in Panama's banking center are: Citibank, HSBC, Dresdner Bank, Bank of Tokyo, Bank of Boston, Banco Nacional de Paris, International Commercial Bank of China, Societe Generale, Banque Sudameris, BBVA, Banco Uno, Banco General, PriBanco, Banco del Istmo, Global Bank, MultiCredit Bank, PanaBank, ABN Amro, Banco Aliado, Banco Continental, BancoLat, BIPAN, Lloyds TLB Bank, Bank of Nova Scotia BIPAN, Bank of Nova Scotia, and much more.
10. Why an offshore company is incorporated in Panama or other tax havens?
a) Shell Companies are non-operational companies. These are legal entities having no independent operations, significant assets or employees.
b) It is not time consuming or expensive to establish anonymous shell corporation. Agents charge fees of $800 to $6,000 as upfront cost and an annual charge for formation of companies and other additional services.
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