Characteristics Of "Consumables" Does Not Attach "Welding Electrodes", MODVAT Credit Can't Be Recovered: CESTAT

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that characteristics of "consumables" do not attach to "welding electrodes", and, therefore, the recovery of the Modified Value Added Tax (MODVAT) credit was incorrect.The bench of C.J. Mathew has observed that MODVAT credit is available on the procurement of goods that are 'inputs' with 'capital goods' being entitled to the extent of conformity with the explanation of that expression in rule 57Q of the...

Delhi High Court Allows Depreciation Claim To Daikin For Goodwill On Exclusive Business Rights

The Delhi High Court while ruling in favour of the Daikin Shri Ram Aircon Pvt. Ltd. has held that the business rights acquired for valuable consideration constitute an intangible asset within the meaning of Section 32(1)(ii) of the Income Tax Act and depreciation is allowable.The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the department has not disputed the exclusive nature of rights, payment of consideration and the same being of an enduring...

Tax Cases Weekly Round-Up: 23 October To 29 October, 2022

Delhi High Court Dividends Received By IFFCO From OMIFCO Oman Can't Be Disallowed Under Income Tax Act: Delhi High Court Case Title: PCIT Versus IFFCO LTD The Delhi High Court has held that the dividends received by Indian Farmers Fertiliser Cooperative (IFFCO) from Oman India Fertiliser Company S.A.O.C (OMIFCO) Oman cannot be disallowed under the Income Tax Act. Bombay High Court Subleasing Of Containers; Deemed Sale, Service Tax Not Applicable; Bombay High Court Case...

ESOP Cross Charges Paid To Overseas Ultimate Holding Company Is Allowable Expenditure: ITAT Allows Deduction To HP

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), while ruling in favour of the HP, held that employee stock option plan (ESOP) cross charges paid to overseas ultimate holding companies are an allowable expenditure.The two-member bench headed by N.V. Vasudevan (Vice President) and Chandra Poojari (Accountant Member) has observed that the ESOP expenditure incurred is a compensation/incentive to the employee and has a direct nexus with his/her employment. The compensation to the...

Cash Deposits Made Out Of Withdrawals For The Purpose Of Daughter's Marriage: ITAT Delete Addition

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee had explained that deposits were made out of cash withdrawals made earlier for the purpose of her daughter's marriage.The bench of Saktijit Dey (Judicial Member) has observed that the explanation furnished by the assessee was believable when the Assessing Officer has not brought on record any contrary material to demonstrate that the assessee must have incurred more expenditure on her daughter's marriage than...

CBIC Instructs Regarding The Acceptance Of E-CoO Issued Under India-UAE CEPA

The Central Board of Indirect Taxes and Customs (CBIC) has issued instructions on acceptance of an Electronic Certificate of Origin (e-CoO) issued under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).The Board has received representations regarding the India-UAE CEPA, stating that importers are having difficulty obtaining preferential tariff treatment based on e-CoO issued by the UAE Issuing Authority, despite the fact that the agreement expressly provides for it.It has been...

Denying The Customs Duty Exemption Despite The Valid Country Of Origin Certificate Is Not Sustainable: CESTAT

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that denying the benefit of customs duty exemption despite the valid country of origin certificate is not sustainable.The bench of Rachna Gupta (Judicial Member) has noted that it will hinder the free flow of trade between agreeing nations if the exemption requested under the applicable rules is denied on one or the other pretext, especially if it is based only on assumptions and presumptions.The...

Distribution Fees Paid By Google India To Google Ireland, For Distribution Of AdWords Programme In India, Not 'Royalty' : ITAT

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the distribution fees paid by Google India to Google Ireland under a Distribution Agreement, under which Google India was appointed as a distributor of AdWords programme to advertisers in India, is not in the nature of 'Royalty' under the India-Ireland DTAA. The Bench of George George K (Judicial Member) and Padmavathy S (Accountant Member) held that unless the non-resident, who is engaged in the sale of...

CESTAT Directs CBIC To Issue Guideline In Respect Of IBC Proceedings Initiated Against Assessee Before CESTAT

The Central Board of Indirect Taxes and Customs (CBIC) has been ordered by the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to consider issuing guidelines or procedures for handling cases before the CESTAT in which an IBC proceeding has been brought against the assessee's company.The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the department has no proper guidelines as to what stand is to be taken in a case...

ITAT Deletes Fees Related To The Period Of Tax Deduction Prior To June 1, 2015

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the levy of late fees of INR 40,000 related to the period of the tax deduction prior to 01.06.2015.The two-member bench of Rahul Chaudhary (Judicial Member) and M. Balaganesh (Accountant Member) has relied on the decision of Karnataka in the case of Fatehraj Singhvi Vs. Union of India in which it was held that the notice under Section 200A of the Income Tax Act for computing late fee under Section 234E of the Income Tax...

Any sum paid to an employee as a bonus or commission to be allowed as a deduction: ITAT Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that any sum paid to an employee as a bonus or commission for services rendered has to be allowed as a deduction.The bench of Saktijit Dey has observed that the reasonableness of the payment or the adequacy of services rendered by the employee is not relevant factors in deciding the allowability of a deduction.The disabling provision of section 36(1)(ii) provides that "if the sum so paid is in lieu of profit or dividend," it...

CBDT extends due date for filing of TDS statement in Form 26Q for the second quarter of Financial Year 2022-23

The Central Board of Direct Taxes (CBDT) has extended the due date for the filing of TDS statements on Form 26Q for the second quarter of the Financial Year 2022–23."Considering the difficulties in the filing of TDS statement in the revised and updated Form 26Q, the Central Board of Direct Taxes (CBDT) has extended the due date of filing of Form 26Q for the second quarter of Financial Year 2022–23 from October 31st, 2022 to November 30th, 2022," the CBDT said.The payee deducts TDS when a...