First Advance Pricing Agreement (APA) of India has been signed on 19.12.14

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes
PRESS RELEASE 19th December, 2014
On 19.12.2014, Central Board of Direct Taxes has signed a bilateral Advance Pricing Agreement (APA) with a Japanese Company. This is India’s first bilateral APA. The APA is for a period of five years. The APA has been finalized in a period of about one and a half years, which is shorter than time normally taken in finalizing APAs internationally.
The APA scheme has been introduced to bring about certainty and uniformity in transfer pricing matters of multi-national companies and reducing litigation. APAs will improve investment climate in the country. In the context of growing economic ties between Japan and India, especially after Hon’ble Prime Minister’s visit to Japan, this APA is expected to generate positive sentiments among Japanese investors in India.
(Rekha Shukla) Commissioner of Income Tax (Media & Technical Policy)  Official Spokesperson, CBDT

Article ID: 291 | Posted By: | Date: 2014-12-20

State Bank of Bikaner and Jaipur has been authorised by DVAT for collection of Tax

State Bank of Bikaner and Jaipur has been authorised by DVAT Department for collection of Tax   GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI DEPARTMENT OF TRADE & TAXES VYAPAR BHAWAN: I.P.ESTATE: NEW DELHI -110 002 No.F.7(400)/Policy/VAT/2011/PF/600-612
In exercise of the powers conferred under sub-rule (2) and (5) of Rule 31 of Delhi Value Added Tax Rules, 2005 (hereinafter referred to as ‘the Rules’) read with clause (b) of sub-rule (4) of Rule 2 of the Rules and Section 36 of Delhi Value Added Tax Act, 2004 (hereinafter referred to as ‘the Act’), I, Sanjeev Khirwar, Commissioner, Value Added Tax, do hereby notify State Bank of Bikaner & Jaipur located in the National Capital Territory of Delhi as ‘Appropriate Government Treasury’ for collection of tax, interest, penalty or any other amount due under the Act or Central Sales Tax Act, 1956 from the dealers registered or liable to be registered under the Act, casual traders, contractees (TAN holders) and any other person in e-payment mode only, in addition to the already notified banks.
2. The Authorisation of State Bank of Bikaner and Jaipur, in addition to the RBI’s regulations, shall further be subject to the conditions mentioned in notification No.F.7(400)/Policy/VAT/2014/1387-98 dated 28/03/2014.
3. This notification shall come into force with immediate effect.
(Sanjeev Khirwar) Commissioner, VAT
No.F.7(400)/Policy/VAT/2011/PF/600-612 Dated: 17-12-2014 

Article ID: 285 | Posted By: | Date: 2014-12-17

Have you also received Penalty Notice of Rs 50000 from DVAT for non-filing of DP1

Like some of our members, If you have also received penalty notice of Rs.50,000 from DVAT Department for non-filing of DP-1, then below is remedy available for you.

Last date for filing DP1 has been extended to 31-03-2015.
Whereas, it is mandatory for all registered dealers to inform the Commissioner about any change effected in the registration particulars.
2. Therefore, I, Sanjeev Khirwar, Commissioner, Value Added Tax, Government of National Capital Territory of Delhi, without prejudice to legal provisions under DVAT Act, 2004 and DVAT Rules, 2005, consider it necessary that the dealer profile of all the registered dealers should be updated.
Download full copy of Notification


Article ID: 283 | Posted By: | Date: 2014-12-17

In the absence of any evidence to prove that assessee has predetermined the sale price - Adjustment of Foreign Exchange Fluctuation Loss cannot be made while computing Arms Length Price

  M/s. NSK India Sales Company Private Limited, v. The Assistant Commissioner of Income-tax,   Held PER Dr.O.K.NARAYANAN, VICE-PRESIDENT, 2nd SEP 2014
Facts (in Brief) :

1) The assessee company (NSK) incorporated in July 2007, is engaged in the distribution and marketing of Bearings and other products. The assessee purchases bearings and other products from its AEs by way of imports and sells them in Indian market. The customers are unrelated to the assessee company.

2) For the impugned assessment year, the assessee company filed its return of income declaring a loss of  Rs. 1,09,38,208.

3) The assessee company characterized its business as that of Normal Risk. But the TPO held that the functional characterization adopted by the assessee company is without basis. The TPO characterized the business of the assessee as that of a Limited-Risk Distributor (LRD). In the matter of deciding the Profit Level Indicator (PLI), the TPO followed Berry Ratio. The assessee has accounted for a loss of Rs.2,45,12,653 in the nature of foreign exchange rate fluctuation loss between INR and Japanese Yen. The assessee company has claimed this foreign exchange loss as an item of adjustment inducing the financial result into an operating loss. But the TPO did not accept the said adjustment as claimed by the assessee company. 
Arguments by Assessee (in Brief) :
  1) The argument of the assessee was that the assessee fixes the sale and purchase price in advance and, therefore, the foreign exchange fluctuation loss has to be borne by the assessee. The DRP held that the contention of the assessee company is not supported by any documentary evidence. The DRP also held that there are no materials to support the contention of the assessee that price negotiations has taken place in advance. Further, the DRP held that when the assessee sells the AEs goods at the list price decided by the AEs, then the AEs must bear foreign exchange loss, as the prices are fixed in advance by the AEs. Against this, the contention of the assessee company was that selling price is not fixed by the AEs but fixed by the assessee company itself. The DRP held that for this proposition, the assessee could not produce any documentary evidence. 
ITAT Held (in Brief) :
Para 16 of the Order (inter-alia) read as under:

"The argument of the assessee regarding the advance pricing of sales is somewhat a proposition difficult to accept. The assessee is importing bearings and other items from its AEs and selling the same to the Indian customers. The purchase cost of the materials is automatically increased by the de-valuation of rupees against Japanese Yen. If that de-valuation is not absorbed by the AEs of the assessee company, the assessee company should adjust its selling price so as to absorb the devaluation loss. Even if that position is waived for a minute for the sake of argument or for the sake of extreme business circumstances, still the DRP has made it very clear that the assessee company has not produced any sort of evidence to show that the assessee had pre-determined the sale price. When advance fixation of sale price

Article ID: 282 | Posted By: | Date: 2014-12-16

CBDT- Special Investigation Team submitted its Second Report on Black Money to Supreme Court

Relevant Portions of the Second Report of the Special Investigation Team (SIT) on Black Money Released. On the Directions of SIT, CBDT Directs Various Assessing Officers to Finalize the Assessments for all Actionable Cases (427), whose names are appearing in the HSBC List Received by the Department  Placed below are the relevant portions of the Second Report of the Special Investigation Team (SIT) on Black Money which was recently submitted by the SIT to the Hon’ble Supreme Court:   I. In response to the directions issued by the SIT, CBDT has directed various Assessing Officers to finalize the assessments for all actionable cases (427), whose names are appearing in the HSBC list received by the Department.   As per the information received from France, there are in all 628 persons/entities (except in 2 cases where the same names have appeared twice). Out of these 628 persons/entities, amounts/balances are shown against 339 persons and no amounts/ balances are shown against 289 persons/entities. In respect of the latter category also, further investigations and assessments are being taken to logical end.   Out of the said 628 persons, 201 are either non–residents or non–traceable, leaving 427 persons’ cases as actionable cases.   The amount involved in these cases as per details available in the information received, is about Rs.4,479 croresapproximately ($ converted @ Rs.45). Out of these, Department has finalized assessment of 79 assessees (involving more than 300 assessments). An amount of Rs.2,926 crores has been brought to tax towards the undisclosed balances in the accounts relating to these persons. For the said amount, these assessees have been levied tax and interest at the appropriate rates. Penalty proceedings under Section 271 (1)(c) of the Income Tax Act, 1961 (I.T. Act) have been initiated in 46 cases. Such penalties have been levied in 3 cases so far. With regard to the other assessees, proceedings are pending.   Further, prosecutions have been initiated in 6 cases u/s. 276C (1) of the Income Tax (I.T.) Act for willful attempt to evade taxes and in 5 cases, proceedings have been initiated u/s. 276D of the I.T. Act on account of willful failure to furnish information in response to the notices issued by the Income Tax Department. Show Cause Notices for filing prosecution have been issued in 10 more cases and further action would be taken at the earliest.  In other cases, necessary action is being expedited and substantial progress is expected in coming months.    II. Apart from HSBC list, further actions taken by various agencies on the basis of directions given by SIT:-   1. Directorate of Revenue Intelligence:––   a) Details have been furnished in respect of 31 cases of iron ore export cases.   In 11 cases, the concerned parties have admitted the undervaluation and before issuance of show cause notices, paid Rs.116.73 crores. Further action would be taken, in accordance with law. In 10 cases, show cause notices have been issued. Preparation of show cause notice is in progress after completion of investigation in other cases.   b)In respect of other categories of trades, investigation is pending in 33 cases. In some cases, references have been made to Financial Intelligence Unit – India (FIU&n

Article ID: 280 | Posted By: TaxReply | Date: 2014-12-15

How to determine applicable TDS Rate on making Foreign Payments

TDS on foreign payments depends on two conditions. First, whether deductee provides a valid TRC or not?  Second, whether deductee holds a valid PAN in India or not? Below is the matrix showing applicable TDS rates depending on the availability of TRC & PAN.

CASE A  - TRC is available & PAN is also Available.
Grossing Up should be done @ DTAA Rate.
TDS should be deducted @ DTAA Rate. 

CASE B - TRC is not available & PAN is also not available.
Grossing Up should be done @ applicable IT Act Rate.
TDS should be deducted @ applicable IT Act Rate or 20%, whichever is higher.

CASE C - TRC is not available & PAN is available.
Grossing Up should be done @ applicable IT Act Rate.
TDS should be deducted @ applicable IT Act Rate.
CASE D - TRC is available & PAN is not available.
Grossing Up should be done @ DTAA Rate (Bosch Ltd. ITAT Bangalore).
TDS should be deducted @ applicable IT Act Rate or 20%, whichever is higher.
* IT Act Rates (as mentioned above) has to be increased by Surcharge & Education Cess.
* DTAA rates need not to be increased by Surcharge & Education Cess.   Requirement of TRC for claiming Relief under DTAA   1)    TRC became mandatory w.e.f. 01/04/12   2)    Format of TRC notified w.e.f. 17/09/12   3)    If TRC is not in specified format then a declaration in Form 10F is also mandatory along with the required documents w.e.f. 01/08/13.  

Article ID: 279 | Posted By: TaxReply | Date: 2014-12-14

What to do if Income Tax Department has rejected your TDS Claim

Have you ever received a demand notice from CPC - Income Tax Department despite of the fact that your all TDS has been deducted and deposited ?

Possible Reason - A common reason could be that you would have mentioned incorrect TAN of the deductor while filing your Income Tax Return. 

Steps for Correction -
Step 1) Login into Income Tax e-filing Portal using your PAN and Password.

Step 2) File a request for correction.

Step 3) Choose Mismatch in TDS option.

Step 4) Enter correct TAN of dedcutor, Name of Deductor , Income and TDS Amount.
(Make sure to enter your all TDS details including the one which was succesfully allowed by CPC Income Tax Department).  

If the details are successfully matched with Income Tax Data and it will positively be rectified within two weeks.  


Article ID: 277 | Posted By: Badal | Date: 2014-12-12

CBDT issued Master Circular on Salary for FY 2014-15

CIRCULAR NO : 17/2014 Dt.10.12.2014 F.No. 275/192/2014-IT(B) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes   SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2014-15 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

CBDT has issued Master Circular on Salary applicable for the Financial Year 2014-15. To download the copy of circular click here        

Article ID: 276 | Posted By: Badal | Date: 2014-12-12

ITR filling for a business assessee

I have a client who doesnot make books of accounts.He is a shopkeeper. His iTR is to be filled for the financial year ended 31.02.12 and 31.03.13. I asked him to make Financial Statements. He dosenot want to make these. His income is not more than Rs.180000/-. Now, my query is How should i disclose his income in ITR either under the head ' Income from Business and Profession" or "other source" or under both the heads partilally.His income under both the financial years is not exceeding the Tax slab.

Article ID: 274 | Posted By: sahil bhatia | Date: 2014-02-25