Finance Budget 2015 Documets

Finance Budget 2015 has been presented by Finance Minister, Shri Arun Jaitley on 28-Feb-2015.

Below are the documents available for download.

1) Budget Speech by Finance Minister

2) Finance Bill, 2015 

3) Memorandum explaining the Finance Bill, 2015

4) Key Highlights of Budget 2015

5) Budget analysis by ICAI


Article ID: 330 | Posted By: | Date: 2015-03-03

Budget 2015 change in TDS Rate on Royalty / Fees for Technical Services and section 195

Budget 2015 change in TDS Rate on Royalty / Fees for Technical Services and section 195 Amendment in section 115A -
TDS rate u/s 115A has been proposed to be reduced from 25% to 10%. Amendment in section 195 -
It is further proposed to amend the provisions of section 195 of the Act to provide that the person responsible for paying any sum, whether chargeable to tax or not, to a non-resident, not being a company, or to a foreign company, shall be required to furnish the information of the prescribed sum in such form and manner as may be prescribed. In case of non-furnishing of information or furnishing of incorrect information under sub-section (6) of section 195(6) of the Act, a penalty of Rs. 1,00,000 shall be levied. Below is the summary for your understanding.
TDS rate 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. TDS RATE ON FOREIGN PAYMENTS CASE Whether TRC is available? Whether PAN is available? Treatment Possible Challenges CASE A Yes Yes Grossing Up should be done @ DTAA Rate.
TDS should be deducted @ DTAA Rate. NA CASE B No No Grossing Up should be done @ applicable IT Act Rate.
TDS should be deducted @ applicable IT Act Rate or 20%, whichever is higher. Foreign Income Tax Authority may decline to give TDS credit in excess of rate prescribed in DTAA. CASE C No Yes Grossing Up should be done @ applicable IT Act Rate.
TDS should be deducted @ applicable IT Act Rate. Foreign Income Tax Authority may decline to give TDS credit in excess of rate prescribed in DTAA. CASE D Yes No Grossing Up should be done @ DTAA Rate (Bosch Ltd. ITAT Bangalore).
TDS should be deducted @ applicable IT Act Rate or 20%, whichever is higher. Foreign Income Tax Authority may decline to give TDS credit in excess of rate prescribed in DTAA.           Note 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.             &nbs

Article ID: 329 | Posted By: | Date: 2015-03-03

SC Held : Fees paid to Non Resident company to prepare scheme for raising the finance is taxable under FTS



GVK Industries Ltd.
Income Tax Officer
Facts & Summary -
1) GVK Industries Ltd. entered into an agreement with ABB Projects & Trade Finance International Ltd.  (Non Resident Company incorporated in Zurich, Switzerland) to prepare a scheme for raising the required finance and tie up the required finance. 
2) For providing these services, the NRC was to be paid, what is termed as, "SUCESS FEE" at the rate of 0.75% of the total debt financing.
  3) The NRC rendered professional services from Zurich by correspondence as to how to execute the documents for sanction of loan by the financial institutions within and outside the country. With advice of NRC the appellant-company approached the Indian Financial Institutions with the Industrial Development Bank of India (IDBI) acting as the Lead Financier for its Rupee loan requirement and for a part of its foreign currency loan requirement it approached International Finance Corporation (IFC), Washington DC, USA. After successful rendering of services the NRC sent invoice to the appellant-company for payment of success fee amount i.e., US $.17,15,476.16 (Rs.5.4 Crores).   4) Appellant-company approached the concerned income tax officer, the first respondent herein, for issuing a ‘No Objection Certificate’ to remit the said sum duly pointing out that the NRC had no place of business in India; that all the services rendered by it were from outside India; and that no part of success fee could be said to arise or accrue or deemed to arise or accrue in India attracting the liability under the Income-tax Act, 1961 (for brevity, ‘the Act’) by the NRC. It was also stated as the NRC had no business connection Section 9(1)(i) is not attracted and further as NRC had rendered no technical services Section 9(1)(vii) is also no attracted. 
5) The first respondent scanning the application filed by the company refused to issue ‘No Objection Certificate’ by his order dated September 27, 1994. 
Held by Supreme Court -
As the factual matrix in the case at hand, would exposit the NRC had acted as a consultant. It had the skill, acumen and knowledge in the specialized field i.e. preparation of a scheme for required finances and to tie-up required loans. The nature of activities undertaken by the NRC has earlier been referred to by us. The nature of service referred by the NRC, can be said with certainty would come within the ambit and sweep of the term ‘consultancy service’ and, therefore, it has been rightly held that the tax at source should have been deducted as the amount paid as fee could be taxable under the head ‘fee for technical service’. Once the tax is payable paid the grant of ‘No Objection Certificate’ was not legally permissible. Ergo, the judgment and order passed by the High Court are absolutely impregnable.

To download full judgement click here   

Article ID: 327 | Posted By: | Date: 2015-02-27

Key Expectations from the Budget 2015-16

Direct-taxes 1. Tax Incentives to the manufacturing sector The Modi Government seeks to boost Indian manufacturing with a "Make in India" campaign. So, one can expect tax incentives for the manufacturing sector in the forthcoming Union Budget. The tax incentives are more likely to be by way of investment-linked incentives rather than profit-linked incentives. Therefore, amendment may be made in the following sections of the Income-tax Act to boost manufacturing sector: (a)  Section 32AC (Investment Allowance): The Finance (No. 2) Act, 2014 amended section 32AC to allow investment allowance of 15% to manufacturing companies who have made investment in new plant and machinery in excess of Rs. 25 Crores during previous year. The threshold of Rs. 25 Crore is pretty high for micro and small enterprises. So, one can expect the threshold limit of investment to be lowered even further to say Rs. 5 crores so that micro and small enterprises would be able to avail the benefits under section 32AC. (b)  Section 32(1)(iia) (Additional depreciation): On similar lines of section 32AC, Section 32(1)(iia) provides additional depreciation at the rate of 20% on new plant and machinery acquired and installed by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation or generation and distribution of power. It is quite possible that to incentivize investments and simplify matters, additional depreciation of 20% may be scrapped and merged in investment allowance and total investment allowance of 35% may be allowed. Read More 2. Need clarity on taxability of capital gains in development agreements In development agreement ('DA'), the land owner hands over the vacant possession of the land to the developers and also assigns the development rights to the developers. In return of giving up the land, the land owner receives an agreed share in the developed property. The taxability of transactions resulting from DA has been contentious issue since a long time. A few of those issues are mentioned as under: (a)  Year of taxability of capital gains, i.e., year of entering into DA or the year of allowing of actual possession or the year of receipt of developed property; (b)  Non claiming of deductions under section 54EC or section 54 in absence of receipt of money where taxability is fixed in the year of entering DA; (c)  Consideration for transfer of capital asset i.e. value of land transferred or value of developed property received. The Budget, 2015 should come up with clear provisions regarding year of taxability of capital gains arising from transactions resulting from DA along with a proper computation mechanism. The difficulty faced in claiming exemption under sections 54 and 54F of the Act should also be kept in mind while making such provisions. Read More 3. Electronic Maintenance of books of account Section 128 of the Companies Act, 2013 allows companies to keep books of account and other relevant papers in electronic format. In contrast, Section 2(12A) of the Act requires maintenance of books of account in written format or print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device. Thus, in current scenario, when Government of India is taking holistic approach for e-Governance plans, it is recommended that the Income-tax Act should permit electronic maintenance of boo

Article ID: 326 | Posted By: | Date: 2015-02-27

Tribunal couldn't restore appeal when assessee didn't pray for extension of pre-deposit time before HC and SC

Where High Court/Supreme Court has confirmed pre-deposit order of Tribunal and there was no prayer before High Court/Supreme Court seeking extension of time to make pre-deposit, Tribunal cannot restore appeal even after belated compliance with pre-deposit order. a) On assessee's stay application, Tribunal directed pre-deposit in part. b) Assessee filed appeal thereagainst before High Court, which was dismissed and a special leave petition before Supreme Court, which was also dismissed. c) After the dismissal of SLP, assessee made pre-deposit and applied for restoration of appeal before Tribunal. d) Tribunal held that since its order had merged with order of High Court/Supreme Court, it did not have power to restore appeal. e) Assessee challenged Tribunal's decision before High Court. High Court held in favour of revenue as under: 1) Once a substantive appeal has been filed before the High Court against an order of the Tribunal on the application for waiver of pre-deposit, the order of the Tribunal, in such a case, would merge with the order of the High Court. 2) No prayer was made before the High Court which dismissed the appeal for extension of time for pre-deposit or for restoration of the appeal. No such prayer was also made before the Supreme Court when the special leave petition was dismissed. In that view of the matter, the Tribunal was not in error in dismissing the miscellaneous application – Kisaan Gramodyog Sansthan v. Commissioner of Central Excise, Kanpur (2015) 54 155 (Allahabad)

Source - Taxmann

Article ID: 325 | Posted By: | Date: 2015-02-25

Employees writ dismissed to send directions to AO as he can claim the refund of excess tax deducted and not seriously aggrieved by it

Summary - Employee's writ petition dismissed for seeking a direction to be sent to Respondents to assess him for tax only after deducting monthly installments recovered from his salary towards housing loan repayment. Held that, if any amount has been deducted in excess from the payments effected to the petitioner, the petitioner is not seriously aggrieved because he would get credit of the same in his assessment under the Income Tax Act.

The petitioner is an assessee under the Income Tax Act, 1961. He is also an employee of the Travancore Cochin Chemicals Limited. It is the case of the petitioner that he had availed a loan from the Union Bank of India in an amount of Rs.5 lakhs in the year 2002. As per the terms of the loan agreement, he was obliged to effect repayment of Rs.4,400/- every month for a period of 20 years. It is his case that while, initially, his employer, namely, the Travancore Cochin Chemicals Limited was taking into consideration the payments made by him every month towards repayment of the loan amount, while deducting tax at source from the payments made to him, from 2006 onwards the said employer began to deduct tax at source on the entire amount paid to him by way of salary. This was pursuant to an instruction received by the employer, that the petitioner was not entitled to a deduction in respect of the amounts paid by him by way of monthly repayments since the house was in the joint names of the petitioner and his wife, and the facility for deduction of the repayment amounts from the taxable income was available only if the house constructed using the loan amount was in the name of the petitioner alone. It was aggrieved by the action of the employer, in deducting higher amounts at source from the payments made to the petitioner, that he approached this Court through the present writ petition seeking inter alia a direction to the respondents to assess the petitioner for income tax only after deducting the monthly instalments recovered from the salary of the petitioner towards housing loan repayment.
2. A statement has been filed on behalf of the 1st respondent wherein it is pointed out that the deduction of tax at source in a lower amount can be permitted only if the petitioner is entitled to the benefit of exemption under Section 80C (2) (xviii) of the Income Tax Act. In the case of the petitioner, it is contended, that he was not entitled to the benefit of deduction under Section 80C (2) (xviii) and it was under those circumstances that the employer was obliged to deduct tax on the entire payments effected to the petitioner by way of salary.   3. I have heard Sri.B.Ramachandran, the learned counsel appearing on behalf of the petitioner as also Sri.Jose Joseph, the learned Standing counsel appearing on behalf of the Income Tax Department.
4. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I note that this is a case where the employer of the petitioner was obliged, in terms of the Income Tax Act, to deduct tax at source on payments effected to the petitioner by way

Article ID: 324 | Posted By: | Date: 2015-02-24

Area-based exemption from basic excise duty doesn't extend to EC, SHEC and National Calamity Contingent Duty

An area-based exemption from basic excise duty or special excise duty leviable under Central Excise Tariff Act, 1985 does not extend to education cesses and National Calamity Contingent Duty leviable under various Finance Acts. a) Assessee, a unit in specified area at Uttarakhand, was eligible for area-based exemption. However, department argued that in absence of reference to National Calamity Contingent Duty (NCCD) and Education Cesses (EC/SHEC) in exemption Notification No. 50/2003-CE, said duty was payable by assessee. b) Assessee argued that said duty should be treated as exempted in view of Industrial Policy envisaging 100 per cent outright exemption from excise duty. The High Court held in favour of revenue as under: 1) Main submission of learned Senior Advocate for the petitioner is on the concept of liberal interpretation. It is vehemently contended by him that implementing notification has to be interpreted liberally and general principle of strict interpretation of an exemption notification in taxation, is not applicable. 2) In addition, he submitted that in interpretation of an implementing notification, the industrial policy would prevail. This submission of learned Senior Advocate for the petitioner is not acceptable to this Court, as exemption from paying NCCD cannot be read into the notification no. 50 of 2003 by simply applying the principles of liberal interpretation. Notification is to be read in plain and simple manner. 3) Therefore, exemption granted by a notification must be read limited to duty of excise as mentioned in notification, and by simple interpretation, it cannot be extended to cover any other kind of excise duty. 4) Moreover, assessee : (a) was getting and availing benefit of exemption notification, (b) was not aggrieved by any condition contained in notification (c) had not challenged notification, hence, present writ petition was dismissed. Thus, assessee was liable to pay NCCD, EC and SHEC as demanded – Bajaj Auto Ltd. v. Union of India (2015) 54 202 (Uttarakhand).

Source - Taxmann

Article ID: 323 | Posted By: | Date: 2015-02-24

Addition of 'speed post' as valid mode of service is clarificatory and retrospective in nature, rules Orissa High Court

Addition of term "speed post" in section 37C of the Central Excise Act, 1944 by Finance Act, 2013 is: (a) clarificatory, (b) procedural for purpose of communication of decisions, etc.; (c) curative. a) An adjudication order dated 12-7-2011 was served on assessee by speed post. b) Assessee argued that service through 'speed post' was not a valid mode of service before amendment by the Finance Act, 2013 by saying that when statute had provided for service of orders by "registered post" on the petitioner, sending the order by "speed post" was not in strict compliance with the law and, hence, such notice served was in a manner not prescribed by law. Therefore, the same could not be held to be adequate service on the petitioner. High Court held in favour of revenue as under: 1) In view of Section 28 of the Indian Post Office Act, 1898, read with Rule 66-B of Indian Post Office Rules, 1933, any postal article registered at post office and a receipt issued in respect of such article is to be treated as "registered post". Both in the case of "registered post" as well as "speed post", the articles when delivered to the post offices, receipts thereof are required to be issued, and consequently, both "speed post" and "registered post" satisfy the requirement of said Section 28.The only difference between registered post and speed post if at all is the charges payable are normally higher for "speed post" as the name suggests the delivery of such articles at an early date. 2) In the Full Bench of the Hon'ble Supreme Court in the case of Shyam Sunder v. Ram Kumar (2001) 8 SCC 24, affirmed the judgment of Apex Court earlier in the case of R. Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630 to the following effect: "Declaratory enactment declares and clarifies the real intention of the legislature in connection with an earlier existing transaction or enactment, it does not create new rights or obligations. If a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. . . . A clarificatory amendment of this nature will have retrospective effect and therefore, if the principal Act was existing law when the Constitution came into force the amending Act also will be part of the existing law. If a new Act is to explain an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act." 3) Following the above judgment of the Hon'ble Supreme Court, High Court further held that addition of term "speed post" in section 37C vide amendment by the Finance Act, 2013 is : (a) merely clarificatory, (b) procedural for purpose of communication of decisions, etc.; (c) curative, as various High Courts had already held that service through 'speed post' was a valid mode; hence, same was retrospective in its operation - Jay Balaji Jyoti Steels Ltd. v. Customs, Excise & Service Tax Appellate Tribunal, Kolkata (2015) 54 176 (Orissa).

Source - Taxmann

Article ID: 322 | Posted By: | Date: 2015-02-24

No sec. 115E benefit on short-term cap gain from sale of foreign exchange asset as it isn't an investment income

Issue: Whether short-term capital gain arising on sale of shares of an Indian company purchased in foreign currency would be deemed as investment income so as to entitle for concessional rate of tax of 20% underSection 115E? The High Court held in favour of revenue as under: 1) Section 115E which is part of Chapter XII-A of the Income-tax Act grants benefit of concessional rate of tax to the extent the income of the Non-resident Indian consists of 'Investment Income' or 'Income by way of long term capital gains' arising out of specified asset, inter-alia, shares of an Indian Company purchased in convertible foreign exchange. 2) Section 115E of the Act specifically indicates income by way of long term capital gains to be entitled to the benefit of Section 115E of the Act as it is not considered to be an income derived from an investment. 3) So, Chapter XIIA of the Act itself makes a distinction between income derived from an asset and an income arising on sale of assets, leading to long term capital gains. The latter is a case of income being attributable to sale of assets. 4) Therefore, income arising on sale of assets leading to short term capital gains could not be considered as income derived from foreign exchange asset so as to qualify as investment income within the meaning of section 115E of the Act. - CIT V. SHAM L. CHELLARAM (2015) 54 348 (Bombay)

Source - Taxmann

Article ID: 321 | Posted By: | Date: 2015-02-24