Reason for Mismatch of TDS

Main reasons for TDS mismatch

Deductor related reasons:

• Non filing of quarterly TDS statements 
• Omission to include details of challan in TDS statement
• Quoting wrong CIN in challan details in the TDS statement
• Entering wrong amount in challan details
• Quoting of wrong TAN in the challan while remitting the TDS in the bank
• Quoting of wrong minor head in the challan while remitting the TDS
• Omission to include details of a deductee in the challan wise annexure in the TDS statement
• Non quoting of PAN of the deductee
• Quoting of structurally invalid PAN of the deductee
• Quoting of valid but non existent PAN of deductee
• Quoting of valid but incorrect PAN of deductee
• Entering incorrect amount in deductee details

Deductee related reasons:

• Error in the TDS amount claimed in the retur
• Claim of inflated TDS credit in the return
• Bogus claim of TDS credit in the return
• Amount paid / credited shown in the TDS certificate erroneously claimed as TDS credit in the return
• Erroneous claim of TDS credit pertaining to two years in the return of income for one year
• Quoting of incorrect TAN of the deductor in the return
• Quoting of the TAN of the last DDO only in case of salary drawn from different DDOs during the year
• Credit for TDS claimed in a different PAN and status
• Credit for TDS claimed for an assessment Year other than the assessment year relevant to the year of deduction

 Bank related reasons :

• Entering wrong TAN while uploading challan data
• Entering wrong minor head code while uploading challan data

Royalty earned by Non Resident from another Non Resident is not taxable in India even if payer embeds the know-how into products sold in India

Under section 9(1)(vi)(c) royalty payable by a person who is a non-resident is deemed to arise in India where the royalty is payable in respect of any right etc utilised for the purposes of a business carried on by such person in India or for the purposes of earning any income from any source in India. Section 9(1)(vi)(c) is a deeming provision and the burden is on the Revenue to prove that the payer has a business/source of income in India. What is important for Section 9(1)(vi)(c) is not whether the right to property is used “in” or “for the purpose of” a business, but to determine whether such business is “carried on by such person in India”; 

ITAT held that it was clear that the software didn't have an independent use and was an integral part of the hardware without which the hardware couldn't function. The software supplied was a copyrighted article and not a copyright right. The software was only used with the hardware and was not independent of the equipment or the chip-set  Since no separate consideration was paid by Indian parties for licensing of the software and the consideration was paid only for the equipment which had numerous patented technologies, the sale couldn't be bifurcated or broken down into different components. Thus, the royalty earned by the appellant couldn't be brought to tax in India under Section 9 of the Act.

Qualcomm Incorporated v/s ADIT, Circle 2(1) International Taxation (ITAT DELHI BENCH ‘E’)

Notice issued under section 153A calling upon assessee to file returns for earlier six assessment years cannot be challenged on ground that it would cause certain degree of hardship to assessee

Section 153A, read with section 132, of the Income-tax Act, 1961 - Search and seizure - Assessment in case of search or requisition -Filing of return for six assessment years

• Whether once there is a search, Assessing Officer has no option but to call upon assessee to file returns of income for earlier six assessment years - Held: Yes. 
• Whether, therefore, notice issued under section 153A calling upon assessee to file returns for those years, cannot be challenged merely on ground that it would cause certain degree of hardship to assessee - Held: Yes.

Facts

• The assessee was a non-resident. He owned a house property in India. A search was conducted in assessee's premises in course of which a panchnama was drawn up inventorising the materials seized.
• Pursuant to search, as required by section 153A, the Assessing Officer issued notices for the past six assessment years calling upon the assessee to file returns of income.
• The assessee filed instant writ petition contending that the search as well as the notices issued under section 153A would only result in extreme harassment to him who was required to file returns for the past six years and face the cumbersome assessment proceedings.

HELD

• Section 153A is couched in mandatory language which implies that once there is a search, the Assessing Officer has no option but to call upon the assessee to file the returns of the income for the earlier six assessment years. It is not merely the undisclosed income that will be brought to tax in such assessments, but the total income of the assessee, including both the income earlier disclosed and income found consequent to the search, would be brought to tax.
• The normal provisions relating to inquiry, affording opportunity, etc., which are provided for in sections 142, 143, etc. are to be followed by the Assessing Officer. There is also a time limit for completion of the assessment under section 153A which is prescribed in section 153B.
• In these circumstances the assessee's contention that he would be put through unnecessary harassment is a non-starter. He has to face the assessment proceedings and participate in them; in case he has evidence or material to show that he has not earned any income which is not disclosed to the income-tax authorities or to rebut the material gathered during the search, it is perfectly open to him to do so. It is his right which is well protected by various provisions of the Act. Appeal remedies are also available against the assessment framed. [Para 7]
• In the instant case the entire gamut of issues relating to the recording of satisfaction, and facts pertaining thereto were canvassed to suggest that the notice was issued mindlessly.
• While the Court is conscious of certain degree of hardship which would occur to any assessee whose premises are searched, that does not afford it any higher right or confer greater remedies, or expand the scope of a limited jurisdiction under article 226. The present petition is therefore, speculative, and misconceived. It is accordingly, dismissed. [Paras 7 and 8]

Madugula Venu v. Director of Income-tax (DELHI HIGH COURT)

Discount Broker

A brokerage which executes buy and sell orders at commission rates lower than a full-service brokerage, but which typically provides fewer services such as research and advice.

Transport / Rent-a-Cab service of employees to and from factory is input service

HIGH COURT OF KARNATAKA

Commissioner of Central Excise, Bangalore-III

v.

Tata Auto Comp Systems Ltd.

CEA NO. 132 OF 2009

JUDGEMENT:

1. Ravi Malimath, J. – This appeal is by the revenue being aggrieved by the order of the Tribunal holding that the assessee is entitled to avail Cenvat credit on the Service tax paid on the transportation services provided by the assessee to their staff for pick up and drop from the residence to the factory and vice-versa.
2. The assessee are holders of Central Excise Registration Certificate for manufacture of motorvehicle parts and accessories. Accordingly, the assessee is availing Cenvat credit of duty paid on inputs, capital goods and input services. The assessee was availing Cenvat and utilizing input tax credit relating to transportation services (Rent-a-Cab Service). Hence, the show cause notice was issued to them as to why the input Service tax availed and utilized on transportation services should not be treated as wrongful availment and utilization of input service credit and the same should not recovered. The assessee replied to the same. However, the assessing officer confirmed the demand. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Appeals who rejected the same. Aggrieved by the same, the assessee preferred an appeal before the Tribunal.
3. The Tribunal by relying on the decision in the case of Stanzen Toyotetsu (P.) Ltd. v. CCE [2009] 21 STT 321 (Bang. – CESTAT) held that the assessee is entitled for availment of Cenvat credit on the Service tax paid on transportation services provided to their staff. Aggrieved by the same, the revenue has preferred this appeal.
4. This appeal was admitted to consider the following substantial question of law :
1. Whether the transportation service, provided in the factory of the M/s. Tata Auto Comp. Systems Ltd., to their staff for pick up and drop from their residence to the factory and vice versa, was an input service, in or in relation to manufacture, whether directly or indirectly of the final products within the meaning and comprehension of Rule 2(1) of the Cenvat Credit Rules, 2004?
2. Consequently whether the Cenvat credit of the Service tax, so paid for receiving the transportation services by them for pick up and drop from their residence to the factory and vice versa, was eligible for availment and utilization in terms of Rule 3 read with Rule 2(1) and Rule 9 thereof?”


The identical question of law came up for consideration before this Court in the case of CCE v.Stanzen Toyotetsu India (P.) Ltd. [2011]32 STT 244 (Kar.). This Court took the view that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises in time which has a direct bearing on manufacturing activity. In fact, the employee is also entitled to conveyance allowance which would form part of his condition of service. Therefore, by no stretch of imagination it can be construed as a welfare measure by denying the availment of Cenvat credit to the assessee for providing transportation facilities as a basic necessity which has a direct bearing on the manufacturing activity. While so holding the Court held that if the credit is availed by manufacturer then the question is what are the ingredients that are to be satisfied for availing such a credit. That the said service should have been utilized by the manufacturer directly or indirectly in or in relation to the manufacturer directly or indirectly in or in relation to the manufacturer of final products or used in relation to activities relating to business. If any of the test is satisfied then the service falls under input service and the manufacturer is eligible to avail Cenvat credit and the Service tax paid on such credit.
5. In this view of the matter, the substantial questions of law are answered in favour of the assessee and against the revenue.

Life Insurance Corporation of India cuts stake in 27 Nifty firms

State-run insurance giant Life Insurance Corporation of India (LIC) has lowered its holdings in as many as 27 of the 50 blue-chip firms forming the market benchmark index Nifty, while selling shares worth an estimated Rs 8,000 crore. Amid stepped-up share purchase by FIIs and an uptrend in the stock market, the Life Insurance Corporation of India (LIC) appears to have booked profits in many blue-chip stocks, shows an analysis of shareholding data of Nifty companies for the three-month period ended December 31, 2012. 

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it lowered its holding in a total of 27 Nifty companies during the quarter. The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000 crore during the quarter, shows the analysis of changes in their shareholding patterns. 

Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of Mahindra & Mahindra, HDFC Bank, ICICI Bank, Tata Motors, L&T, HDFC, Wipro, SBI, Maruti Suzuki, Dr Reddys and Bajaj Auto. It also trimmed holdings in Ambuja Cements, Cipla, TCS, Lupin and Asian Paints. A marginal decline was also witnessed in its stakes in companies such as IDFC, Hindustan Unilever, Grasim, ACC, BPCL, Bank of Baroda, Punjab National Bank, Sun Pharma and Tata Power. 

On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents with purchase of shares worth an estimated Rs 4,000 crore. The major companies where LIC has raised its stake include Infosys, RIL and Cairn India. Other such companies are ITC, Power Grid Corp, NTPC, Siemens, Bharti Airtel and Hero MotoCorp. 

The state-run insurer also marginally hiked its exposure in Ultratech, Gail India, Ranbaxy, Kotak Mahindra Bank and HCL Technologies, while its shareholding remained almost unchanged in companies like ONGC, Tata Steel, BHEL and Reliance Infra. 

Among the Nifty companies, LIC's holding in terms of value is estimated to be highest in ITC (Rs 27,326 crore), followed by RIL (Rs 21,659 crore), ONGC (Rs 17,764 crore), SBI (Rs 17,058 crore), L&T (Rs 16,800 crore), and ICICI Bank (Rs 10,006 crore). 

Nifty is a well-diversified 50-stock index accounting for 22 sectors of the economy. The index represented about three- fourth of the free float market capitalisation of all the stocks listed on NSE as on December 31, 2012. 

The insurance major appears to have mainly booked profits in select stocks from sectors like banks, pharma, auto, refineries and metal.

Source: Times of India (bit.ly/WOT4EF)

Failure To Obtain JCIT’s Approval Renders s. 153C Assessment Order Void

Pursuant to search & seizure action u/s 132 on the premises of a third party, certain documents belonging to the assessee were found and seized pursuant to which a notice u/s 153C was issued to the assessee and assessment u/s 153C r.w.s. 144 were framed. In passing the assessment orders, the AO (ITO) omitted to obtain the consent of the JCIT as mandated by s. 153D. Before the Tribunal, the assessee argued that the failure to obtain the JCIT’s consent rendered the assessment a nullity. The Tribunal (137 ITD 94) upheld the plea on the basis that as the heading to s. 153D refers to a “prior approval” and uses negative wording and the word “shall”, compliance of s. 153D is mandatory and cannot be waived by the assessee. Reliance was also placed on Clause 9 of the Manual of Office Procedure which makes it clear that an assessment order under Chapter XIV-B can be passed only with the previous approval of the JCIT and that the approval must be in writing and stated to have been obtained in the body of the assessment order. On appeal by the Department to the High Court, HELD dismissing the appeal:

Though the question raised proceeds on the basis that approval of the JCIT was given as he had corrected the draft assessment order and the changes were incorporated by the AO in the final assessment order, the finding of fact was recorded by the Tribunal is that no prior approval of the Joint Commissioner was taken before the ITO passed the order. In view of the above, there is no reason to entertain the proposed question and the appeal is dismissed.