Tax Planning

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Proxy

A written authorization given by a shareholder for someone else, usually the company's management, to cast his/her vote at a shareholder meeting or at another time.

Benami Transactions (Prohibition) Amended Act, 2016

Though the Benami Transactions (Prohibition) Act, 1988 has been on the statute book since more than 28 years, the same could not be made operational because of certain inherent defects. With a view to providing effective regime for prohibition of benami transactions, the said Act was amended through the Benami Transactions (Prohibition) Amended Act, 2016. The amended law empowers the specified authorities to provisionally attach benami properties which can eventually be confiscated. Besides, if a person is found guilty of offence of benami transaction by the competent court, he shall be punishable with rigorous imprisonment for a term not less than one year but which may extend to 7 years and shall also be liable to fine which may extend to 25% of the fair market value of the property. 

The Benami Transactions (Prohibition) Amendment Act, 2016 came into effect from1st November, 2016. Several benami transactions have been identified since the coming into effect of the amended law. Show cause notices for provisional attachment of benami properties have been issued in 140 cases involving properties of the value of about Rs. 200 crore. Out of these, provisional attachment has already been effected in 124 cases. The benami properties attached include deposits in bank accounts and immovable properties. 

The Government has put in place empowered institutions for efficient implementation of the amended law. In exercise of powers conferred under sub-section (2) of section 28 read with section 59 of the amended Prohibition of Benami Property Transactions Act, 1988, vide Notification No. SO 3290E, dated 25.10.2016 the Central Government has notified specified Income-tax authorities to act as Initiating Officer, Approving Authority and Administrator in respect of benami transactions. Further, vide Notification No. SO 3288E, dated 25.10.2016, the Adjudicating Authority has been notified

Net Indirect Tax collection upto February 2017 stood at Rs 7.72 lakh crore, 22.2% more than the corresponding period last year

The figures for indirect tax collections (Central Excise, Service Tax and Customs) up to February 2017 show that net revenue collections are at Rs 7.72 lakh crore, which is 22.2% more than the net collections for the corresponding period last year. Till February 2017, about 90.9% of the Revised Estimates (RE) of indirect taxes for Financial Year 2016-17 has been achieved.

As regards Central Excise, net tax collections stood at Rs. 3.45 lakh crore during April-February, 2016-17 as compared to Rs.2.53 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 36.2%.

Net Tax collections on account of Service Tax during April-February, 2016-17 stood at Rs. 2.21 lakh crore as compared to Rs.1.83 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 20.8%.

Net Tax collections on account of Customs during April-February 2016-17 stood at Rs. 2.05 lakh crore as compared to Rs. 1.94 lakh crore during the same period in the previous Financial Year, thereby registering a growth of 5.2%.

During February 2017, the net indirect tax grew at the rate of 8.4% compared to corresponding month last year. The growth rate in net collection for Customs, Central Excise and Service Tax was 10.9%, 7.4% and 7.6% respectively during the month of February 2017, compared to the corresponding month last year.

Direct Tax Collections up to February, 2017 show growth of 10.7%, Net growth in Corporate Income Tax at 2.6%, Net growth in Personal Income Tax at 19.5%

The Direct Tax collections up to February, 2017 continue to show a steady growth trend. The collection net of refunds stands at Rs. 6.17 lakh crore, which is 10.7 % more than the net collections for the corresponding period last year. This collection is 72.9 % of the total Budget Estimates for Direct Taxes for Financial Year 2016-17. 

As regards the growth rates for Corporate Income Tax (CIT) and Personal Income Tax (PIT), in terms of gross revenue collections, the growth rate under CIT is 11.9% while that under PIT (including STT) is 20.8 %. However, after adjusting for refunds, the net growth in CIT collections is 2.6 % while that in PIT collections is 19.5 %. Refunds amounting to Rs.1.48 lakh crore have been issued during April 2016- February 2017, which is 40.2% higher than the refunds issued during the corresponding period last year.

INCOME TAX CASE-LAWS

INCOME TAX CASE-LAWS

SECTION 2(22)(e)

DEEMED DIVIDEND

Advances/loans received by HUF from a closely-held company is taxable as deemed dividend u/s 2(22)(e) if Karta, who is shareholder in lending company has substantial interest in the HUF even if HUF is not registered and/or shareholder - [2017] 77 taxmann.com 71 (SC)

SECTION 11

CHARITABLE OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Application of income : SLP granted against High Court's ruling that merely because assessee-trust incurred expenditure in excess of income in relevant previous year for charitable purposes out of accumulated charity fund, it could not be denied benefit of exemption under section 11(1)(a) - [2017] 77 taxmann.com 2 (SC)

Depreciation: 

SLP granted against High Court's ruling that amendment made in section 11(6) is prospective in nature and it would operate with effect from 1-4-2015 - [2017] 77 taxmann.com 14 (SC)

SECTION 44BBB

FOREIGN COMPANIES, CIVIL CONSTRUCTION BUSINESS IN CERTAIN TURNKEY PROJECTS

Conditions precedent : Section 44BBB which deals with turnkey project, not applicable to assessee being engaged in providing consultancy services - [2017] 77 taxmann.com 4 (Delhi - Trib.)

SECTION 68

CASH CREDIT

Gift : SLP dismissed against High Court's ruling that where assessee failed to establish creditworthiness of donor and genuineness of transaction, addition made in terms of section 68 of gift amount was justified - [2017] 77 taxmann.com 1 (SC)

Gift : SLP dismissed against High Court's ruling that where Assessing Officer after making proper and detailed enquiries, took a view that amount received by assessee as gift from his relatives was a genuine transaction, impugned revisional order passed by Commissioner directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gift afresh, was not sustainable - [2017] 77 taxmann.com 15 (SC)

SECTION 92C

TRANSFER PRICING - COMPUTATION OF ARM'S LENGTH PRICE

Comparables and adjustments/Comparables – Illustrations : In transfer pricing proceedings, a company performing similar functions can not be rejected as a comparable on ground that it has higher proportion of material cost in total operating cost - [2017] 77 taxmann.com 17 (Chennai - Trib.)

Trade Mark Rules 2017

The Trade Mark Rules, 2017 have been notified and have come into effect from 06th March, 2017. These Rules, which replace the erstwhile Trade Mark Rules 2002, will streamline and simplify the processing of Trade Mark applications. 

Some salient features of the revamped Rules are as follows: 

• Number of Trade Mark (TM) Forms have been reduced from 74 to 8. 
• To promote e-filing of TM applications, the fee for online filing has been kept at 10% lower than that for physical filing. 
• Based on stakeholders feedback, the fees for Individuals, Start-ups and Small Enterprises have been reduced from that proposed in the draft Rules – i.e. only Rs 4,500 as against Rs 8,000 for e-filing of TM applications proposed at the draft stage. 
• Modalities for determination of well-known trademarks have been laid out for the first time.
• The provisions relating to expedited processing of an application for registration of a trade mark have been extended right upto registration stage (hitherto, it was only upto examination stage). 
• Over all fees have been rationalized by reducing the number of entries in Schedule I from 88 to just 23. 
• Modalities for service of documents from applicants to the Registry and vice-versa through electronic means have been introduced to expedite the process; e-mail has been made an essential part of address for service to be provided by the applicant or any party to the proceedings so that the office communication may be sent through email. 
• Hearing through video conferencing has been introduced. 
• Number of adjournments in opposition proceedings has been restricted to a maximum of two by each party, which will help dispose off matters in time. 
• Procedures relating to registration as Registered User of trademarks have also been simplified. 

It may be recalled that the examination time for a TM application has already been brought down from 13 months to just 1 month in January 2017; this is despite a stupendous 35% jump in TM filings in 2015-16 vis a vis the previous year. The new Rules should give a boost to the Intellectual Property Regime in India.