2. Dear Reader,
We at JGarg Economic Advisors Private Limited have
always endeavoured to add value to our clients,
associates and acquaintances through initiating
various knowledge offerings. With the onset of this “Everyone who’s ever taken a shower
new financial year 2012-13 and the introduction of has an idea. It's the person who gets
cardinal tax changes in the Finance Bill 2012, we
out of the shower, dries off and does
attempt to capture the pulse of throbbing
controversies attached to retroactive amendments something about it who makes a
brought about in the Finance Bill, till such proposals difference.”
become the law of land. We hope that our limited
contributions through circulating these knowledge
flashes shall be useful to you.
Happy reading.
CA Gaurav Garg CA Parul Mittal
CA Shweta Gupta CA Vineeta Goyal
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3. News Flash
GAAR may lose bite to soothe investors RBI study for higher FDI cap in insurance sector
The Finance ministry is considering exempting RBI, in a study released earlier his month on FDI flows to
transactions or tax-saving arrangements less than INR India said that there are certain sectors including
15 crore to ensure only corporate structures of agriculture where FDI is not allowed while sectoral caps
significant size come under the ambit of the new in some sectors such as insurance and media are
regime, known as General Anti-Avoidance Rules (GAAR). relatively low compared to global patterns. The RBI
It is also considering implementing GAAR after several study found that sectoral cap was higher in China than
months or even in the financial year beginning April 01, in India for insurance and a few other sectors, while
2013, a ministry official said. countries like Brazil and Russia have higher sectoral caps
Halved tax to keep alive & kicking in India than India across most of the sectors.
The Finance ministry is set to halve the tax burden to SEBI to announce new consent settlement
keep alive the interest of private equity (PE) players, norms soon
who constitute the biggest foreign direct investor group SEBI is set to put in place a new and detailed mechanism
in India. The proposed change will put PE at par with for its 'consent‘ procedure -- an out-of-court-like
foreign institutional investors , who currently enjoy a settlement through which it settles cases of suspected
concessional long-term capital gains tax of 10% on gains irregularities by listed companies and various market
from unlisted or off-market share transfers. entities. SEBI decided to revise the existing consent
India & Switzerland signed treaty for identity procedure, after it found lack of uniformity and
requirements under their double taxation necessary details in the prevailing system, which is in
agreement inked on April 20, 2012 place since 2007, a senior official said.
Switzerland has agreed to provide information about Exchange traded fund for PSUs
Indian citizens with bank accounts. This will enable India The government is toying with the idea of an exchange
to get information even if Indian government has traded fund for shares of public sector companies
limited details regarding any person having a bank (PSUs) on the lines of Hong-Kong’s Tracker Fund, which
account in Switzerland. Agreement will be effective from has been a runaway success. 3
April 01, 2011
4. Due Dates
Due Date Particulars Period Form/Challan No.
May 05, 2012 Monthly service tax For the month of Challan No. GAR 7
payment April, 2012
May 07, 2012 TDS payment Form the month of Challan No. 281/17
April, 2012
May 15, 2012 Quarterly TDS return January – March, Form 24Q, 26Q, 27Q
2012 & 27EQ
May 12, 2012 Half-yearly ESI October 2011 – Form 5
return March 2012
May 21, 2012 ESI payment For the month of ESI Challan
April, 2012
May 30, 2012 Issue TDS January – March Form 16A/ 27D
certificates 2012
May 31, 2012 Issue of TDS Annual from April Form 16
certificates to 2011 – March 2012
employees 4
5. Notifications/ Circulars
Service tax Circular No. 155/6/2012 - ST CBDT Circular No. 1/2012 dated April 09, 2012
CBEC clarified that for the airlines which were collecting All deductors shall issue TDS certificate in Form 16A
differential service tax on tickets issued before April 01, generated through TIN central system, which is
2012 for journeys after April 01, 2012 (effective service downloaded from TIN website with a unique TDS
tax rate w.e.f April 01, 2012 is 12%),the point of taxation certificate number in respect of all sums deducted on or
shall be the date if receipt of payment or date of after April 01, 2012 under any provision of Chapter XVII-
issuance of invoice, whichever is earlier. Thus the B other than Section 192.
service tax shall be charged @10% in case of tickets
RBI (A.P. DIR Series) Circular No. 112 dated April
issued before April 01, 2012 where payment received
before April 01, 2012.
20, 2012
As per the existing ECB guidelines, existing ECB may be
Service tax Circular No. 156/7/2012 - ST refinanced by raising a fresh ECB subject to the
A committee has been constituted to review the scheme condition that the fresh ECB is raised at a lower all-in
for electronic refund of service tax paid on taxable cost. Through this Circular, it has been decided that the
services used for export of goods, made operational borrowers desirous of refinancing an existing ECB can
vide notification 52/2011-ST dated December 30, 2011. raise fresh ECB at a higher all-in cost under the approval
The Committee will submit its report to the chairman, route subject to the condition that the enhanced all-in
CBEC before June 20, 2012. cost does not exceed the prescribed all-in cost ceiling
Service tax Circular No. 157/8/2012 - ST under existing guidelines.
CBEC clarified that services provided by Agriculture
RBI (A.P. DIR Series) Circular No. 113 dated April
Produce Marketing Committee (APMC) is not in nature
of Business Support Service (BSS) and hence exemption 24, 2012
made available under BAS in relation to agriculture vide As per the announcement made in the Union Budget for
notification no. 14/2004-ST on the market fee or ‘mandi the year 2012-13, it has been decided to allow ECB for
shulk”. Any other service provided by APMC for a charge working capital as a permissible end-use for the civil
other than market fee would be taxable under the aviation sector, under the approval route subject to
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respective taxable head. prescribed conditions.
6. Notifications/ Circulars
MCA General Circular No. 7/ 2012 dated April 25, CBEC Circular No. 962/05/2012-CX dated March
2012 28, 2012
The Circular effective from May 20, 2012 clarifies that the CBEC clarified that duty payable under Rule 8 of Central
facility for name approval through STP mode on Excise Rules 2002, the cenvat credit allowed to be used is
certification by professional will continue to be available. what was in balance on the last date of that month or
However, such names will be put to online check by the quarter and not what is accrued thereafter. Whereas, duty
system for ascertaining similarity with trademark, the work payable under section 11A where generally duty payable
item will be transferred for processing in non-STP mode. is determined by Central Excise officer, the restriction on
All name applications submitted in STP mode shall be put the utilization of the cenvat credit accruing subsequent to
for system check. All names approved in STP mode will be the last date of the month or quarter in which the arrears
made available on the dash board of the concerned ROC for arise, is not applicable.
immediate examination. Name approval application in case
of single word (other than words private limited) shall not
SEBI Circular No. CFD/DIL/LA/SK/AT/8278/2012
be processed in STP mode. dated April 11, 2012
For the quarter ended FY 2011-12 and in respect of annual
MCA vide notification G.S.R. (E) dated April 17,
audited results for FY 2011-12, listed entities have an
2012 option to either:
In Schedule XIV to the Companies Act, 1956 after serial •Submit limited reviewed Q4 results within 45 days from
number IV relating to Ships and the entries relating the end of the quarter and thereafter submit annual
thereto, serial number V is inserted pertaining to the audited results as soon as they are approved by the Board.
treatment of Intangible assets (Toll Road) created under (or)
Build, Operate and Transfer, Build, Own, Operate and • Submit annual audited results within 60 days from the
Transfer or any other form of Public Private Partnership end of fourth quarter along with Q4 results which would
Route. be a balancing figure.
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7. Case Law Synopsis
Transfer Pricing Income Tax
Lending or borrowing money between two associated There is no business connection between the
enterprises comes within the ambit of international expenditure incurred on higher education of director
transaction and whether the same is at arm’s length who went abroad for doing M.Sc. in entrepreneurship
price has to be considered. Tata Autocomp Systems Ltd. immediately after completing her graduation and there
vs. ACIT : Decided by Mumbai ITAT being no history of the appellant company as far as
sending its workplace abroad for training which can be
Segmental accounts of assessee required to be
said to have relation with the business activities. Natco
considered for determination of assessee’s profit to total
Exports Pvt. Ltd. vs. CIT : Decided by Delhi High Court
cost from international transaction. Hinduja Ventures
Ltd. vs. ACIT : Decided by Mumbai ITAT
Section 28(iiid) of the Income Tax act, 1961 provides that
If TPO does not reject a comparable on the ground of any profit from the sale of DEPB is chargeable to income
functional incomparability then neither the AO or the tax under the head “PGBP”. The word “profit” means the
revenue can take a plea of functional incomparability of gross proceeds of a business transaction less the costs of
the comparables chosen by the assessee in its TP study. the transaction. DEPB is “cash assistance” receivable by
Carlyle India Advisors Pvt. Ltd. vs. ACIT : Decided by a person against exports under the scheme of the
Mumbai ITAT Government of India and falls under clause (iiib) of
Section 28 and is chargeable to income tax under the
Application of CUP method based on comparable head Profits and Gains from Business or Profession”
transactions of foreign AE with its unrelated customers even before it is transferred by the assessee.
upheld. Terms and conditions providing 50:50 split of net Thus as per the explanation (baa) to Section 80HHC read
freight revenue typical to the logistic industry, with the words used in clauses (iiid) and (iiie) of Section
geographical difference not material in benchmarking 28, the assessee was entitled to a deduction under
for logistics industry, assessee’s own case for AYs 2004- Section 80HHC on export profits.. M/s Topman Exports
05 and 2005-06 followed. Agility Logistics Pvt. Ltd. vs. vs. CIT : Decided by Supreme Court
DCIT : Decided by Mumbai ITAT 7
8. The sole purpose of this publication is to disseminate legal updates and
apprise you of vital tax news. The content forming part of this knowledge
flash is broad in nature and comprises of information in public domain. It
does not involve any special analysis pertaining to any definite facts and
cannot be used in any way, as a substitute for specific professional advice. It
has been prepared for the general guidance on matters of interest. Due care
The sole purpose of this publication is to disseminate legal updates and apprise you of vital tax news. The content
forming part of this knowledge flash compilingnatureinformation, however, noavailable in public domain. It
has been taken while is broad in the and comprises of information representation
does not involve any special analysis pertaining toas to the facts and cannot be used in any way, as a the
(express or implied) is given any definite accuracy or completeness of substitute for
specific professional advice. It has been prepared for the general guidance on matters of interest. Due care has been
information contained in this publication.
taken while compiling the information, however, no representation (express or implied) is given as to the accuracy or
completeness of the information contained in this publication.
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