Refund of Self-Assessment tax is also entitled to interest

The Tribunal held that a refund on account of self-assessment tax was entitled to interest u/s 244A(1)(b). 

In view of the judgement of the Madras High Court in Cholamandalam Investment and Finance Ltd294 ITR 438 (Special Leave Petition dismissed by the Supreme Court) and Sutlaj Industries Ltd 325 ITR 331 (Del) and the fact that there is nothing contrary, the appeal of the department is dismissed.

VODAFONE V/S INCOME TAX AUTHORITY OF INDIA

Vodafone Essar Limited, formerly known as Hutchison Essar is a telecom service
provider in India that covers twenty three telecom circles in India and is based in Mumbai.
Vodafone holds sixty seven percentage stake in Vodafone Essar Limited and Essar holds the rest
thirty three percentage stake. It is the second largest mobile phone operator in terms of revenue
after Bharti Airtel, and third largest in terms of customers. It has around ten thousand employees
across India. It has a subscriber base of approximately one hundred and six million and
commands a market share of twenty four percent in India.
On February 11, 2007, Vodafone agreed to acquire the controlling interest of sixty seven
percentage held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion. The company was
valued at USD 18.8 billion. The transaction closed on May 8, 2007. Despite the official name
being Vodafone Essar, its products are simply branded ‘Vodafone’. It offers both prepaid and
postpaid GSM cellular phone coverage throughout India.

Arguments of Vodafone: 
Vodafone argued that the transaction took place between offshore entities owned by itself
and Hutchison and was outside India’s jurisdiction and moreover the deal was not taxable in
India as the funds were paid outside India for the purchase of shares in an offshore company.
Vodafone’s contention was that the provisions were not applicable as the primary
obligation to discharge the tax was with the payee i.e. HTIL. Moreover withholding tax
provisions cannot have extra-territorial application and is applied to companies of Indian
residence only.
Arguments of Tax Authority: 
But the tax department seeks to show that since most of the assets were in India, the deal
was liable to Indian capital gains tax. Hutch had sold Vodafone valuable rights - including tag
along rights, management rights and the right to do business in India and that the offshore
transaction had resulted in Vodafone having operational control over the Indian asset, which is
the second largest telecom service provider in India.
The taxman’s argument was focused on proving that even though the Vodafone-Hutch
deal was offshore, it was taxable as the underlying asset was in India and so it pointed out that
the capital asset; that is the Hutch-Essar or now Vodafone-Essar joint venture is situated here and
was central to the valuation of the offshore shares. It also argues that under Indian law, the buyer
in a deal is required to withhold any capital gains tax liability and to pay it to the treasury.
Treatment of Capital Gains on extra territorial transaction: The Indian Parliament, under the provisions of the Constitution, has the competence to
enact a legislation having an extraterritorial application. But it is unsure whether the Income Tax
Act has such powers. According to Section 9 of the Income Tax Act, where a non-resident earns
any income by a transfer of capital asset in India (whether direct or indirect), the capital gains tax
would apply. But Section 9 does not state that the transfer of the capital asset can be direct or
indirect. It is only income which can be direct or indirect.
Pursuant to Section 195 of the Act, every person paying any sum, which is chargeable to
tax in India to a non-resident, must deduct income tax at source at the time of payment or credit.
This applies to both residents as well as non-residents. 

The Satyam Scam Case, 2009

This was perhaps India's biggest corporate fraud case where M/s Satyam Computer Services Limited (M/s SCSL) caused loss to the investors to the tune of Rs.14,162 crore. The company head, Ramalinga Raju and members of his family secured illegal gains to the tune of about Rs.2,743 crore by various tricks. The fraud was perpetrated by inflating the revenue of the company through false sales invoices and showing corresponding gains by forging the bank statements with the connivance of the Statutory and Internal Auditors of the company. The annual financial statements of the company with inflated revenue were published for several years and this lead to higher price of the scrip in the market. In the process, innocent investors were lured to invest in the company. Attempts were made to conceal the fraud by acquiring the companies of kith and kin.


Like several other cases of this type, the Satyam case also came to the CBI as soon as the country got wind of it. The CBI constituted a Multi-Disciplinary Investigation Team (MDIT) to investigate the case. The team worked hard, burnt midnight oil and achieved success in a record time of 45 days when it filed its first chargesheet against the accused for offences of criminal conspiracy, cheating, forgery and falsification of accounts.

Big Changes in MVAT Composition Scheme for Small Retailers w.e.f October 2014

Under new composition scheme, tax payer has to pay 1% on the total turnover of sales including tax free goods OR 1.5% on the sales of taxable goods.

one has to choose option from 1% or 1.5% of VAT rate.

E.g. if the total turnover is 50 lakhs which includes taxable goods of Rs. 40 lakhs and tax free goods of Rs. 10 lakhs and if option for 1% is selected then he has to pay VAT @ 1% on total sales of 50 lakhs i.e. Rs. 50,000. If he chooses 2nd option then he has to pay VAT @ rate 1.5% on taxable sales of 40 lakhs i.e. Rs. 60,000.

Object behind the change:

This scheme is targeted to give benefit to the dealers who find difficulty in maintaining the books of accounts

Following are the conditions of the composition scheme:

1) The total turnover of sales of retail sellers should not exceed 50 lakhs in the previous year.

2) The claimant dealer should not be manufacturer or an importer. He should be retailers of goods.

3) The taxable goods sold are purchased from registered dealer. Purchases of taxable goods from unregistered dealer shall be allowed only if meant for packing of goods.

4) The selling dealer shall not collect VAT separately in respect of sales. And he is not eligible to issue “Tax Invoice” in respect of sales made.

5) The claimant dealer shall not be entitled to claim setoff of the purchases made.

Existing Retailers: A dealer liable to file six monthly returns for the year 2014-15 or a dealer opted for the earlier composition scheme may enter into new scheme for the year 2014-15 by uploading Form 4A on or before 30th October 2014. The dealers who are liable to file monthly or quarterly returns for the year 2014-15 shall not be eligible to enter into the scheme in this year.

New Retailers: A newly registered dealer can opt for the scheme by filling Form 101. Those dealers who desire to opt out of the composition scheme shall intimate in Form 4B at the beginning of the year on or before the 30th April 2015.

The dealer, who contravenes any of the conditions of this notification, shall ceases to be eligible for the benefits of the scheme.

Additional duty of Excise is leviable on an imported article only if Excise duty is levied on a like article manufactured in India

In Shivam Engineering Company Vs. Union of India [2014-TIOL-1563-HC-AHM-CUS] , Shivam Engineering Company have filed a writ petition before the Hon’ble Ahmadabad High Court requesting to prohibit the Revenue from levying Additional Duty of Excise under Section 3(1) of the Customs Tariff Act, 1975 as per the rates prescribed under Heading No. 89.08 of the Central Excise Tariff Act, 1985 (the Excise Tariff). Heading 89.08 of the Excise Tariff covers vessels and other floating structures for breaking up.
With reference to the judgement and placing reliance on the same by The Hon’ble High Court in "Hyderabad Industries Ltd. Vs. Union of India [2002-TIOL-369-SC­CUS-CB]", wherein the Hon’ble Supreme Court had held that when articles which are not produced or manufactured cannot be subjected to levy of Excise duty, then on the import of like article, no CVD can be levied under the Customs Tariff.
The Hon’ble High Court further observed that import of vessels and other floating structures for breaking up does not constitute manufacture in India, so no Excise duty is leviable in India. Accordingly, it has been held that no additional duty is leviable on the vessels and other floating structures imported into India for breaking up, under section 3(1) of the Customs Tariff.

Brought forward unabsorbed depreciation can be set off against the Income U/S 68

It is concluded in ACIT Vs. M/s. Shree Raghupati Fibres Pvt. Ltd. (ITAT Ahmedabad), ITA. No. 256/Ahd/2011, Date of Order: 12.09.2014, that Brought forward unabsorbed depreciation can be set off against the Income which does not form part of any specific head of income and is also not business income as section 32 provides that brought forward depreciation merges with the depreciation of the current year and becomes current year’s depreciation which is permitted to be set off against any income of the current year other than salary.

Thus

It is not in dispute that brought forward unabsorbed depreciation can be set off against the income which is assessable under the head ‘income from other sources’