NOTIFICATIONS/ INSTRUCTION

DCM (Plg) No.1859/10.27.00/2016-17

Withdrawal of Legal Tender Character of existing Rs 500/- and Rs 1000/- Bank Notes (Specified Bank Notes) - Deposit of Specified Bank Notes (SBNs) into bank accounts

IDMD.CDD.No.1453/14.04.050/2016-17

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016

IDMD.CDD.No.1454/14.04.050/2016-17

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 - Operational Guidelines

Notification_S.O. 4086(E)

Govt further puts restrictions on depositing cash - More than Rs 5000/- to be deposited only once up to Dec 30, 2016

Instruction No 4

Launch of Remand Report functionality in Appeal module of Income Tax Business Application (ITBA)

MIXED BUZZ

Govt reduces deemed profit from 8% to 6% u/s 44AD of I-T Act to promote digital payment

Sum exceeding Rs 5000 in old notes can be deposited only once up to Dec 30

CASE LAWS

2016-TIOL-234-SC-IT + Story

IAN PETER MORRIS Vs ACIT: SUPREME COURT OF INDIA (Dated: November 29, 2016)

Income Tax - Sections 17(1)(iv), 147, 209(1)(d), 234B & 234C

Keywords: non compete fees - restriction for conduct of business - software development - payment of simple interest - compensation & capital receipt

Whether if a sum of money received by assessee from its employer in context of non-compete agreement is construed as salary, in that case interest u/s 234B & 234C for delay & deferment of advance tax payment cannot be levied - YES: SC

The assessee was founder director of Log-In Systems Innovations Limited, the company engaged in the business of software development and consultancy. The said Company was acquired by one Synergy Credit Corporation Limited, as a result of which assessee was offered a position of Executive Director in the Acquirer Company for a gross compensation of Rs.1,77,200/- per annum. An Acquisition Agreement was executed between the Acquirer Company and the Acquiree Company on a going concern basis for a total consideration of Rs.6,00,000/-. On the same date, a Non-Compete Agreement was signed between the assessee and the Acquirer Company imposing a restriction on the appellant from carrying on any business of Computer Software development and marketing for a period of five years for which the assessee was paid a sum of Rs.21,00,000/-. The question that arose in the proceedings commencing with the Assessment Order is whether the aforesaid amount of Rs.21 lakhs is on account of 'salary' or the same is a 'capital receipt'. The HC in the order under appeal took the view that the said amount is 'salary amount' on which interest would be chargeable/leviable u/s 234B and 234C.

The Apex Court held that,

++ a perusal of the relevant provisions of Chapter VII would go to show that against salary a deduction, at the requisite rate at which income tax is to be paid by the person entitled to receive the salary, is required to be made by the employer failing which the employer is liable to pay simple interest thereon. The provisions relating to payment of advance tax is contained in Part 'C' and interest thereon in Part 'F' of Chapter VII. In cases where receipt is by way of salary, deductions u/s 192 is required to be made. No question of payment of advance tax under Part 'C' of Chapter VII can arise in cases of receipt by way of 'salary'. If that is so, Part 'F' of Chapter VII dealing with interest chargeable in certain cases (Section 234B – Interest for defaults in payment of advance tax and Section 234C – Interest for deferment of advance tax) would have no application to the present situation in view of the finality that has to be attached to the decision that what was received by the assessee under the Non-Compete Agreement was by way of salary. For the aforesaid reasons, the appeals are allowed; the order of the High Court so far as the payment of interest u/s 234B and Section 234C is set aside.

Assessee's appeal allowed

2016-TIOL-233-SC-MISC

SIDDHARTH MEHTA Vs UoI: SUPREME COURT OF INDIA (Dated: December 16, 2016)

Finance Act, 2016 - Sections 199D(2), 199E, 199F & Constitution of India - Article 132

Keywords: policy formation - constitutional validity - declared income - statement of objects & penalty

The assessee is an individual. It was submitted by the counsel for the assessee that the Union of India could have come with a better scheme regard being had to the Statement of Objects and Reasons behind the scheme. It has been submitted by the assessee's counsel that had a different kind of scheme been framed, the country would have got more good money in banks and the honest tax payers would have deposited the amount.

On further appeal, the Apex Court held that,

Whether the Supreme Court is authorized to encroach upon the policy making arena of Govt, suggest a different policy on the basis that the policy framed by UOI could have been better - NO: SC

++ we are disposed to think that he is suggesting a different scheme to be implemented by the Union of India. Needless to say, this Court cannot enter into or encroach upon the policy making arena and suggest a different policy on the foundation that the policy framed by the Union of India could have been better. That is not within the domain of the Court. There is a distinction between assailment of the constitutional validity of a policy and conception of framing of a better policy. In view of the aforesaid analysis, we do not find any justification to issue notice in the present writ petition and it is, accordingly, dismissed.

Assessee's appeal dismissed

2016-TIOL-3269-CESTAT-MUM + Story

Thermax Instrumentation Ltd Vs CCE: MUMBAI CESTAT (Dated: October 10, 2016)