CS Final :: Direct And Indirect Taxation - Law and Practice : December 2004

Reddy India Ltd. is an Indian company. For the previous year 2003-04, the following incomes are noted from the books of account of the taxpayer:

	Rs.
Income from a business in India	3,80,000
Income from a business in a foreign country with whom India has ADT agreement	2,16,000

According to the ADT agreement, Rs.2,16,000 is taxable in India. However, it can also be taxed in the foreign country @ 11.85% which can be set off against Indian tax liability. Find out the Indian tax liability for the assessment year 2004-05.

What is the time-limit for completion of re-assessment in consequence of a finding given in an order under section 254 of the Income-tax Act, 1961?

What are the tax concessions available under the Income-tax Act, 1961 in the case of conversion of a firm into a private limited company?

Rebecca Ltd. amalgamated with Rex Ltd. Discuss the benefits available to the shareholders of Rebecca Ltd., the amalgamated company.

Sunil Ltd., an Indian company, is engaged in the business of development of computer software. The following is the profit and loss account for the year ending 31st March, 2004

	Rs.			Rs.
To freight and insurance attributable to			By sale of software in India	12,00,000
delivery of softwares outside India	1,00,000		By sale of software and
To expenses incurred in foreign			providing technical
exchange for providing technical			services outside India	17,00,000
services outside India	1,50,000		By export incentives	70,000
To other business expenses	7,50,000		By interest	2,10,000
To depreciation	3,00,000		By profit of foreign branch	3,60,000
To income tax penalty	20,000
To income-tax	2,20,000
To net profit	20,00,000
	35,40,000			35,40,000

337

‘Processing’ is distinct from ‘manufacturing’ and mere processing does not mean manufacture. Elucidate.

Explain the provisions made under the Customs Tariff Act, 1975 for classification of packing materials and packing containers.

When payment is made by a client or customer to an assessee after deducting his income-tax liability under the provisions of tax deducted at source (TDS), whether the service-tax liability of the assessee is only towards the amount actually received from his client/customer or service-tax is to be paid on the amount of income-tax deducted at source as well ?

An assessee purchased various inputs and credit of duty on inputs was taken up instantly. Later on, some inputs were pilfered from the store room of the assessee. The proper officer raised a demand under section 11A of the Central Excise Act, 1944, read with rule 12 of the CENVAT Credit Rules, 2002, for recovery of CENVAT credit wrongly taken on inputs lost from store room. The assessee has claimed that one to one co-relation is not required for CENVAT credit and as he has suffered duty, CENVAT credit is available to him. Examine the case in the light of central excise provisions and decided case laws, if any, and state your views whether the demand can be confirmed or not.

337

An importer has imported certain goods and while determining the assessable value, landing charges @ 1% of CIF value were added. The importer has claimed that actual landing charges are much lower than 1% of the CIF value in his case. You have been asked to advise whether the importer can file a bill of entry by adding actual landing charges instead of notional 1% of CIF value or not.

State, with reasons in brief, whether the following services attract service-tax or not:

(i)	Services rendered by consulting engineer relating to computer software.
(ii)	Services provided by a customs house agent.
(iii)	Beauty parlours providing services relating to hair dying.

State with reasons whether following are includible in the assessable value of goods or not for the purpose of central excise :

(i)	Dharmada collected from the buyer;
(ii)	Cost of cartons and labels supplied by customer;
(iii)	Royalty collected from customers for use of trademark; and
(iv)	Dealer’s commission, collected by dealer directly from customers, and not from assessee.

How is customs value of export goods determined for assessment? Explain briefly.

When can an application for settlement of case before settlement commission be filed under the Customs Act, 1962?

337

State, giving reasons in brief, whether the following statements are correct or incorrect :

(i)	Consignment transactions are subjected to central sales tax after the Constitution (46th Amendment) Act, 1982.
(ii)	Goods involved in works contracts are included in definition of sale under the Central Sales Tax Act, 1956.
(iii)	The offences under the Central Sales Tax Act, 1956 are cognizable and bailable.
(iv)	If the State Government issues a general exemption notification with no reference to any period of time then promissory estoppel would be applied.
(v)	Service-tax on Company Secretary’s services was introduced by the Finance (No.2) Act, 1998 with effect from 16th October, 1998.
(vi)	If any person liable to pay service-tax fails to apply for registration, a mandatory penalty of Rs.1,000 will be imposed.