FEBRUARY 2014

India Tax Konnect

Editorial In the third quarter review of monetary policy announced on 28 January 2014, the Reserve Bank of India (RBI) has raised the repo rate by 25 basis points to eight per cent to combat inflation. Even though WPI-based inflation rate reduced to 6.16 per cent in December 2013 from 7.52 per cent in November 2013, the consumer price inflation remained high at 9.87 per cent in December 2013.

In a move to curb black money and fake currencies, the RBI decided to withdraw all currency notes issued prior to 2005, including INR 500 and INR 1,000 denominations, effective 31 March 2014. From April 2014, such currency notes holders will be required to approach banks to exchange these notes. Banks will provide an exchange facility for these notes until further communication. From 1 July 2014, persons seeking exchange of more than ten pieces of INR 500 and INR 1000 notes will have to furnish proof of identity and residence to the bank.

On the international tax front, the Authority for Advance Ruling (the AAR), in the case of Mitsubishi Corporation held that the application filed before the AAR, after filing of the return of income but before the issue of notice for assessment, cannot be considered as pending for adjudication before the income-tax authorities and therefore, the application is to be admitted. Further, the AAR observed that without issuing notice for assessment under Section 143(2) of the Income-tax Act, 1961 (the Act), or notice under Section 142(1) of the Act, for inquiry before assessment in cases where the return of income is not filed, there is no jurisdiction to examine or adjudicate a debatable issue claimed or shown in the return of income. Consequently, the return of income filed before such notices is not a bar on admissibility of the AAR application.

In line with the Rajasthan High Court’s decision in the case of Rajasthan Urban Infrastructure Development Project, the Central Board of Direct Taxes vide Circular No.1/2014 has clarified that in terms of an agreement/contract between the payer and the payee, if the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source, under the withholding tax provisions of the Act, on the amount paid/payable, without including such service tax component.

On the transfer pricing front, the Supreme Court in the case of Global Vantedge Pvt. Ltd. held that the total transfer pricing adjustment, along with the arm’s length price already reported by the taxpayer, cannot exceed the total revenue earned by the taxpayer and its associated enterprise from third party clients. The Supreme Court dismissed the tax department’s Special Leave Petition against the order of the Delhi High Court wherein the High Court had upheld the Delhi Income-tax Appellate Tribunal’s (the Tribunal) order confirming the findings of the Commissioner of Income-tax (Appeals) [CIT(A)]. The tax department had contended that it was incumbent upon the Tribunal to have recorded its own findings rather than merely confirming the findings of the CIT(A).

On the indirect tax front, tax exemption to services provided by way of sponsorship of specified sporting events has been expanded to include foreign participants. Earlier, the Service tax exemption on sponsorship of sporting events organized by a national sports federation or its affiliated federations was restricted to only participating teams or individuals representing any ‘district, state or zone’.

We at KPMG in India would like to keep you informed of the developments on the tax and regulatory front and its implications on the way you do business in India. We would be delighted to receive your suggestions on ways to make this Konnect more relevant.

Contents

International tax 2

Corporate tax 3

Mergers and acquisitions 5

Transfer pricing 6

Indirect tax 7

Personal tax 11

software. Further, since the taxpayer did not have a Permanent Establishment (PE) in India, no income was offered to tax as business profit under Article 7 of the tax treaty.

The Pune Tribunal placed reliance on the decision of the Karnataka High Court in the case of Samsung Electronics Co. Ltd. [2012] 345 ITR 494 (Kar), wherein it was held that the payment for right to make a copy of the software and use it for internal business operations would be treated as royalty, since by making a copy of the software, storing it on hard disk and taking a back up copy, would trigger royalty provisions. Drawing an analogy from the said decision, the Tribunal held that the payment received by the taxpayer from its Indian subsidiaries is taxable as royalty under the Act and the tax treaty.

Cummins Inc. v. DDIT [2013] 38 taxmann.com 286 (Pune)

Note: It may be relevant to note that, recently, the Delhi High Court, in the case of Infrasoft Ltd. [2013] [39 taxmann.com 88][Delhi HC] has not agreed with the view of the Karnataka High Court in the case of Samsung Electronics Co. Ltd.

Notifications/Circulars/Press releasesIndia signs tax information exchange agreement with Government of Belize

The Government of India (GOI) signed an agreement with the Government of Belize on 18 September 2013 for exchange of information with respect to taxes. Vide notification dated 7 January 2014, in exercise of the powers conferred by Section 90 of the Act, the GOI has directed that the provisions of the said agreement shall be given effect to in the Union of India with effect from the date of entry into force of the said agreement, i.e. 25 November 2013.

Source: http://indianacts.taxmann.com

Protocol amending the India-U.K. and Northern Ireland tax treaty

India and UK had signed a Protocol on 30 October 2012, amending the Convention for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains. Recently, Her Majesty’s Revenue and Customs, UK (HMRC), notified the protocol and provided an entry into force date, being 27 December 2013. However, India is yet to issue a notification on this.

Source: http://www.hmrc.gov.uk/taxtreaties/news/uk-india-protocol.htm

For further details please refer to our Flash News dated 9 November 2012, available at this link.

International tax DecisionsApplication to AAR cannot be rejected merely because return of income has been filed

The applicant, a company incorporated in Japan, entered into two separate contracts with an Indian company, i.e. (i) an offshore supply contract, and (ii) an onshore service contract. The applicant filed the return of income and also made an application before the AAR with regard to issues relating to its taxability in India.

The tax department objected with regard to the admissibility of the application, relying on the decision of the AAR in the case of SEPCO III Electric Power Corporation [2011] 16 taxmann.com 195 (AAR) and NetApp B.V [2012] 19 taxmann.com 79 (AAR), wherein it was held that when the return of income is filed, the issue should be treated as pending before an Income-tax Authority.

The AAR observed that when the return of income is filed, it is processed under Section 143(1) of the Act. While processing the return of income, the tax department does not have any jurisdiction to examine or adjudicate any issue other than those mentioned in Section 143(1) of the Act. Further, before or without issuing notice under section 143(2) or section 142(1) in cases whether a return is not filed, the Income-tax department has no jurisdiction to examine or adjudicate debatable issues claimed or shown in the return of income.

The AAR, relying on the decisions of Jagtar Singh Purewal [1995] 213 ITR 512 (AAR) and Hyosung Corporation Korea [2013] 36 taxmann.com 150 (AAR), held that mere filing of the return does not attract a bar on the admission of the application as provided in section 245R (2) of the Act. Only when the issues are shown in the return and notice under section 143(2) is issued, will the question raised in the application be considered as pending for adjudication before the Income-tax Authorities.

Mitsubishi Corporation (A.A.R. No.1309 of 2012) (AAR)

Payment for transfer of non-exclusive user right, in respect of software for internal use, is taxable as a royalty under the Act, as well as under the tax treaty

The taxpayer, a company incorporated in the USA, granted the user rights of software to two of its subsidiaries in India, which the taxpayer had acquired under an agreement with Oracle Inc., USA.

The taxpayer claimed that payment received from its subsidiaries in India for granting user right of such software was not in the nature of a royalty or fees for technical services under the tax treaty, since there is no transfer of any part of the copyright and the transaction involves sale of a copy of the copyrighted

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Corporate tax

DecisionsBalance 10 per cent of additional depreciation available in the subsequent year on new asset, acquired post September

The taxpayer is engaged in the business of manufacturing tyres in India. The taxpayer claimed additional depreciation in respect of new machinery and plant acquired after 30 September 2005, in the Assessment Year (AY) 2006-07, in accordance with the provisions of Section 32(1)(iia) of the Act. In the subsequent AY, i.e. AY 2007-08, the taxpayer claimed the balance 10 per cent of depreciation. However, the AO disallowed the taxpayer’s claim for the remaining 10 per cent additional depreciation claimed in AY 2007-08. The AO rejected the claim of the taxpayer on the grounds that there was no provision for carry forward of any additional depreciation, which was confirmed by the Dispute Resolution Panel (DRP).

The Cochin Tribunal noted that the Act is silent about the allowance of the balance 10 per cent additional depreciation in the subsequent year and, in light of this, the eligibility of the taxpayer for claiming 20 per cent of the additional depreciation cannot be denied by invoking the second proviso to Section 32(1)(ii) of the Act. The Cochin Tribunal, relying on the decisions of Delhi Tribunal in the case of DCIT v. Cosmo Films Ltd [2012] 139 ITD 628 (Del) and ACIT v. SIL Investment Ltd. [2012] 148 TTJ 213 (Del) and the decision of Mumbai Tribunal in the case of MITC Rolling Pvt. Ltd v. ACIT (ITA No. 2789/Mum/2012), held that where new machinery is purchased after the month of September of the relevant AY, then the balance 50 per cent of the additional depreciation is to be allowed in the subsequent year.

Apollo Tyres Ltd v. ACIT [TS-646-ITAT-2013(COCH)]

In-spite of enduring benefit derived, expenditure incurred for setting up new V-SAT facility for improving data transfer speed held as revenue expense

During AY 1997-98, the taxpayer had set up new V-SAT facility to increase the data transfer speed. It borrowed money for setting up the V-SAT application. The taxpayer claimed deduction of the said expenditure for setting up the V-SAT facility along with interest on the loan as revenue expenditure. The AO disallowed the expenditure incurred for setting up the V-SAT facility, treating the same as capital in nature and also denied deduction for interest on the loan. This disallowance was upheld by the CIT(A). The Tribunal observed that the taxpayer was using telephone lines for receiving and sending the data.

To improve the communication between its clients in connection with receipt and sending data, the taxpayer had

set up the aforesaid facility. Thus, the licence fee paid by the taxpayer for the said new technology was revenue in nature. The Tribunal further held that the interest paid on the loan borrowed for setting up the said facility is also deductable as revenue expenditure.

The Karnataka High Court referred to the Supreme Court’s decision in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC), wherein it was held that the test of enduring benefit is not a certain or conclusive test and cannot be applied blindly and mechanically without regard to the particular facts and circumstances. The High Court observed that in order to transfer data at a much higher speed, V-SAT application through satellite was adopted. After setting up of the new facility, the taxpayer continued to manage the project as part and parcel of the existing project. Though, the amount spent resulted in advantage of enduring benefit, the expenditure was revenue in nature and allowable as a deduction under Section 37 of the Act. Further, in respect of deduction of interest on the loan borrowed for the new facility, the High Court allowed this deduction of interest relying on the decision of the Supreme Court in the case of DCIT v. Core Health Care Ltd. [2008] 298 ITR 194 (SC).

CIT v. Kirloskar Computer Services Ltd. [TS-662-HC-2013(KAR)]

High Court sets aside Tribunal’s decision that sale and lease back transaction was merely a colourable device for tax evasion

The taxpayer purchased imported Metal Cops from the Kota factory of the vendor, J.K. Synthetics Ltd., and thereafter leased them to the Delhi factory of the same vendor. The transaction was executed to resolve the acute financial crises faced by the Kota factory, due to labour unrest and closure of the factory, while at the same time benefiting the Delhi factory which needed the Metal Cops. The Metal Cops were directly transported from the Kota factory to the Delhi factory for commercial reasons (of saving freight costs) after payment of appropriate sales tax. The taxpayer (lessor) claimed 100 per cent depreciation under Section 32 of the Act after classifying the Metal Cops as plant and machinery and having a value below INR 5,000.

The High Court observed that there was no material on the basis of which the Tribunal could have arrived at the conclusion that the entire transaction relating to purchase and leasing of Metal Cops was merely a paper transaction. Further, the High Court relied on the Supreme Court’s decision in the case of CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC) wherein it was held that when a Court of fact acted on material partly relevant and partly irrelevant and it was impossible to say

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to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its finding, the finding would be vitiated for the use of inadmissible material, and thereby an issue of law would arise. Similarly, if the Court of fact based its decision partly on conjecture, surmises and suspicions, and partly on evidence, in such a situation an issue of law would arise. Ruling in favour of the taxpayer, the High Court held that, in the present case, the Tribunal’s decision is at least partly, if not wholly, based on conjectures and surmises, and is therefore liable to be interfered with.

Steel Products Ltd. v. CIT [TS-669-HC-2013(CAL)]

Third member bench of Mumbai Tribunal held that the disallowance under Section 14A of the Act read with Rule 8D of Income tax Rules, applies to tax-free securities held as stock-in-trade

The taxpayer is engaged in the business of share trading and held shares as stock-in-trade. In its return for AY 2008-09, the taxpayer had declared income from dividends which was exempt, and had suo-moto disallowed INR 0.122 million under Section 14A of the Act. The AO rejected the quantum of disallowance made by the taxpayer under Section 14A holding it as without any basis, and applied rule 8D of the Income Tax Rules, 1962 (the Rules) of the Rules for computing the disallowance.

The matter was referred to the Third Member bench due to the difference of opinion between the Accountant Member (AM) and Judicial Member (JM). Before the Third Member bench, the taxpayer relied on the decisions in the case of CCI Ltd v. JCIT [2012] 71 DTR 141 (Kar), DCIT v. India Advantage Securities Ltd. (ITA No. 6711/Mum/2011) and Yatish Trading Co. Pvt. Ltd. v. ACIT [2011] 129 ITD 237 (Mum), in which it was held that Section 14A of the Act and Rule 8D of the Rules apply to shares held as investment and not to the shares held as stock-in-trade. The tax department relied on Godrej & Boyce Manufacturing Co. Ltd. v. DCIT & Anr. [2010] 328 ITR 81 (Bom) (where it was held that Rule 8D of the Rules is mandatory) and ITO v. Daga Capital [2009] 117 ITD 169 (Mum) (SB) (where it was held that Section14A of the Act applies to stock-in-trade). It was held by the Tribunal that the issue under appeal is squarely covered by the principles laid down in the decision of Godrej & Boyce Mfg. Co, Dhanuka & Sons [2011] 339 ITR 319 (Cal), JCIT v. American Express Bank Ltd. [2012] 24 taxmann.com 50 (Mum) and Damani Estates & Finance, in which the issue has been elaborately considered. The argument that the judgement of the Karnataka High Court in CCI Ltd is the solitary High Court judgement on the point and it should be followed is not correct because the issue has also been considered by the Calcutta High Court in Dhanuka & Sons. Also, while CCI Ltd has not considered the jurisdictional High Court judgement in Godrej & Boyce, Dhanuka & Sons has duly considered Godrej & Boyce in taking the view that Section 14A/Rule 8D apply to shares held as stock-in-trade. Accordingly, it was held that the disallowance under Section 14A of the Act has to be made even when shares are held as stock-in-trade.

DCIT v. D.H. Securities Pvt. Ltd. [TS-643-ITAT-2013(Mum)]

Expenditure on further improvement and development of software held as capital in nature; allowable as expenditure in respect of scientific research

The taxpayer acquired intellectual property, i.e. software,

for INR 108.2 million, which was capitalised in its books. For AY 2001-02, the taxpayer spent a sum of INR 92.7 million in further developing and improving the software to secure an enduring benefit. The development expenditure mainly included the salary cost of the employees and other general administrative expenses incurred in connection with development of the software product called ‘Talisma’.

The tax department was contending that any expenditure incurred on further development of the software had to be treated as capital in nature, since the expenditure on purchase of ‘Talisma’ software had been capitalised by the taxpayer.

The High Court noted that Section 35 of the Act deals with expenditure on scientific research. Section 35(1)(iv) of the Act provides for deduction in respect of any expenditure of a capital nature on scientific research related to business carried on by the taxpayer. Referring to the definition of ‘scientific research’ under Section 43(4) of the Act, the High Court noted that any activities for extension of knowledge in the field of natural science fall within the definition of ‘scientific research’. Thus, the High Court held that such development of software was on account of ‘scientific research’. As the expenditure on further development of software incurred by the taxpayer was capital in nature, the High Court held that it was an allowable deduction under Section 35(1)(iv) of the Act, as it was incurred in relation to the business carried on by the taxpayer.

CIT vs. Talisma Corporation Pvt. Ltd. [TS-654-HC-2013(KAR)]

Notifications/Circulars/Press releasesCentral Board of Direct Taxes accepts High Court verdict. No TDS under Section 194J of the Act on service tax component if indicated separately

The Central Board of Direct Taxes (CBDT) has issued Circular No. 1/2014, dated 13 January 2014, pointing out that the Rajasthan High Court has taken a view in CIT(TDS) v. Rajasthan Urban Infrastructure [2013] 37 taxmann.com 154 (Raj) that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act. Pursuant thereto, the CBDT has decided in exercise of powers under Section 119 of the Act that wherever in the terms of the agreement/contract between the payer and the payee, if the service tax component comprised in the amount is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

Circular No. 1/2014 dated 13 January 2014

Circular on Section 40(a)(ia) of the Act

The CBDT has issued a Circular (CBDT Circular No. 10/DV/2013, dated 16 December 2013), wherein it has been clarified that the provision of Section 40(a)(ia) of the Act would cover not only the amounts which are payable as on 31 March of a previous year but also amounts which are payable at any time during the year.

The CBDT clarified that in case any High Court decides an issue contrary to ‘Departmental view’, the ‘Departmental

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Mergers and acquisitions

DecisionsRental income from temporary letting of unsold units held as stock-in-trade to be treated as ‘business income’

The taxpayer has constructed a Commercial Complex. All the units in the Complex were put on sale; however, with a fall in demand, a few units were not sold and continued to be part of the taxpayer’s stock-in-trade. Some such units were let out on rent. In the past, the rental income from these units was offered as income from house property; however, in the current year, it was included as part of the business income. The taxpayer claimed that the treatment as income from house property was due to ignorance about the legal position. The AO treated the rental income as income from house property.

Considering the fact that the unsold units in the stock-in-trade were already treated as business assets, the Tribunal held that the rental income from unsold units in the complex should be treated as ‘income from business’. As regards the past conduct of the taxpayer, the Tribunal held that ignorance of law could be an excuse.

Late (Smt) Nirmala Sahu v. CIT (All) – (ITA No 48 to 53 of 2007)

‘Informal guidance’ on non-public shareholding

Mr. Bhavook Tripathi (acquirer), a person who is neither the promoter nor part of the promoter group of R Systems International Limited (R Systems), made a public offer for acquisition of shares in R Systems and on completion of the offer held 31.11 per cent shares in R Systems. The holding was subsequently increased to 34.82 per cent. The promoters’ holding in R Systems was 50.17 per cent. According to R Systems, as the aggregate holding of promoters and acquirer was approximately 85 per cent, this exceeded the maximum permissible non-public holding of 75 per cent.

Regulation 7(4) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 provides that in case the acquirer’s acquisition pursuant to the open offer results in the acquirer’s holding crossing the maximum permissible non-public limit, the acquirer should reduce his holding to the permissible limit of 75 per cent.

R Systems had sought SEBI’s view on whether the acquirer’s holding should be treated as part of the non-public holding in R Systems, and, if yes, whether the acquirer should be required to reduce its holding in R Systems to ensure compliance with the minimum public shareholding.

The Securities Contract Regulation Rules (SCRR) defines the term ‘public’ to mean persons other than promoters, promoter group and subsidiary/associates of the company.

Considering the submission that the acquirer was neither the promoter nor part of the promoter group and considering the definition of public, SEBI opined that the acquirer’s holding in R Systems is not part of the non-public holding and Regulation 7(4) is not applicable to the same.

view’ thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. Further, the tax authority shall examine the said judgment on a priority basis to decide as to whether filing a Special Leave Petition (SLP) to the Supreme Court will be adequate for the said decision or whether some legislative amendment is called for.

CBDT Circular No. 10/DV/2013, dated 16 December 2013

Note: The controversy with respect to the disallowance of expenditure under Section 40(a)(ia) of the Act has been a matter of debate before the Courts. There are conflicting precedents by judicial authorities on the applicability of Section 40(a)(ia) of the Act with regard to the disallowance of expenditure in computing the business income. In the case of Merilyn Shipping & Transport [2012] 136 ITD 23 (Visakhapatnam) (SB), the Special Bench has held that disallowance of expenditure on account of non-deduction of tax is restricted only to the expenditure ‘payable’ as at the end of the previous year. Subsequently, the Calcutta and Gujarat High Courts (in CIT v. Crescent Export Syndicate [2013] 216 Taxmann 258 (Cal), CIT v. Md. Jakir Hossain Mandal [2013] 33 taxmann.com 123 (Cal) and CIT v. Sikandarkhan N. Tunvar [2013] 33 taxmann.com 133 (Guj)) have given a reasoned ruling distinguishing the decision of Merilyn Shipping & Transport. The High Courts have held that the views expressed in the case of Merilyn Shipping & Transports are not acceptable. Therefore, disallowance under Section 40(a)(ia) of the Act can be made even for the amounts which have been paid during the year. On the other hand, the Allahabad High Court in the case of Vector Shipping Services (P) Ltd. [2013] 218 Taxman 93 (All), without dealing with the decision of Calcutta and Gujarat High Court, has held that for disallowance of expenditure on which tax has not been deducted, the amount should be payable and not which has already been paid by the end of the year. One may contend that the decision in the case of Vector shipping Services (P) Ltd [2013] 218 Taxman 93 (All) is per incuriam. Further, the Mumbai Tribunal in the case of Rishti Stock and Shares Pvt Ltd. (ITA No.112/Mum/2012) dealt with this issue and held that the Allahabad High Court had given passing remarks which are only obiter dicta. The Calcutta High Court and the Gujarat High Court have dealt with this issue arising out of the Special Bench decision in the case of Merilyn Shipping and Transports and specifically disapproved it and such a decision constitutes the ratio decidendi of these cases. It is the ratio decidendi of a judgment which prevails upon the contrary obiter dicta of another judgment. Accordingly, disallowance under Section 40(a)(ia) of the Act for TDS default is applicable to expenditure paid during year.

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Transfer Pricing

DecisionsDelhi High Court reversed the decision in the case of Li & Fung India Private Limited and held that transfer pricing officer’s determination of the arm’s length price for sourcing support services based on markup on free on board value of exports is contrary to the provisions of the law

During FY 2005-06, the taxpayer rendered sourcing support services to its Hong Kong-based associated enterprise (AE), for which it received a remuneration of cost plus five per cent. The taxpayer applied the Transactional Net Margin Method (TNMM) to determine the arm’s length price (ALP) of such remuneration, considering operating profit/total cost (OP/TC) as the profit level indicator (PLI). The Transfer Pricing Officer (TPO), while accepting the TNMM as the most appropriate method, held that the cost for the purpose of the 5 per cent mark-up should include the free on board (FOB) value of exports that have been facilitated by the taxpayer. The dispute resolution panel (DRP) upheld the order of the TPO on principle, but reduced the markup to 3 per cent on the FOB value of exports. The Tribunal, while upholding on principle the TPO’s findings that the cost plus markup methodology adopted by the taxpayer is not at arm’s length, held that the amount of adjustment cannot exceed the amount that has been retained by the AE out of the total remuneration received from third party customers. The Tribunal further held that the distribution of total compensation received by the AE from its customers between the taxpayer and the AE should be in the ratio of 80:20.

The High Court held that broad basing of the profit determining denominator, as the FOB value of the exports to determine the ALP, is contrary to provisions of the Act and the Rules. In this regard, the High Court held that:

• Rule 10B(1)(e) of the Rules does not enable imputation of cost incurred by third parties to compute the taxpayer’s net profit margin for application of the TNMM.

• Attributing the costs of third party manufacture, when the taxpayer does not engage in that activity, and when those costs are clearly not the taxpayer’s costs, is impermissible. Such adjustment is outside the provision of the law.

• The assessment carried out by the taxpayer must first be rejected for any further alterations to take place.

The High Court found merit in the taxpayer’s submission that the lower authorities, including the Tribunal, misdirected themselves in holding that the taxpayer assumed substantial risk. The High Court held that the taxpayer is a low risk contract service provider exclusively rendering sourcing support to its AE and did not bear any significant operational risks for its functions. Rather, it is the AE that undertakes

substantial functions and assumes enterprise risks. The High Court further held that tax authorities should base their conclusions on specific facts, and not on vague generalities, such as ‘significant risk’, ‘functional risk’, ‘enterprise risk’, etc., without any material on record to establish such findings. The impugned order has not shown how, and to what extent, the taxpayer bears ‘significant’ risks, or that the AE enjoys such locational advantages, as to warrant rejection of the transfer pricing exercise undertaken by the taxpayer. If such findings are warranted, they should be supported by demonstrable reasons, based on objective facts and the relative evaluation of their weight and significance.

Li & Fung (India) Private Limited v. CIT (ITA No. 306 of 2012

ALP of an international transaction cannot exceed the ‘Final Sales Price’- Supreme Court dismisses Revenue SLP against Global Vantedge Ruling

The taxpayer had entered into an arrangement with RCS Centre Corp (RCS), its AE, and was engaged in rendering IT enabled services/back office support services in the field of credit collection and telemarketing to its AE. The taxpayer considered RCS as the tested party and compared the profit margin of RCS with the average margin of foreign comparable companies in its transfer pricing study report. The TPO concluded that the AE is not to be treated as a tested party and considered the taxpayer as the tested party. The CIT(A) upheld the action of the TPO treating the taxpayer as ‘tested party’. The CIT(A) granted partial relief in favour of the taxpayer by stating that the total adjustment together with the ALP cannot exceed the total revenue earned by the taxpayer and it’s AE from third party clients. The Tribunal upheld the order of the CIT(A) on the grounds that neither the taxpayer nor the Revenue had been able to provide any basis or material to rebut the findings and conclusions of the CIT(A).

The issue raised before the High Court was with regard to the determination of ALP. Also, the tax department contended that it was obligatory upon the Tribunal to record its own findings rather than merely confirming the findings of the CIT(A). The High Court observed that with regard to the determination of ALP, the Tribunal had examined the issue at length and extensively quoted the decision of the CIT(A), examined the CIT(A)’s order, and thereafter confirmed his order. The High Court observed that after examining the findings of the CIT(A), the Tribunal had given the tax department an opportunity to controvert or rebut the findings and conclusions arrived by the CIT(A). However, the tax department was unable to controvert those findings and point

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Indirect Tax

Service Tax - Decisions

Service tax - Decisions Service tax on ‘one time maintenance charges’ received by the builders/developers from the flat owners

The taxpayer (a builder), collected ‘one time maintenance charges’ from each of the flat owners and deposited it to a separate bank account as a fixed deposit. Interest earned on this deposit was utilised to pay charges such as municipal taxes, security charges, electricity charges, etc. The department demanded service tax from the appellant on such deposits under the category of ‘Maintenance or Repair Service’.

The Mumbai Tribunal held that the appellant was not providing any maintenance or repair services to the flat owners on the basis of the following observations:

• The taxpayer was not in the business of providing maintenance or repair services as they were paying municipal taxes, security charges, electricity charges, etc., only on behalf of the flat owners as a trustee or pure agent without charging anything on their own

• The payments were made on a cost to cost basis and were debited from the fixed deposit account

• To accept maintenance charges, deposit these amounts in a separate bank account and make such payments were statutory obligations on the appellant under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, sale, management and transfer) Act, 1963.

Kumar Builders and others v. CCE [2013-TIOL-1806-CESTAT-MUM]

Rule 6(3) of Service Tax Rules, 1994 is applicable on service recipients as well

Rule 6(3) of the Service Tax Rules, 1994 [Rule 6(3)] allows the taxpayer to take credit of excess service tax paid in specified cases. In the instant case, the issue involved was whether Rule 6(3) would apply to service recipients liable to pay service tax under the reverse charge mechanism.

The Chennai Tribunal observed that Rule 6(3) applies to an ‘assessee’ and the term ‘assessee’ has been defined under Section 65(7) of the Finance Act, 1994, which means ‘a person liable to pay service tax’. Since the appellant as a service recipient is liable to pay tax under reverse charge mechanism, it would fall under the category of ‘assessee’, and hence Rule 6(3) would apply.

INOX Air Products Ltd. v. CCE [2013 (32) S.T.R 336 (Chen)

to any new evidence to enable the Tribunal to deviate from the CIT(A)’s view. Further, it was not the case that the Tribunal ignored any of the points made by the tax department, which could have been rectified.

The Supreme Court did not find any substantial question of law arising out of the (impugned) High Court, and hence it dismissed the tax department’s SLP against the High Court order.

CIT v. Global Vantedge Pvt. Ltd. (ITA No. 1828/2010)

Notifications/Circulars/Press releasesCBDT issues important directives on Safe Harbour Rules

The CBDT issued a letter dated 20 December 2013 in which it has laid down important directives/clarifications regarding the implementation of the Safe Harbour Rules. The following issues were discussed/clarified:

• AOs should carefully verify and provide in writing to the Board, the details of all Form 3CEFAs, i.e. applications for exercising the Safe Harbour option, received by them.

• The Safe Harbour option in Form 3CEFA in paper format should not be confused with Form 3CEB (detailing International Transactions) which is filed electronically.

• AOs are required to examine the Form within two months, from the end of the month in which the option was filed, and decide whether to accept the Safe Harbour option or make a reference to the TPO, failing which, the Safe Harbour option will be considered as having been accepted with a validity of five years.

• If there are minor defects in Form 3CEFA, the AO can provide an opportunity to the taxpayer to rectify these, but the statutory time limit of two months provided in the Safe Harbour Rules cannot be exceeded.

• Safe Harbour Rules will not apply to eligible international transactions entered into with an associated enterprise, located in any country or territory, notified under Section 94A of the Act (e.g. Cyprus) or in a ‘no tax’ or ‘low tax’ countries.

• In cases where the taxpayer has opted for Safe Harbour, but has reported rates or margins lower than the Safe Harbour rates/margins, the income is to be computed on the basis of Safe Harbour rates/ margins.

• Safe Harbour rates/margins are not to be considered as a benchmark by the AO/TPO in cases not covered by the Safe Harbour Rules. Cases of regular transfer pricing audit shall be carried out without regard to the Safe Harbour margins/rates.

Source: www.itatonline.org

8

Refund of Service tax paid on input services received before date of obtaining centralised registration; not available

One of the issues involved in this case was whether refund is available of service tax paid on input services received by a branch office before the date of obtaining centralized registration, against export of service.

The Mumbai Tribunal held that the facility of centralized registration is a special facility granted under the CENVAT Credit Rules, 2004 and therefore, in the absence of this, the appellant is not eligible to claim credit on input services received at a branch office before the date of centralized registration.

It was also held that a provision for exemption, concession or exception must be construed strictly, and if such exemption is available subject to compliance with the conditions, these conditions should be complied with.

Compass Business Process Outsourcing Pvt. Ltd. v. CCE [TS-239-Tribunal-2013-ST]

Cricket promotion, not being charitable in nature, liable to service tax under the category, ‘club or association service’

The taxpayer, as cricket association, collected membership fees from its members. The issue was whether such membership fees could be treated as charitable in nature and accordingly fall under the exclusionary clause of the category ‘Club or association service’, and hence is not liable to service tax.

The larger bench of the Mumbai Tribunal upheld the demand, observing the following:

• The object of the taxpayer, being promotion of cricket, cannot be considered as a service to the poor and needy, and therefore is not charitable in nature

• Promotion of a particular game or sport is not a public service, though it may be in the public interest

• Public services, generally, are understood to mean services which are provided by organizations like Municipal Corporations and State Governments relating to health, education, etc

• The taxpayer’s treatment as a ‘charitable organization’ under the Act is immaterial for the purposes of service tax.

Vidarbha Cricket Association v. CCE [TS-234-Tribunal-2013-ST]

Circulars/Notifications/Press ReleasesTax exemption for services provided by way of sponsorship of specified sporting events expanded to include foreign participants

Previously, the service tax exemption on sponsorship of sporting events organized by a national sports federation or its affiliated federations was restricted to only participating teams or individuals representing any ‘district, state or zone’. [Vide Entry No. 11(a) of the Mega Exemption Notification, Notification No. 25/2012-ST, dated 20 June 2012].

Now, the said Entry has been amended to include participating teams or individuals representing any country as well.

Notification No. 1/2014-ST, dated 10 January 2014

Clarification regarding issuance of discharge certificate and availment of CENVAT credit of tax paid under Voluntary Compliance Encouragement Scheme

The Government has clarified that CENVAT credit of tax paid under the Voluntary Compliance Encouragement Scheme (VCES) can be claimed only after payment of tax dues in full and receipt of a discharge certificate in Form VCES-3.

Further, the Circular directs the field officers to ensure that the discharge certificate is issued promptly and not later than the stipulated period of seven days from the date of furnishing the details of payment of tax dues in full along with interest, if any, by the declarant.

Circular No. 176/2/2014-ST, dated 20 January 2014

Clarification issued on the applicability of the exemption notification in relation to services provided by a Resident Welfare Association to its own members

Service tax legislation exempts services provided by a Voluntary Compliance Encouragement Scheme (RWA) to its own members, by way of reimbursement of charges or share of contribution, up to INR 5,000 per month per member for sourcing of goods or services from a third person, for the common use of its members. In this Circular, the Government has clarified certain doubts raised in relation to the scope of this exemption. The key clarifications are listed below:

• Where the contribution exceeds INR 5,000 per month per member, the entire contribution would be liable to service tax

• The RWA may avail CENVAT credit and use this for payment of service tax, in accordance with the provisions of the CENVAT Credit Rules, 2004

• Where the third party issues bills relating to consumption of water, electricity and other services directly in the name of the individual members and where these have been discharged by the RWA on behalf of its members, the RWA would be termed as a ‘pure agent’ of its members (subject to the fulfillment of all the conditions relating to claiming ‘pure agent’ exemption). The value of these services would be excluded from the taxable value of services provided by the RWA.

Circular No.175/01/2014-ST, dated 10 January 2014

Central Excise - Circulars/Notifications/Press ReleasesImporters are mandatorily required to obtain registration under Central Excise for passing on CENVAT Credit

The Central Excise Rules, 2002 and the CENVAT Credit Rules, 2004 have been amended with effect from 01 March 2014 to provide the following:

• Registration is made mandatory for importers issuing invoices on which CENVAT Credit can be obtained

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Circular No. 979/03/2014-CX dated 15 January 2014

Education Cess not leviable on other Cesses levied under the Acts which are not administered by the Department of Revenue

The CBEC has clarified that a Cess levied under an Act which is not administered by the Ministry of Finance (Department of Revenue), but only collected by the Department of Revenue under the provisions of those Acts cannot be treated as a duty which is both levied and collected by the Department of Revenue. Therefore, the Education Cess and the Secondary and Higher Education Cess are not to be calculated on Cesses which are levied under Acts administered by Departments/Ministries other than the Ministry of Finance (Department of Revenue), but are only collected by the Department of Revenue in terms of those Acts.

Circular No. 978/2/2014-CX dated 07 January 2014

DecisionsOutward transportation is not an input service

The taxpayer claimed CENVAT credit of service tax paid on outward transportation under GTA service.

The Kolkata High Court held that the service tax paid on the outward transportation charges may be claimed as CENVAT Credit only with regard to that transportation which was made from one place of removal to another place of removal. Hence, CENVAT Credit cannot be claimed on the outward transportation of final products from the factory gate to the premises of the customers.

CCE v. Lumino Industries Limited [2014-TIOL-25-HC-KOL

SAD is exempt in case of stock transfer of goods from EOU to DTA

In the case of clearance of goods from EOU to DTA, Notification No. 23/2003-C.E dated 31 March 2003 provides exemption from the payment of additional duty of customs leviable under Section 3 (5) of the Customs Tariff Act, 1975 (i.e. SAD). However, no such exemption is applicable if such goods, when sold in DTA, are exempted by the State Government from payment of Value Added Tax (VAT)/Central Sales Tax (CST).

The taxpayer had stock transferred the goods from its EOU unit to its DTA unit. As this is a case of stock transfer, VAT/CST is not leviable. However, the taxpayer claimed exemption from the payment of SAD. The Central Excise authorities demanded SAD on the ground that VAT/CST is exempted by the State Government on stock transfer.

The Mumbai Tribunal held that SAD is not exempted if VAT/CST is ‘exempted’ by the State Government. However, this is not a case of exemption from payment of VAT/CST by the State Government, but the VAT/ CST itself is not leviable / applicable in the case of stock transfer. Therefore, the taxpayer is entitled to claim the exemption from SAD.

VVF Limited v. CCE [2014-TIOL-04-CESTAT-MUM]

CENVAT credit with respect to service tax paid on transportation of final products

In the instant case, the issue was whether CENVAT credit is available in respect of the final products which are chargeable

• An importer issuing the invoice on which CENVAT Credit can be obtained, will be considered as a ‘First Stage Dealer’.

Notification No. 17/ 2013-CX (N.T) and 18/ 2013-CX (NT), both dated 31 December 2013 the contract is titled as ‘penalty’

Sub-Rules 5, 5(A), 5(B), 5(C) of Rule 3 of the CENVAT Credit Rules, 2004 amended

Sub-Rules 5, 5(A), 5(B) and 5(C) of Rule 3 of the CENVAT Credit Rules, 2004 prescribe provisions relating to treatment of CENVAT Credit availed under the prescribed circumstances. There was no clarity as to whether the amount required to be paid can be done only in cash or whether the CENVAT Credit balance could be utilised towards the said payment. Further, there was no clarity as to whether the said amount was required to be paid immediately at the time of clearance of inputs/capital goods or if its value would be written off in the books of accounts or if there would be a remission of duty on the final products, as the case may be; or whether it could be paid on a monthly basis similar to duty payment on manufactured goods.

Vide this notification; an Explanation has been inserted in the CENVAT Credit Rules, 2004 to provide that the said amount could also be paid by utilising the CENVAT Credit balance. Further, the Explanation provides that the amount may be paid (in cash or by utilising credit) on or before the fifth day of the following month (except for the month of March, where payment is required to be made before 31st March), i.e., on a monthly basis, and not on a transaction to transaction basis.

Further, according to Rule 3 (5C) of CENVAT credit Rules, 2004, where, on any goods manufactured or produced, the payment of duty is ordered to be remitted under Rule 21 of the Central Excise Rules, 2002, the CENVAT Credit obtained on the inputs used in the manufacture or production of said goods is required to be reversed. Now, this Rule has been amended to provide that even the CENVAT Credit obtained with respect to input services used in or in relation to the manufacture or production of said goods is required to be reversed.

Notification No.1 / 2014 - CE (N.T), dated January 8, 2014

Sale of goods below their manufacturing cost is not a reason to reject the transaction value in all cases

In the case of M/s Fiat India Limited, 2012 (283) E.L.T 161 (SC), the Supreme Court had held that where for the purpose of achieving market penetration, goods are sold at a price substantially lower than the cost of their manufacture and such sales are continued for a long period, say, more than five years, the revenue could reject the transaction value declared under Section 4 of the Central Excise Act, 1944 (the Excise Act) and invoke the provisions of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 to assess Central Excise duty.

In this regard, trade has sought clarifications on the issue of whether the declared transaction value can be rejected in all cases where the transaction value is lower than the manufacturing cost and profit. In this background, the Central Board of Excise and Customs (CBEC) has clarified that mere sale of goods below the manufacturing cost and profit cannot be taken as the sole basis for rejecting the transaction value. Accordingly, if there is sales in circumstances similar to those in the case of M/s FIAT, only then can the transaction value be rejected.

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to Excise duty at specific rates and not ad valorem rates and the transportation of goods is beyond the factory gate.

The Tribunal had held that where duty is chargeable at specific rates or at the value determined under Section 4A of the Excise Act, and not the ad valorem rates under Section 4 of the Excise Act, the definition of ‘place of removal’ as given in Section 4(3)(c) of the Excise Act would not be applicable and, as such, the ‘place of removal’ will be the factory gate. Therefore, in such cases, CENVAT credit cannot be availed with respect to service tax paid on transportation of final products beyond the factory gate.

Ultratech Cement Ltd v CCE, TS-248-Tribunal -2013-EXC

Customs Duty Notifications/Circulars/Press ReleasesNo SAD exemption in case of stock transfer of goods from Special Economic Zone to Domestic Tariff Area for self consumption

In the case of clearance of goods from a Special Economic Zone (SEZ) to Domestic Tariff Area (DTA), the Notification No. 45/ 2005-Cus dated 16 May 2005, provides exemption from the payment of SAD). However, no such exemption is applicable if such goods, when sold in a DTA, are exempted by the State Government from payment of sales tax or VAT. In this regard, the CBEC has clarified that, in the case of stock transfer from SEZ to DTA for self-consumption, i.e. otherwise than for sale, no sales tax/VAT is leviable on such a transaction. As no sales tax / VAT is leviable on the said transaction, SAD is payable.

Circular No. 44/2013-Cus dated 30 Dec 2013

Foreign Trade Policy Notifications/Circulars/Press ReleasesLimited Liability Partnerships are covered within the definition of ‘Group Companies’

The Director General of Foreign Trade (DGFT) has amended the definition of ‘Group Company’ in Para 9.28 of Foreign Trade Policy, 2009-2014, to include Limited Liability Partnerships (LLPs) in the definition of ‘Group Company’. However, neither a partnership nor proprietorship firm is covered within the ambit of definition of a ‘Group Company’.

Notification No. 58/(RE-2013)/2009-2014, dated 18 December 2013

Status Holder Incentive Scrip, Served from India Scheme and Agri Infrastructure Incentive Scheme scrips cannot be used for payment of Customs duty for shortfall in Export Obligation under Advance Authorisation or Duty Free Import Authorisation

The DGFT has amended Para 3.17.11 of the Foreign Trade Policy 2009-14 and now the scrips issued under the Status Holder Incentive Scrip (SHIS) Scheme, Served from India Scheme (SFIS) and Agri Infrastructure Incentive Scheme (AIIS), cannot be used for payment of Custom duty for shortfall in export

obligation under Advance Authorisation or Duty Free Import Authorisation (DFIA).

Notification No. 64/(RE-2013)/2009-2014, dated 06 January 2014

VAT – DecisionsTransfer of right to use incorporeal right exclusively in favour of the transferee is leviable to sales tax

The taxpayer was engaged in the business of operating a supermarket under the name and style of VITAN A/c Supermarket. The taxpayer entered into a franchise agreement with M/s. Rajalakshmi Departmental Stores, wherein the franchisee was given the exclusive right to operate the supermarket.

The taxpayer had developed a business plan and method for the operation of the supermarket, providing general merchandise and services, utilizing certain standards, specifications, methods, procedures and management systems together with the trade name, services, trademark, trade symbol and copyright as adopted and designed for use in their system.

In terms of the agreement, the franchisee was required to pay a refundable deposit and ‘fee’ based on the per centage specified on the sales. The authorities levied VAT at 4 per cent on the franchise commission received for the periods 2002-03 and 2004-05 on the ground that the consideration is towards the right to use intangible property i.e. trademark.

The Hon’ble High Court held that the transaction made by the petitioner is a transfer of a right in the trademark and a trading style which are incorporeal rights and are intangible things, and transfer of such an incorporeal right is undoubtedly eligible for tax. The petitioner has transferred their right to use their trademark, goodwill and reputation exclusively to the franchisee in respect of a particular outlet and any misuse of such exclusively licensed right rendered, means the franchisee is open to action which is meant to include the termination of the agreement.

For transferring the right to use the trademark, it is not necessary to hand over the trademark to the transferee or give control or possession of the trademark to him. This could be done merely by authorizing the transferee to use the trademark in the manner required by law and the right to use the trademark could be transferred simultaneously to any number of persons. Therefore, it is not a mere licence or transfer of a mere right to enjoy but transfer of the right to use intangible goods, and hence sales tax is leviable on the amount received by the petitioner.

M/s Vitan Departmental Stores and Industries Limited v. The State of Tamil Nadu (2013-TIOL-897-HC-MAD-CT

In the absence of written agreement, obligation could be inferred from circumstantial evidence

The taxpayer effected a sale to Vijayashree Colata Limited of Maharashtra. The purchaser had taken delivery of goods within the state and then moved these goods inter-state at its own cost. The taxpayer claimed the sale as an inter-state sale, though there was no agreement between the parties to that effect. The AO treated the sale as a local sale on the ground that the purchaser had taken delivery within the state and levied tax accordingly.

11

The Madras High Court held that in the absence of written agreement, the obligation could be inferred from circumstantial evidence. The terms of the agreement between the parties were evident only by the dispatch details, indicative of the understanding between the parties. The criterion for considering the transaction as an inter-state sale was the movement of goods intimately connected with the sale. In the present case, the sale and the movement were intimately connected, and the movement of goods was a consequence of the sale. The movement of goods and the sale were inextricably connected, hence the sale would be considered as an inter-state sale.

Aspick Engineering (P.) Ltd. v. State of Tamil Nadu [2013] 62 VST 216 (Mad)

Notifications/Circulars/Press ReleaseHimachal Pradesh

With effect from 1 July 2014, all dealers registered under the HP VAT Act and the CST Act, irrespective of their turnover limit, are required mandatorily to file returns electronically.

Notification No. EXN-F(10)-7/2011, Dated 30th December, 2013

Chhattisgarh

The last date for completion of assessment proceedings which were to be completed:

• By the end of the calendar year 2012, but those which are not completed by 31 December 2013, has been extended till 31 March 2014.

• By the end of the calendar year 2013, but those which are not completed by 31 December 2013, has been extended till 30 June 2014.

Notification No. F-10- 33/55/2013/CT/V (73)/ (74), dated 27th December, 2013

Haryana

With effect from 1 January 2014, there is no requirement for carrying waybills in Form VAT D-3 (Inward and Outward) during transportation of goods into Haryana and goods moving out of any district in Haryana.

Notification No. S.O.132/H.A. 6/2003/S. 60/2013 dated 31 December 2013

With effect from 31 December 2013, the benefit of zero rated sale to SEZ units in Haryana which was withdrawn vide Notification dated 6 December 2013 has been reinstated, provided the SEZ unit issues a declaration in Form D2A to the selling dealer. A single declaration form would cover all transactions between a selling dealer and the SEZ unit for a financial year.

Further, it has been provided that all provisions related to Form VAT-D1 (i.e. declaration in case of sale to government) would apply to Form VAT-D2A as well.

Notification No. S.O.132/H.A. 6/2003/S. 60/2013 dated 31 December 2013

Punjab

With effect from 20 December 2013, the Punjab Voluntary Disclosure of Value Added Tax Scheme, 2013 has been introduced for settlement of unpaid taxes by a registered dealer or taxable person in case of any discrepancy in the discharge of their tax liabilities. In order to avail the benefit under the scheme, the dealer has to submit an application in the prescribed form on or before 31 January 2014.

Maharashtra

The due date for filing of an audit report in Form 704 for FY 2012-13 by Developers is on or before 15 February 2014, without payment of a penalty for late filing. This is available only for developers not opting for the composition scheme.

Trade Circular No. 1T of 2014 Dated 4th January, 2014 and Trade Circular No. 2T of 2014 Dated 7th January, 2014

Rajasthan

With effect from 1 October 2013, vide Notification No. F. 12(101)FD/Tax/2011-59 dated 13 August 2013, a registered dealer engaged in execution of a works contract has been exempted from payment of tax leviable on the transfer of property in goods involved in the execution of the works contract(s). The said Notification also provides for payment of an exemption fee in lieu of tax payable. In connection with the above, a Notification effective from 1 October 2013 has been issued prescribing the rate of the exemption fee at 1 per cent of the total value of the works contract in the case of a works contract related to setting up of a new enterprise or expansion of an existing enterprise manufacturing fertilizer within the State with a minimum investment of INR 2,500 crores.

Notification No F.12(101)FD/Tax/2011-87 Dated 9th January, 2013

Uttarakhand

The due date for filing of the Annual Return for FY 2012-13 has been extended from 31 December 2013 to 15 March 2014 on payment of a late fee in accordance with the provisions of the Uttarakhand VAT Act and Rules framed thereunder.

Notification No. 24/2014/19(120)/XXVII(8)/2008 Dated: 7 January, 2014

Personal Tax

Notifications/Circulars/Press ReleasesNon-machine readable passports will be invalid from 2015

The International Civil Aviation Organization (ICAO) has set a deadline of 24 November 2015, for globally phasing out all non-machine readable passports.

Non-machine readable passports include handwritten passports with pasted photographs or passports having a validity of 20 years. Indian citizens who travel abroad and do not have machine readable passports should try to obtain machine readable passports on or before 24 November 2015 so that their travel outside India is hassle-free.

Contact us:

Hiten Kotak Co-Head of Tax T: +91 (22) 3090 2702 E: hiten@kpmg.com

Punit Shah Co-Head of Tax T: +91 (22) 3090 2681 E: punitshah@kpmg.com

Girish Vanvari Co-Head of Tax T: +91 (22) 3090 1910 E: gvanvari@kpmg.com

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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