Transfer-pricing treatment of ITeS margins excludes pass-through tax recoveries and separate delayed-receivables interest after working-capital adjust...
Capacity-utilisation adjustments under TNMM can neutralise substantiated COVID-related idle costs where underutilisation materially affects profitabil...
TNMM functional comparability requires excluding rice manufacturers from a pure Basmati rice trader's benchmark and recognising operating export recei...
Working-capital adjustment subsumes delayed-receivable effects in TNMM benchmarking of captive software-development services, avoiding separate notion...
Transfer-pricing comparability requires exclusion of financially illogical super-profit comparables and correction of unsupported annual-report and ma...
Charitable character assessment preserves Section 80G approval despite inclusive spiritual teachings and incidental religious expenditure within the s...
Penalty proceedings for cash-loan acceptance require assessment proceedings and recorded Assessing Officer satisfaction; absent these, the proceedings...
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Levy of service tax on cheque dishonour charges and late delivery charges was challenged. It was held that the recovery of liquidated damages or penalty from another party cannot be considered as consideration for any service, as neither the appellant is carrying out any activity to receive compensation, nor can there be an intention of the other party to breach or violate the contract and suffer a loss. The purpose of imposing compensation or penalty is to ensure that the defaulting act is not undertaken or repeated, and cannot be said to be towards toleration of the defaulting party. The expectation is that the other party complies with the terms of the contract, and a penalty is imposed only if there is non-compliance. The Appellate Tribunal has consistently held that penalty or late delivery charges cannot be subjected to Service Tax u/s 66E of the Finance Act 1994. Consequently, the impugned order was set aside, and the appeal was allowed.
Levy of service tax on cheque dishonour charges and late delivery charges was challenged. It was held that the recovery of liquidated damages or penalty from another party cannot be considered as consideration for any service, as neither the appellant is carrying out any activity to receive compensation, nor can there be an intention of the other party to breach or violate the contract and suffer a loss. The purpose of imposing compensation or penalty is to ensure that the defaulting act is not undertaken or repeated, and cannot be said to be towards toleration of the defaulting party. The expectation is that the other party complies with the terms of the contract, and a penalty is imposed only if there is non-compliance. The Appellate Tribunal has consistently held that penalty or late delivery charges cannot be subjected to Service Tax u/s 66E of the Finance Act 1994. Consequently, the impugned order was set aside, and the appeal was allowed.
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