paper 6 advanced tax laws and practice · reorganisation or restructuring of capital decisions. tax...

Q&A-6.1

Paper 6 Advanced Tax Laws and Practice

Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.2

Bird's-Eye View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.5

Line Chart Showing Relative Importance of Chapter . . . . . . . . . . . . . . . Q&A-6.9

Frequency Table Showing Distribution of Marks . . . . . . . . . . . . . . . . . . Q&A-6.10

Frequency Table Showing Marks of Compulsory Questions . . . . . . . . . Q&A-6.11

Legends for the Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.12

Study Material Based Contents

1. Study (I) General Framework of Direct Taxation in India . . . . Q&A-6.13

2. Study (II) Companies Under Income Tax Laws . . . . . . . . . . . Q&A-6.16

3. Study (III) Tax Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.47

4. Study (IV) Tax Management . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.71

5. Study (V) Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.111

6. Study (VI) Central Excise Laws . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.114

7. Study (VII) Custom Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.201

8. Study (VIII) Promissory Estoppel in Fiscal Laws . . . . . . . . . . . . Q&A-6.276

9. Study (IX) Tax Planning and Financial Management Decisions Q&A-6.278

10. Study (X) Basic Concepts of International Taxation . . . . . . . . Q&A-6.279

11. Study (XI) Advance Ruling and Tax Planning . . . . . . . . . . . . . Q&A-6.295

12. Study (XII) Taxation of Inbound Transactions . . . . . . . . . . . . . . Q&A-6.303

13. Study (XIII) Taxation of Outbound Transactions . . . . . . . . . . . . Q&A-6.309

14. Study (XIV) Objective Questions . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-6.311

Question Paper of December, 2011 . . . . . . . . . . . . Q&A-6.342

Question Paper of June, 2012 . . . . . . . . . . . . . . . . . Q&A-6.347

Question Paper of December, 2012 . . . . . . . . . . . . Q&A-6.352

Question Paper of June, 2013 . . . . . . . . . . . . . . . . . Q&A-6.358

Q&A-6.2

SyllabusPaper 6 (100 marks)

Advanced Tax Laws and Practice

Level of knowledge : Expert knowledge

Objectives :

To provide —

(i) knowledge of framework of taxation system in India.

(ii) knowledge of various concepts and their application relating to tax laws with a

view to integrating the relevance of these laws with financial planning and

management decisions.

(iii) an overview of international taxation.

Detailed contents :

Part A : Direct Taxation - Law and Practice (30 marks)

1. General Framework of Direct Taxation in India

Different direct tax laws and their inter-relationship; importance of Income Tax Act

and Annual Finance Act and related Constitutional provisions; harmonisation of tax

regime.

2. Companies under Income-tax Laws

Classification and tax incidence; corporation tax as per Article 366; computation

of taxable income and assessment of tax liability considering special provisions

relating to companies.

3. Tax Planning

Concept of tax planning; Tax planning with reference to setting up a new business;

locational aspects; nature of business; tax holiday, etc. Tax planning with regard

to specific management decisions such as mergers and takeovers; location of

undertaking; introduction of voluntary retirement; tax planning with reference to

financial management decisions such as borrowing or investment decisions;

reorganisation or restructuring of capital decisions. Tax planning with respect to

corporate reorganization; tax planning with reference to employees’ remuneration.

Tax planning vis-à-vis important provisions of wealth-tax including court rulings

and legislative amendments.

4. Tax Management

Return and procedure for assessment; special procedure for assessment of search

cases, e-commerce transactions, liability in special cases; collection and recovery

of tax; refunds, appeals and revisions; penalties imposable, offences and

prosecution.

Q&A-6.3

Part B : Indirect Taxation – Law And Practice (50 marks)

5. Introduction

Special features of indirect tax levies—all pervasive nature, contribution to

Government revenues; constitutional provisions authorizing the levy and collection

of duties of central excise, customs, service tax, central sales tax and VAT.

6. Central Excise Laws

Basis of chargeability of duties of central excise - goods, manufacture,

classification and valuation of excisable goods, CENVAT; assessment procedure,

exemption, payment, recovery and refunds of duties.

Clearance of excisable goods; Central Excise Bonds; maintenance of accounts

and records and filing of returns.

Duties payable by small scale units. set-off of duties – concept, meaning and

scheme; Central Excise Concessions on exports; search, seizure and

investigation; offences and penalty.

Adjudication, Appeal and Revision, including appearance before CEGAT by

Company Secretary as authorised representative; settlement of cases.

7. Customs Laws

Levy of and exemption from, customs duties – specific issues and case studies;

assessment and payment duties; recovery and refund of customs duties.

Procedure for clearance of imported and exported goods; drawback of duties.

Transportation and warehousing

Confiscation of goods and conveyances and imposition of penalties; search,

seizure and arrest, offences and prosecution provisions.

Adjudication, Appeal and Revision; Settlement of Cases. Introduction of New

Syllabus of the Company Secretaryship Course

Student Company Secretary 45 November 2007

8. Promissory Estoppel in Fiscal Laws – principles and applicability with reference

to indirect taxes.

9. Tax Planning and Management - scope and management in customs, with

specific reference to important issues in the respective areas.

Part C: International Taxation (20 marks)

10. Basic Concepts of International Taxation

Residency issues; source of income; tax havens; unilateral relief and Double Tax

Avoidance; transfer pricing; international merger and acquisitions; impact of tax on

GATT 94, WTO, anti dumping processing; the subpart F Regime : definition of

CFC, Subpart F Income and Operating Rules.

Q&A-6.4

11. Advance Ruling and Tax Planning

Authority for advance rulings, its power and procedure; applicability of advance

ruling; application for advance ruling and procedure on receipt of application.

Tax planning and special provisions relating to certain incomes of nonresident

corporate assessee.

Double taxation avoidance agreements; general principles; provisions and tax

implications thereof.

12. Taxation of Inbound Transactions

Taxation of passive investments; capital gains & losses; income taxation; property

taxation; branch profit taxation.

13. Taxation of Outbound Transactions

Foreign tax credit; foreign income exclusions; indirect foreign tax credit (deemed

paid system vs. current pooling system); Controlled Foreign Corporations; PFIC’s

(Passive Foreign Investment Companies); cross border merger, acquisitions and

transfers.

Q&A-6.5

Bird's-Eye View

Paper 6

Advanced Tax Laws and Practice

Question Paper Based Contents of Last Five Examinations

Years Q. No. Chapter Page

No.No. Name

2011

June

1. (a)

(b)

(c)

2. (a)

(b)

(c)(i)

(ii)

3. (a)

(b)

(c)

4. (a)

(b)

(c)

(d)

5. (a)

(b)

(c)

6. (a)

(b)

(c)

(d)

7. (a)

(b)(i)

(ii)

(c) (i)

(ii)

8. (i)

(ii)

(iii)

(iv)

14

14

14

3

3

4

3

4

3

4

14

14

6

6

6

7

6

6

7

7

6

7

6

7

11

11

10

10

12

11

Objective Questions

" " "

" " "

Tax Planning

" "

Tax Management

Tax Planning

Tax Management

Tax Planning

Tax Management

Objective Questions

" " "

Central Excise Laws

" " "

" " "

Custom Laws

Central Excise Laws

" " "

Custom Laws

" "

Central Excise Laws

Custom Laws

Central Excise Laws

Custom Laws

Advance Ruling and Tax Planning

" " " " "

Basic Concepts of International Taxation


Taxation of Inbound Transactions


330

330

331

61

61

91

56

91

56

91

332

333

159

160

192

267

160

161

239

239

161

239

123

209

299

299

286

292

305

299

Q&A-6.6

(v)

(vi)

10

10


" " " " "

286

280

2011

Dec.

1. (a)

(b)

2. (a)

(b)

(c)

3.

4. (a)

(b)

(c)

(d)

5. (a)

(b)

(c)

6. (a)

(b)

(c)

7. (a)

(b)

(c)

8. (i)

(ii)

(iii)

(iv)

(v)

(vi)

3

3

3

3

3

3

14

14

6

6

6

7

6

6

7

7

6

7

7

10

13

12

11

10

11

Tax Planning

" "

" "

" "

" "

" "

Objective Questions

" "

Central Excise Laws

" " "

" " "

Custom Laws

Central Excise Laws

" " "

Custom Laws

" "

Central Excise Laws

Custom Laws

" "


Taxation of Outbound Transactions





62

49

64

57

57

64

334

334

161

161

192

268

162

193

269

269

163

240

240

287

309

305

299

287

299

2012

June

1. (a)

(b)

2. (a)

(b)

(c)

3.

4. (a)

(b)

(c)

(d)

5. (a)

(b)

14

3

3

3

4

2

14

14

6

7

6

7

Objective Questions

Tax Planning

" "

" "

Tax Management

Companies under Income Tax Laws

Objective Questions

" "

Central Excise Laws

Custom Laws

Central Excise Laws

Custom Laws

335

67

68

68

92

29

336

337

163

270

194

270

Q&A-6.7

(c)

6. (a)

(b)

(c)

7. (a)

(b)

(c)

8. (i)

(ii)

(iii)

7

6

7

7

6

6

7

10

11

12

Custom Laws

Central Excise Laws

Custom Laws

" "

Central Excise Laws

" "

Custom Laws




271

195

241

241

163

164

241

288

300

305

2012

Dec.

1. (a)

(b)

(c)

2. (a)

(b)

3. (a)

(b)(i)

(ii)

(c)

4. (a)

(b)

(c)

(d)

5. (a)

(b)

(c)

6. (a)

(b)

(c)

7.(a)(i)

(ii)

(b)

(c)

8. (i)

(ii)

(iii)

(iv)

(v)

(vi)

2

3

3

4

2

2

4

3

3

14

14

6

6

6

7

6

6

6

7

6

7

6

7

10

11

12

10

12

10


Tax Planning

" "

Tax Management


" "

Tax Management

Tax Planning

" "

Objective Questions

" "

Central Excise Laws

" "

" "

Custom Laws

Central Excise Laws

" "

" "

Custom Laws

Central Excise Laws

Custom Laws

Central Excise Laws

Custom Laws







31

58

69

109

45

31

93

58

58

338

339

195

164

196

271

196

197

197

272

199

242

165

242

290

302

306

293

303

279

Q&A-6.8

2013

June

1. (a)

(b)

2. (a)

(b)

3. (a)

(b)

(c)

4. (a)

(b)

(c)

(d)

5. (a)

(b)

(c)

6. (a)

(b)

(c)

7. (a)

(b)

(c)

8. (i)

(ii)

(iii)

(iv)

(v)

14

3

2

3

3

4

3

14

14

6

7

6

7

7

6

7

7

6

7

6

10

10

11

10

12

Objective Questions

Tax Planning


Tax Planning

" "

Tax Management

Tax Planning

Objective Questions

" "

Central Excise Laws

Custom Laws

Central Excise Laws

Custom Laws

" "

Central Excise Laws

Custom Laws

" "

Central Excise Laws

Custom Laws

Central Excise Laws


" " " "




339

59

45

70

70

110

59

340

340

165

273

199

273

274

199

274

274

165

243

165

291

291

302

294

307

Q&A-6.9

Line Chart Page

Q&A-6.12

Legends for the Graphs

Sh

ort

No

tes

Dis

tin

gu

ish

Be

twe

en

De

sc

rip

tiv

e

Pra

cti

ca

l

Question upto Dec. 2008 are from CS Final Gr. III Old Course and from June - 2009onwards are from CS Professional Programme New Course.

Q&A-6.13

Star Rating

On the basis of Maximum marks from a chapter Nil

On the basis of Questions included every year from a chapter Nil

On the basis of Compulsory questions from a chapter Nil

1 General Framework of

Direct Taxation in India

This Chapter Includes : Different direct tax laws and their inter-relationship;

Importance of Income Tax Act and Annual Finance Act and related Constitutional

provisions; Harmonisation of tax regime.

Marks of Short Notes, Distinguish Between, Descriptive & Practical Questions

SHORT NOTES

2003 - Dec [3] Write notes on the following:

(i) Tax avoidance vs. tax evasion. (5 marks)

Q&A-6.14 Solved Scanner CS Prof. Prog. M-III Paper 6

Answer:

Tax Avoidance Tax Evasion

1 Tax avoidance means planning for

minimization of tax according to legal

requirement but it defeats the basic

intention of the legislature.

Tax evasion means avoiding of tax

liability illegally.

2 Tax avoidance takes into accounts

various lacunas of law.

Tax evasion involves use of unfair

means.

3 Tax avoidance is lawful but involves the

elements of mala fide intention.

Tax evasion is unlawful.

4 Tax avoidance is planning before the

actual liability for tax comes into

existence.

Tax evasion involves avoidance of

payment of tax after the liability of

tax has arisen.

DESCRIPTIVE QUESTIONS

1999 - Dec [5] (b) What is the effect of an administrative circular issued by the Central

Board of Direct Taxes giving extra-legal benefits to tax-payers? Is it enforceable against

the income-tax department when such a circular has not been adhered to in

assessment? Discuss. (8 marks)

Answer:

As per section 119(1) of the Income Tax Act, 1961 all the income tax authorities and

other persons employed in the execution of the act shall observe and follow the orders,

instructions and directions of the Boards i.e., CBDT (Central Board of Direct Taxes). In

view of the binding nature of the circulars, it is not open to the revenue to raise a

contention that is contrary to a binding circular issued by the Board, still a departmental

circular is not law. It may bind the income tax authorities but the appellate authority, the

Tribunal or the High Court is not bound to take a judicial notice of a circular. The duty

of interpreting a statute is of the Court and it has to interpret the law independent of any

interpretation put upon it by the executive.

The circulars can bind the Assessing Officer but will not bind the appellate authority or

the Tribunal or the Court or even the assessee. CIT. v. Hero Cycles Pvt. Ltd. 1997.

However, where a circular gives administrative relief strictly beyond the terms of the

relevant provision of the statute, the contention of the department that the circular has

no legal effect cannot be accepted. It is now the judicial view that circulars giving

administrative relief to assessee in general are binding on the tax authorities. In

Solved Scanner CS ProfessionalProgramme Advanced Tax Laws and

Practice M-III Paper-6 Dec-2013

Publisher : Shuchita Prakashan ISBN : 9789350346044 Author : Dr. Arun Kumar, CSSumit Srivastava

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