HIGHLIGHTS OF RAILWAY BUDGET 2016-17

Highlights of Railway Budget for 2016-17.

Following are highlights of the Railway Budget for 2016-17

(Apr-Mar), presented by Railway Minister Suresh Prabhu in Parliament today:

GENERAL

* Budget reflects aspirations of the entire railway family

* Rail Budget reflects aspiration of all

* Core objective is to improve individual experience

* Rail Budget is the vision of PM Modi

* Making all efforts to turn PM’s vision into reality

* Railways facing headwinds on tepid economic growth

* Railways have stood the test of time

* Need to overhaul Railways’ work culture

* Need to bring in new approach

* Will lay out three pillars of strategy

* Looking at new areas for generating revenues

* Need to reorganise, rejuvenate, restructure railways

* Railways facing headwinds from 7th pay panel burden

* Will engage with global agencies for funds

* Absolute deductions planned in expenses such as diesel

* Have significantly reduced cost of power procurement

* Will revisit all rules, structures to overhaul railways

* To improve procurement practises at par with international norms

* New revenues through changes in freight policies

* Punctuality has gone up to almost 95%

* To include implementation reports in Budget

* Carry 23 mln passengers every day

* Special teams to screen railway operations

* To introduce 33% quota for women passengers

FY17 ESTIMATES

* FY17 investment seen at 1.21 trln rupees

* Investment rate of capex has increased substantially

* FY17 capital expenditure seen 1.2 trln rupees

* FY17 revenue seen 1.84 trln rupees

* Capex to grow exponentially

* Ramped up capex in FY17

* FY17 operating ratio seen 92%

* Increasing rigour on cost optimisation in FY17

* Freight’s contribution to earnings seen 67%

* FY17 gross budgetary support seen 400 bln rupees

* 44 new projects planned FY17 worth 927 bln rupees

FY16 REVISED

* 87.2 bln rupees saved from last year budget estimate

* FY16 operating ratio seen 90%

* FY16 loss from subsidising passenger fares seen 300 bln rupee

* Saving from previous Budget estimates 787 bln rupees

INFRASTRUCTURE, MODERNISATION

* To be at forefront of infrastructure growth

* Railways will be at forefront of infra growth

* To generate employment for 90 mln man days by FY18

* To commission broad gauge lines at 7 km/day FY17

* FY17 track commissioning aim 2,800 km

* Aim to have zero direct discharge of human waste by 2020

* Reserved accommodation to be available on demand by 2020

* Aim 80 km/hour avg speed of express train by 2020

* Freight speed seen at 50 km/hr by 2020

* To eliminate all unmanned level crossings by 2020

* Taken action on 139 Budget announcements made last yr

* To run semi high-speed trains on Golden Quadrilateral by 2020

* Action initiated on 139 FY16 Rail Budget announcements

* To meet reservation on demand by 2020

* Will take a zero-based budgeting approach

* To take zero-base budgetary approach for freight

* To conduct recruitment online

* To set up Margao, Hazira ports FY17 via PPP

* To spend 8.5 trln rupees over 5 yrs to modernise rail infra

* To hasten electrification of railways working with Power Min

* To build more dedicated freight corridors

* To up FY17 allocation for electrification by 50%

* To generate employment of 140 mln man-days in 2018-19

* 65,000 additional berths generated in FY16

* Taken steps to significantly improve svcs for rail passengers

* Dedicated IVRS system receiving over mln feedback calls daily

* Set up mechanism to get direct feedback from customers

* Responsiveness to customer needs touched new heights this yr

* Initiated IT-based internal audit

* Signed MoUs with some zonal railways

* To move to contract award system online in FY17

* Social media being used as a tool to bring transparency

* Mission to ensure transparent bidding process

* To set up 2 loco units with 480 bln rupee invest

* To set up new loco units with order book of 400 bln rupees

* Aim to have 100 WiFi-enabled stations this yr, 400 in next 3

* To redevelop stations by different models

* Finalised 2 locomotive factories bids under ‘Make In India’

* E-ticket capacity 7,000 tickets/minute now vs 2,000 earlier

* Introduced 1,780 automatic ticket vending machines

* Initiated capacity augmentation on some busy routes

* Developed application to maintain centralised land data

* To open cashless ticketing facilities for foreigners in 3 mos

* To introduce tickets with bar codes

* To introduce bar-coded tickets

* To start track management system under Digital India

* To introduce bar-coding of tickets at major stations

* To allow cancellation of tickets via call on 139

NEW TRAINS, LINES

* Plan to electrify 2,000 km track in FY17

* Track laying to be at 13km/day in FY18, 19km/day in FY19

* North-South dedicated freight corridors in Delhi-Chennai

* Plan Kharagpur-Vijaywada freight corridor

* Plan Mumbai-Kharagpur freight corridor

* Decongestion on Jalandhar-Jammu line going on

* To put 3 freight corridor projects on high priority

* Mizoram, Manipur to come under broad gauge network soon

* To launch long distance fully unreserved Antyodaya trains

* To have more unreserved passenger coaches

* Proposed dedicated freight corridor for east-west, east coast

* Proposed dedicated freight corridors for north-south

* Overnight double-decker trains named ‘Uday trains’

* Overnight double-decker trains for better access on busy line

BORROWING

* Will scout overseas for rupee bonds

* To scout international markets for rupee bonds

INVESTMENT PUSH

* Secured funding from LIC at favourable terms

* Bankable projects assured of funding now

* LIC to invest 1.5 trln rupees over 5 years

* 1 rupee invest in rail can impact econ output by factor of 5

* In partnership with SAIL, NTPC, coal ministry on funding

* Signed MoUs with 6 states for JVs

* Got expressions from 17 states to form JVs

* MoUs with zonal railways for quantifying performance

* Forming JV with states for local rail projects

* Availing multilateral financing for station development

* Cabinet approved redevelopment of 400 stations via PPP model

* Bidding process in advanced stage to redevelop 4 stations

* To undertake bidding to redevelop some big stations next yr

* Bankable railway projects to be completed in 3-4 years

MISCELLANEOUS

* To raise quota of lower berth for women, senior citizens

* To build additional toilets in 475 stations before FY16 end

* Aim 17,000 bio-toilets before FY16 end

* Initiated audit for punctuality of passenger trains

* Disposable bed rolls at all stations for all classes

* 311 railway stations currently under CCTV surveillance

* All stations to have CCTV surveillance in phased manner

* Anti-falling measures in suburban coaches

* To eliminate accidents by adopting latest technology

* Entered into R&D pacts with Korea, Japan to improve ops

* All railway stations to be under CCTV surveillance in phases

* Supporting 120,000 concurrent users now vs 40,000 earlier

* Installed CCTV cameras at 311 stations

* To introduce ‘Deen Dayalu’ coaches

* Every customer a brand ambassador for railways

* To upgrade Baroda rail institute to full fledged university

* Working on implementing Kakodkar panel report on safety

* To have Hamsafar, Tejas, Uday coaches for reserved passengers

* Tajas speed to be 130 km/hour

* Deen Dayalu coaches for unreserved passengers for long travel

* To add 2 or 4 more unreserved coaches in long distance trains

* New catering policy for multipurpose stalls at stations

* To extend e-catering services to all 408 A1, A2 stations

* IRCTC to introduce local cuisines available on demand

* To make local cuisine available on demand on trains

* IRCTC to unbundle catering services

* Set up Swachh Rail waste aggregation and recycling centre

* To install 30,000 bio-toilets at stations

* To start Clean-My-Coach service on pan-India basis

* To introduce CCTV coverage at all Tatkal counters‎

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 29, 2016

CORPORATE & PROFESSIONAL UPDATE FEBRUARY 29, 2016

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INCOME TAX ACT

SECTION 2(22)

DEEMED DIVIDENDS

Loans and advances to shareholders : Where assessees P and S were directors in two sister companies, namely AE and AI, and AI received Rs. 10 lakh as loan from AE, it would be treated as deemed dividend under section 2(22)(e) in hands of P and S in proportion to their shareholdings in AI – [2016] 190 (Delhi – Trib.)

SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

Plant : Expenditure incurred by assessee-AOP on acquiring trademarks, copyright and know-how of erstwhile firm would come within definition of ‘plant’ and, thus, assessee’s claim for depreciation in respect of same was to be allowed – [2015]  400 (SC)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Legal expenses : Where erstwhile firm’s business was purchased as going concern by assessee-AOP formed by some partners of erstwhile-firm, legal expenses subsequently incurred by AOP for defending business of going concern and for protecting its interests were to be allowed as deduction under section 37(1) – [2015]  400 (SC)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and Adjustments/Adjustments – Interest : Where extended credit period to A.E. for realisation of sale proceeds is directly related to and arising out of sale transaction, sale transaction with A.E. and resultant extended credit period for realisation of sale proceeds being two sides of a coin, are closely linked transactions, and, thus, transaction relating to extra credit period to A.E. has to be aggregated with sale transactions for determining ALP – [2016]  216 (Mumbai – Trib.)

Comparables and adjustments/Adjustments – AMP expensesWhere TPO applied bright line test to benchmark AMP transactions which was not valid in view of Sony Ericsson Mobile Communications India (P.) Ltd. v. CIT [2015] 374 ITR 118/231 Taxman 113/55 taxmann.com 240 (Delhi), matter was remanded to apply ratio of said case – [2016]  218 (Mumbai – Trib.)

SECTION 260A

HIGH COURT – APPEALS TO

Scope of : In absence of substantial question of law being framed, High Court can not upset final finding of fact arrived at by Tribunal – [2015] 400 (SC)

SECTION 268A

FILING OF APPEAL OR APPLICATION FOR REFERENCE BY INCOME-TAX AUTHORITIES

Circular No. 21/2015 : Where tax effect in appeals filed by revenue before Tribunal was less than Rs. 10 lakhs in each case, in view of instructions of CBDT Circular No. 21/2015, dated 10-12-2015 appeals so filed by revenue were to be dismissed as not maintainable – [2016] 189 (Pune – Trib.)

COMPANIES ACT

SECTION 108

TRANSFER OF SHARES – NOT TO BE REGISTERED EXCEPT ON PRODUCTION OF INSTRUMENT OF TRANSFER

Where there was no evidence on record to establish that share transfer deed was executed by petitioner transferring his shares, shareholding of petitioner in company was to be restored – [2016] 223 (CLB – New Delhi)

SECTION 284

DIRECTORS – REMOVAL OF

Where no special notice as per section 284(2) was given for holding EGM to remove petitioner as director of company, his removal was patently illegal – [2016] 223 (CLB – New Delhi)

SECTION 399

OPPRESSION AND MISMANAGEMENT – RIGHT TO APPLY

Petition for rectification of register of member alleging illegal transfer of petitioner’s share could not be challenged on ground of lack of required member of shareholding – [2016] (CLB – New Delhi)

SECTION 433

WINDING UP – CIRCUMSTANCES IN WHICH COMPANY MAY BE WOUND UP

Where there was no privity of contract between petitioner and respondent-company, and respondent had also not acknowledged its debt, it was not liable to make any payment to petitioner, hence petition for winding up respondent-company at instance of petitioner was not maintainable – [2016] (Gujarat)

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

Mere recruitment of pilots by an airline by another airline will not bring about structural changes in the operations of the market, rules CCI – [2016] (CCI)

SERVICE TAX

SECTION 65(25)

TAXABLE SERVICES – CLEARING AND FORWARDING AGENT’S SERVICES

Agents procuring orders and exploring potential customers for their principal are more appropriately classifiable under ‘Business Auxiliary Services’ and not under ‘Clearing and Forwarding Agent’s services’ – [2016] (Chennai – CESTAT)

CST & VAT

SECTION 11 OF GUJARAT VALUE ADDED TAX ACT, 2003

TAX INCIDENCE AND LEVY – TAX CREDIT

Where assessee purchased castor oil seeds for manufacture of castor oil and after crushing same obtained castor oil as well as deoiled cake (waste) and it used deoiled cake in furnace as a fuel in manufacture of castor oil, action of Assessing Authority in disallowing input tax credit for use of deoiled cake was not proper – [2016] (Gujarat)

CENVAT CREDIT RULES

RULE 9

CENVAT CREDIT – DOCUMENTS ON WHICH CREDIT MAY BE TAKEN

Where there is no dispute about receipt of material and payment of duty thereon, credit taken based on ‘endorsed bill of entry’ is valid – [2016] (Mumbai – CESTAT)

STATUTES

INDIRECT TAX LAWS (ST./EX./CUS. & (CST & VAT))

Delhi VAT -Framing of central assessments – CIRCULAR NO.38 OF 2015-16 [NO.F.3(636)/POLICY/VAT/2016/1463-69], DATED 18-2-2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 28, 2016

CORPORATE & PROFESSIONAL UPDATE FEBRUARY 28, 2016

Untitled92A

TAXABILITY OF SERVICES PROVIDED BY GOVERNMENT

Finance Act, 2015 has proposed to cover all services provided by Government or local authority to business entities under service tax net however effective date of this amendment was awaited since long. Now, Central Government vide Notification No. 06/2016 ST dated 18th February 2016 appointed the 1st April 2016 as the date on which the aforesaid provisions will come into effect. Simultaneously, scope of mega exemption has been extended to cover services provided by Government or a local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year (Notification No. 07/2016-ST).

Further, by virtue of notification no. 30/2012 ST dated 20.06.2012 read with Rule 2(1)(d) of Service Tax Rules, 1994, in case of service provided or agreed to be provided by Government or Local Authority to a business entity, the recipient of service is liable for payment of service tax under reverse charge mechanism however date of this amendment is still awaited.

Therefore, w.e.f. 1st April 2016, service tax will be applicable on following services provided by Government or Local Authority:

S. No. Nature of Service Taxability Who is liable to pay
1. Services by Department of Post provided to Government Non-taxable NA
2. Services by department of Post provided to person other than Government Taxable# Service Provider i.e. department of post
3. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport Taxable# Service Provider
4. Transport of goods or passengers Taxable# Service Provider
5. Renting of immovable property service to business entity Taxable# Service Provider
6. Renting of immovable property to person other than Business Entity Non-taxable NA
7. Other services provided to business entity Taxable# Service Receiver*
8. Other services provided to person other than business entity Non-taxable  

Notification for reverse charge is yet to come.

exemption is available if services are provided to business entity having turnover in preceding F.Y. is up to Rs. 10 lakh.

Here it is worthwhile to mention that any services provided by government will remain exempt if the same is covered under any separate clause of negative list of service or mega exemption notification

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 27,2016

CORPORATE & PROFESSIONAL UPDATE FEBRUARY 27,2016

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Direct Tax

  • IT: CPU alone cannot be described as computer; routers and switches being input/output devices, are integral part of computer and, hence, entitled to higher rate of depreciation at 60 per cent[2016] 66 taxmann.com 239 (Mumbai – Trib.) IBAHN India (P.) Ltd. v. DCIT
  • Investment in house property need not be sourced from capital gains only for availing of sec. 54F relief
  • IT : For availing exemption under section 54F, amount invested in new asset need not be entirely sourced from capital gain[2016] 66 taxmann.com 191 (Punjab & Haryana) CIT v. Kapil Kumar Agarwal
  • IT:Calculation of interest u/s 244A – when a refund of tax has to be reduced by refund already granted it is only the tax element which has to be adjusted and not the interest element paid on the delayed refund of the tax. This is so as the interest which is paid to the assessee is for the wrongful withholding of the assessee s refund by the revenue – CIT Vs. Tata Power Co. Ltd. (2016 (2) TMI 670 Bombay High Court)
  • IT:Non deduction of TDS – Disallowance u/s 40(a)(ia) – payment made on account of offshore supply of equipments – the subject mentioned payments are not chargeable to tax in India in terms of section 195 – Hence no disallowance could be made u/s. 40(a)(i)/40(a)(ia) – Linde India Ltd. Vs. DCIT, Cir-12, Kolkata (2016 (2) TMI 668 ITAT Kolkata)
  • IT:Expenditure on construction of house for labourer – the structure does not vest in the assessee and it has to pay monthly rent thereof to the Government the expenditure incurred by the assessee thereon has been rightly treated as a revenue expenditure – CIT, Nagpur Vs. Manganese Ore India Ltd (2016 (2) TMI 711 Bombay High Court)
  • IT:Reopening of assessment – charging of share premium over and above the intrinsic value of the share is income which has escaped assessment – the share premium being on the capital amount cannot be subjected to tax as income - Khubchandani Healthparks Pvt. Ltd. Vs. ITO, Mumbai (2016 (2) TMI 710 Bombay High Court)
  • Shares Buyback cannot be equated with capital reduction. [Goldman Sachs (India) Securities Pvt. Ltd vs. ITO (ITAT Mumbai)].
  • CBDT notifies Atal Pension Yojana u/s 80CCD. Notification No. 7/2016-Income Tax.
  • HC denied to admit appeal as assessee changed its stand initially taken before AO
    [2016] 66 taxmann.com 252 (Punjab & Haryana) Maken Cement Industries, Kathua v. CIT
  • Rectification of mistake – when the issue has been decided by the CIT(A) then only CIT(A) can rectify the order u/s 154 – AO has no jurisdiction to rectify such order –  Income Tax M/s. NHPC Ltd. Versus Asstt. Commissioner of Income Tax, Circle-II, Faridabad And Vica-Versa- 2016 (2) TMI 676 – ITAT DELHI
  • Calculation of interest u/s 244A – when a refund of tax has to be reduced by refund already granted it is only the tax element which has to be adjusted and not the interest element paid on the delayed refund of the tax. This is so as the interest which is paid to the assessee is for the wrongful withholding of the assessee s refund by the revenue – HC – Income Tax Commissioner of Income Tax- 2 Versus M/s Tata Power Co. Ltd.- 2016 (2) TMI 670 – BOMBAY HIGH COURT

Indirect Tax

  • ST:It was contended that it is under obligation to maintain the building and the appellant being builder only taken re-imbursement of various services which was provided by various service provider, not liable for Service Tax on Management Maintenance or Repair service collected from Flat owners – Omega Associates Vs. CST, Mumbai (2016 (2) TMI 690 CESTAT Mumbai)
  • ST: Scientific and Technical Consultancy service to clients located outside India – Refund of CENVAT credit allowed based on place of performance of services – CCE, Pune-I Vs. Sai Life Sciences Ltd. (2016 (2) TMI 724 CESTAT Mumbai)
  • CBEC: CBEC has notified and appoints 1st day of April, 2016 as the date on which the provisions of sub-section (1) of section 109 of Finance Act, 2015 shall come into effect. Consequentially, all the services provided by the Government or local authority to a business entity, except the services that are specifically exempted, that is, or are covered by any entry of negative list, shall be liable to service tax from the 1st day of April, 2016.
  • Service Tax : Renting out property to hotels is not liable to service tax; further, notional interest on security deposit cannot be added to ‘agreed rent’ for demanding service tax.
    [2016] 66 taxmann.com 254 (New Delhi – CESTAT) Lake Palace Hotel and Motels (P.) Ltd. v. Commissioner of Central Excise
  • Service Tax : Burden of proof is on revenue to show that there was wilful suppression of facts by assessee with a view to evade service tax; but, once revenue brings out certain material, then, burden shifts back to assessee [2016] 66 taxmann.com 256 (Gauhati) Bordubi Engineering Works v. Union of India
  • Service export prior to export of service rules, 2005 are eligible for export rebate. [J.P. Morgan Services India Private Ltd. vs. Commissioner of Central Excise (Service Tax) (CESTAT-Mumbai)].
  • DVAT E-File Form DP-1 before 29.02.16 positively to give effect to amendments/ information of dealers provided through it, pending and desired from long.
  • Appy Fizz is an aerated branded soft drink, taxable at 20 per cent under Kerala VAT
    [2016] 66 taxmann.com 301 (Kerala) Parle Agro (P.) Ltd. v. Commissioner Commercial Taxes
  • Application for advance Ruling - Taxability of activity of services for rendering analysis of the drugs and market survey etc. – AAR rejected both the contentions and admitted the application for consideration. – AAR – M/s Steps Therapeutics Ltd, Hyderabad Versus Commissioner of Customs, Central Excise And Service Tax, Hyderabad-IV – 2016 (2) TMI 692 – AUTHORITY FOR ADVANCE RULINGS
  • Extended period of limitation – The initial burden is on the department to prove that the situations visualised by the proviso existed. But once the department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualised by the section the burden shifts and then applicability of the proviso has to be construed liberally – HC –  M/s Bordubi Engineering Works Versus Union of India, The Commissioner, Central Excise & Service Tax, The Additional Commissioner, Central Excise & Service Tax, The Superintendent (A/E) , Central Excise, The Joint Commissioner, Central Excise & Service Tax – 2016 (2) TMI 691 – GAUHATI HIGH COURT

MCA Updates

  • Purchaser of assets of liquidating -co. in a auction wasn’t liable to pay sales taxes dues of such Co.- HC
  • MCA has recently issued a notice inviting comments on the draft Companies (Cost Records & Audit) Amendment Rules, 2016 dated 23.02.2016.
  • CL: Sales tax dues of company-in-liquidation could not be termed as taxes in relation to property hence, Appellants who had purchased property of company-in-liquidation in court auction were not required to pay same[2016] 66com 220 (Gujarat) Readymix Concrete Ltd. v.Official Liquidator of Beclawat of India Ltd.
  • MCA has recently issued a notice inviting comments on the draft Companies (Cost Records & Audit) Amendment Rules, 2016 dated 23.02.2016.
  • MCA invites comments on Draft Companies (Cost Records and Audit) Amendment Rules, 2016, to be submitted latest by 08.03.16.
  • MCA invites comments on draft Companies (Incorporation) second Amendment Rules, 2016 & Companies (Authorized to Register) Amendment Rules, 2016 till 2 Mar 2016.

Company Law

  • Query: I have one query as – Company has appointed an auditor within 90 days of incorporation of company but after taking appointment auditor resigns within a week and then company again appointed auditor. WHETHER COMPANY IS LIABLE TO FILE INFORMATION REGARDING APPOINTMENT OF SECOND AUDITOR TO ROC?
  • Answer: There is no statutory obligation on Company regarding the intimation of first Auditor, so appointed by the Company. In case, Company has filed Form ADT-1 regarding the appointment of first Auditor who was appointed within 90 days of incorporation. Then only, Company is required to first file Form ADT-3 regarding resignation of first Auditors, so appointed and then file Form ADT-1 for the appointment of Second Auditor.

In case Company has not intimated about the appointment of first Auditor as well, then statutorily Form ADT-1 is required to be filed within 15 days of the date of AGM of Company.

Other updates

NSE (National Stock Exchange) has issued a Circular stating that ‘One Person Company’ can act as a Stock Broker provided the entity has at least two Directors. However, such broker would not be allowed to trade in his proprietary account.

  • SEBI has notified the amendments which may be called as the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2016 and shall come into force on the date of their publication in the Official Gazette.
  • Controlled by Delhi based CA firm held as resident in India[2016] 66taxmann.com 283 (Delhi) Commissioner of Income-tax, Delhi v. Mansarovar Commercial (P.) Ltd.
  • Get ICAI Now Mobile App for latest ICAI Updates – Available on Android, iOS, Windows and Blackberry 10. To download please visit http://www.icai.org/mobile
  • Union Bank invites applications from CA eligible/interested firms/companies for empanelment as Concurrent Auditors for F.Y. 2016-17.
  • ICAI Inviting Suggestions on the drafted Background Material of Certificate Course on Derivatives.
  • A smile is happiness you’ll find right under your nose.-Tom Wilson
  • Don’t cry because it’s over. Smile because it happened. -Dr. Seuss 

Key Dates:

  • Advance information for 1st fortnight of March of functions with booking cost > Rs 1 lakh in Banquet Halls, hotels etc. in Delhi: 27.02.2016
  • The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 26, 2016

CORPORATE & PROFESSIONAL UPDATE FEBRUARY  26, 2016

Untitled6Direct Tax

  • When the issue has been decided by the CIT(A) then only CIT(A) can rectify the order u/s 154, AO has no jurisdiction to rectify such order – Tribunal.[M/s. NHPC Ltd. vs Asstt. Commissioner of Income Tax, Circle-II, Faridabad And vica-versa – 2016 (2) TMI 676 – ITAT DELHI]
  • Section 292C inter alia provides that where any books of accounts or other documents are found in possession or control of any person in the course of search u/s 132 or survey under Section 133A of the Act it may be presumed that such books or documents belong to such person. Undisputedly such presumption is rebuttable- (PR. Commissioner of Income Tax Versus M/s Delco India Pvt. Ltd. – 2016 (2) TMI 607 – DELHI HIGH COURT)
  • Loss on revaluation of investments – valuation of stock in trade – the securities of the Banks are investment and have to be valued at costs or market price whichever is less – claim of loss allowed- (The Commissioner of Income Tax (Large Tax Payer Unit) Versus M/s Union Bank of India – 2016 (2) TMI 606 – BOMBAY HIGH COURT)
  • IT:Expenses allowable as revenue expenditure u/s 37 – there is no concept of deferred revenue expenditure in the Act except under certain specified sections where amortization is specifically provided. Normally the ordinary rule would be that the revenue expenditure incurred in a particular year is to be allowed in that year – CIT Vs. Vadilal Enterprises Ltd (2016 (2) TMI 631 Gujarat High Court)
  • IT:Non-deduction of tax at source u/s 194H – non-cash payment to dealers – impugned proceedings were beyond prescribed time limitation and thus the same deserve to be annulled ACIT 51(1), New Delhi Vs. Samsung India Electronics (P) Ltd (2016 (2) TMI 629 ITAT Delhi)
  • No disallowance of penalty paid for procedural non-compliances. [Mangal Keshav Securities Limited vs. ACIT (ITAT Mumbai)]
  • No charity in initial years cannot be sole basis for trust registration denial.[M/s Prabhat (A House of Hope for Special Children) vs CIT (Exemptions), (ITAT Chandigarh)].
  • Expenses can be allowed once business is setup despite it’s non-commencement. [M/s. Multi Act Realty Enterprises Pvt. Ltd. vs. ITO (ITAT Mumbai)]
  • Section 54EC deduction allowed if cheques presented within 6 months. [Neela S. Karyakarte vs ITO (ITAT Mumbai)].
  • No reassessment on ground that assessee didn’t offer any disallowance under sec. 14A in respect of tax free income

Indirect Tax

  • Services having indirect nexus with business are Input services. [Sudarshan Chemical Industries Ltd. vs. CCE Appeals (CESTAT Mumbai)]
  • Export benefit cannot be denied on re-processed damaged goods. [M/s Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Nagpur (CESTAT Mumbai)]
  • No CENVAT reversal under Rule 6 on SEZ supply with effect from 10/09/2004. [Commissioner of Central Excise vs. M/s. Mather Platt Pumps Ltd. (CESTAT Mumbai)]
  • Testing cost of returnable durable cylinders not includible in AV. [M/s Bombay Oxygen Corporation Ltd. vs. Commissioner of Central Excise (CESTAT Mumbai)]
  • Mandatory recovery of advertising cost should be included in AV. [M/s Rathi Transpower Pvt. Ltd. vs. Commissioner of Central Excise (CESTAT-Mumbai)]
  • Demand of service tax on management, maintenance or repair service collected from flat owners, in this fact the appellant is not liable for service tax – Tribunal.[M/s Omega Associates vs Commissioner of Service Tax, Mumbai – 2016 (2) TMI 690 – CESTAT MUMBAI]
  • Business Auxiliary Service – Activity of maintaining complete Toll Operation supply of Man Power and maintenance of Toll Collection System including Plaza maintenance etc. – NHAI is not running any business – Activity is not taxable – Shri Jivanlal Joitaram Patel Versus Commissioner of C. Ex. & Service Tax, Ahmedabad-III – 2016 (2) TMI 611 – CESTAT AHMEDABAD)
  • Whether a single Member of the Appellate Tribunal Value Added Tax (AT) can legitimately function as the AT in terms of Section 73(1) of the Delhi Value Added Tax Act 2004 – Held Yes – HC – Bharat Bijlee Limited. Versus Commissioner of Trade & Taxes, Govt. of N.C.T. of Delhi & Others – 2016 (2) TMI 655 – DELHI HIGH COURT)

Service Tax And Excise Laws

  • ST: Refund of un-utilized CENVAT Credit – the assessee is not a registered C.E. or S.T. assessee and therefore cannot come under the purview of CENVAT Credit Rules 2004 and therefore cannot claim refund under Rule 5 of the Cenvat Credit Rules 2004 Shams Healthcare Software Pvt Ltd Vs. CCE&ST, Nagpur (2016 (2) TMI 658 CESTAT Mumbai)
  • ST: CBEC has amended the negative list e.f. 1st April, 2016 to exempt services provided by Govt. or a Local Authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year from ST leviable thereon under Section 66B of the said Act.
  • RBI:RBI has decided to upward revise  the threshold for monitoring and reporting of frauds in NBFCs from Rs. 25 Lac to Rs. 1 Crore with immediate effect.
  • Leading bourse National Stock Exchange (NSE) today said that ‘one person company’ can act as stock broker provided the entity has at least two directors.
  • However, such broker would not be allowed to trade in his proprietary account.
  • “One Person Company (OPC) as described under the Companies Act is eligible to be registered as a stock broker, provided it satisfies the condition of minimum two directors, as stipulated under…Securities Contract (Regulation) Rules, 1957,” NSE s ..
  • Partial recovery of rent of leased vehicles from employees couldn’t be chargeable to ST under ‘renting services’.
  • CENVAT credit on foreign commission to foreign agent allowed. [Monarch Catalyst Pvt. Ltd. vs. Commissioner of Central Excise (CESTAT-Mumbai)]
  • CENVAT of Inputs & Input services for producing electricity captively consumed allowed. [M/s JSW Steel Coated Products Ltd. vs. CCE (CESTAT Mumbai)].

FAQ on Company Law

Query We have a query regarding the Board meeting of a Small company. As per Section 173(1), every company is required to hold 4 Board meetings in a year while Section 173(5) provides that OPC, Small companies & Dormant companies are required to conduct one meeting in each half of the calendar year and gap between two meetings should not be less than 90 days. Does it mean that Small Company cannot hold two Board meetings within a period of 90 days?

Answer: This is an optional provision which gives an option to the Small companies to either conduct minimum four Board meetings in a year and maximum gap between two consecutive meetings cannot be more than 120 days as per Section 173(1) of Companies Act 2013 or conduct one meeting in each half of the calendar year and gap between two meetings should not be less than 90 days as per Section 173(5) of the Companies Act 2013.

However, it does not mean that a company cannot hold two Board meetings within a period of 90 days. But if it holds two meetings within a period of 90 days, it has to comply with Section 173(1) of the Companies Act 2013.

Banking & Corporate Laws

  • SFIO is solely empowered to investigate into affairs of co., it supersedes over other investigations under Cos Act: HC
  • Director can’t run parallel business to compete with own Co. due to her animosity against co-director
  • Deduction u/s 80-IA-Whether the Tribunal was right in holding that the deduction under Section 80-IA is not allowable at all to the assessee since there was no taxable income though the unit  eligible for deduction had net profit-Held Yes – Sanra Software Ltd.vs. DCIT, Chennai (2016 (2)TMI 574 Madras High Court).
  • Registration petition u/s 80G(5) is denied where assessee is not an institution expressed to be for the benefit of any particular religious  community or caste u/s 80G(5)(iii) or having any purpose the whole or substantially the whole of  which is of religious nature under explanation 3 there in –Tribunal .[Shri Yamunaji  Mandir , Trust –Moviya vs Commissioner of Income Tax-I-2016(2)TMI 569 ITAT RAJKOT]
  • Interest from surplus fund is taxable as income from other sources. [M/s Himalayan Expressway Limited vs. ITO (ITAT Chandigarh), ITA No. 690/ Chd/2014, AY 2009-2010]
  • Securities Premium is not accumulated profits u/s 2(22)(E): ITAT.[M/s Jeans Knit Pvt. Ltd. vs. ACIT (ITAT Bangalore ), ITA No.1105/Bang/2013 & ITA No. 1244/Bang/2013, AY 2008-09].
  • Daughter have equal rights in parents property prospectively: SC. [ Prakash & Ors vs. Phulavati & Ors (Supreme Court), Civil Appeal No.7217 of 2013 & others.].
  • Debentures, whether fully or partly or optionally convertible, are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure – [ITAT Delhi in case of DCIT, New Delhi Vs. M/s Alcobex Metals Ltd.]
  • Expenditure incurred on the issue of Foreign Currency Convertible Bonds (FCCB) is revenue expenditure allowable under section 37(1) of the I.T. Act –Gati Ltd. vs. ITO , W -2(2)Hyderabad (2016  (2) TMI 404 ITAT Hyderabad).
  • Non TDS deduction disallowance is not sustainable if payee discharges his tax liability. [Kurian Ulahannan Moothukuzhi yil vs. ITO (ITAT Ahmedabad), I.T.A. No.2524/Ahd/2014,AY 2010-11]
  • Penalty u/s 271AAA is not tenable where no search was conducted.[DCIT vs. M/s Sam India  Abhimanyu Housing (ITAT Delhi) ITA No.1257/Del./2015,AY2011-2012.
  • Supreme Court on deemed registration u/s 12AA in case 6 months deadline in not adhered to( SOCIETY FOR THE PROMN. OF EDN. CASE).& another case is Delhi High Court on reopening u/s 148 on quality of reason & live link requirement (in SABHARWAL PROPERTIES case) .
  • Exempts services provided by Government or local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year w.e.f.1.4.2016-Notification No. 07/2016- Service Tax dated 18th February,2016 Department of Revenue.)
  • CENVAT credit eligible on furniture & fittings used for output service.[ICICI Lombard General Insurance Company Ltd. vs. Commissioner of service Tax [Mumbai CESTAT].
  • All the services provided by the Government or local authority to a business entity, except the services that are specifically exempted,or covered by any another entry in the Negative List ,shall be liable to service tax w.e.f. 1.4.2016-Notification No.06/2016-Service Tax ,dated 18th February ,2016 Department o revenue.
  • Sebi prohibits an Auditor from issuing any certificates  required under securities laws, directly or indirectly .
  • Union Bank of India invites applications from CA firms for concurrent audit of its branches. Start date 22.02.2016 end date 05.03.2016.
  • The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33
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CORPORATE AND PROFESSIONAL UPDATE DATED FEBRUARY 25, 2016

CORPORATE & PROFESSIONAL UPDATE  DATED FEBRUARY 25, 2016

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INCOME TAX ACT

SECTION 4

INCOME – CHARGEABLE AS

General principle : Tax cannot be levied on assessee at a higher amount or at a higher rate merely because assessee, under a mistaken belief or due to an error, offered income for taxation at that amount or that rate -[2016] 66 taxmann.com 181 (Rajkot – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARMS LENGTH PRICE

Comprarables and adjustments/Comparables – Illustrations : Where on FAR analysis conclusion that a company is correctly chosen as a comparable remains unassailed, then it is necessary for revenue at that stage to bring some cogent reason, argument or fact justifying that still comparable needs to be excluded

Comparables and adjustments/Comparables – Illustrations : Where assessee (Semco) had provided a comparable summary of FAR analysis undertaken by Semco and Sigma, an overseas enterprise, to show that Semco was less complex entity and in earlier and later years, Semco was taken as tested party, there was no justification for taking Sigma as tested party for benching international transaction

Comparables and adjustments/Safe Harbour rule : Amendment to proviso to section 92C being applicable with effect from 1-10-2009, will have no bearing on benefit of +/- 5 per cent safe harbour given to assessee for year 2005-06

SECTION 220

COLLECTION AND RECOVERY OF TAX – WHEN TAX PAYABLE AND WHEN ASSESSEE DEEMED IN DEFAULT

Waiver of interest : Where order of Commissioner (Appeals) allowing registration to assessee firm was reversed by Tribunal, benefit of waiver of interest in respect of section 220(2) would be allowed up to period provided in this order of Tribunal and it could not be restricted up to date of order of jurisdictional High Court in another case on similar issue

SECTION 268A

FILING OF APPEAL OR APPLICATION FOR REFERENCE BY INCOME-TAX AUTHORITIES

Circular No. 21/2015 : Where tax effect in revenue’s appeal before High Court was below than prescribed monetary limit of Rs. 20 lakhs as per circular No. 21/2015, dated 10-12-2015, appeal was liable to be treated as dismissed as withdrawn

Circular No. 21/2015 : CBDT Circular No. 21/2015, dated 10-12-2015 will apply to pending appeals also

COMPANIES ACT

SECTION 445

WINDING UP – COPY OF ORDER TO BE FILED WITH REGISTRAR

In case of winding up of company, relevant date for computing workmen’s dues will be date of winding up as per section 445(3) and not date of appointment of Official Liquidator

SECTION 529A

WINDING UP – OVERRIDING PREFERENTIAL PAYMENTS

Dues of secured creditors including banks and workers have priority over all other debts including claim of Excise Department – [2016] 

SERVICE TAX

SECTION 65(27)

TAXABLE SERVICES – COMMERCIAL TRAINING OR COACHING SERVICES

Flying training services provided by an approved flying training institute are not liable to service tax, as services fall within meaning of ‘qualification recognized by law’

CUSTOMS ACT

SECTION 132

OFFENCES AND PENALTIES – CUSTOMS

Where assessee has been exonerated in adjudication proceedings on merits and charge of holding/importing ‘prohibited goods’ or charge of evasion has been dropped on merits, criminal prosecution cannot continue on same set of facts

CENVAT CREDIT RULES

RULE 5

CENVAT CREDIT – REFUND OF

Provision of onsite services by overseas branch for which payment is received in India in convertible foreign exchange would amount to ‘export of service’ and would form part of ‘export turnover’ as well as ‘total turnover’ in determining cenvat refund under rule 5 of CENVAT Credit Rules, 2004

STATUTES

DIRECT TAX LAWS

Guidelines for Power Generation, Transmission and Distribution in Special Economic Zones (SEZs)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE DATED FEBRUARY 24, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED FEBRUARY 24, 2016

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  • IT: CIT(A) was fully justified in deleting the addition made by the AO for alleged bogus purchases particularly when the GP rate declared by the assessee was progressive and was accepted by the AO ITO, W-2(2), Ghaziabad Vs. Ray Steels (2016 (2) TMI 498 ITAT Delhi)
  • IT: As the assessee has executed the project undertaking the risks and rewards and therefore the claim of Sec-80IB (10) is justified. Needless to mention that the appellant need not be the landowner for claiming deduction uls.80-IB(10) – Indra Housing Vs. ACT (2016 (2) TMI 489 ITAT Chennai)
  • ST: Claim of refund of service tax paid during April 2011 to March 2012 on services of constructions of college building – Ld. CST (A) by proper application of mind set aside rejection of refund claim and allowed appeal of the respondent. – Refund cannot be denied – CST-VII Vs. SM Sai Construction (2016 (2) TMI 486 CESTAT Mumbai)
  • SEBI has reviewed the guidelines to further streamline the process of OFS with an objective to encourage greater participation of all investors.
  • MCA invites comments on:

Draft Companies (Incorporation) Second Amendment Rules 2016

Draft Companies (Authorised to Registered) Amendment Rules 2016

Draft Companies (Auditor’s Report) order, 2016.

Draft Companies (Accounting Standards) amendment rules 2016.

Draft Companies (Indian Accounting Standards) amendment rules 2016.

Revised Schedule III to the Companies Act, 2013 for a company whose financial statements are drawn up in compliance of companies (Indian Accounting Standards) rules 2015 and as amended from time to time.

  • Interest on small saving schemes may fall; Govt. revised framework to fix interest rates
  • CBEC tights noose on tax evaders; mandates RBI and Electricity boards to file AIR
    NOTIFICATION NO.4/2016-ST, DATED 15-2-2016
  • MCA proposes Ind AS 11 & 18 for revenue recognition, defers Ind AS 115
  • Updated guidance note issued for bank audits : ICAI has issued a guidance note on bank audits. The guidance note aims to assist auditors in performing bank audits for FY 2015-16.
  • HC directed liquidator to pay overdue bills of security agency appointed for protecting assets of liquidating co.[2016] 66 taxmann.com 162 (Gujarat) United Security Organization (P.) Ltd. v. Official Liquidator of Mardia Steels Ltd. (In Liquidation)

Recent Important Directives Dated 15-02-2016 Of The CBDT On Section 80-IA(5) And Passing Of Section 154 Rectification Orders:-

CBDT Clarifies Meaning Of Term “Initial Assessment Year” In S. 80-IA(5) Of The Income-tax Act

The CBDT has issued Circular No. 1/ 2016 dated 15.02.2016 in which it has clarified the meaning of the term “initial assessment year” in section 80-IA(5) of the Income-tax Act, 1961.

CBDT Directs AOs To Strictly Follow S. 154 Rectification Time Limits

The CBDT has issued Instruction No. 01/2016 dated 15.02.2016 in which it has directed Assessing Officers to strictly follow the time limit of six months prescribed under section 154(8) of the Income-tax Act, 1961 to pass rectification orders. The CBDT has also directed the supervisory officers to monitor the adherence to the prescribed time limit and initiate suitable administrative action where failure to adhere to the prescribed time limit is noticed.

CBDT Directs AOs To Pass S. 154 Rectification Orders In Writing

The CBDT has issued Instruction No. 02/2016 dated 15.02.2016 in which it has directed Assessing Officers to pass rectification orders in writing and serve a copy on the assessee and not just make an entry on the AST system.

  • Refund cannot be denied merely for procedural lapse i.e. if assessee is eligible to get refund, it should be allowed even if there is a delay of 2 days because of the intervening Saturday and Sunday &  the claim was filed on Monday. [Markers Mart And Prince Exports vs C.C.E &  S. Tax, Jaipur II-2016 (2)TMI 258-CESTAT NEW DELHI].
  • Interest u/s 234A- Board has clarified that no interest u/s 234A is chargeable on the amount of self assessment tax paid by the assessee before the due date of filing of return of income-HC[Sri Suresh Sharma vs the assistant commissioner of Income Tax -2016 (2) TMI274 – KARNATAKA HIGH COURT]
  • When the Assessing Officer and Commissioner concurrently found that there was unexplained expenditure and source of such income was not satisfactorily explained, section 69C of the Act would certainly be application–HC[RAVIKIRAN CERAMICE PVT LTD vs PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2016(2)TMI352- GUJARAT HIGH COUR T]
  • Brokerage expenses not allowed against income from House Property.[M/s Radiant Premises Pvt.Ltd. vs. ACIT(ITAT Mumbai), ITA No.5494/MUM/2013,A.Y.2010- 2011]
  • Disallowance u/s 14A no separate books of account are maintained for taxable income and exempt income, some expenditure on account of administrative expenses has to be disallowed on reasonable estimate basis- Tribunal [M/s Coated Fabrics Pvt. Ltd. Vs ACIT, Circle -1 (1),Pune -2016(2) TMI 373-ITAT PUNE]
  • Procedure, Formats and Standards for ensuring secured transmission of electronic communication including scrutiny assessment u/s 143(3)-Circular-Dated 3-2-2016.
  • Income Tax: Amount received on transfer of Bungalow- the presumption under the law is that the assessee had sold his interest in the entire property even if he has acquired such ownership rights after the sale –to be assessed under the head “capital gains”-ITAT Mumbai in case of [ITO ,Mumbai vs Shri Ajit L Verma Mimbai]
  • Delhi high court landmark decision in new Skies Satellite case on issue of retrospective operation of Finance act 2012, amendments in section 9 held Retrospective operation a highly contentious issue; held “the parliaments is simply not equipped with the power to, through domestic law, change the terms of a treaty, it is fallacious to assume that any change made to domestic law to rectify a situation of mistaken interpretation can spontaneously further their case in an international treaty . Therefore,mere amendment to section 9(i)(vi) cannot result in a change.
  • Rental income from a fully furnished house is taxable as income from other sources if composite rent is inseparable. [ACIT vs Ajay Kalia]
  • RBI extends the Date for Withdrawal of pre-2005 Series Bank Notes to June 30,,2016.
  • ICAI issues Guidance Note on Audit of Banks released by Auditing and Assurance Standards Board.
  • ICAI issues Revised 2016 Guidance Note on Reporting of Fraud under Section 143(12) of the Companies Act, 2013.
  • MCA invite comments on Revised schedule III for a co. whose financial statements are drawn up as per IND AS Rules,2015 &Draft CARO,2016 latest by 23.02.16
  • Empanelment for audit of PSUs for the year 2016-2017;Online application with C&AG –Last Date extended to 22.2.2016. Last date for receipt of documents 15.3.16. Any change in data occurring after the cut-off date that lead reduction in the rank of applicant firm shall be taken in to account.        
  • The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33
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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 23, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 23, 2016

6

  • Supply Of Goods to Indian Navy not must to claim excise exemption.
  • Manufacture of rosin and turpentine without aid of power , seeking retrospective exemption is not a constitutional right – HC. [Mangalam Organics Limited vs Union of India – 2016 (2) TMI 529 – Delhi High Court].
  • Brokerage paid to the third party has nothing to do with the rental income paid by the tenant brokerage not deductible in computing income from house property
  • Cenvat of Goods/ Service used in construction of rented property allowed. [Nirlon Ltd. vs. Commissioner of Central Excise,Mumbai].
  • Proceedings under rule declared unconstitutional by HC in invalid. [Vipul-S Plasticrafts P. Ltd. vs. Commissioner of Central Excise].
  • The petitioner is admittedly not a foreign company : Since the petitioner is not an eligible assessee in terms of section 144C(15)(b), no draft order can be passed in the case of the petitioner u/s 144C(1) – HC. [Honda Cars India Limited (Formerly – M/s. Honda Siel Cars India Limited vs Deputy Commissioner of Income Tax & Another – 2016 (2) TMI 527 – Delhi High Court].
  • Kindly attend the Annual Award Function of NIRC of ICAI  on February 20th at 3 PM in NDMC Convention Centre, Connaught Place, New Delhi.

Direct Tax:

  • Bogus purchases – CIT(A) was fully justified in deleting the addition made by the AO on account of alleged bogus purchases particularly when the GP rate declared by the assessee was progressive and was accepted by the AO. – ITO, Ward 2 (2) , Ghaziabad Versus Ray Steels – 2016 (2) TMI 498 – ITAT DELHI
  • Disallowance of short term capital loss on sale of shares – sale of share was effected between two group companies having the same directors about the shares of the group company during the lock-in period – it is case of sham transaction – loss booked not allowed –  AAA Portfolios Pvt. Ltd. Versus DCIT, Circle-1 (1) , New Delhi – 2016 (2) TMI 499 – ITAT DELHI

Indirect Tax:

  • Claim of refund of service tax paid by them during the period from April 2011 to March 2012 on services of constructions of college building – Ld. Commissioner (Appeals) by proper application of mind set aside rejection of refund claim and allowed appeal of the respondent. – Refund cannot be denied – Commissioner of Service Tax-VII Versus M/s SM Sai Construction – 2016 (2) TMI 486 – CESTAT MUMBAI

Updates:

  • IRDAI has issued Clarification on IRDAI (Registration of corporate Agents) Regulations, 2015 Vide Ref: IRDA/CAGTS/CIR/LCE/029/ 02/2016 dated 16.02.2016.
  • RBI has recently issued Notification on the Implementation of Section 51-A of Unlawful Activities Prevention Act (UAPA), 1967 – Updates to ISIL (Da’esh) & Al-Qaida Sanctions List Vide Notification No.  DBR.AML.No.10293/14.06.001/ 2015-16 dated 16.02.2016

Company Law:

Query:  Does income tax representation services can be rendered by an auditor under section 144? Are they covered in management services?

Answer:  No, they are not considered as management services. So, an auditor can render tax representation services provided it shall be approved by the Board or Audit committee of the company, as the case may be, in pursuant to Section 144 of the Act.

Key Dates:

  • E-payment of DVAT & CST tax for Jan: 21.02.2016
  • New appeal filing monetary limit shall  apply to pending appeals also.[ITO vs. Smt. Sudha Brijratan Damani (ITAT Mumbai), I.T.A. No. 6952/Mum/2013].
  • CBEC makes it mandatory for RBI and Electricity Board to file Annual Information Return. Notification no. 04/2016 dated 15.02.2016.
  • Interest from surplus fund is taxable as income from other sources. [M/s Himlayan Expressway Limited vs. ITO (ITAT Chandigarh), ITA No. 690/ Chd /2014, AY 2009-2010].
  • 172 : No TDS on payment to Non–Resident shipping companies. [CIT vs. V.S. Dempo & Co. Pvt. Ltd. (Bombay High Court), Income Tax Appeal Nos. 989, 991, 948, 957,978 of 2015].
  • WIP Valuation on receipt basis is forbidden in Mercantile Accounting. [The ACIT vs. M/s. Ambarwadikar & Co., Engineers & Contractors (ITAT Pune), ITA Nos.169 to 171/PN/2006 & C.O.No.27/PN/2010].
  • MCA invites comments on The Draft Companies (Accounting Standards) & (Indian Accounting Standards) Amendment Rules 2016 to be submitted latest by03.2016.
  • Last date for submission of online application form for emplacement with O/o C&AG for the year 2016-2017 for audit of PSUs is extended to 2.2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 22, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 22, 2016

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DIRECT TAX

  • The petitioner is admittedly not a foreign Company. – Since the petitioner is not an eligible assessee in terms of Section 144C(15)(b) no draft order can be passed in the case of the petitioner u/s 144C(1) –( Honda Cars India Limited (Formerly – M/s. Honda Siel Cars India Limited Versus Deputy Comm. of Income Tax & Another – 2016 (2) TMI 527 – DELHI HIGH COURT)
  • Addition under Section 41(1) – The loan transactions were on the capital account and the writing off the loan was also on capital account and did not find place in the Profit and Loss Account – Thus the cessation of the liability by itself would not lead to the attraction of Section 41(1)- (Principal Commissioner of Income Tax-09 Versus M/s. Tinna Finex Ltd. – 2016 (2) TMI 526 – DELHI HIGH COURT)

INDIRECT TAX

  • Seeks to further amend notification No. 12/2012-Customs, dated 17.03.2012- (click here to view)
  • Classification of services – providing services relating to transportation of light Commercial Motor Vehicles & Multi Utility Vehicle manufactured by M/s Force Motors Ltd. by way of getting them driven by skilled drivers – None of the limbs of BAS covers the impunged activity – Taxable under BSS w.e.f. 1.5.2006- (Capital Transport Convoy Contractor Versus Commissioner of Central Excise And Service Tax, Indore – 2016 (2) TMI 546 – CESTAT NEW DELHI)

COMPANY LAW

Query:Sub-section 6 of the Section 149 of Companies Act 2013 provides for meaning of independent Director and clause (c) & (d) of sub-section 6 of section 149 of Co. Act, 2013 provides that Independent Director or his relatives has or had no pecuniary relationship or transaction with Company, its holding, subsidiary or associate company etc. Please explain the meaning of “Pecuniary Relationship” and “materiality” in this regard.

Answer:Ministry of Corporate Affairs has in its Report of Expert Committee on Management and Board Governance has explained that the term material pecuniary relationship should also be clearly defined for the purpose of determining whether the director is independent or not. The concept of “Materiality’ is relevant from the recipient’s point of view and not from that of the company. The term ‘material’ needs to be defined in terms of percentage. In view of the Committee, 10% or more of recipient’s consolidated gross revenue / receipts for the preceding year should form a material condition affecting independence. For determining materiality of pecuniary relationship, transactions with an entity in which the director or his relatives hold more than 2% shareholding, should also be considered.

MCA UPDATES

  • MCA has recently invited comments on the draft companies (Incorporation) Second Amendment Rules, 2016
  • MCA has recently invited comments on the draft companies (authorised to registered) amendment rules 2016

KEY DATES

E-payment of DVAT & CST tax for Jan: 21.02.2016

Payment of ESI of Jan: 21.02.2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 21, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY  21, 2016

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INCOME TAX ACT

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Reassessment : Where assessee had disclosed all material facts relating to tax free dividend income at time of making assessment, initiation of reassessment proceedings merely on basis of change of opinion that assessee did not offer any expenditure for disallowance under section 14A in respect of said income, was not sustainable – [2016] 66 168 (Delhi)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Projected profits of subsequent years can’t be considered for working out the PLI under TNMM – [2016] 66 185 (Delhi – Trib.)

Comparables and adjustments/Comparables – General : Where TPO made addition to assessee’s ALP in respect of pharmaceutical products exported to its AE, since Commissioner (Appeals) deleted said addition without taking into account effect of provisions contained in Chapter X of Act, matter was to be remanded back for disposal fresh – [2016] 66 132 (Mumbai – Trib.)

Comparables and adjustments/Comparables – Illustrations : In case of assessee rendering non-binding investment advisory services to its AE, a company providing services of merchant banking and investment, could not be accepted as valid comparable while determining ALP – [2016] 66  130 (Mumbai – Trib.)

SECTION 153

INCOME ESCAPING ASSESSMENT – TIME LIMIT FOR COMPLETION OF REASSESSMENT

Extended period of limitation : Where in writ petition, High Court gave direction to reconsider matter with regard to auditing books of account under section 142(2A), time taken by Commissioner to decide matter in respect of auditing would stand excluded while computing period of limitation – [2016] 66 taxmann 138 (Allahabad)

COMPANIES ACT

SECTION 235

INVESTIGATION INTO AFFAIRS OF COMPANY

Where as per directions of Court a Special Investigating Team (SIT) was constituted comprising of officers of departments of Serious Fraud Investigation Office (SFIO) of Company Affairs under Ministry of Corporate Affairs, Government of India; Enforcement Directorate, Income-tax Department as well as Central Bureau of Investigation, SFIO segment of SIT would look into violations and would have supremacy over investigations under Companies Act and other constituents would look into violation of provisions of Laws/Acts governing them and they would be within their rights to initiate appropriate actions under their respective Acts – [2016] 66 118 (Punjab & Haryana)

SECTION 391

COMPROMISE AND ARRANGEMENT

Where there was a representative union, duly recognized under Gujarat Industrial Relations Act, 1946, applicant committee of workers not being representative nor recognised union, would have no locus standi to appear as party respondent in company Petition – [2016] 66  170 (Gujarat)

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

CCI rejected the complaint filed by Meru Cabs against Uber for alleged conduct of unfair trade practice by providing heavy discounts to drivers and customers. CCI said that the fluctuating market share figures of the various players show that the competitive landscape in the relevant market is quite vibrant and dynamic and therefore, the radio taxi services market in Delhi is competitive in nature and UBER does not appear to be holding a dominant position in the relevant market therefore, no case of contravention is made out against Uber Group under Sections 3 or 4 of the Act – [2016] 66  199 (CCI)

SERVICE TAX

SECTION 65(90a)

TAXABLE SERVICES – RENTING OF IMMOVABLE PROPERTY SERVICES

Where assessee had provided ‘leased vehicles’ to its officials and had merely recovered from officials excessive expenses incurred on ‘leased vehicles’ beyond entitlement of such officials, such recovery would not amount to ‘vehicle renting services to officials’ and cannot be charged to Service tax – [2016] 66  154 (New Delhi – CESTAT)

SECTION 73

RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED

Where assessee availed cenvat credit on capital goods/services installed/availed in Jammu & Kashmir by including premises of J&K in centralized registration though no taxable services were provided in state of J&K, by virtue of section 64(1) of Finance Act, 1994, extended period was applicable to demand duty tax – [2016] 66 128 (Kolkata – CESTAT)

CENTRAL EXCISE ACT

SECTION 2(f)

MANUFATURE – CLASSIFICATION

Process involved in production of Gulabari & Keora Water amounts to manufacture and these products are classifiable under Heading 33030020 and 33030030 respectively – [2016] 66 155 (New Delhi – CESTAT)

Shilajit Capsules (Ayurvedic medicine) manufactured by assessee as per its own patented formula and not as per formula given in any Authoritative ayurvedic text, would be classified as PP medicine under heading 33049011 and not as generic ayurvedic medicine under heading 30.03 – [2016] 66  155 (New Delhi – CESTAT)

SECTION 4A

VALUATION UNDER CENTRAL EXCISE – RETAIL SALE PRICE/MRP BASED

Where assessee has cleared goods to ultimate customer as per declared RSP (Retail Sale Price) and there is no flowback from retail seller to assessee, then, declared RSP cannot be challenged as incorrect – [2016] 66 136 (Chennai – CESTAT)

CUSTOMS TARIFF ACT

SECTION 3(1)

CHARGE/LEVY – ADDITIONAL DUTY OF CUSTOMS/CVD

For purpose of payment of CVD equal to excise duty based on RSP, since there is no procedure under Customs Act to challenge RSP, hence, RSP can be challenged only as per section 4A of the Central Excise Act and rules made thereunder – [2016] 66 136 (Chennai – CESTAT)

CENVAT CREDIT RULES

RULE 1

CENVAT CREDIT – SHORT TITLE, EXTENT AND COMMENCEMENT OF

Cenvat Credit Rules do not apply on cenvat credit of service tax in state of Jammu & Kashmir and, therefore, credit taken with respect to services availed in state of Jammu & Kashmir has to be denied – [2016] 66 128 (Kolkata – CESTAT)

RULE 9

CENVAT CREDIT – DOCUMENTS AND ACCOUNTS UNDER CENVAT

Where details prescribed in rule 4A(1) of Service Tax Rules are available in a document, it will be a proper document for availing cenvat credit – [2016] 66  128 (Kolkata – CESTAT)

STATUTES

DIRECT TAX LAWS

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – CBDT resolves disputes of RS.5000 crore under Mutual Agreement Procedure (MAP) of tax treaties – PRESS RELEASE, DATED 16-2-2016

CORPORATE LAWS

Review of Offer for Sale (OfS) of Shares through Stock Exchange Mechanism – CIRCULAR NO.CIR/MRD/DP/36/2016, DATED 15-2-2016

Notice inviting comments on the draft rules W.R.T. NCLT related provisions under the Companies Act, 2013 -PRESS RELEASE, DATED 28-1-2016

INDIRECT TAX LAWS (ST,EX,CUS. & (CST & VAT))

Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016 – NOTIFICATION NO.4/2016-ST, DATED 15-2-2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 011-233 433 33

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