REAL ESTATE BILL

real-estate-bill-2015

POWER TO BUYER – THE NEW REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

The real estate sector in India, in the recent times, has been plagued with lack of transparency, unregulated and unscrupulous activities of developers, oppressed and highly dissatisfied consumers and lack of timely and cost effective remedies. The arm twisting tactics and unethical business practices followed by many real estate developers have led to skyrocketing prices of real estate and a pool of consumers which is repelled by such high pricing and absence of proper check on developers. As a result, a large section of our population still dreams of owning a home.

In order to address the aforesaid issues affecting the real estate sector in the country, the Real Estate (Regulation And Development) Act, 2016 (“RERA”) has been brought into force. RERA received Presidential assent on March 26, 2016 and the Ministry of Housing and Urban Poverty Alleviation (“MHUPA”), vide its notification dated April 26, 2016, appointed May 1, 2016 as the date for coming into effect of 69 out of total 92 sections of RERA.

The rules for giving effect to the provisions of RERA are to be formulated and notified within a period of 6 (six) months from the date of commencement of the Act by respective State Governments (for each Sate), MHUPA (for  Union Territories  except Delhi  and Puducherry), Ministry of Urban Development (for Delhi) and Union Territory Government (for Puducherry).

RERA aims at putting institutional infrastructure in place in the country for the purpose of ensuring uniform regulatory environment, protection of consumer interest, quick adjudication/ resolution of disputes and overall development of the real estate sector.

THE SALIENT FEATURES OF RERA ARE DISCUSSED HERE UNDER:

Uniform Applicability: The provisions of RERA extend to whole of India  (except  Jammu  and  Kashmir)  and  are  applicable  to commercial as well as residential real estate projects. The said feature of RERA will be crucial in ensuring its uniform applicability and preventing any real estate project from escaping the provisions of RERA, unless expressly exempted, by the reason of said project being commercial or residential. Constitution of Regulatory Authority: RERA provides for constitution of Real Estate Regulatory  Authority (“Regulatory Authority”) for all States and Union Territories, as regulator for real estate projects, within a period of one year from the date of coming into effect of the Act. The said Regulatory Authority will perform such duties and exercise such powers as are assigned to it under RERA, including but not limited to granting registration to real estate  projects/real estate agents, maintaining database of projects/ promoters/ real estate agents, issuing orders/directions to ensure compliance of RERA, imposing penalty for offences, etc. Registration of Real Estate Projects: All real estate projects shall be required to be registered with the concerned Regulatory Authority if the area of land proposed to be developed therein exceeds 500 square meters, or the number of apartments proposed to be developed therein exceeds 8 (inclusive of all phases), or if the completion certificate with respect to such project has not been obtained on the date of commencement of the Act,. The said application shall be filed within a period of 3 (three) months from the date of commencement of this Act with respect to ongoing projects.

Undertaking marketing/sale with respect to a real estate project will not be permissible for promoters till necessary registration has been obtained under RERA.

Disclosures by Promoters: While filing an application for registration of a real estate project, promoters are required to provide disclosures with respect to all the details of the project and give declaration with respect to completion schedule and title of the land for the project. The period within which a promoter undertakes to complete the project under its application of registration is the period for which the registration for the said project shall be valid under RERA .Agreement with Buyers: RERA mandates the promoters to first enter into a written agreement for sale with the buyers and register the said agreement before accepting any advance payment or application fee (not exceeding 10% percent of the cost). Further, the said agreement for sale shall be in the prescribed form in order to prevent promoters from drafting one-sided agreements in their favour. Maintenance of Project Receivables in a Separate Account: RERA directs promoters to deposit and maintain at least 70% (seventy percent) of the amounts realised for the real estate project from the allottees, from time to time, in a separate account to be maintained in a scheduled bank, to be withdrawn in proportion to percentage of completion of project for covering the cost of construction and the land cost. The said requirement has been incorporated in RERA in order to prevent diversion/misappropriation of funds so obtained by promoters from allottees of a real estate project. Check on Promoters’ Powers: RERA imposes several checks on powers/activities of promoters, including but not limited to the requirements of seeking prior consent of at least two third allottees before altering sanctioned plans/common areas of a project and/or transferring the project to a third party, rectifying structural/ workmanship/ quality defects within a period of 30 days of being notified, maintaining insurance with respect to land and building of the project, refunding the money or paying monthly interest, as the allottee may desire, in the event of delay in completion, etc. Registration of Real Estate Agents: RERA has mandated all real estate agents to get themselves registered with the Regulatory Authority before facilitating any real estate transaction. Further, RERA incorporates a provision that requires real estate agents to facilitate possession of all necessary documents that an allottee is entitled to and perform all such other function as may be prescribed under the rules. Buyers’ Rights: RERA grants several rights to the buyers, including but not limited to right to have access to database of promoters/projects/real estate agents, right to claim refund/monthly interest in the event of delay, right to claim compensation for any loss caused due to defect in title of project land, etc. Time Bound Dispute Resolution Mechanism: In addition to constitution of Regulatory Authorities, RERA also provides that appropriate Government shall constitute an Appellate Tribunal (“Appellate Tribunal”) within a period of 1 (one) year from the date of commencement of the Act for hearing appeals against the orders of Regulatory Authority that are preferred within a period of 60 (sixty) days from the date of receipt of copy of concerned order.

RERA also provides that the proceedings of Regulatory Authority and Appellate Tribunal shall be completed within a period of 60 (sixty) days from the date of receipt of complaint or appeal, as the case may be.

Offences and Penalties: Failure of any promoter to get its real estate project registered in compliance with section 3 of RERA may result in levy of penalty up to 10% of the estimated cost of the project along with imprisonment for a term up to 3 (three) years in the event of continued default. Further, in the event of any promoter failing to provide correct information for registration or failing to adhere to any other provision of RERA, apart from section 3, such promoter shall be liable to a penalty up to 5% of the estimated cost of the project.

The Central Government has, as of now, notified 69 out of the total 92 sections under RERA. However, the 22 sections that are yet to be notified, such as prior registration of real estate projects; registration of real estate agents; duties/ obligations of promoters, are essential for regulating the activities of promoters and achieving the key objective of bringing transparency in the real estate sector.

Until the said remaining sections are notified, constitution of Regulatory Authority and framing of necessary rules under RERA will not result in achievement of desired results of transparency, accountability and timely handovers. Therefore, it will have to be seen as to how much time the Government takes before notifying the remaining sections and, accordingly, makes it obligatory for the promoters to ensure full compliances of their duties under the Act.

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HOW TO FILE TDS RETURN ONLINE?

USUAL MANUAL FOR CHANGED PROCEDURE FOR FILING OF E-TDS QUARTERLY STATEMENT W.E.F. 01 MAY 2016

how to file tds returns online

WITH EFFECT FROM 01 MAY 2016 ETDS QUARTERLY STATEMENT / RETURNS SHALL BE UPLOADED AT TRACES TDSCPC WEBSITE AND NOT ON TIN NSDL WEBSITE.

TDS STATEMENT UPLOAD: User Manual

  • Pre-Requisites for Uploading TDS Statement
  • To upload TDS, user should hold valid TAN and should be registered in e-Filing
  • Statement should be prepared using the Return Preparation Utility (RPU) and validated using the File Validation Utility (FVU). The utilities can be downloaded from tin-nsdl website (https://www.tin-nsdl.com/).
  • Valid DSC should be registered in e-Filing.
  • Upload TDS/TCS Statement

STEPS in Uploading TDS Statement:

Step 1: In e-Filing Homepage, Click on “Login Here”

Step 2: Enter User ID (TAN), Password, and Captcha. Click Login.

Step 3: Post login, go to TDS   Upload TDS.

Step 4: In the form provided, select the appropriate statement details from the drop down boxes for:

  • FVU Version
  • Assessment Year
  • Form Name
  • Quarter
  • Upload Type

Note:

  • TDS can be uploaded from Asst. Year 2011-12
  • Only Regular Statements can be uploaded, the Correction statement can be uploaded only through tin-NSDL portal.

Step 5: Click Validate to Validate Statement details.

Step 6: “Upload TDS ZIP file”: Upload the TDS/TCS statement (Prepared using the utility downloaded from tin-NSDL Website)

Step 7: “Attach the Signature file” Upload the signature file generated using DSC Management Utility for the uploaded TDS ZIP file. For further details on generating Signature file click here. Navigate to Step by Step Guide for Uploading Zip File (Bulk Upload)

Step 8: Click on “Upload” button.

Once the TDS is uploaded, success message will be displayed on the screen. A confirmation mail is sent  to the registered email id.

View Filed TDS Statement – the steps are as below:

Step 1: Login to e-Filing, Go to TDS

Step 2: In the form provided, select the details from the drop down boxes for Assessment Year, Form Name and Quarter respectively for which the TDS was uploaded.

Step 3: Click on “View Details”.

Step 4: The status of the TDS uploaded is displayed.

  • Once uploaded the status of the statement would be “Uploaded”. The uploaded file will be processed and validated. Upon validation the status will be either be “Accepted” or “Rejected” and would be reflected within 24 hours from the time of upload. In case if “Rejected”, the rejection reason will be displayed.
  • If the status is “Rejected”, click on the Token Number to view the error details.
  • Reason for rejection would be displayed as below:

Step 6: If the status is “Accepted”, click on the Token Number to see the details of acknowledgement of the statement uploaded for all future reference. 

We look forward for your valuable comments. www.carajput.com

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GOODS AND SERVICE TAX (GST)

gst

GST is levied only at the Destination point, It is taxed only at the value addition at each stage and supplier at each stage is permitted to set off through tax credit mechanism which would eliminate all cascading effect. There will be a no distinction between goods and services. 

STRUCTURE OF GST IN INDIA: 

  • INTRA STATE TAXABLE SUPPLY: Excise and service tax will be known as CGST.
  • Local VAT and other taxes will be known as SGST.
  • INTER STATE TAXABLE SUPPLY: CST will be replaced by integrated GST (IGST).
  • IMPORT FROM OUTSIDE INDIA: In this case custom duty like CVD, SAD etc. IGST will be charged 

FEATURES, REGISTRATION & RETURNS UNDER GST:

  • GST shall have two component one levied by the central and the other levied by the states .Rates for GST would be prescribed appropriately reflecting revenue consideration and acceptability.
  • IGST is applicable on the import of goods & services and inter-state stock transfer of goods & services and is levied and collected by the central.
  • The taxpayer would need to submit periodical return, in common format as far as possible , to both central GST authority and to the concerned state GST authorities
  • Export of goods and services are zero rated.
  • Each taxpayer would be allotted a PAN linked identification number with a total of 13-15 digits. This would bring the GST PAN-linked system in line with in existing PAN based system for income tax facilitating data exchange and taxpayer compliance.
  • The taxpayer would need to submit periodic return to both the central GST authority and to the concerned state GST authority. ITC credit can also be verified on the basis of return filed and revenues reconciled against challan data from bank.
  • Current threshold limit under central excise duties is RS 1.50 lacs and that under service tax is RS 10 lacs. Whereas the threshold limit under state VAT is between 10 lacs to 20 lacs.
  • Constitutional amendment bill is required to be passed in both the house of parliament. The CG has full majority in lok sabha however a lot depend on how the CG will ensure safe passage of the bill in rajya sabha , where it does not have the sufficient majority.

Hope GST Bill is approved in this monsoon session of Parliament: Arun Jaitley The finance minister 

Contributed by: Team Rajput Jain & Associates, Chartered Accountants–Managing Partner, Swatantra Singh

We look forward for your valuable comments. www.carajput.com

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GUIDELINES FOR FOREIGN INVESTMENT IN THE E-COMMERCE SECTOR

GUIDELINES FOR FOREIGN INVESTMENT IN THE E-COMMERCE SECTOR:

FDi in E Commerce www.carajput.com

E-commerce in recent times has been growing rapidly in India. By 2020, the e-commerce market size is expected to reach USD80 billion1, showing year on year growth in the range of 30 to 35 percent. This growth is likely to sustain for the next few years as e-commerce continues to reach new geographies, encompass new markets and provide greater benefits to e-retailers, consumers in terms of providing a large number of traders an additional source of sales, providing consumer greater convenience and access to a large number of products, etc.  The key features of the press note issued by Department of Industrial Policy and Promotion in this regard are enumerated below:

  • Foreign investment will not be allowed in the inventory based model of e-commerce.
  • 100 per cent foreign investment will be allowed under the automatic route in an entity undertaking sale of service through e-commerce.
  • 100 per cent foreign investment will be allowed under the automatic route in market place-based model subject to the following conditions :
  • Permission to marketplace e-commerce entity to enter into B2B transactions with sellers registered on its platform.
  • The marketplace may provide support services to a seller in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services.
  • Sales from one vendor or its group companies should not exceed 25 per cent of the sales affected through the marketplace.
  • Website should clearly provide name, address and other contact details of the seller.
  • Post sale, delivery of goods to the customer, customer satisfaction, warranty/guarantee of goods and services sold will be the responsibility of the seller.
  • The marketplace will not exercise ownership over the inventory for sale may be facilitated in conformity with the guidelines of the Reserve Bank of India.
  • E-commerce entities will not directly/indirectly influence the sale price of goods or services and shall maintain a level playing field.

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CORPORATE AND PROFESSIONAL UPDATE JUNE 29, 2016

Professional Update For the Day:

29

DIRECT TAX:


Income Tax: Amounts deposited in “golaks” in Gurudwara doesn’t amount to anonymous donations but charity [TS-343-ITAT-2016(ASR)]

Income Tax: CBDT issued an addendum circular to Circular No. 22/2016 clarifying that no TCS u/s 206C(1D) will be levied if the cash receipt does not exceeds two lakh even if the sale consideration exceeds two laks rupees and also the tax is required to be collected at source on cash component of sale consideration not on whole of sale consideration. Vide Circular No. 23/2016 dated 24.06.2016.

Income tax : CBDT issued Income Tax (16th amendments) Rules, 2016 vide Notification No. 49/2016 dated 22th June 2016.CBDT made the amendment in Rule 10U Application of general Anti Avoidance Rule of Income tax Rules, 1962. As per the Amendments made in the 10U (1)(d) the date “30th August 2010” has been substituted with “1st day of April 2017”. Similarly, In Rule 10U (2) the date “1st day of April 2015” has been substituted with the date “1st day of April 2017”

Reopening invalid if AO records satisfaction in mechanical manner & without application of mind via {M/S Banke Bihari Properties Pvt. Ltd Vs ITO (ITAT New Delhi)}

Demolition/Redevelopment not amounts to transfer, so no withdrawal of 54F via {Shri Dilip Manhar Parekh Vs The Dy. CIT}

No TDS on commission paid outside India for services received outside India by Non-Residents via {DCIT vs. M/s Sess Resources Ltd. (ITAT Panaji)}

Denies Sec. 80P deduction to labour cooperative society outsourcing labour work [TS-342-HC-2016(P & H)]

Income Tax: Where assessee sold shares in a company and Assessing Officer, after considering all relevant facts relating to sale price of shares, taxed gain from such sale as capital gain, reopening of assessment on ground that part of consideration received by assessee was non-compete fee assessable as business income, was not justified – [2016] 70 taxmann 258 (Delhi)

Income Tax: Failure to issue notice under sec. 143(2) couldn’t be cured by resorting to deeming fiction of sec. 292BB Sanjeev Aggarwal v. Deputy Commissioner of Income-tax, Circle-1(1), Chandigarh [2016] 70 taxmann.com 265 (Chandigarh – Trib.)

Income tax : New monetary threshold for filing appeals before High Court is also applicable to pending cases Commissioner of Income-tax v. Smt. Manbhar Devi Meena [2016] 70 taxmann.com 275 (Rajasthan)

Income Tax: For purpose of considering whether shares acquired by assessee by way of gift, are long-term capital assets or not, date on which donor acquired shares is relevant and not date on which assessee acquired shares in question – [2016] 70 taxmann 258 (Delhi)

The Hon’ble Bombay High Court in the case of co-owner Smt. Chhaya B Parekh in Income Tax Appeal No. 1583 of 2012 vide judgment dated 24th January, 2013 had held that demolition of residential bungalow will not tantamount to transfer and hence the same will not be hit by provisions of section 54F(3) of the Act.( Shri Dilip Manhar Parekh Vs The Dy. CIT)

CBDT has issued Income tax (17th Amendment) Rules, 2016. It has provided  conditions for relaxation of higher TDS U/s 206AA of the Income Tax Act for  non availability of PAN card in case of Non Resident/Foreign Companies.

Income Tax : ITAT Mumbai held that CIT cannot revise assessment for making afresh examination of an issue already examined by the AO who has taken one of the possible views because there has been no erroneous order which could ordered to be revised. (M/s. Rachana Finance & Investments Pvt. Ltd. vs. CIT ) ITAT Mumbai

Income Tax : No TDS on commission paid outside India for services received outside India by Non-Residents.[DCIT vs. M/s Sess Resources Ltd. (ITAT Panaji)].

Income Tax : CBDT has issued clarification on the Income declaration scheme, 2016. Queries have been received from the public about various provisions of the Scheme. The Board has considered the same and the clarifications issued vide Circular No. 24/2016 dated 27.06.2016

Income Tax: No TDS u/s 206AA on some payments to non-residents without PAN if TIN & other specified details & documents furnished. Notification 53 of  Dated :24.6.16.

 Auditor’s opinion on Section 80P interpretation cannot be a information for reopening u/s 147. [Jaipur Sahakari Kraya Vikraya Samiti Ltd. vs. ITO (ITAT Jaipur)].

INDIRECT TAX:


Excise : Goods bearing brand name of others are ineligible for SSI-exemption and are liable to duty; hence, SSI-units can avail exemption for unbranded goods simultaneously with Cenvat credit against duty-paid on branded goods – [2016] 70 Taxmann 244 (Punjab & Haryana)

Excise : Simultaneous availment of SSI exemption on unbranded goods and credit of duty on branded goods aren’t barred  Commissioner, Central Excise Commissionerate, Panchkula v. Cure Quick Remedies (P.) Ltd. [2016] 70 taxmann.com 244 (Punjab & Haryana)

Service tax : CBEC has exempt service tax on taxable services by way of transportation of goods by a vessel from outside India up to customs station in India with respect to which the invoice for the service has been issued on or before 31st May, 2016 subject to the condition of production of customs certified copy of the import manifest or import report required to be delivered under section 30 of the Customs Act, 1962 vide Notification No. 36/2016dated 23.06.2016

Service tax : CBEC has exempt the taxable services from whole of the Krishi Kalyan Cess leviable thereon with respect to which the invoice for the service has been issued on or before 31st May, 2016 subject to the condition that the provision of the service has been completed on or before 31st May, 2016 vide Notification No. 35/2016 dated23.06.2016

CST & vat : Where against assessment order, assessee filed writ petition and High Court declined to interfere on ground that alternative remedy under VAT Act was available and no questions of law were involved, since questions raised by assessee were pure questions of law, same could be gone into a writ petition and High Court should have decided matter – [2016] 70 Taxmann 274 (SC)

CST : Where ‘C’ Form had been validly issued to a dealer and subsequently Commissioner cancelled said Form, there is no statutory power under CST Act that permit Commissioner cancellation of ‘C’ Form that has been validly issued – [2016] 70 Taxmann 255 (Delhi)

Excise: As per rule 9(5), onus of establishing that inputs have been received is on person taking credit; hence Commissioner (Appeals) cannot place onus on revenue to establish that inputs have not been received. – [2016] 70 Taxmann 279 (Mumbai – CESTAT)

Custom: DGFT vide Notification No. 12/2015 dated 24.06.2016 has made prohibition on import of milk and milk product from China. The prohibition on import of milk and milk products (including chocolates and chocolate products and candies/ confectionary/ food preparations with milk or milk solids as an ingredient) from China ineffective till 23/06/16 as per the Notification.

Excise : In exercise of power conferred under section 9(2) of Central Excise Rules 2002 the Central Board of Excise and Customs hereby specifies that A person who is registered as First Stage Dealer shall not be required to take registration as an Importer or A person who is registered as Importer shall not be required to take registration as First Stage Dealer.

Custom : HC allows duty drawback of Basic Customs Duty on export of final product, though import duty on inputs and raw materials utilized therein paid through debit in Duty Entitlement Pass Book scrip. Gujrat High Court  [TS-250-HC-2016(GUJ)-CUST]

OTHER UPDATES :


MCA : Forms AOC-4 XBRL, GNL-1, INC-6, INC-2 and CRA-2 are likely to be revised on MCA21 Company Forms Download page w.e.f 25th June 2016. Stakeholders are advised to check the latest version before filing.

Annual filing forms for Companies Act, 1956 – 23AC, 23ACA, 23B, 20B, 21A are likely to be available on MCA21 portal by mid-August 2016.

Interest rate on PPF retains at 8.1% for quarter ending September, 2016, same as stayed in 1st Quarter of 2016-17.

MCA has changed Version of e-forms MR-1 (Return of Appointment of MD/WTD/Manager), CHG-1 (Application for Registration of Creation, Modification of charge other than those related to debenture), CHG-4 (Particulars for satisfaction of charge thereof), MGT-14 (Filing of Resolutions and Agreements to the Registrar) w.e.f 7th June, 2016. The form has been updated on MCA Portal. Only new version of e-form will be acceptable. Stakeholders are requested to plan accordingly and ensure that latest version of form is downloaded for e-filing. Form- wise date of last version change is available at on the website of MCA.

RBI: RBI has issued a Circular dated 23rd June, 2016 and detailed the format/requirements of submission of Proforma Ind AS Financials. The RBI had directed banks to submit Proforma Ind AS Financial Statements from the half-year ended September 30, 2016, latest by November 30, 2016. Banks will be guided by the Ind AS notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and the Report of the Working Group on “Implementation of Ind AS by Banks in India”.

ICAI has issued FAQs regarding requirements to prepare consolidated Financial Statement dated on 24.06.2016. These FAQs on Consolidated Financial Statements have been issued by the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI). The purpose of these FAQs is to illustrate and to assist in clarifying the requirements regarding preparation of Consolidated Financial Statements.

RBI: RBI has issued a Circular dated 23rd June, 2016 and detailed the format/requirements of submission of Proforma Ind AS Financials. The RBI had directed banks to submit Proforma Ind AS Financial Statements from the half-year ended September 30, 2016, latest by November 30, 2016. Banks will be guided by the Ind AS notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and the Report of the Working Group on “Implementation of Ind AS by Banks in India”.

ICAI has issued FAQs regarding requirements to prepare consolidated Financial Statement dated on 24.06.2016. These FAQs on Consolidated Financial Statements have been issued by the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI). The purpose of these FAQs is to illustrate and to assist in clarifying the requirements regarding preparation of Consolidated Financial Statements.

RBI: The Reserve Bank of India has released the Financial Stability Report (FSR) June 2016The FSR reflects the overall assessment on the stability of India’s financial system and its resilience to risks emanating from global and domestic factors. Besides, the Report also discusses issues relating to development and regulation of the financial sector.

KEY DATES :


Advance Information for 1st fortnight of July of functions with booking cost more than Rs. 1 lakh in Banquet halls; hotels etc. in Delhi in form No. BE-2 under DVAT Act. – 27-06-2016

Return in the form 26QAA by Banks for interest up to Rs. 5000 for March Quarter in Income Tax Act-30.06.2016

E-Filling of form 15G/H in respect of the period 01.10.2015 to 31.03.2016 in Form 15G/H in Income tax act-30.06.2016

Pay difference of service tax deposited on provisional basis and actual annual service tax (Where both taxable & exempt service tax provided and input credit taken on provisional basis) in challan No. GAR-7 in Service Tax Act-30.06.2016

“Life is very similar to a boxing match. Defeat is not declared, when you fall down. It is declared, when you refuse to RISE UP.”

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CORPORATE AND PROFESSIONAL UPDATE JUNE 24, 2016

Professional Update For the Day:

Untitled18A

DIRECT TAX:


Income Tax: Where issue of allowability of MAT credit was decided by AO by order dated 8-12-2011, even though issue of surcharge and cess was also allowed to be carried forward by AO by order dated 29-11-2012, revisional order passed on 30-3-2015 denying MAT credit would be time barred [2016] 70 taxmann.com 155 (Kolkata – Trib.)

Income Tax : SLP dismissed against High Court’s ruling that even if assessee voluntarily disclosed a sum subsequent to search and offered said sum to tax, penalty levied under section 271(1)(c) was justified
[2016] 70 taxmann.com 175 (SC)/[2015] 373 ITR 681 (SC)/[2015] 279 CTR 536 (SC)

Registration u/s 12AA cannot be denied on town planning activities continuing from earlier years.[ ITO vs. Moradabad Development Authority (ITAT Delhi)].

Income tax : Where as per sale agreement, transaction of sale of property was to be completed after five years of agreement at buyer’s option but possession of property was allowed to be taken over by buyer on next day of agreement in part performance of agreement, transfer within meaning of section 2(47) took place when possession was taken over by buyer and not when buyer exercised option to buy said property after five years – [2016] 70 taxmann 118 (Panaji – Trib.)

Income Tax: Recording of satisfaction by Assessing Officer of person searched that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized belong to person other than person searched is a sine qua non for initiating action under section 153C; where Assessing Officer of person searched and such other person is same, then also, first while making assessment in case of person searched, Assessing Officer has to record such satisfaction, then, copy of this satisfaction note is to be placed in file of such other person and relevant document should also be transferred from file of person searched to file of such other person and thereafter, in capacity of Assessing Officer of such other person, he has to issue notice under section 153A, read with section 153C – [2016] 70 taxmann 156 (Delhi – Trib.)

Registration u/s 12AA cannot be denied on town Planning Activities continuing from earlier years [ITO vs. Moradabad Development Authority (ITAT Delhi)].

Income Tax: CBDT clarifies that the higher turnover threshold of Rs. 2 crores for non-audit of accounts is granted only to assesses, opting for presumptive taxation scheme u/s 44AD.

Income Tax : Interest U/s. 244A on excess self assessment tax payment cannot be denied. [CIT vs. Birla Corporation Limited].

Income tax :  ITAT can examine whether AO has rightly exercised discretionary powers to extend due date of Special Audit Report
Principal Commissioner of Income-tax v. Nilkanth Concast (P.) Ltd.
[2016] 70 taxmann.com 157 (Delhi)

Income Tax: Reassessment held as invalid as notice was affixed at the wrong address Income-tax Officer, Ward 2 (3), Chandigarh v. Om Parkash  Kukreja [2016] 70 taxmann.com 147 (Chandigarh – Trib.)

Income Tax: Tax audit threshold of Rs 2 cr. only applicable to taxpayers opting for presumptive tax scheme: CBDT

Income Tax: Proceedings can be initiated against the amalgamated company on account of the failure of the amalgamating company to distribute the statutory percentage of the accumulated profits. In the given case Calcutta High Court held that Tribunal was not right in holding that the proceedings against the amalgamated company could not be initiated on account of the failure of the amalgamating company to distribute the statutory percentage of the accumulated profits.( CIT Vs. M/s. Shaw Wallace Distilleries Ltd.)

Income Tax: CBDT vide Notification No. 45/2016 dated 14-th June , 2016 has exempted the tax in the hand of the resident on the investment made in the shares issued by the start-up companies, if the consideration is in excess of the face value for issue of shares  of the “start-up” companies. For the purposes of this notification, “startup” shall mean a company in which the public are not substantially interested and which fulfills the conditions specified in the notification of the Government of India. Further the Central Government, hereby notifies the ‘classes of persons’ for the purposes of the said clause as being the ‘person’ defined under sub-section (31) of section 2 of the said Act.

Income Tax: CBDT has made 15th Amendments Rules, 2016 vide Notification No. 48/2016 dated 20th June, 2016.CBDT has made amendments in FATCA rules for registration, Due Diligence &information maintenance. Further, in the said rules, in Appendix-II Form 61B has been substituted with the new amended form with effect from 1st January, 2017.

Income Tax: CBDT has issued clarification regarding Threshold limit of tax audit under section 44AB and section 44AD vide press release dated 20th June 2016. The higher threshold for non-audit of accounts has been given only to assessee opting for presumptive taxation scheme under section 44AD.

Income Tax: CBDT vide Notification No. 47/2016 dated 17th June 2016 has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in the notification, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934CBDT vide Notification No. 47/2016 dated 17th June 2016 has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in the notification, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934

CBDT vide Notification No. 46/2016 dated 17th June 2016 has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in clause (23DA) of section 10 of the said Act received by any securitization trust as defined in clause (d) of the Explanation to section 115TC of the said Act.

Income Tax: New Explanation to sec. 263 doesn’t give unfettered powers to CIT to revise every order of AO Narayan Tatu Rane v.    Income-tax Officer, Ward 27(1)(1), Mumbai [2016] 70 taxmann.com 227 (Mumbai – Trib.)

Income Tax: Deeming fiction of sec. 50 won’t be triggered on transfer of rights in land Smt. Devindraben I. Barot v. Smt. Devindraben I. Barot  [2016] 70 taxmann.com 235 (Ahmedabad – Trib.)

Deferred consideration contingent on uncertain future event cannot be taxed before vesting of right to receive via {CIT vs. Mrs. Hemal Raju Shete (Bombay High Court)}

Where the Assessee uses a network of computers for its business purposes, the LAN/WAN equipment is an essential part and to be regarded as computer peripherals. Hence depreciation will be allowed @ 60%.- (Global Trust Bank Limited, New vs. Department Of Income Tax) Delhi

INDIRECT TAX:


CENVAT : Refund claims under rule 5 of the CENVAT Credit Rules, 2004 : This scheme is applicable only to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on the date of the issue of the circular dated 10-11-2015. As clarified therein, claims which have been remanded are out of the purview of this scheme

Excise : Settlement Commission can reject application only in two cases : (a) assessee has not made full and true disclosure [section 32F], or (b) assessee has not co-operated in proceedings before it [section 32L]; there is no provision to send matter back merely because of differences between assessee and department – [2016] 70 taxmann 168 (Delhi)

Central Excise: Valuation – excise duty on the sample bottles under Rule 8 of the Valuation Rules – nothing is flowing back to the manufacture from the distributors – genuineness of transaction not doubted by the revenue – no demand can be raised – Tri

VAT  : Non-production of ‘C’-Forms – Demanding a higher rate of tax under the CST Act, 1956 due to the non production of ‘C’ Forms – The appellants and petitioners are not entitled to the reliefs prayed for – HC

Service tax : Penalty couldn’t be waived off on grounds of financial hardship if taxpayer failed to deposit collected tax Amcon Engineers (P.) Ltd. v. commissioner of Service Tax, Delhi [2016] 70 taxmann.com 217 (New Delhi – CESTAT)

An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. It was held in the given case that Nortel India is an independent company and a separate taxable entity under the Act. There is no material on record which would indicate that its office was used as an office by the Assessee or Nortel Canada the same cannot lead to the conclusion that Nortel India was acting as a sales outlet. (M/S Nortel Networks India International Inc. Vs DIT)

Excise : Gujarat HC grants refund of Education Cess & Secondary and Higher Secondary Education Cess (‘ paid by assessee under mistake of law on Oil Cess levied u/s 15 of Oil Industry Development Act ; Holds that such Cesses can only be levied on duties of excise and merely because machinery provisions of Central Excise Act have been incorporated in OID Act for collection and refund of Cess, it cannot be inferred that Oil Cess assumes the character of ‘excise duty’; Notes that Oil Cess is levied and administered by Ministry of Petroleum and Natural Gas, whereas conditions precedent for levy of said Cesses are that excise duty should be levied and collected by Ministry of Finance .Gujrat High Court

Excise : Activities of image scanning, editing and loading on CD are classifiable as photography services Global Digital Color Lab v. Commissioner of Central Excise, Jaipur-I   [2016] 70 taxmann.com 226 (New Delhi – CESTAT)

Excise : Dept. can’t revoke excise registration on allegations of fraud without hearing assessee Commissioner, Central Excise Commissioner ate, Udaipur v. Mangalam Cement Ltd., Kota [2016] 70 taxmann.com 241 (Rajasthan)

Excise : Service of notice by registered post without acknowledgment due isn’t a valid service under excise: HC RP Casting (P.) Ltd. v. Customs, Excise & Service Tax Appellate Tribunal, New Delhi[2016] 70 taxmann.com 242 (Rajasthan)

Service tax : No service tax on under construction flats if price includes land value via {Suresh Kumar Bansal vs UOI (Delhi High Court)}

Service tax : No service tax audit by service tax department or CAG via {Mega Cabs Pvt. Ltd. Vs. Union of India & Ors. (Delhi High Court)}

OTHER UPDATES :


RBI : RBI decides to simplify and rationalise the process of registration of new NBFCs In order to make the process of registration of new NBFCs smoother and hassle free, the application form for registration of new NBFCs and the checklist of documents to be submitted have been revised. The number of documents to be submitted by the NBFC applicants has been reduced from existing set of 45 documents to 7-8 in the revised process. Secondly, from now onwards, there would be two different types of applications for non-deposit taking NBFCs (NBFC-ND) based on Sources of Funds & Customer Interface as follows: a) Type I – NBFC-ND not accepting public funds1 / not intending to accept public funds in the future and not having customer interface2 / not intending to have customer interface in the future b) Type II – NBFC-ND accepting public funds/ intending to accept public funds in the future and/or having customer interface/intending to have customer interface in the future The processing of cases for Type I – NBFC-ND applicants would be on fast track mode.

SEBI : SEBI invites applications from CA firms, for empanelment to take up assignments relating to forensic audit of SEBI registered RTA/STA.

Central Depository Services (India) Limited [CDSL] has launched ‘m-Voting’, a mobile app for e-Voting. This m-Voting app enables Android based smart phone users to cast their vote on company resolutions even while they are on the move. The m-Voting can also be used for voting at the AGM/EGM venue. The m-Voting app can be downloaded from Google Play Store for Android based phones, while the app for iPhone and Windows Phone would be released shortly and can be downloaded from the App Store and Windows Phone Store, respectively.

Govt. allows 100% FDI in e-commerce, aviation and defense

Sebi : SAT sets aside 5 years ban on merchant banker who failed to examine bank statement of issuer Co. Almondz Global Securities Ltd. v. Securities and Exchange Board of India [2016] 70 taxmann.com 222 (SAT – Mumbai)

MCA : Construction carried out by builder under joint development agreement amounts to construction services N. Bala Baskar v. Union of India, Ministry of Finance [2016] 70 taxmann.com 151 (Madras)

MCA : Ministry of Corporate Affairs has notified that Annual Filing Forms for Companies Act, 1956 – 23AC (Form for filing balance sheet and other documents with the Registrar), 23ACA (Form for filing Profit and Loss account and other documents with the Register), 23B (Information to the Registrar by company for appointment of auditor), 20B (Form for filing annual return by a company having a share capital with the Registrar), 21A (Particulars of annual return for the company not having share capital) are likely to be available on MCA21 portal by mid-August 2016. The Ministry had earlier removed these e-forms due to maintenance of the website. Stakeholders are requested to plan accordingly.

The NDA government on Monday announced relaxed foreign direct investment (FDI) norms in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products. It has allowed up to 100% foreign direct investment (FDI) in defence through the approval route, 100% FDI in food product e-commerce, 100% FDI in greenfield pharma via the automatic route, 100% in browfield pharma – of which 74% will be through automatic route – 100% FDI in scheduled airlines, and up to 49% FDI in airlines through automatic route. While FDI in defence beyond 49% was already allowed through approval route and up to 49% through automatic route, the new norms have done away with the condition of access to ‘state-of-art’ technology in the country for FDI more than 49%.

Sebi : SAT sets aside 5 years ban on merchant banker who failed to examine bank statement of issuer Co. Almondz Global Securities Ltd. v. Securities and Exchange Board of India [2016] 70 taxmann.com 222 (SAT – Mumbai)

MCA : Construction carried out by builder under joint development agreement amounts to construction services N. Bala Baskar v. Union of India, Ministry of Finance [2016] 70 taxmann.com 151 (Madras)

MCA : Ministry of Corporate Affairs has notified that Annual Filing Forms for Companies Act, 1956 – 23AC (Form for filing balance sheet and other documents with the Registrar), 23ACA (Form for filing Profit and Loss account and other documents with the Register), 23B (Information to the Registrar by company for appointment of auditor), 20B (Form for filing annual return by a company having a share capital with the Registrar), 21A (Particulars of annual return for the company not having share capital) are likely to be available on MCA21 portal by mid-August 2016. The Ministry had earlier removed these e-forms due to maintenance of the website. Stakeholders are requested to plan accordingly.

The NDA government on Monday announced relaxed foreign direct investment (FDI) norms in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products. It has allowed up to 100% foreign direct investment (FDI) in defence through the approval route, 100% FDI in food product e-commerce, 100% FDI in greenfield pharma via the automatic route, 100% in browfield pharma – of which 74% will be through automatic route – 100% FDI in scheduled airlines, and up to 49% FDI in airlines through automatic route. While FDI in defence beyond 49% was already allowed through approval route and up to 49% through automatic route, the new norms have done away with the condition of access to ‘state-of-art’ technology in the country for FDI more than 49%.

MCA : Forms AOC-4 XBRL, GNL-1, INC-6, INC-2 and CRA-2 are likely to be revised on MCA21 Company Forms Download page w.e.f 25th June 2016. Stakeholders are advised to check the latest version before filing.

PPF : The Central Government has amended Public Provident Fund Scheme, 1968. This Scheme may be called Public Provident Fund (Amendment) Scheme, 2016. It shall come into force on the date of its publication in the Official Gazette. The Government changed the norms for Public Provident Fund deposits, allowing the subscribers of the scheme to prematurely close their accounts and withdrawal the complete amount after five years. However, the withdrawal will be allowed for expenditure towards higher education or medical treatment. Currently, the lock-in-period for complete withdrawal from PPF accounts is 15 years.

Annual filing forms for Companies Act, 1956 – 23AC, 23ACA, 23B, 20B, 21A are likely to be available on MCA21 portal by mid-August 2016.

Interest rate on PPF retains at 8.1% for quarter ending September, 2016, same as stayed in 1st Quarter of 2016-17.

MCA has changed Version of e-forms MR-1 (Return of Appointment of MD/WTD/Manager), CHG-1 (Application for Registration of Creation, Modification of charge other than those related to debenture), CHG-4 (Particulars for satisfaction of charge thereof), MGT-14 (Filing of Resolutions and Agreements to the Registrar) w.e.f 7th June, 2016. The form has been updated on MCA Portal. Only new version of e-form will be acceptable. Stakeholders are requested to plan accordingly and ensure that latest version of form is downloaded for e-filing. Form- wise date of last version change is available at on the website of MCA.

KEY DATES


Payment of ESI for the month of May- 21-06-2016

E-Payment of DVAT & CST tax for the month of May -21-06-2016

Issue of TDS certificate in case of payment/credit made in the month of May for purchase of property u/s 194IA -22-06-2016

Issue of DVAT certificate for deduction made in month of May -22-06-2016

Advance Information for 1st fortnight of July of functions with booking cost more than Rs. 1 lakh in Banquet halls; hotels etc. in Delhi in form No. BE-2 under DVAT Act. – 27-06-2016

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CORPORATE AND PROFESSIONAL UPDATE JUNE 18, 2016

Professional Update For the Day:

8-Tips-Biz-Name

DIRECT TAX:


Income Tax : The initiation of the proceedings u/s 153C in the absence of recording of the satisfaction by the AO of the person searched was held to be invalid and accordingly the assessment framed u/s 153C of the Act is quashed – Bhawna Bhalla Vs. ACIT, CC-21, New Delhi & DCIT, CC-21, New Delhi Vs. Bhawna Bhall

Income Tax: Disallowance made under sec. 14A has to be added back to book profit to compute MAT Haldia Petrochemicals Ltd. v. Joint Commissioner of Income-tax,Range- 12, 3, Kolkata [2016] 70 taxmann.com 70 (Kolkata – Trib.)

Income Tax: TDS not deductible on web hosting and marketing services procured from US based entity. [DCIT vs. M/s Matrimony.Com Pvt. Ltd. (ITAT Chennai)].

Income Tax: TDS –  15G/15H declarations for the period from 01 OCT 2015 to 31 MAR 2016 to be submitted through e-filing portal by 30 JUN 2016 – Notification No.9/2016.

Income Tax: Interest awarded under Land Acquisition Act forms part of compensation; not liable to sec. 194A TDS Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat [2016] 70 taxmann.com 45 (Gujarat)

Income Tax : Mere TP addition doesn’t justify levy of penalty if assessee had applied incorrect TP method in good faith Mitsui Prime Advanced Composites India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle- 6 (1), New Delhi [2016] 70 taxmann.com  123 (Delhi – Trib.)

Income Tax: Penalty will be levied u/s 271C for assessee’s failure to withhold TDS u/s 194A on interest paid to its sister concerns. Kerala HC opined that the only way assessee could take the benefit of Sec. 273B was by establishing that there was “reasonable cause” justifying its failure to comply with Sec. 194A. Kerala High Court

Income Tax: Penalty U/s 271(1)(c) shall not be imposed if assessing officer at the time of initiation of penalty proceedings has not specified whether penalty is initiated for the inaccurate particulars of income or concealment of income.(DCIT Vs. M/s Grass Field Farms & Resorts P. Ltd.) ITAT Jaipur

Income Tax: TDS not deductible on web hosting & marketing services procured from US based entity via {DCIT vs. M/s Matrimony.Com Pvt. Ltd. (ITAT Chennai) }

Income Tax: ITAT directs TPO to recalculate additions by considering only international transactions instead of total sales Federal Mogul Automotive Products (India) Ltd. v. Deputy Commissioner of Income-tax, Circle-11 (1), New Delhi [2016] 70 taxmann.com 121 (Delhi – Trib.)

Income Tax : Works contract services used for maintenance of office equipment are eligible input services Red Hat India (P.) Ltd. v. Principal Commissioner, Service Tax, Commissionerate, Pune [2016] 70 taxmann.com 132 (Mumbai – CESTAT)

Utility for Income Declaration Scheme, 2016 released by CBDT :  Central Government vide its notification no. 33/2016 dt. 19th May, 2016 has specified The Income Declaration Scheme Rules, 2016. Utility regarding these forms are now available on Income Tax website. Income Tax: Sec. 246A doesn’t allow filing of appeal before CIT(A) against order passed by AO under Sec. 195(2) Deputy Commissioner of Income-tax (International Taxation)-4(2), Mumbai v. Abu Dhabi Ship Building PJSC [2016] 70 taxmann.com 224 (Mumbai – Trib.)

Income Tax Assessee gets enduring benefit from the rights acquired in films and serials and they do not expire on the date of first telecast as contemplated by the assessee – The rights are intangible assets within the meaning of Explanation (iii) to Section 32 and do not fall within the purview of Section 37(1). The assessee is entitled to claim depreciation on same. (Eenadu Television Private Limited. Vs. ACIT, Hyderabad) ITAT Hyderabad

Income Tax: Where assessee, an Indian company, received dividend from a Brazilian company, since assessee was a resident company of India within meaning of article 23 paragraph 3 of DTAA and, Brazilian company had already paid tax on its profits in excess of rate prescribed in paragraph 2 of article 10 of DTAA before distribution of dividend income, such dividend would be exempt from tax in India – [2016] 70 taxmann.com 22 (Kolkata – Trib.)

Income Tax: Section 147 could not be availed of for purpose of correcting a mistake in assessment order; Assessing Officer could not sit in appeal over decision of his predecessor Assessing Officer, who had examined claim and allowed claim of deduction under section 54EC by taking plea that assessee was eligible for lesser amount – [2016] 70 taxmann.com 72 (Gujarat)

Income Tax : Official Assignee need not go before the CBDT for waiver of interest payable under Income-tax assessments. The Insolvency Court itself can consider the question of waiver of interest in terms of the power conferred under section 7 of the Presidency Town Insolvency Act and in the light of the provisions of the Income-tax Act – [2016] 70 taxmann.com 182 (Madras)

Utility for Income Declaration Scheme, 2016 released by CBDT :  Central Government vide its notification no. 33/2016 dt. 19th May, 2016 has specified The Income Declaration Scheme Rules, 2016. Utility regarding these forms are now available on Income Tax website.

Income Tax: Sec. 246A doesn’t allow filing of appeal before CIT(A) against order passed by AO under Sec. 195(2) Deputy Commissioner of Income-tax (International Taxation)-4(2), Mumbai v. Abu Dhabi Ship Building PJSC [2016] 70 taxmann.com 224 (Mumbai – Trib.)

Income Tax Assessee gets enduring benefit from the rights acquired in films and serials and they do not expire on the date of first telecast as contemplated by the assessee – The rights are intangible assets within the meaning of Explanation (iii) to Section 32 and do not fall within the purview of Section 37(1). The assessee is entitled to claim depreciation on same. (Eenadu Television Private Limited. Vs. ACIT, Hyderabad) ITAT Hyderabad

Income Tax: AO of searched person has to record satisfaction even if he is also the AO of other person under sec. 153C  Narsi Creations v. Deputy Commissioner of Income-tax, Central Circle-12, New Delhi
[2016] 70 taxmann.com 156 (Delhi – Trib.)

Income Tax: Revenue couldn’t treat taxpayer as BPO if same was categorized as KPO in earlier year on basis of same agreement
SNL Financial (India) (P.) Ltd. v. Deputy Commissioner of Income-tax, Cir.8, Ahmedabad [2016] 70 taxmann.com 146 (Ahmedabad – Trib.)

Income Tax :  Co. outsourcing significant part of its operations can’t be a comparable for a Co. rendering IT enabled services American Express India (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 1(1), New Delhi [2016] 70 taxmann.com 82 (Delhi – Trib.)  Registration u/s 12AA cannot be denied on town Planning Activities continuing from earlier years [ITO vs. Moradabad Development Authority (ITAT Delhi)].

INDIRECT TAX:


Service tax & custom : CBEC has issued a circular for speedy disbursal of pending refund claims of exporters of service under rule 5 of the CENVAT Credit Rules, 2004 vide Circular No. 195/05/2016- Service Tax dated 15th June ,2016.This scheme is applicable only to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on the date of the issue of the circular dated 10-11-2015

CBEC has issued a single window project for simplification of procedure in SWIFT for clearance of consignment related to drugs & Cosmetics reg. vide Circular No. 28/2016- CUS- dated 14th June, 2016

Excise  : Whether there will be Eligibility of Cenvat credit of services at their retail outlets from where sales are affected. In the given case No sales are affected at the factory gate but duty is paid at the time of clearance. It was held that since the goods are not sold at the factory gate but are sold at the retail outlets, therefore, by virtue of the express provisions of Section 4(3) (c)(iii) of the Central Excise Act, 1944 the place of removal in the case of appellant will be the retail outlet. Hence cenvat credit will be eligible.( M/s Sports And Leisure Apparel Ltd. Versus Commissioner of Customs, Central Excise And Service Tax-Noida)- 2016 (6) TMI 468- CESTAT ALLAHABAD

Vat : Delhi value added tax has launched “Good Dealer Reward Scheme” Vide order instruction No. F.3 (632)/Policy/VAT/2015/PF/363- 69 dated 10.06.2016. The objective of the scheme is to acknowledge the efforts of better performing dealers so as to further encourage them to continue their efforts for better tax compliance and also to set examples for other dealers.

Central Excise: SSI Exemption – use of Brand/Trade mark or others – as long as assignment stands the assessee using the brand name is eligible for the benefit of SSI exemption notification – Tri

Excise  : CBEC has amend the notification No. 214/86 – central excise dated 25.03.1986 vide notification No. 24/2016 dated 14.06.2016 and further it amends the notification No. 67-95- Central Excise – dated 16.03.1995 vide Notification No. 25/2016 dated 14.06.2016.In this notification they have substituted the word “ Free Trade Zone” with “Special Economic Zone”

Central Excise: Levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more – reg. Circular No. 1031/19/2016-CX Dated 14th of June, 2016 F. No. 332/5/2016-TRU Dated 14th of June, 2016

Service tax : No interest can be demanded on time-barred payment of service tax  commissioner of Central Excise, Bhopal v. Western Coal Fields Ltd.[2016] 70  taxmann.com 133 (New Delhi – CESTAT)

Service tax : CESTAT grants refund of excess service tax paid on ‘brokerage’ towards stock-broker services, pursuant to subsequent downward adjustment thereof through credit notes to clients. It Rejected the Revenue’s stand that principle of unjust enrichment applicable to present case since issuance of credit notes not sufficient to establish that tax burden had not been passed onto recipients of service. CESTAT Mumbai

Custom : Seeks to extend the levy of anti-dumping duty on imports of Pentaerythritol, originating in, or exported from the People’s Republic of China, for a period of one year

Service tax & custom : CBEC has issued a circular for speedy disbursal of pending refund claims of exporters of service under rule 5 of the CENVAT Credit Rules, 2004 vide Circular No. 195/05/2016- Service Tax dated 15th June ,2016.This scheme is applicable only to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on the date of the issue of the circular dated 10-11-2015

CBEC has issued a single window project for simplification of procedure in SWIFT for clearance of consignment related to drugs & Cosmetics reg. vide Circular No. 28/2016- CUS- dated 14th June, 2016

OTHER UPDATES


Changes in form 2, 3, 4 & 11 vide Limited Liability Partnership (Second Amendment) Rules 2016

ICAI: 30 SEP 2016 is the last date for payment of Membership & Certificate of Practice (CoP) Fee for FY 2016-17.

Threshold limit of PF withdrawal for deduction of tax, raised to Rs. 50,000 from Rs. 30.000 with effect from 1st June, 2016 vide Finance Act, 2016.

Net realizable of stock to be taken as value it would fetch on actual sale in future. [ITO vs. M/s. Mahendra Traders (ITAT Kolkata)].

A month after India redrew its tax agreement with Mauritius, the government has constituted a working group to examine the “consequential issues” arising out of the changes. Sebi : The Securities and Exchange Board of India (Sebi) has issued a consultation paper on financial disclosures to be made by the newly-introduced Infrastructure Investment Trusts (InvITs). Comments have been invited by June 28. It has proposed that annual disclosure to stock exchanges be on a quarterly basis, not half-yearly as suggested earlier.

Rbi : The country has a lot of “unmet demands” for bank loans and a lot of gap is still to be filled in the banking space, Reserve Bank of India Deputy Governor Harun Rashid Khan has said. “We have a lot of unmet demands (for bank loans still a lot of gaps to be filled,” Khan said in reply to a question on the central bank’s plan to issue more licences for setting up new banks.

Sebi : The Securities and Exchange Board of India (Sebi) has issued a consultation paper on financial disclosures to be made by the newly-introduced Infrastructure Investment Trusts (InvITs). Comments have been invited by June 28. It has proposed that annual disclosure to stock exchanges be on a quarterly basis, not half-yearly as suggested earlier.

KEY DATES


Payment of ESI for the month of May- 16-06-2016

E-Payment of DVAT & CST tax for the month of May -16-06-2016

Payment of ESI for the month of May- 21-06-2016

E-Payment of DVAT & CST tax for the month of May -21-06-2016

“Great minds discuss ideas; average minds discuss events; small minds discuss people.”

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TODAY HAS RELEASED THE MODEL GST LAW

TODAY HAS RELEASED THE MODEL GST LAW 

download

Finance Minister Arun Jaitley, after the meeting of  Empowered Committee of State Finance Ministers, has said, “So far, every state has given its detailed views on the GST itself. Virtually, every state has supported the idea of GST except one state Tamil Nadu, they have made some suggestions which has been taken note of.

The Finance Minister TODAY has released the Model GST Law after getting in-principle nod from the Empowered Committee of State Finance Ministers. The copy of the Model GST Law can be down loaded from the following link:

http://www.finmin.nic.in/reports/ModelGSTLaw_draft.pdf

A printable Copy in PDF format is also attached for your ready reference…

Hope, you will find the same useful…Happy GST ahead…

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CORPORATE AND PROFESSIONAL UPDATE JUNE 10, 2016

Professional Update For the Day:

trademark-patent-startup-india-incentive-1050x600

DIRECT TAX:


Income Tax  :  Compensation and interest awarded by the Motor Accident Claims cannot be categorized or even described as income – TDS is not liable to be deducted – Chinnadurai Vs. Tamil Nadu State Transport Corporation, Salem (Madras High Court)


Income Tax : Cancellation of the lease and the payments of the consideration – It is clearly a capital asset has come into existence in the hands of the assessee which is of enduring benefit for the business of the assessee and consequently the expenditure is liable to be treated as capital expenditure – Depreciation to be allowed – Hotel La Paz Gardens Ltd. Vs. ACIT, Cir-2(1), Panaji, Goa (ITAT Panaji)


Income Tax : CBDT has notified the Cost Inflation Index (CII) for FY 2016-17 at 1125 (FY 2015-16: 1081) – Notification No.42/2016, dt.02 JUN 2016. Income Tax  :  AIR Information without lawful enquiry is not sufficient to hold a belief that cash deposit is Income and hence cannot form reason to believe that Income has escaped assessment.(Sh. Amrik Singh, vs. Income Tax Officer ) [ITAT Amritsar ]


Income Tax : Pune ITAT allows deduction to assessee for interest paid on Share application money received from shareholders pending allotment. [TS-304-ITAT-2016(PUN)]


Income Tax : Where assessee, a charitable trust, incurred expenditure in excess of income in previous year relevant to assessment year for charitable purposes, out of accumulated charity fund, it could not be denied benefit of exemption under section 11(1)(a) in respect of income of previous year relevant to assessment year, which had been admittedly applied for charitable purposes – [2016] 69 taxmann 425 (Rajasthan)

INDIRECT TAX:


Service Tax: services rendered by director aren’t liable to service-tax if his remuneration is taxed as salary Rent Works India (P.) Ltd. V. Commissioner of Central Excise, Mumbai-V [2016] 70 taxmann.com 38 (Mumbai – CESTAT)


Service Tax :  Cenvat credit ALLOWED for all the input services pertain to the manufacturing activity and the respective services were input for the said activity for which that was utilised – M/s Sundaram Clayton Ltd. Vs.CCE, Chennai (CESTAT Chennai)


Service Tax :   CBEC notifies 100% reverse charge on representational service provided by Senior Advocate before any court, tribunal, authority etc., directly or indirectly, to any business entity who is litigant, applicant or petitioner in such case and such business entity shall be the person liable to pay service tax in the government exchequer – Notification No.33 & 34/2016-ST, dt.06 JUN 2016.


Service Tax: Service tax department cannot conduct audit of assessee. Delhi High Court has held as Under after hearing the revenue and assessee and considering their submissions. Resultantly, the Court: (i) declares Rule 5A(2) as amended in terms of Notification No. 23/2014- Service Tax dated 5th December 2014 of the Central Government, to the extent that it authorises the officers of the Service Tax.( Mega Cabs Pvt. Ltd. Vs. Union Of India & Ors.)Delhi High Court


Service Tax :  Short payment of Service tax in the month of July 2011 made due to the adjustment of service tax paid in excess in the month of May 2011. Section 13 of the General Clauses Act 1897 provides that singular include the plural.Further it is a well settled legal principle that the statue should be interpreted as it is even if the intention isimperfect, accordingly month includes months.(M/s. Schwing Stetter (India) Pvt. Ltd. Versus CCE, LTU, Chennai) – 2016 (6) TMI 239 – CESTAT CHENNAI


VAT : Department of Trade & Taxes has issued a circular for requirement of item wise details in Forma Annexure -2A, Annexure 2B, DVAT 30 and DVAT 31 Vide circular No. 9/2016 of 2016-17 dated 6/06/2016. Delhi Govt. clarifies that furnishing of item-wise details of sales and purchases in DVAT Returns and Forms DVAT 30 and 31 (Sales & Purchases Registers) is mandatory for tax period commencing from April 1, 2016. However, same is optional for last quarter of FY 2015-16.


CENTRAL EXCISE : Procuring various components of lamp shades and chandeliers from different sources and thereafter, assembling and packing same in cartons with logo and code number of product does not give rise to a ‘new product’ and therefore, does not amount to manufacture – [2016] 70 taxmann 20 (Punjab & Haryana)


CENTRAL EXCISE : When condonation of delay is sought on ground that delay occurred due to mistake of counsel, then, such plea cannot be accepted without affidavit of such counsel; hence, appeal was dismissed as time-barred – [2016] 70 taxmann 18 (Punjab & Haryana)

MCA UPDATES  :


MCA has notified new versions of e-forms AOC-4, INC-6, INC-12 and INC-29.

KEY DATES :  


Return filling for non SSI assessee for may in form ER-1-10/06/2016


Return filling for EOU for Month of March in form ER-2- 10/06/2016


Return filling in form no ER-6 by the units paying duty more than 1 crore (Cenvat + PLA) for may -10/06/2016

“The greatest sin is to think yourself weak”

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CORPORATE AND PROFESSIONAL UPDATE JUNE 8, 2016

Professional Update For the Day:

8-Tips-Biz-Name


DIRECT TAX:

Income Tax  : Fresh claim of deduction u/s 80G in respect of donations allowed by CIT (A) – the restriction laid down in the decision in the case of Goetze (India) Ltd. is applicable only to making claim before AO and not before the appellate authorities under the Act – Deduction allowed – Allahabad Bank Vs. CIT (ITAT Kolkata)


Income Tax : Disallowance / addition u/s 40A (3) – cash expenditure – business expediency – Amount was directly deposited the cash in the account of the companies – there is no evasion of tax by claiming the bogus expenditure in cash – No additions – Prabir Kumar Mullick Vs. ITO (ITAT Kolkata)No TDS for provident fund withdrawals of up to Rs 50,000 (increased from Rs.30,000/-).


Income Tax :  No reassessment to check creditworthiness of investor if all details were already furnished at assessment stage [2016] 69 taxmann.com 444 (Delhi)
Allied Strips Ltd. v. Assistant Commissioner of Income-tax  Section 68, read with section 147, of the Income-tax Act, 1961 – Cash credits (Share application money) – Assessment year 2007-08 – During original assessment proceedings, assessee, in response to specific queries raised by Assessing Officer regarding share application money, furnished complete details of shareholders, their addresses, PANs, acknowledgment of e-returns and their confirmation letters – After considering said details, Assessing Officer framed assessment making no addition on account of share application money – After four years, Assessing Officer reopened assessment on ground that creditworthiness of investors remained unverified – Whether on facts, issuing notice under section 148 would amount to change of opinion which is not permissible – Held, yes


 ICAI’s income from coaching is exempt as its main purpose is to train future CAs [2016] 70 taxmann.com 54 (Delhi – Trib.)  Deputy Director of Income-tax (E), Trust Circle-IV v. Institute of Chartered Accountants of India


Income Tax :  Setting up of business - For a new business or for a new source of income which has come into existence, previous year would start from date of setting up of new business or from date when new source of income has come into existence – [2016] 69 taxmann 380 (Lucknow – Trib.)


Income Tax : Section 14A was inserted by the Finance Act, 2001 with retrospective effect from 1-4-1962. The section provided for a disallowance of all expenditure incurred to earn exempt income, that is, income not includible in the total income of a tax payer. Rule 8-D of the Income Tax Rules’ 1962 (inserted w.e.f 24-03-2008) read with Section 14A of the Income Tax Act’1961 provides for the mechanism to quantify the amount of disallowance. Before this notification, the amount to be disallowed shall be the aggregate of (i) expenditure directly incurred to earn exempt income, (ii) interest expense worked out on the basis of a prescribed formula even though the interest is not directly attributable to any income or receipt and (iii) ½% of the average value of the investment the income from which is exempt from tax. There has been high end litigation on the application of the section. Around 15% of the tax litigation is attributed to the determination of expenditure relating to exempt income. There was an imperative need to clarify and simplify some of the provisions of the section and the rule so far as to quantify the amount of expenditure attributable to exempt income. Under the existing provisions before this notification, the application of Rule 8-D sometimes results in an unintended outcome whereby the amount of such expenditure exceeds the total amount otherwise claimed as expenditure; obviously, the disallowance cannot exceed the amount claimed. Sometimes the disallowance under the Rule also results in the disallowance exceeding the exempt income which resulted in unnecessary high pitched assessments, high demands leading to high end litigation.


INDIRECT TAX:

Service Tax: Levy of penalty – appellant has already been spared from non-imposition of penalty u/s 78 by the adjudicating authority – What is not alleged in the show cause notice cannot be traversed at a later point of time in any proceedings – No penalty –GRR Logistics Pvt. Ltd. Vs. CST (CESTAT Chennai)


Service Tax: Audit is a special function which has to be carried out by duly qualified persons like a Cost Accountant or a CA. It cannot possibly be undertaken by any officer of the Service Tax Department. There is a distinction between auditing the accounts of an Assessee and verifying the records of an Assessee. Therefore, without assigning any reasons and giving opportunity of being heard, conducting special audit by departmental officers is ultra-vires.


VAT and Sales : In the absence of any rules being framed u/s 102(2)(z) read with Section 59(2) of the DVAT Act the power of the Commissioner U/s 59(2) of the DVAT Act to call upon a person to produce the books of accounts and other documents cannot be exercised – Vayam Technologies Ltd. Vs. CTT (Delhi High Court).


CENTRAL EXCISE : APPEALS – BINDING NATURE OF PRECEDENTS – HIGH COURT- Officers must withdraw orders/actions contrary to binding judicial orders reserving right to challenge them in legal proceedings; and in case of any violation, concerned officials would be liable to individual penalties, including forfeiture of their salaries until they take a corrective action – [2016] 70 taxman 29 (Bombay)


“No matter how many goals you have achieved, you must set your sights on a higher one.” ~ Jessica Savitch

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