CORPORATE AND PROFESSIONAL UPDATE March 16, 2017

Professional Update For the Day:

12742418_685376608232570_407065997594926807_nDirect Tax

Non-refundable deposits received by Club for providing facilities to its members taxable as revenue receipt. [2017] 78 338 (Mumbai – Trib.)

The tax demand raised by the authorities under the proposed GST regime can be paid in monthly installments for up to two years, in case of financial hardship

Income Tax Department in its latest drive has started de-activating PAN of all Income Tax assesses who were allotted more than one PAN at anytime in the past.

CBDT clarified that Place of Effective Management (POEM) guidelines shall not apply to company other than an Indian company having turnover or gross receipts of Rs 50 crores or less in a financial year. CIR NO.8 OF 2017 [F.NO.142/11/2015-TPL]

CBEC has launched a mobile application for Goods and Services Tax. The mobile application enables taxpayers to be well informed of the latest updates on GST.

Indirect Tax

Delhi VAT: Denial of Input Tax Credit on the ground that the transactions were reflected in retail invoices and not tax invoices and therefore did not qualify for credit is not valid as the strict interpretation of Section 50(2) was unwarranted. Credit allowed. Revenue’s appeal dismissed. (J C Decaux Advertising I P Ltd. – Delhi High Court. January 9, 2017).

Limitation period of one year is not applicable for claiming refund of Excise taxes paid under protest. High Court of Punjab and Haryana in the case of CCEC Chandigarh-1 Vs. Ind. Swift Lands Ltd.

Extension to 08.03.17 of last date to file DVAT-16, DVAT-17 & DVAT-48 for Q3 of 2016-17.CIRCULAR NO. 25 of 2016-17.

Retired VAT Officer can be appointed as member of VAT Tribunal: Case Name: Bihar Value Added Tax Act Vs Commercial Taxes Bar Association (Patna High Court)

GST Update:

GST to be implemented from 1st July! As informed by Economic Affairs Secretary Shaktikanta Das, all the states have agreed for the GST implementation from the said date.

GST Late Returns would attract fee @ Rs.100 per day subject to maximum of Rs.5000. This fee is separate for each return i.e. GSTR-1, 2, 3 etc.

UGST law proposed for implementation of GST in Union Territories like Andaman & Nicobar Islands, Chandigarh etc. as SGST not applicable to them

Under GST Composition Scheme in 17-18 for most Manufacturers & Restaurants @ 5% & Traders at 2% if turnover upto 50 lacs in 16-17. NA for Service sector.

MCA UPDATE:

MCA has amended the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. They shall come into force from the 28th February, 2017.

SEBI UPDATE:

SEBI has made various amendments to the existing norms for settlement of administrative and civil proceedings, to streamline and strengthen the settlement process.

OTHER UPDATE

India´s revised tax treaty with Singapore, aimed at checking round tripping of funds, has come into force. The principal clause allowing levy of capital gains tax on investments routed through Singapore will come into force from April 1.

E-Filling New TM Govt Fees Rs.4500 for individual/ startup/ Small Business. For Others Rs.9000. Physical filing Fees Rs.5000 for individual/ startup/ Small Business and for Others Rs.10000.

The head quarters of all PSU banks subject to audit, are expected to get a comprehensive list of firms for allotment from RBI from 06-03-2017. In turn banks are supposed to complete the allotment procedure by 16th March, 2017.

ICAI has submitted Post-Budget Memorandum to the Government and suggested certain amendments to the proposals contained in the Finance Bill, 2017 which would help the government to achieve the desired objectives.

ICAI ARF hereby invites proposals from eligible Chartered Accountants to be associated for handling its upcoming project of Indian Railways for conversion of its books of accounts from hybrid to accrual accounting. The firms satisfying the eligibility criteria may fill their particulars latest by 20th March, 2017.

The government will consider the demands made by foreign retailers for allowing nonfood items such as home care products under the foreign direct investment (FDI) policy, Union minister.

Govt. notifies new rules on Trade Marks to be applicable w.e.f. 06.03.2017. The govt brought down the number of forms required for filing an application from 74 to eight and almost halved the application fees.

Key Dates:  Due dates for the month of March 2017:

6 March : Service tax monthly deposit other than Ind,HUF & P.Firm

7 March  : TDS/ TCS deposit

15 March : Deposit of PF

15 March :Payment of Advance Tax

20 March : Monthly UP VAT return & tax

21 March : Deposit of ESI

31 March : E-payment of service Tax by all assesses Monthly/ Quarterly

31 March :Filing of Belated Income.Tax returns for the A/Y 15-16 & A/Y 16-17

Payment of Advance Income Tax by all assesses (100%): 15.03.2017

E-payment of PF for Feb: 15.03.2017

Love doesn’t mean to win someone, but it means to lose yourself for someone. It is not done by the excellence of mind, but done by the purity of heart.

Only two types of persons are happy in this world. First is Mad and second is Child. Be Mad to achieve what you desire & be a Child to enjoy what you have achieved.

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 011-23343333 / 9555555480

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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

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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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CORPORATE AND PROFESSIONAL UPDATE MAY 31, 2016

Professional Update For the Day

Untitled7Direct Tax:

CBDT Clarification regarding no cancellation of registration u/s 12AA in certain circumstances : CBDT issues beneficial circular No. 21/2016 dt. 27 May 2016, clarifies that where charitable trust engaged in ‘advancement of object of general public utility’ crosses the threshold of 20% or Rs. 25 lakhs for prescribed commercial activities under proviso to Sec. 2(15), it shall not be mandatory to cancel the Sec. 12AA registration. It is clarified that it shall not be mandatory to cancel the registration already granted u/s 12AA to a charitable institution merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cut-off is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act.

This circular was much needed due to the introduction of Chapter XII-EB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions wherein cancellation of registration granted u/s 12AA may lead to a charitable institution getting hit by sub-section (3) of section 115TD and becoming liable to tax on accreted income. Therefore, any cancellation of registration in cases as above would have caused additional hardship to an assessee institution due to attraction of tax-liability on accreted income. It has been further advised to the field authorities so far as not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of the relevant sections of the act.

Delhi HC allows assessee’s writ & quashes assessment u/s 143(3) read with Sec 144C for AY 2009-10,  presumes that order was not passed within the prescribed time-limit as Revenue could not prove service of final assessment order u/s 144C on assessee As Revenue could not produce any proof of dispatch of the assessment order soon after it was passed , HC accepts assessee’s contention that final assessment order was not passed on the date mentioned therein and was probably antedated in order to avoid the expiry of the limitation period.[TS-285-HC-2016(DEL)]

Cracking The Conundrum: Appearance Clause Under Taxation Statutes

CBDT invites comments on GAAR to provide a fillip to its implementation 

Indirect Tax:

CBEC provides that  Notification No. 30/2012 – Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20th June, 2012 shall be applicable mutatis mutandis for the purposes of Krishi Kalyan Cess vide Notification No. 27/2016 dated 26/05/2016. This notification shall come into force from the 1st day of June, 2016.

CBEC provides vide Notification No. 28/2016 dated 26/05/2016 that Krishi Kalyan Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in the notification No. 26/2012-Service Tax, dated 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June, 2012. Thisnotification shall come into force from the 1st day of June, 2016.

CBEC has inserted a new clause in the  Explanation 1, after clause (d ) in notification 39/2012- service tax dated 20/06/2012 vide Notification No.29/2016 dated 26.05.2016. The new clause is “(e)Krishi Kalyan Cess as levied under sub-section (2) of section 161 of the Finance Act, 2016 (28 of 2016).” 

Company Law:

Query: In case of striking off the name of Company under Fast Track Exit mode, what if any of the stakeholders raises objection for Striking off the name of the Company?
Answer: If any of the stakeholders raises objection, the applicant Company can reply to that. There is no time period for giving of reply by the applicant Company. However, the applicant Company needs to note that if the validity of the Fast track exit mode is expired before resolving all the queries, then the procedure under fast track exit mode may not be undertaken by the ROC.

Query:  We filed Form FTE with the ROC in the month of March 2016 which was pending for approval since then. Now we have received Resubmission but when we are entering the date of Statement of Accounts of March 2016 in Form FTE, there is pop-up error which is coming as –Date of Statement of accounts cannot be older than 30 days of filing Form FTE. Kindly advice us what should be done.
Answer: As in your case, you have originally filed Form FTE in March 2016, so it is quite obvious that Statement of Accounts would be of March 2016 only. In case you are getting this error on preparation of Resubmission form, you should raise ticket with MCA Portal and mail the detail of problem being faced toappl.helpdesk@mca.gov.in as this is technical issue on the part of MCA Portal.


Key Dates: 

Statement by Non-Resident having Liaison Office in India (u/s 285): 31.05.2016

Today 30/05/16 is the last day for Issue of TDS/TCS certificate (Form 16A/27D) for Q4 of 2015-16 by all deductors.

31.05.16 is the last date for issue of TDS certificate to employees (Form 16), for the F.Y. 2015-16 by all deductors.

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“If you have the spirit of understanding everything in a positive way, You will enjoy each and every moment of life, whether it is pressure or pleasure.”

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CORPORATE AND PROFESSIONAL UPDATE MAY 28, 2016

Professional Update For the Day:

6DIRECT TAX:

Income Tax: Delhi HC allows assessee’s writ & quashes assessment u/s 143(3) read with Sec 144C for AY 2009-10,  presumes that order was not passed within the prescribed time-limit as Revenue could not prove service of final assessment order u/s 144C on assessee As Revenue could not produce any proof of dispatch of the assessment order soon after it was passed , HC accepts assessee’s contention that final assessment order was not passed on the date mentioned therein and was probably antedated in order to avoid the expiry of the limitation period.[TS-285-HC-2016(DEL)]

Income Tax : Allowability of loss on demerger in the computation of book profit u/s 115JB – MAT – the observation of the AO that such loss could not be debited to the profit and loss account and ought to have been adjusted against the reserve of the assessee company is not Correct – Tri

CBDT enables electronic filing of forms-ITR 1, 4S, 15CA, 15CB & 15CC; other ITR forms to be enabled shortly, CBDT press release dated 04-04-2016.

INDIRECT TAX

Service Tax: CBEC provides that  Notification No. 30/2012 – Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20th June, 2012 shall be applicable mutatis mutandis for the purposes of Krishi Kalyan Cess vide Notification No. 27/2016 dated 26/05/2016. This notification shall come into force from the 1st day of June, 2016

Service tax : CBEC provides vide Notification No. 28/2016 dated 26/05/2016 that Krishi Kalyan Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in the notification No. 26/2012-Service Tax, dated 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June, 2012. This notification shall come into force from the 1st day of June, 2016.

Central Excise: Entitlement of Cenvat credit – Input Services not received in the registered unit – appellant is entitled for the Cenvat Credit in respect of Security Services, Fettling Contract Service & Architectural Services used outside the factory of the appellant in their own Hinjewadi & Wai unit

KEY DATES :

Issue of TDS/TCS certificates for March quarter by all deductors/collectors: 30.05.2016. 

“Failure will never overtake me if my determination to succeed is strong enough.”

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CORPORATE AND PROFESSIONAL UPDATE MAY 21, 2016

Professional Update For the Day:

Untitled5DIRECT TAX: 

Income Tax: Disallowance of profit in sale of agriculture land – whether transaction in property by assessee company should not be treated as business activity – Held that – There is no enabling provision in the income-tax law prescribing that even if the assessee s income is exempt by a provision, then it can be forcibly brought into the tax net by assuming the assessee s activity to be adventure in the nature of trade. – ( The ACIT, Circular, Alwar Versus M/s. Focal Point Builders and Promoters Pvt. Ltd. ) – 2016 (5) TMI 635 – ITAT MUMBAI.

Income Tax: Addition u/s 41 – conversion of unsecured loan from the sister as gift by book entry – in the earlier years, interest paid to sister was claimed as deduction – whether remission / cessation of liability u/s 41(1) – Held that – There was no remission of liability u/s 41(1) of the Act, because the gift was genuinely made by Smt. Kiranben Gandhi and accepted by the assessee out of natural love and affection and there was no business consideration  ( Shri Shailesh C. Modi Versus Income Tax Officer, Ward – 1 (1) (4) , Surat)-  2016 (5) TMI 637 – ITAT AHMEDABAD. 

INDIRECT TAX :
VAT : Department of Trade & Taxes has extended the last date of filling of online/hard copy of fourth quarter return for the year of 2015-16 in DVAT Form-16, DVAT Form-17, and DVAT Form 48 along with required Annexure /enclosures to 23/05/2016 vide Circular No. 5 of 2016-17 dated 16.05.2016 . However, the tax due shall continue to be paid in the usual manner as per the provisions section 3(4)  of the Delhi value Added Tax Act, 2004.

VAT & CST : Department of Trade & Taxes has issued a Circular on Grant of registration under DVAT & CST vide circular No. 6 of 2016-17 dated 17.05.2016.The department of trade and taxes has developed a mobile application DVATMsewa to provide various services to the traders.One of the services to be provided with this app is registration of delars under DVAT Act,2004 and CST Act, 1956

Key dates :

Today (21.05.16) is the last date for e-payment of DVAT & CST for the month of April, 2016.

Issue of TDS Certificate in case of payment/credit made in April for purchase of property u/s 194Iain Form 16B: 22/05/2016

Issue of DVAT Certificate for deduction made in April: 22/05/2016

Payment of ESI of April: 21/05/2016

No one gets a sudden rise, not even the sun. It takes time to rise to the peak of success. Just keep your efforts going and be positive. 

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CORPORATE AND PROFESSIONAL UPDATE MAY 27, 2016

Professional Update For the Day: 

Untitled18ADirect Tax:

Domestic black money to be declared to jurisdictional principal CIT or CIT: CBDT clarifies

No disallowance could be made on estimated basis without rejecting books of account of Assessee 

The demolition of the structure would not constitute a transfer of the assets in terms of Section 54(3) of the Act in view of the decision of the Apex Court in the matter of Vania Silk Mills P. Ltd. v. CIT, reported in 191 ITR 647. In the above case, the Apex Court has held that when an asset is destroyed, there is no question of transfer taking place under the Act. The Apex court held that in terms of the Act that the words ‘Extinguishment of any right’ in Section 2(47) of the Act, does not include an extinguishment of right on account of destruction. It has to be an extinguishment of right on account of transfer. Thus, a destruction of assets when not on account of any transfer would not be hit by Section 54F(3) of the Act.(Dilip Manhar Parekh Vs. DCIT) ITAT Mumbai

HC disallows input tax credit to Karnataka Dealer for its default in maintaining books and producing tax invoices[2016] 69 taxmann.com 299 (Karnataka)Nav Bharat Steel v. State of Karnataka 

High court had allowed Sec 10A benefit to assessee sub-contracting part of its software development work (‘onsite work’) to AEs abroad. High court had rejected Revenue’s contention that Sec 10A benefit should be denied as onsite work was not performed in a free trade zone or through assessee’s own personnel / employees. High court had held that Sec 10A nowhere provides that ‘onsite’ work of software development should be carried out by assessee’s own personnel. HC had further held that the “on-site” work done under the direct supervision and control of assessee “would be nothing but on behalf of the assessee ‘itself'”(MphereSoftware)

Indirect Tax:

CBEC has issued a circular no. 19/2016 dated 20.05.2016 In furtherance to the proposal that each warehouse be allotted a unique warehouse code so that importers can declare the warehouse in which goods shall be deposited, at the into-bond bill of entry stage, CBEC explains the module developed at ICES to capture details of customs bonded warehouses licensed in each Commissionerate. Unique warehouse code generated shall be published on ICEGATE website for information of trade. Declaration of Warehouse Code in Bill of Entry would become mandatory for filing Into-Bond and Ex-Bond Bill of Entry from June 20, 2016

Company Law:

Query: – In case status of the Company is non-active on MCA portal, can it make active and apply under fast track exit mode?

Answer: In case ROC has sent notices to the Company under Section 560 (1) or 560 (2) or 560 (3) of the Companies Act 1956, then such Company needs to make an application to the Registrar of Companies, in writing, that it proposes to strike off the name of the Company by following the procedure under Fast Track Exit mode and submit the documents requisite under fast track exit mode. Further procedure will be initiated by the Registrar in this regard.

Key Dates:

Issue of TDS/TCS certificates for March quarter by all deductors/collectors: 30.05.2016

Extension to 27.05.16 of last date to file DVAT-16, DVAT-17 & DVAT-48 for Q4 of 2015-16.circular no. 7 of 2016-17 dated 23.5.16.

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