corporate and professional update december 9, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 9, 2015

DIRECT TAXES:

1. Revision u/s 264 in favor of assessee – the appeal of the Assessee has not been disposed on merits. In view of this there was no bar to the CIT in exercising jurisdiction u/s.264 – the embargo imposed in Sec. 264 that there should be no appeal pending before CIT(A) on the issues raised in the application u/s.264 is not applicable in the present case- (Agro Service Syndicate C/o A.K. Dutta And Co. Versus ITO, Ward-29 (3) , Kolkata – 2015 (12) TMI 500 – ITAT KOLKATA).

2. Minimum alternate Tax (MAT) – donation paid is allowable expenditure while computing the book profit of the assessee u/s 115JB- (M/s. HTC Global Services (India) P Ltd Versus Assistant Commissioner of Income Tax & vice versa – 2015 (12) TMI 498 – ITAT CHENNAI).

3. Simplification of process of online rectification because of incorrect TDS details filed in Income Tax Return.

4. Disallowance of miscellaneous expenses – Merely because some expenditure is claimed on the basis of self made vouchers cannot make the expenditure disallowable- (Shri Vimal Kumar Mantri Versus The ACIT Circle- 4, Jaipur – 2015 (12) TMI 555 – ITAT JAIPUR).

5. Revision u/s 263 – the action of the Principal CIT is not based on facts on record and no application of mind while considering the proceedings under section 263- (SEC Industries P. Ltd., Versus DCIT, Circle 3 (1) , Hyderabad – 2015 (12) TMI 554 – ITAT HYDERABAD).

6. Income-tax deduction from salaries during the Financial Year 2015-16 under section 192 of the Income-tax Act, 1961

7. Reference is invited to Circular No.17/2014 dated 10.12.2014 whereby the rates of deduction of income-tax from the payment of income under the head “Salaries” under Section 192 of the Income-tax Act, 1961 (hereinafter ‘the Act’), during the financial year 2014-15, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2015-16 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department.

8. CBDT RAISES MONETARY LIMIT FOR FILING OF APPEAL BY REVENUE :  The Hon’ble CBDT has issued a path breaking Circular No 21/2015 dated 10.12.2015, for revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal, Hon’ble High Court and SLP before Hon’ble Supreme Court. The Circular issued by Hon’ble CBDT is a measure for reducing litigation. The new monetary limits for filing of Appeals by the Departments are as under:

9.       S.No	10.   Appeals in Income Tax matters	11.   Monetary Limits (in Rs.)
12.   1	13.   Before Appellate Tribunal	14.   10,00,000/-
15.   2	16.   Before High Court	17.   20,00,000/-
18.   3	19.   Before Supreme Court	20.   25,00,000/-

INDIRECT TAXES:

1. Recovery of service tax – Section 87 – freezing of bank accounts – adjudication of show cause notice is pending – the settled principle that levy assessment and valuation alone will enable the Revenue to recover the amount of taxes and recovery cannot precede prior important steps –(M/s Quality Fabricators And Erectors Versus The Deputy Director, Dgcei Zonal Unit Mumbai And Others – 2015 (12) TMI 494 – BOMBAY HIGH COURT).

2. Denial of refund claim – a slight delay in filing for the registration by the assessee with the Department cannot become a valid ground for rejecting their refund claim – Circular No. 120/01/2010-S.T. allows filing of refund claim on quarterly basis and an exporter can claim refund for previous quarter in the next quarter- (M/s Movik Net Work India Pvt Ltd Versus Commissioner of Service Tax Bangalore And Vice-Versa – 2015 (12) TMI 493 – CESTAT BANGALORE).

3. Demand of service tax – Authorization dealer service – three service provided to the Retail customers – the value of services is included in the dealers margin and no service charge is received from the service recipient. If at all in the light of the above it is the transaction between the two dealers which could have been subject to tax- (COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, NASHIK Versus M/s AUTOMOTIVE MANUFACTURES LTD – 2015 (12) TMI 549 – CESTAT MUMBAI).

4. Demand of service tax on Security Agency Services – Appellants were aware the levy of tax and they have not paid the tax and therefore it is a fit case to invoke the extended period of limitation. Hence the extended period of limitation would be invoked in this case- (M/s New Industrial Security Services, M/s New Industrial Security Services (M) Versus Commissioners of Central Excise, Customs and Service Tax-Surat-I – 2015 (12) TMI 548 – CESTAT AHMEDABAD). 

FAQ ON COMPANY LAW: 

1. Query:The Board of directors of M/s ABC Limited, an unlisted company having a paid-up capital of Rs. 6 crores consisting of equity share capital of  Rs. 5 crores and preference share capital of Rs. 1 crore and also 1,100 ‘Small Shareholders’ holding equity shares. We have a query as- “Is it necessary for the Company to appoint a Director to represent the ‘Small Shareholders’”? Advise explaining the relevant provisions of the Companies Act, 2013 and the Rules. 

Answer: Section 151 of the Companies Act, 2013 provides that a listed company may have one director elected by such small shareholders in such manner and with such terms and conditions as may be prescribed. Further, the explanation to section 151 clarifies that for the purposes of this section “small shareholders” means a shareholder holding shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed. As the company given in the question is an unlisted company, it is not bound by Section 151 and hence, it is not necessary for the company to appoint a director to represent the “small shareholders”.

2. Query: We have a listed company as our client company. Some small shareholders of the said company want to appoint Mr. A as Director as their representative on the Board of Directors of the said company. Mr. A is holding 1000 equity shares of 10 each in the said company. Please advice as whether Mr. A could be appointed as Small Shareholders’ Director. 

Answer: Section 151 of the Companies Act, 2013 provides that a listed company may have one director elected by such small shareholders in such manner and with such terms and conditions as may be prescribed. Further, the explanation to section 151 clarifies that for the purposes of this section “small shareholders” means a shareholder holding shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed. Further Companies (Appointment & Qualifications of Directors) Rules, 2014 clearly provides that a listed company, may upon notice of not less than one thousand small shareholders or one-tenth of the total number of such shareholders, whichever is lower, have a small shareholders’ director elected by the small shareholders.

3. From the above, it is clear that Mr. A who holds 1,000 shares in the company is not debarred from being appointed the small shareholders’ director in the company.

4. Relaxation of additional fees and extension of last date of in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013

5. In continuation of this Ministry’s General Circular 1412015 dated 28.10.2015, keeping in view requests received from various stakeholders, it has been decided to relax the additional fes payable on e-forms AOC4, AOC (CFS) AOC-4 XBRL and e- Form MGT-7 upto 30.12,2015, wherever additional fee is applicable.

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: singh@carajput.com or call at 9555555480