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…

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 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.

True guidance is like a small torch in a dark forest. It doesn’t show everything at once.But gives enough light for the next step to be safe.

If you want a quality, act as if you already had it.   -William James

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CORPORATE AND PROFESSIONAL UPDATE MAY 26, 2016

Professional Update For the Day:

DIRECT TAX:

CBDT notifies jurisdiction for Income Declaration Scheme, 2016 Circular No. 19/2016-Income Tax.

SCN cannot be issued to debtors until tax liability crystallise – HC [M/s Quality Fabricators and Erectors Vs The Deputy Director, DGCEI, Zonal Unit Mumbai and Others (High Court Of Bombay) ]

Sec. 263 not justified due to multiple view on applicability of TDS[Neo Sports Broadcast Pvt.Ltd Vs CIT (TDS) (ITAT Mumbai)]

No Addition u/s 68 if identity, creditworthiness & genuineness established[DCIT Vs. M/s Overseas Infrastructure Alliance (I) Pvt. Ltd. (ITAT MUMBAI)]

ITAT deletes hypothetical, harassing & inconvenient decision[Mrs.Mintu Sayermal Jain Vs Income Tax Officer (ITAT Mumbai)]

Income tax has enabled Electronic Verification Code for online filling of appeal before Commissioner (Appeal) in Form 35 for taxpayers not required file using DSC on income tax India Efilling .(Click here to view)

Mumbai ITAT upholds CIT(A)’s inclusion of interest income earned on Fixed Deposit Receipts as part of operating income while benchmarking international transactions in assessee’s Manufacturing and Trading Activities segment for AY 2005-06; Holds that since advances received against exports were immediately placed in FDR with the bank for the purpose of taking letter of credit in favour of the overseas sellers, it could not be said that surplus funds were parked in FDRs only to earn interest income. MUMBAI ITAT – [TS-264-ITAT-2016(Mum)-TP]

INDIRECT TAX:

Central Govt. issues draft Notification and Circular proposing to provide optional single registration and return to first stage dealer and importer; As per proposed Notification, assessee who conducts business as first stage dealer shall be exempt from taking separate registration as an importer and vice versa; However, same is optional and any assessee needing separate registration for his own business purposes may so register; This is so as credit chain becomes shorter when an importer operates also as first stage dealer; Moreover, such assessees henceforth shall have option to file single quarterly return giving details of transactions as first stage dealer and importer in one single table; CBEC invites feedback from Departmental Officers and members of trade by June 6th : CBEC Circular

No service tax applicable on payment processing services proposed to be rendered to foreign entity, who provides domain registration services to customers in India; Such intended services, classifiable as “Business Support Services”, would be rendered on applicant’s own account for a fee equal to operating costs incurred plus 13% mark-up; Consequently, since recipient is located outside India and applicant would receive payment in convertible foreign exchange, these services would qualify as ‘export’ in terms of Rule 6A of Service Tax Rules and remain non-taxable for purpose of service tax; Further, no services can be said to have been provided to Indian customers as applicant would receive fees from foreign entity even in respect of those customers who directly remit service charges through International Credit Card, wherein applicant is not in the picture

Company Law:

Query: Whether a partner would be able to give loan to or transact other commercial transactions with LLP?

Answer: A partner may lend money to and transact other business with the LLP and shall have the same rights and obligations with respect to the loan or other transactions as a person who is not a partner

Key Dates:

Advance information for the 1st fortnight of June of functions with booking cost > Rs1 lakh in Banquet halls, hotels etc. in Delhi: 27.05.2016

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

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CORPORATE AND PROFESSIONAL UPDATE MAY 25, 2016

Professional Update For the Day:

Untitled15ADirect Tax:

IT : Merely because creditor could not be traced on date when verification was made, is not a ground to conclude that there was cessation of liability in terms of section 41(1) because cessation of liability has to be cessation in law, of debt to be paid by assessee to creditor[2016] 69  257 (Karnataka) Commissioner of Income-tax v. Alvares & Thomas

Transmission charges for electricity won’t attract TDS under sec. 194J[2016] 69  252 (Karnataka) Commissioner of Income-tax v. Gulbarga Electricity Supply Co. Ltd.

IT: TDS – the payment paid by the assessee to scheduled banks for opening letters of credit was in the nature of interest u/s 2(28A) – but since the amount had been paid to scheduled banks no tax was required to be deducted at source u/s 194A – No disallowance u/s 40(a)(ia) – M/s Vardhman Chemtech Pvt. Ltd. Vs. ACIT, Chandigarh (ITAT Chandigarh)

IT: Revision u/s 263 – the disallowances u/s 14A and u/s 36(1)(iii) of the Act were the matters before the CIT(A) – the same does not come under the jurisdiction of the CIT u/s 263 – M/s Deepak International Ltd. Vs. JCIT, Cir-V, Ludhiana (ITAT Chandigarh)

Bogus purchase and sale of shares: Law explained as to on whom the onus is to show that the purchase and sale of shares are bogus and the circumstances required to be proved by the AOArvind Asmal Mehta vs. ITO (ITAT Mumbai)

S.143(1)/ 147: Entire law on the reopening of s. 143(1) assessments in the light of Zuari Estate Development 373 ITR 661 (SC) explained Indu Lata Rangwala vs. DCIT (Delhi High Court)

Indirect Tax:

ST: Recovery of interest – Section 73B of the Finance Act 1994 – Collected Service tax from the transporters when no service tax was payable and not deposited to the Government – later amount was deposited with the government – Demand of interest set aside – M/s Chhattisgarh State Co-operative Marketing Federation Ltd. Vs. CCE&ST, Raipur (CESTAT New Delhi)

SC : Absent cargo loading / unloading, mere labour supply at customer’s packing-plant not ‘CHS’ [TS-197-SC-2016-ST]

CESTAT : Upholds input credit reversal on exempt goods; Duty-payment cannot render them ‘dutiable’ [TS-196-CESTAT- 2016-EXC]

Service Tax : Services received from foreign intermediary in connection with raising of External Commercial Borrowings (ECB) is liable to service tax under ‘Banking and Other Financial Services’ under reverse charge in hands of Indian service recipient[2016] 69  266 (Mumbai – CESTAT) Gitanjali Gems Ltd. v. Commissioner of Service Tax

Cenvat Credit : Payment of cenvat-reversal under rule 6 of CENVAT Credit Rules, 2004 is in nature of ‘other tax’ and is, therefore, not includible in ‘transaction value’ of exempted goods, even if reversal amount is recovered from buyers

Cenvat Credit : When assessee is paying specified percent cenvat-reversal on value of ‘exempted HDPE pipes’ used for manufacturing ‘exempted sprinkler system’, they are not required to pay cenvat-reversal on value of ‘exempted sprinkler system'[2016] 69  265 (New Delhi – CESTAT) Commissioner of Central Excise, Indore v. Kriti Industries (India) Ltd.

SC: 9 Judge bench to decide entry tax validity; Hearings to commence July 18 [TS-200-SC-2016-NT]

Cenvat Credit : If Modvat credit could not be used by assessee due to restriction imposed by department, balance lying in Modvat account must be allowed as credit in Cenvat account[2016] 69  216 (Patna)Commissioner of Central Excise v. Bata India Ltd.

Deputation of employees and sharing of cost on actual basis with group Cos. doesn’t amount to rendering of service[2016] 69  198 (Mumbai – CESTAT) Franco Indian Pharmaceutical (P.) Ltd. v. Commissioner of Service-Tax

VAT & ST: Validity of law – rate of tax – interstate movement of goods – The law validly enacted by a State Legislature cannot be challenged on the ground that it defies logic and common sense – M/s Schwing Stetter (India) Pvt. Ltd. Vs. CCT (Madras High Court)

Company Law:

Query: Is Director Identification Number (DIN) mandatory for filing Form FTE with ROC?

Answer:  No, DIN is not mandatory for Managing Director or Director of the Company for filing Form FTE to strike off the name of Company under the Fast Track Exit mode Scheme. Details of Managing Director or Director can be filled up for inserting Permanent Account Number (PAN) or Passport Number instead of DIN.

Query: Whether a partner would be able to transfer his ‘economic rights’?

Answer: A partner’s economic rights (i.e. rights of a partner to a share of the profits and losses of the LLP and to receive distribution at the time of winding up) in the LLP shall be transferable. However, such a transfer shall not by itself cause the partner’s disassociation or a dissolution and winding up of the LLP.

However, such transfer shall not entitle the transferee or assignee to participate in the management or conduct of the LLP’s activities. Therefore, the transferee would not be deemed to be a ‘partner’ of the LLP just because a partner has transferred him the ‘economic rights’. For becoming a partner of LLP, the manner specified in the LLP Agreement or the provisions of the Act would have to be followed.

Other Update : 

ICAI: Committee on Economic, Commercial Laws & WTO (CECL&WTO) is organizing a Live Webcast on “Identifying Common FEMA Contraventions” on Friday, 27 May 2016 at 4-6PM. Link athttp://estv.in/icai/27052016

Key Dates:

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

Due date for e-filing of form no. 61 for Q4 extended to 31st October, 2016 from 30th April, 2016. CBDT Circular no. 14/2016 dated 18/05/16.

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Don’t find fault, find a remedy.  -Henry Ford

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CORPORATE AND PROFESSIONAL UPDATE MAY 14, 2016

Professional Update For the Day:

29

Direct Tax:

CBDT has granted relaxation of time for submitting Form ITR-V to be filed electronically without attesting digital signature for the Asst. Years from 2009-10 to 2014-2015 through Electronic Verification Code (EVC) till 31 AUG 2016.

Primary agricultural credit society can claim deduction u/s 80P. [ The Chirakkal service Co-Operative Bank Ltd vs. CIT (Kerala HC)].

Big B’ in Tax trouble; Apex Court nods to reopening of his tax case of 2001[2016] 69 taxmann.com 170 (SC) Commissioner of Income-tax, Mumbai v. Amitabh Bachchan

CBDT has not revised due dates for filing of TCS returns

Tax returns for A.Y.s 2009-10 to 2014-15 filled electronically under time limit of Sec.139, to be verified through ITR V Form by 31.08.16.CBDT Circular no.13/2016.

The government has gained the right to tax capital gains arising in Mauritius from sale of shares acquired on or after April 1, 2017.

Exercise of S. 263 on expenses claim withdrawn by assessee valid. [Commissioner Of Income Tax vs.Amitabh Bachchan (SC)].

IT: Depreciation in respect of electrical installations, elevators, DG sets installed in the building let-out by the assessee which is receiving rental income from the said building allowed – M/s IBC Knowledge Park Pvt. Ltd. Vs. CIT & DCIT, Bangalore (2016 (5) TMI 372 – Karnataka High Court)

Exercise of Sec. 263 on expenses claim withdrawn by assessee valid. [Commissioner of Income Tax vs.Amitabh Bachchan (SC)].

IT: Penalty U/s 271(1)(c) – penalty proceedings are distinguished and separate and assessee can raise fresh plea in the penalty proceedings which has been done in this case – Sudhir Awasthi Vs. ITO, W-5(2), Jaipur (2016 (5) TMI 367 – ITAT Jaipur)

The Income declaration scheme 2016 and the direct tax dispute resolution scheme 2016 expected to come into force on 01.06.16.CBDT press release of 12.05.16.

Sec. 40 (a) (i) is discriminatory and not applicable to Indo-US DTAA. [CIT vs. Herbalife International India Pvt. Ltd (Delhi HC)].

Section 94-A(1) is constitutional valid.[Madras High Court T. Rajkumar and Others vs. UOI and Ors. (Madras HC)].

Indirect Tax:

ST: Advertising agency service on commission basis – Model (1) Placement of advertisement in traditional media on behalf of the advertiser – Modes (2) Buying and selling of advertisement inventory in non-traditional media on its own account – In both Models there is no service tax liability – M/s AKQA Media India Pvt. Ltd. Vs. CST, Mumbai (2016 (5) TMI 456 – AAR)

VAT & ST: The contracts of construction of glass curtain wall executed by the Applicant would not constitute contracts for construction of buildings mentioned in Para A of the Notification dated 8 MAR 2000 issued for the purpose of section 6A(1) of the Works Contract Act – M/s Permasteelisa Vs. ACST & DCST(2016 (5) TMI 497 – Bombay High Court)

DTAA: After successful renegotiating tax treaty with Mauritius, the GoI is looking to rework the double taxation avoidance pact with Singapore to plug the leakage.

Service Tax wrongly paid on the manufacturing activity is allowed to be adjusted against excise duty. [Hyva India Pvt. Ltd. vs. Comm of Central Excise, Customs and Service Tax, Bangalore-I (2016) 68 taxmann.com 383 (CESTAT)].

ST: Import of internet connectivity services – The server placed outside India are meant for internet connectivity services and can’t be considered as hiring of simple physical space for placing servers – prima facie case is in favor of assessee – M/s HT Media Ltd. Vs. CST, Delhi (2016 (5) TMI 377 – CESTAT New Delhi)

VAT & ST: Detention of goods in transit – detention order passed u/s 70A of the GVAT Act suffers from the breach of principles of natural justice as well as lack of application of mind and therefore stands vitiated – Jay Ambey Traders Vs. State of Gujarat (2016 (5) TMI 435 – Gujarat High Court)

DVAT Regd dealers to display certificate of registration at principal place and certified copy at other places of business in Delhi. DVAT circular no: 4 of 2016-17.

VAT on diesel reduced to 16.75% from 18% in Delhi

Excise & Customs : Before initiating garnishee proceedings for recovery of dues of assessee from assessee’s debtor under Section 11(2), revenue must first of all adjudicate what sums are due to Government[2016] 69 taxmann.com 37 (Bombay)  Sikkim Ferroys Alloys Ltd. v. Office of the Assistant Commissioner of Central Excise

Changes in VAT rate schedules w.e.f 10.05.2016. VAT rates on sweets and namkeen, marble, footwear, e-rickshaws reduced to 5%. DVAT Notification dated 09.05.2016.

Govt. amended Mauritius Treaty to bring LTCG, STCG & Derivatives Income to tax at par with the Domestic Tax w.e.f. 01.04.2019. No tax till March 31, 2017. From 01.04.17 to 31.03.2019, LTCG is exempt, STCG to be taxed @ 7.50% & Derivatives Income to be taxed @15%.

Company Law:

MCA has notified The Companies (Registration Offices and Fees) Amendment Rules, 2016. The Ministry has amended Forms GNL-1 and GNL-4 which shall be compatible with the latest V2 platform designed by the MCA.

Other Update :

Rajya Sabha passes the insolvency and bankruptcy bill and the finance bill 2016 on wednesday, 11th May, 2016.

Get ICAI now mobile app for latest ICAI updates. Available on android, iOS, windows and blackberry 10. To download please visit: – http://www.icai.org/mobile.

FEMA (exports of goods and services) regulations, 2015. Notification no. RBI/2015-16/395A.P. (DIR series) Circular No.68 [(1)/23(R)] dated may 12, 2016.

CAs to submit PAN nos. to ICAI at http://icai.org/new_post.html?post_id=12138. For DSC latest by 14th May, 2016.

Key Dates:

Deposit of DVAT TDS for April in Form DVAT-20: 15/05/2016

TDS/TCS return for March Quarter by all Deductors/Collectors Including Govt. on the Form 24Q,26Q,27Q and 27EQ:– 15/05/2016

Advance information for 2nd fortnight of May of functions with booking cost > Rs. 1 Lakh in Banquet Halls,Hotels etc. in Delhi : 12/05/2016

E-Payment of PF for April(No grace of 5 days): 15/05/2016

15.05.16 (Sunday) is last day to file TDS/TCS returns for Q4 of F.Y. 2015-16. TDS statements to be filed in 31 days from F.Y. 16-17.

 

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