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.

 “When you judge another, you do not define them, you define yourself.”

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

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Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

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.

 

The chief danger in life is that you may take too many precautions.      -Alfred Adler

Deep relationship is not built by forcing others to understand you but by giving them, the confidence that you will never misunderstand them.

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Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE MAY 13, 2016

Professional Update For the Day:

Untitled7Direct Tax:

CBDT has issued a circular regarding Verification of tax-returns for Assessment Years 2009-2010, 2010-2011, 2011-2012 2012-2013, 2013-2014 and 2014-2015 through EVC which are pending due to non-filing of ITR-V Form and processing of such returns vide circular No. 13/2016 dated 09.05.2016.

Gujarat HC allows assessee’s writ, holds that interest on enhanced compensation doesn’t fall within the ambit of the expression “interest” as envisaged u/s 145A (which provides that interest received on compensation/ enhanced compensation shall be taxable in the year of receipt); Revenue had rejected assessee’s NIL TDS certificate application made u/s 197(1) on the ground that interest on enhanced compensation (received u/s 28 of the Land Acquisition Act) is taxable as income from other sources in terms of Sec 145A- Gujrat High Court

Only consistent loss making co. should be excluded from the list of comparables: ITAT

IT: Interest income accrued on time deposits – AO has only taken into account the Journal entries credited in the account. The AO has not taken into account the corresponding Journal entries debited – No additions –DLF Hilton Hotels Vs. CIT, Delhi (2016 (5) TMI 492 – Delhi High Court)

IT: Refund of TDS wrongly deducted – Deduction for TDS on Compensation u/s 28 of Land acquisition Act – ITO (TDS) directed to forthwith deposit such amount with the Reference Court which shall thereafter disburse such amount to the petitioner herein – Movaliya Bhikhubhai Balabhai Vs. ITO, Surat (2016 (5) TMI 488 – Gujarat High Court)

Indirect Tax:

HC reverses CESTAT decision, disallows MODVAT credit under Rule 57G of Central Excise Rules on the basis of invoices endorsed by consignee; Said Rule amended w.e.f. April 1, 1994 by which invoices issued by manufacturers and dealers in prescribed form were considered valid duty paying documents, thus eliminating endorsement thereof; Further, in terms of Notifications dated March 30, 1994 and July 4, 1994, invoices issued by specified category of persons viz. wholesale distributors, dealers & importers, enabled input credit availment; HC finds that CESTAT has ignored LB ruling in Balmer Lawrie & Co. Ltd. where it was held that after the issuance of Notification dated July 4, 1994, invoices can be issued only by a registered dealer and only then MODVAT credit can be claimed on strength thereof; Hence, by virtue of changes in procedure, manufacturer could avail MODVAT credit only upon invoices being issued under Rule 52A, holds HC thereby allowing Revenue appeal  : Gujarat HC

HC dismisses Revenue appeal, upholds availment of CENVAT credit by company HO i.r.o. input services rendered to various units, absent restriction of proportionate distribution in terms of Rule 7(d) of CENVAT Credit Rules; Rule 7 at relevant time, permitted input service distributor (ISD) to distribute CENVAT credit of input services to its manufacturing units or units providing output services subject to conditions that (a) credit distributed does not exceed service tax amount, and (b) credit of service tax attributable to service used by one or more units exclusively engaged in manufacture of exempted goods or providing exempted services shall not be distributed.- Rajsthan High Court

Company Law:

MCA has notified new versions of e-forms PAS-3, CHG-1, DIR-12, SH-11 and FTE.

Word of Wisdom:

Life is ten percent what happens to you and ninety percent how you respond to it.    -Lou Holtz

Life’s most persistent and urgent question is, ‘What are you doing for others?’     -Martin Luther King, Jr.

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Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE MAY 11, 2016

Professional Update For the Day:

Untitled34ADirect Tax: 

IT: Taxing of capital gains u/s.50B r.w.s.2 (42C) – sale of undertaking as a going concern for a lump sum consideration – addition made by the AO u/s.50B on account of gain arising from transfer of BOPP Films Undertaking confirmed – Supreme Industries Ltd. Vs. ACIT, CC-29, Mumbai (2016 (5) TMI 264 – ITAT Mumbai)

IT: Undisclosed income – Addition made on the basis of the statement during the survey u/s. 133A is not sustainable in the eyes of law – Avinash Kumar Setia Vs. DCIT, CC-17, New Delhi (2016 (5) TMI 261 – ITAT Delhi)

CBDT prescribes procedure for e-filing of Form 15CC in respect of foreign remittance made u/s 195

CBDT prescribes procedure for e-filing of Form 15G/15H

Provisions relating to gift apply only to an Individual or HUF and not to an AOP
[2016] 68 taxmann.com 376 (Delhi – Trib.) Mridu Hari Dalmia Parivar Trust v. Assessing Officer, Circle 31(1)

A person can apply for non-deduction of TDS u/s 195 even if he has been subjected to concealment penalty: CBDT

Now, TDS or TCS return can also be filed via incometaxindiaefiling.gov.in

Indirect Tax:

Excise & Customs : Where pre-deposit amount has been determined after considering/adjusting Cenvat credit amount, then, such ‘net pre-deposit’ amount has to be paid in cash and cenvat credit cannot be used to pay same[2016] 69 taxmann.com 10 (Kerala) Commissioner of Central Excise, Customs & Service Tax v. Kinship Services (India) (P.) Ltd.

Govt. entities in Delhi no more required to file details of purchases below Rs. 1000 in DVAT Form GE-II

ST: Levy of penalty – As the assessee had paid service tax and interest by showing their bonafides before issuance of SCN – Penalty liable to be waived of by invoking Section 80 – Cognizant Technology Solutions India Pvt. Ltd. Vs. CCE&ST, Chennai (2016 (5) TMI 230 – CESTAT Chennai)

VAT & ST: Merely because the advertisements of the advertisers were displayed on the Sites would not necessarily lead to the conclusion that they had acquired the right to use the Sites – Tim Delhi Airport Advertising Pvt. Ltd. Vs. CT&T (2016 (5) TMI 297 – Delhi High Court)

FEMA Updates:                 

Ministry of Commerce & Industry has issued  Policy on foreign investment for Asset Reconstruction Companies-amendment of paragraph 6.2.18.1 of ‘consolidated FDI Policy Circular of 2015’ vide press No. 4(2016 Series) dated 06/05/2016.

MCA Updates:

MCA has issued Companies (Registration Offices and Fees) Amendment Rules, 2016 vide Notification dated 06/05/2015, which shall come into force from the date of their publication in the Official Gazette. The New Rules has further substituted Form No. GNL-1 (Form for filing an application with Registrar of Companies) and Form GNL-4 (Form for filing addendum for rectification of defects or incompleteness)

Word of Wisdom:

The most difficult task is to make everybody happy. The simplest task is to be happy with everyone. Surprisingly, the purpose of both are the same.

Mankind is made great or little by its own will.      -Friedrich Schiller

Life isn’t about finding yourself. Life is about creating yourself.      George Bernard Shaw Continue reading

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE MAY 3, 2016

Professional Update For the Day:

29DIRECT TAX:

Now, deductor is liable to furnish of evidence of claims by employee for deduction of tax under section 192 of IT Act, 1961. Notification no. 30/2016 dated 29/06/2016.

Property TDS Payment due date extended to 30 days. Notification no. 30/2016-IT dated 29/04/2016.

In absence of contumacious conduct penalty U/s. 271C not leviable. [ITO (TDS), Vs. Pushpanjali Hospital and Research Centre Pvt. Ltd. (ITAT Agra)].

CBDT has issued a Press Release on Framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies dated on 28th April, 2016.

CBDT has issued a MAT-IndAS Committee Report.

Madras HC sets-aside ITAT order, holds loss on share-sale transaction, not speculative for assessee rejects Revenue’s invocation of deeming fiction under Explanation to Sec 73;Held that When there is no systematic or organised course of activity and when there is no regularity in the transaction and as the purchase is infact an one time activity it cannot be construed as a speculative transaction” and further cannot come under the ambit of ‘business.

PERMANENT ACCOUNT NUMBER  : Duplicate PAN card : Where two PAN Cards were allotted in name of assessee-society to two factions within management of assessee – society, it was held that question as to, which of two actions should be authorized to operate PAN CARD would depend on orders of pending suit; till that time, holder of second PAN CARD should Surrender said second PAN Card to PAN Service provider – [2016] 68 taxmann.com 297 (Delhi)

INDIRECT TAX:

Central Govt. exempts all coastal vessels carrying exclusively coastal goods and operating from coastal or EXIM berths from provisions of Sections 92, 93, 94, 95, 97 and 98(1) of Customs Act; Accordingly, such vessels would no longer be required to make entry by presenting bill of coastal goods and carry advice book; Also, goods can be loaded at any port without bill being passed by the officer and can depart without written order vide notification No. 56/2016 dated 27th April,2016.

Delhi Govt. issues clarification on new composition scheme for restaurants and halwais u/s 16(12) of DVAT Act; States that condition requiring payment of tax on opening stock is not applicable to those dealers who w.e.f April 1, 2016 intend to shift from composition scheme u/s 16(1) to new the scheme, as such goods have already suffered VAT at time of purchases and also no ITC has been claimed thereon; Also clarifies that such dealers shifting to new scheme shall not be eligible to claim ITC on closing stock held on March 31, 2016 vide Circular No. 1 of 2016-17 dated 27-04-2016.

ST: Cenvat credit – Common Input services belongs to three units but whole of the credit was availed at one unit – assessee has been able to prove that all the three units are one and the same have common management – credit allowed – National Engineering Industries Ltd. Vs. CCE, Jaipur (2016 (5) TMI 12 – Rajasthan High Court)

VAT & ST: Waiver of pre-deposit under APGST Act – It is always open to the petitioner to file appropriate proceedings before ADC seeking stay in the appeal filed or by filing a separate application as required under Section 19(2A) – Anand Cements Vs. State of Telangana (2016 (5) TMI 5 – Supreme Court)

Company Law Updates:

Company Law Board has notified the amended Regulations further to amend the Company Law Board Regulation, 1991 through which official timing for hearing at CLB has been changed w.e.f 02.05.2016, words  and   expression “10.30 a.m. to 1.30 p.m.  and 2.30 p.m. to 4.30 p.m.” the words and  expression  “10.30 a.m.  to 1.00 p.m. and 2.00 p.m. to 4.30 p.m.” shall be substituted in Regulation 9 of the said regulation.

Other Updates:

The Real Estate (Regulation and Development) Act, 2016 came into force on May 01, 2016. Union Ministry of Housing and Urban Poverty Alleviation (HUPA) notified 69 of the total 92 sections of the Act to bring it into force from 1 May 2016.

Key Dates:

Last date of E-payment of service tax foe April by companies vide Challan No. GAR-7 -06/05/2016

Look at mistake as just a mistake not as “My” or “His” mistake because “My” brings guilt & “His” brings anger. Only acceptance brings Improvement.

Noble deeds that are concealed are most esteemed. -Blaise Pascal

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Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE JANUARY 7, 2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 7, 2016

6

INCOME TAX ACT 

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Rule 8D : When assessee itself admitted that a disallowance had to be made with regard to expenditure for earning of income which was exempted from taxation under Act, such expenditure had to  computed not on ad hoc basis by estimating same but as per method prescribed under rule 8D(2)

SECTION 48

CAPITAL GAINS – COMPUTATION OF

Expenses in connection with transfer : Where assessee received a property with clause in his mother’s will providing overriding title in favour of his three sisters, payment made by assessee to his sisters for acquiring absolute title in property would be reduced as expenditure while computing capital gain on sale of said property

SECTION 54EC

CAPITAL GAINS – NOT TO BE CHARGED ON INVESTMENT IN CERTAIN BONDS

Bonds, availability of : Where REC Bonds in which assessee wanted to invest were not available on date on which period of six months for making such investment under section 54EC expired and as soon as such bonds became available, assessee made investment at earliest possible opportunity, exemption under section 54EC was to be allowed to assessee.

SECTION 69

UNEXPLAINED INVESTMENTS

Unaccounted sales : Where assessee failed to justify his stand that there was no unaccounted sale as indicated in seized documents, addition made on basis of seized documents was justified.

Stocks : Where there was no material to show that assessee had received any consideration in excess of amount shown in sale deed, merely because valuation given to bank to avail higher bank limit, no addition could be made.

SECTION 80G

DEDUCTIONS – DONATION TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS

Trusts or organizations, which claim exemption under section 80G and perform their duties to further their aims and objects, are duty bound to maintain proper accounts

SECTION 90

DOUBLE TAXATION RELIEF – WHERE AGREEMENT EXISTS

Taxes covered : Surcharge and education cess is not leviable when tax rate is prescribed under DTAA

SECTION 92CA

PRICING – REFERENCE TO TPO TRANSFER

Reference under section 92CA made to TPO where there was no assessment pending was invalid and bad in law, hence, order of TPO pursuant to illegal reference could not be used in reassessment proceedings by Assessing Officer and therefore reassessment proceedings based on illegal reference were held to be void ab initio

SECTION 145

METHOD OF ACCOUNTING – SYSTEM OF ACCOUNTING

System of accounting : Position prior to amendment by Finance Act, 1997: Assessee having opted for mercantile system of accounting in respect of all other activities, could have adopted cash system in respect of sales of newspaper and advertisement revenue.

SECTION 245F

SETTLEMENT COMMISSION – POWER AND PROCEDURE OF

Income Tax Settlement Commission has no right to direct a special audit u/s 142(2A) in the course of settlement proceedings under Chapter XIX-A of the Act as assessment of the type contained in section 143(3) is outside the purview of settlement proceedings

SECTION 293

CIVIL COURTS, BARS OF SUITS IN

Scope of Court’s power : Where department filed an application under section 132A for handing over of silver bullion seized by police from assessee, in view of fact that neither police nor department had gathered any information regarding ownership of silver bullion, Trial Court was justified in passing order of handing over of goods to department subject to payment of cash security.

COMPANIES ACT

SECTION 290

DIRECTORS – VALIDITY OF ACTS OF

The benefit of Section 290 of the 1956 Act (section 176 of the 2013 Act) is generally available to third parties who enter into transactions with a company not knowing what the internal structure and mechanism of the company.

SERVICE TAX

SECTION 65(19)

TAXABLE SERVICES – BUSINESS AUXILIARY SERVICES

Where assessee-franchisee was only engaged in trading of SIM cards/recharge coupons of BSNL and his relationship with BSNL was on principal-to-principal basis and assessee was not acting as agent of BSNL and BSNL had already paid service tax on full MRP, no service tax could be demanded from assessee.

SECTION 65B(44)

SERVICE – ACTIVITY CARRIED OUT FOR A CONSIDERATION

Provision of a facility by club to its members is an ‘activity’ for consideration and since clubs and members are deemed to be separate persons under Explanation 3(a) to section 65B(44), Membership fee/Entrance fee for provision of such facilities is liable to service tax.

CENTRAL EXCISE ACT

 APPEALS – BINDING NATURE OF PRECEDENTS – HIGH COURT

Judgment passed by co-ordinate Bench of High Court is binding on another bench of High Court even if earlier judgment of High Court has not been appealed against by Revenue owing to monetary limits.

CUSTOMS ACT

SECTION 125

 CONFISCATION – RE-CONFISCATION

Once goods were confiscated in hands of importer and allowed to be redeemed on payment of redemption fine and penalty, same cannot be re-confiscated in hands of bona fide purchaser of said goods.

STATUTES

CORPORATE LAWS

SEBI (Terms and Conditions of Service of Chairman and Members) Amendment Rules, 2015 – Amendment in Rule

INDIRECT TAX LAWS 

Reference regarding proper Certificate under Notification No.108/95-C.E., Dated 28-8-1995

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

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE JANUARY 6, 2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 6, 2016

Untitled52A

INCOME TAX ACT

SECTION 2(15)

CHARITABLE PURPOSE

Object of general public utility : Where assessee-society was providing latest information and training to those persons who were already in relevant field of advertising communication, etc. and in such process if certain persons became super-specialists in particular field and institution was charging fee, case would not fall under proviso to section 2(15)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Commission : Foreign export commission paid through banking channels to foreign commission agent, who sold assesse’s product in foreign countries, could not be disallowed as unverifiable

SECTION 80-IA

DEDUCTIONS – PROFITS AND GAINS FROM INFRASTRUCTURE UNDERTAKINGS

The use of non-obstante clause in section 80-IA(2A) would show that tax holiday to undertaking providing telecommunication services is in respect of “profits of eligible business” and not restricted to “profits derived from eligible business” as mentioned in section 80-IA(1)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Export of commodities to AE at the same price at which those were purchased from local market did not call for transfer pricing adjustment if transaction was made by assessee to retain the status of Star Export House

Comparables and adjustments/Comparables – Illustration Leading provider of business process outsourcing service cannot be compared to company rendering technical support services by its own

Comparables and adjustments/Adjustments – Risk adjustment : Where an assessee, a captive service provider does not assume any risk or takes lesser risk as compared to comparable company which undertakes higher risks, it is entitled to some risk adjustments

SECTION 145

METHOD OF ACCOUNTING

Rejection of accounts : Books of account were rejected, where majority of purchases were found to be not verifiable

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

Where OP, distributor of natural gas, invoked ‘pay for if not taken’ liability under gas sales agreement (GSA) with informant, conduct of OP was not abusive as GSA was entered into by parties after thorough negotiation

SERVICE TAX

SECTION 65(64)

MANAGEMENT, MAINTENANCE OR REPAIR SERVICE

Since there was difference of opinion between two members of Tribunal as to whether services provided by assessee engaged in exporting software consultancy, development of software, maintenance or repair of software and management consultancy in relation to ERP software implementation were taxable under head ‘management maintenance or repair’ service or ‘consulting engineers’ service and to what extent same was taxable, matter was to be referred to Third Member

SECTION 67

VALUATION OF TAXABLE SERVICES – EXCLUSIONS

Interest was excluded from ‘taxable value’ vide Explanation 1(viii) to section 67 from 10-9-2004; since insertion of said Explanation had removed an anomaly that existed earlier, it should be treated as clarificatory in nature and retrospective from 16-8-2002

CENTRAL EXCISE ACT

SECTION 3

CHARGE/LEVY

Toilet preparations containing alcohol are subject to excise duty under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 and said duty is collected by States; duty cannot be demanded thereon under Central Excise Act

In case clearance by EOU to job-workers in DTA, local sale price in India cannot be regarded as ‘customs value’ under proviso to section 3(1) of Central Excise Act, 1944; value is to be determined as per customs law

SECTION 11A

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

When first notice had merely raised issue of exemption, second notice raised upon new facts regarding valuation, can validly invoke extended period of limitation

CST & VAT

SECTION 8 OF CENTRAL SALES TAX ACT, 1956

RATE OF TAX – CONCESSIONAL RATE OF TAX

Where assessee, a works contractor, applied for inclusion of construction equipment, plant, machinery and tools used in process of execution of works contract in certificate of registration under Central Sales Tax Act, said items were eligible for inclusion

CENVAT CREDIT RULES

RULE 2(l)

CENVAT CREDIT – INPUT SERVICE – CAB SERVICES

Cab services utilised by a BPO company for transportation of its employees to and from work place and their homes, are eligible for input service credit

RULE 3

CENVAT CREDIT – REMOVAL OF INPUTS/CAPITAL GOODS

No cenvat reversal can be demanded on exchange of inputs with associate/related companies, as demand is revenue neutral; however, for infraction of procedural rule 3(5) of CENVAT Credit Rules, 2004, penalty is leviable

RULE 9

CENVAT CREDIT – DOCUMENTS ON WHICH CREDIT MAY BE TAKEN

Non-mentioning of registration number of service provider cannot be ground to deny input service credit for those services which are eligible

STATUTES

DIRECT TAX LAWS

Section 115JB, read with sections 115JA and 271(1)(c), of the Income-tax Act, 1961 – Minimum Alternate Tax – Penalty under section 271(1)(c) wherein Additions/ Disallowances made under normal provisions of the said Act but Tax levied under MAT provisions under sections 115JB /115JC, for Cases prior to Assessment Year 2016-17

Section 153C, read with section 158BD, of the Income-tax Act, 1961 – Search and Seizure – Assessment of income in case of other person – Recording of Satisfaction note under section 158BD/153C of said Act

Income-tax (Twenty Second Amendment) Rules, 2015 – Substitution of rules 114B, 114C, 114D, 114E, Form No.60, 61 and 61A xes, Tax assistant Group C posts, Recruitment Rules, 2015

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 14, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 14, 2015

23 INCOME TAX ACT

SECTION 2(15)

CHARITABLE PURPOSE

Object of general public utility – Banking technology service : Where assessee-society was established by RBI to provide Banking Technology services and to carry out research which was charitable in nature; merely because it had generated surplus during course of carrying on ancillary objects, it could not be denied exemption under section 11 – [2015] 63  297 (Hyderabad – Trib.)

SECTION 4

INCOME – CHARGEABLE AS

Compensation for closure of business : Where assessee-company was formed for carrying out bottling activities for Coca Cola Co. in a particular area, in view of fact that Coca Cola Co. subsequently decided to set up its own bottling plant, compensation paid by it to assessee for closure of business was to be treated as capital receipt not liable to tax – [2015] 63  338 (Mumbai – Trib.)

SECTION 11

CHARITABLE OR RELIGIOUS TRUST – EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Application of income : Once it is held that assessee-society is eligible for exemption under section 11, as a logical corollary, its income has to be computed on commercial principles – [2015] 63  297 (Hyderabad – Trib)

SECTION 13

CHARITABLE OR RELIGIOUS TRUST – DENIAL OF EXEMPTION

Sub-Section (1)(c) : Where assessee, an educational institution, entered into an agreement with managing trustee for purchase of his land and paid certain amount to him in advance and subsequently said agreement was cancelled and managing trustee returned principal amount along with interest, it could not be said that money was diverted for interest of managing trustee and hence there was no violation of section 13(1)(c) – [2015] 64  46 (Chennai – Trib.)

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME

Tax free bonds : Where assessee claimed that interest bearing borrowed funds were utilized entirely for purpose of business and investment in tax free bonds had been made out of its own funds and Assessing Officer having noticed that assessee had kept all funds in one common pool partly disallowed interest paid on borrowed funds applying section 14A, disallowance of interest paid not justified – [2015] 63  345 (Bombay)

SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

In case of trust : Where assessee-trust was eligible for exemption under section 11, it was not entitled for depreciation under section 32 – [2015] 64  46 (Chennai – Trib.)

Hiring of vehicles : Where assessee-owner of vehicles, was engaged in business of hiring and leasing of those vehicles to third parties, higher rate of depreciation had to be allowed in respect of leased out vehicles – [2015] 63  338 (Mumbai – Trib.)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Reseasesrch expen : Where assessee incurred expenditure for obtaining technical feasibility research reports, for further selling to its customers, said expenditure was allowable as revenue expenditure as it was for expansion of business – [2015] 63  344 (Delhi – Trib.)

Professional fee : Whether where assessee paid certain amount to ‘R’ towards professional fees in connection with negotiation, drafting agreements and finally receiving compensation from Coca Cola Co., payment so made was to be allowed as business expenditure – [2015] 63  338 (Mumbai – Trib.)

SECTION 40(a)(ia)

BUSINESS DISALLOWANCE – INTEREST ETC., PAID TO A RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE

Deposit of tax : Where assessee had deducted tax in last month of previous year and deposited same before due date of filing of return under section 139(1), Assessing Officer could not disallow said payment under section 40(a)(ia) – [2015] 64  47 (Mumbai – Trib.)

SECTION 69

UNEXPLAINED INVESTMENTS

Purchases : Where nothing was there on record to show that purchases and sale was made outside regular books of account by assessee, merely because assessee was prosecuted for keeping sugar beyond permissible limits, addition of value of excess sugar as undisclosed income was not justified – [2015] 64  43 (Punjab & Haryana)

SECTION 80G

DEDUCTIONS – DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS

Condition precedent : Filing of copy of registration under section 12AA along with application for grant of approval under section 80G is a condition precedent for consideration of request for grant of such approval –[2015] 64  33 (Lucknow – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments : Where foreign AE gave Indian assesseelicence to manufacture and market insulin and transactions arranged between assessee with Indian third party to get insulin manufactured also involved AEs, provisions of section 92B would be attracted and said transaction would be an international transaction between assessee and AE requiring determination of ALP under section 92(1) – [2015] 63 351 (Bangalore – Trib.)

Comparables and adjustments/Comparable – Illustrations : Huge turnover companies and companies in which extraordinary event of amalgamation had taken place could not be considered as comparables with assessee being a small company providing ITES – [2015] 63  351 (Bangalore – Trib.)

SECTION 115JA

MINIMUM ALTERNATE TAX

Computation of book profit : Excess provision for depreciation provided for in earlier years and credited to profit and loss account consequent to change in method of depreciation, would qualify for adjustment under clause (i) of Explanation to section 115JA – [2015] 63  329 (Madras)

SEBI ACT

SECTION 11

POWERS AND FUNCTIONS OF BOARD

Where in order to comply with direction of SEBI that a company getting trading membership of NSE could not carry on any other activity apart from broking, appellant – PGSL was incorporated for taking over membership card of PCMIL, transfer of membership from PCMIL to PGSL was due to compulsion of law and appellant would be entitled to benefit of fee continuity and, thus, would not be required to pay fresh registration fees – [2015] 64 141 (SC)

COMPETITION ACT

SECTION 44

PENALTY FOR MAKING FALSE STATEMENT OR OMISSION TO FURNISH MATERIAL INFORMATION

Where appellants invoked jurisdiction of Commission by asserting that R-2 insurance company was in a dominant position and it had abused its position by not removing their names as defaulter from Specific Approval List, but suppressed a crucial fact that they had already availed similar remedy by filing writ petition before High Court, they would not be entitled to claim any relief – [2015] 64  29 (CAT – New Delhi)

NEGOTIABLE INSTRUMENTS ACT

SECTION 138

DISHONOUR OF CHEQUE FOR INSUFFICIENCY ETC., OF FUNDS IN ACCOUNT

Section 141 creates a legal fiction against defaulting company, so as to cover within its ambit all persons who have consented, connived or anyway attributed to commission of offence – [2015] 64  42 (Delhi)

SERVICE TAX

SECTION 65(25aa)

TAXABLE SERVICES – CLUB OR ASSOCIATION’S SERVICES

Sections 65(25aa), 65(105)(zzze) and 66 are ultra vires and beyond legislative competence of Parliament, insofar as they seek to levy service tax on services provided by clubs/associations to their members – [2015] 63 154 (Gujarat)

CENTRAL EXCISE ACT

SECTION 4

VALUATION UNDER CENTRAL EXCISE – TRANSACTION VALUE – DESIGN CHARGES

Where assessee manufactured goods using design prepared by its sister concern and client paid separately to assessee and sister concern, charges for design prepared by sister concern were includible in value of goods manufactured – [2015] 63  352 (Mumbai – CESTAT)

SECTION 37C

SERVICE OF DECISIONS, ORDERS, SUMMONS, ETC.

Where Adjudicating Authority passed refund order on 3-4-2009 and dispatched same to assessee by speed post on 16-4-2009 and Commissioner (Appeals) in view of dispatch of order on 16-4-2009 assumed date of receipt by assessee on 18-4-2009, Commissioner (Appeals) was in error in holding that date of service on assessee was 18-4-2009 without proof of same available on record – [2015] 64  49 (Mumbai – CESTAT)

CST & VAT

SECTION 8 OF CENTRAL SALES TAX ACT, 1956

RATE OF TAX – PARTIAL EXEMPTION FROM PAYMENT OF TAX

Where assessee in terms of notification dated 6-5-1986 was allowed partial exemption from tax payable in respect of inter-State sales for assessment years 1999-2000 to 2001-02, reopening of impugned assessments subsequently on plea that partial exemption was wrongly retained by assessee, as full central sales tax was collected from consumers, was illegal – [2015] 63  233 (Rajasthan)

SECTION 34 OF DELHI VALUE ADDED TAX ACT, 2004

RETURNS, ASSESSMENT AND TAX ADMINISTRATION – ASSESSMENT AND RE-ASSESSMENT – LIMITATION ON

Where Assessing Authority issued on assessee notices of default assessment and penalty dated 1-4-2015 for assessment year 2008-09, impugned notices had been issued after expiry of period of six years as stipulated in section 34 from relevant year 2008-09 and were liable to be quashed – [2015] 63  30 (Delhi)

STATUTES

DIRECT TAX LAWS

Clarification regarding defective notices issued to FII/FPIs – PRESS RELEASE, DATED 10-12-2015

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – Meeting between heads of Revenue Administration of India and Korea for suspension of collection of taxes during pendency of Mutual Agreement Procedure (MAP) – PRESS RELEASE, DATED 9-12-2015

New Facility of Pre-Filing TDS Data while submitting online rectification – PRESS RELEASE, DATED 10-12-2015

CORPORATE LAWS

Monthly Development Report for Commodity Derivative Exchanges – CIRCULAR NO.CDMRD/DEA/4/2015, DATED 9-12-2015

FEM (Manner of Receipt and Payment) (Amendment) Regulations, 2015 – Amendment in Regulation 5 –NOTIFICATION [NO.FEMA.357/2015-RB]/GSR 935(E), DATED 7-12-2015

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

Central Excise (Second Amendment) Rules, 2015 – Amendment in Rules 8, 12 and 17 – NOTIFICATION NO.25/2015-C.E. (N.T.), DATED 9-12-2015

Service tax (Third Amendment) Rules, 2015 – Amendment in Rule 6 – NOTIFICATION NO.26/2015-ST, DATED 9-12-2015

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 9555555480

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 11, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 11, 2015

Untitled3

INCOME TAX ACT

SECTION 2(47)

CAPITAL GAINS – TRANSFER

Immovable property : Where assessee was directed to handover possession of its property to revenue, in absence of written contract between assessee and State regarding quantification of consideration to be paid by assessee it could not be held that there was a transfer in terms of section 2(47)(v) – [2015] 64  12 (Hyderabad – Trib.)

SECTION 9

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

Business Profit/Commission: Assessee was not liable to deduct tax at source when non-resident selling agents provided services outside India on payment of commission – [2015] 64  18 (Chennai – Trib.)

SECTION 12A

CHARITABLE OR RELIGIOUS TRUST – REGISTRATION OF

Cancellation of : SLP granted against High Court’s order wherein it was held that merely because receipts from commercial activities of assessee-trust were more when compared to overall receipts from charitable activities, registration of assessee-trust could not be cancelled – [2015] 63  325 (SC)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Interest expenditure : Merely because there was some cash balance in hands of assessee, Assessing Officer could not disallow interest on belated payment of purchases made by assessee – [2015] 63  370 (Ahmedabad – Trib.)

SECTION 80HHC

DEDUCTION – EXPORTERS

Reassessment : SLP granted against High Court’s ruling that where reassessment made in view of retrospective amendment of section 80HHC(3) was accepted by assessee and had attained finality, same could not be challenged in view of a later judgment holding such amendment arbitrary to extent of its retrospectively – [2015] 63  328 (SC)

SECTION 145

METHOD OF ACCOUNTING – ESTIMATION OF INCOME

Gross profit rate : Unless defect is pointed out in books of assessee, no addition could be made by Assessing Officer – [2015] 63  370 (Ahmedabad – Trib.)

SECTION 194J

DEDUCTION OF TAX AT SOURCE – FEE FOR TECHNICAL OR PROFESSIONAL SERVICES

Payments to doctors : Where assessee, running a hospital, availed services of some doctors, since there did not exist employer-employee relationship between parties, assessee was justified in deducting tax at source under section 194J while making payments of professional fee to doctors – [2015] 63  362 (Punjab & Haryana)

SECTION 253

APPELLATE TRIBUNAL – APPEALS TO

The Tribunal can exercise its discretion to accept the memorandum of appeal even if same is deficient in enclosures but not when appeal is not accompanied by fee – [2015] 64  95 (Hyderabad – Trib.)

COMPANIES ACT

SECTION 25

CHARITABLE COMPANIES

Delhi HC orders 5 Top Office-bearers of Congress Party to face criminal proceedings for forming and misusing a section 25 company as SPV for clandestine acquisition of 99% stake in Old defunct real-estate rich newspaper publication company (AJL) and for misappropriating funds of Congress Party for the purpose – [2015] 64 117 (Delhi)

SECTION 186

MEETINGS AND PROCEEDINGS – POWER OF TRIBUNAL TO ORDER MEETING TO BE CALLED

A civil suit filed against removal of directors was maintainable when proceedings before CLB were not maintainable as appellants lacked voting rights – [2015] 64  116 (Gujarat)

MRTP ACT

SECTION 2(o)

RESTRICTIVE TRADE PRACTICE

Where no evidence had been produced by complainant to show that its production of 3-wheelers was halted on account of non-production and non-supply of parts, viz. power packs by respondent manufacturer, compensation could not be awarded alleging unfair trade practice – [2015] 63  371 (CAT – New Delhi)

SECTION 36A

PROHIBITION OF ABUSE OF DOMINANT POSITION –DEFINITION OF

Where respondents had not made any misrepresentation about quality and suitability of their product or otherwise induced complainant to purchase their product, they could not be held to be guilty of unfair trade practice under section 36A – [2015] 63  371 (CAT – New Delhi)

SECTION 36B

PROHIBITION OF ABUSE OF DOMINANT POSITION

Complaint made by a person who is not a consumer or a trade association cannot be made basis for making an inquiry under section 36B – [2015] 63  371 (CAT – New Delhi)

PREVENTION OF MONEY LAUNDERING ACT, 2002

SECTION 5

ATTACHMENT OF PROPERTY INVOLVED IN MONEY LAUNDERING

There is no restriction in respect of person in possession of proceeds of crime. Section 5 of Money Laundering Act does not restrict that property in hands of persons involved in Money Laundering alone can be attached pending confiscation. Thus, provisional attachment of property is not restricted in hands of accused persons alone – [2015] 64  96 (Madras)

SERVICE TAX

SECTION 65(68)

TAXABLE SERVICES – MANPOWER RECRUITMENT OR SUPPLY AGENCY’S SERVICES

Where assessee had leased its factory under compromise scheme, then, sums received from lessee towards reimbursement of salary payable to employees working in factory, could not be regarded as ‘manpower supply services’ to lessee and was, therefore, not liable to service tax – [2015] 63  358 (Mumbai – CESTAT)

CENTRAL EXCISE ACT

SECTION 35F

APPEALS – DEPOSIT OF CERTAIN PERCENTAGE OF DUTY/TAX DEMANDED OR PENALTY IMPOSED BEFORE FILING APPEAL

Where department has challenged validity of utilization of credit balance for payment of duty, 7.5 per cent pre-deposit as a condition for filing appeal has to be made separately and ‘disputed utilization’ of credit cannot be regarded as sufficient pre-deposit for purpose of section 35F – [2015] 64  7 (Mumbai – CESTAT)

CUSTOMS ACT

SECTION 14

VALUATION OF IMPORTED GOODS – TRANSACTION VALUE – IDENTICAL/SIMILAR GOODS

Where revenue had submitted that goods in Chart D were identical to goods in Charts A and B and taken value of goods in Charts A and B as basis for valuation, Tribunal was right in remanding matter back for verification whether goods in Chart D were identical to goods in Charts A and B – [2015] 63  357 (SC)

CENVAT CREDIT RULES

RULE 2(k)

CENVAT CREDIT – INPUT

Since CENVAT Scheme is a beneficial legislation, ‘input’ should be given widest meaning to cover ‘anything put into stream of manufacture’; therefore, inputs used for manufacture of capital goods viz. ‘moulds’ are eligible for credit – [2015] 63  360 (New Delhi – CESTAT)

RULE 2(l)

CENVAT CREDIT – INPUT SERVICE

Where assessee-broker had passed-on brokerage to sub-brokers at rates higher than rate earned by itself and even goods involved were not tallied, sub-broker’s services could not be regarded as ‘input services’. – [2015] 63 355 (New Delhi – CESTAT)

STATUTES

DIRECT TAX LAWS

Section 119 of the Income-tax Act, 1961 – Income-tax Authorities – Instructions to Subordinate Authorities – Extension of due date for deposit of Tax Deducted at Source and Tax Collected at Source for State of Tamil Nadu – PRESS RELEASE, DATED 7-12-2015)

CORPORATE LAWS

Discussion Paper on Convergence to Ind-AS in Insurance Sector – PRESS RELEASE, DATED 7-12-2015

Guidelines on insurance claims for losses due to flood in State of Tamil Nadu, Puducherry and Neighboring Districts of Andhra Pradesh – CIRCULAR NO.IRDA/NL/RI/MISC/15-16/37, DATED 7-12-2015

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

Jurisdictions of Principal Chief Commissioner, Chief Commissioner, Principal Commissioner and Commissioner – Amendment in Notification No.27/2014-C.E. (N.T.), Dated 16-9-2014 – NOTIFICATION NO.24/2015-C.E. (N.T.), DATED 7-12-2015

Extension of date for filing of Central Excise Return and payment of Central Excise duty and Service tax – PRESS RELEASE, DATED 5-12-2015

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 9555555480

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

CORPORATE & OTHER LAWS UPDATE NOVEMBER 24, 2015

Corporate and Professional Update November 24, 2015

Untitled18AIndirect Taxes:

Activity of production of Marble Slabs / tiles from rough irregular marble slabs – cutting and polishing of the granites into slabs and tiles do not amount to activity of manufacture- (M/s Aravali Marbles Versus Commissioner of Central Excise And Service Tax, Jaipur-I, CESTAT NEW DELHI).

Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100 Export Oriented Unit – DTA unit clearing goods to 100 EOU can be termed as export for the purpose of allowing DTA unit to claim refund of unutilized CENVAT credit- (Commissioner Versus Metflow Cast Pvt. Ltd. – 2015 (11) TMI 145 – GUJARAT HIGH COURT).

Introduction of time limit for restoration of registration applications.

Clarification regarding leviability of service tax in respect of Seed testing with effect from 01.07.2012.

Challenge to rule 57A of Assam VAT – Specific activities which are not to be treated as manufacture Delegated legislation cannot take away the right that is vested or accrued by way of retrospective amendment – amended rule 57A(1) ultra vires the provisions of the definition of manufacture under the Act and beyond the competence of rule-making power to alter the definition of manufacture- (Ganesh Metcoke Industries Versus State of Assam, GAUHATI HIGH COURT).

Winding up of the respondent company seeked – It is well settled that proceeding for winding up is not a proceeding for the recovery of outstanding dues. Nor for that matter can the remedy of a petition for winding up be utilized to pressure a company which is commercially solvent to pay a debt which is bonafide disputed- (Soni Gulati & Co. Versus JHS Svendgaard Laboratories Limited, HIMACHAL PRADESH HIGH COURT).

Levy of vat on E-commerce transactions – virtual shop – facility for providing online sale or purchase of goods – department did not challenge or rejected the returns filed by the actual sellers / dealers – demand of VAT cannot be raised from the petitioner (Flipkart / myntra) (Flipkart Internet (P.) Ltd. Versus State of Keral, KERALA HIGH COURT).

Direct Taxes:

Exemption u/s 11 & 12 denied – the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation – the benefit of change in law by Finance Act 2014 should be available and for all the years the benefit of exemption should be available on the date of registration as all the assessments were pending- (Sree Sree Ramkrishna Samity Versus Deputy Commissioner of Income Tax, ITAT KOLKATA).

Reopening of assessment – amalgamation of company – From the documents on record it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible under the Act- (M/s. Ashoka Buildcon Ltd. Versus Asstt. Commissioner of Income Tax, Circle – 2, Nashik and Vice-Versa, ITAT PUNE).

Eligibility for benefit U/s 11 – transaction of the sale of the land by the assessee in a wise manner by applying commercial prudence is only an activity which is incidental to the main objects of the assessee – proviso of Section-2(15) will not be applicable- (Income Tax Officer Chennai Versus Sri Magunta Raghava Reddy Charitable Trust, ITAT CHENNAI).

Disallowance u/s 40(a)(ia) – amount paid to seconded employees on which tax is not deducted at source – since the assessee was not liable to deduct tax under s. 194J there is no question of levying any interest also under s. 201(1A)- (Deputy Commissioner of Income Tax, Corporate Circle 1 (1) , Chennai Versus M/s. Amalgamations Ltd., ITAT CHENNAI).

CBDT releases Explanatory Notes to provisions of the Finance Act, 2015 vide Circular No. 19 dated 27.11.2015.Click here to view

Transaction of shares – Assessment of income – the shares held by the assessee trust are capital assets in its hands and gain arising on the transfer of these shares by the assessee trust shall be taxable under the head income from the capital gains in the hands of assessee trust- (Mahindra and Mahindra Employees‟ Stock Option Trust Versus ADCIT, Range-12 (2) ITAT MUMBAI).

Addition on account of license fees connectivity charges and co-ordination charges for the use of Vision plus software – revenue v/s capital expenditure – held as revenue expenditure deductible u/s. 37- (GE Capital Business Process Management Serves Pvt. Ltd. Versus A.C.I.T., Circle 12 (1) , New Delhi And Vice-Versa, ITAT Delhi).

FAQ on Company Law:

Query:  The Board of Directors of a Limited Company proposes to donate Rs. 50,000 to a political party during the financial year ending 31st March, 2015. The average net profits determined in accordance with the provisions of the Companies Act, 2013 during the three immediately preceding three financial years is Rs. 40,00,000/-. Examine with reference to the provisions of the Companies Act, 2013 whether the proposed donation is within the power of the Board of Directors of company.

Answer: Under section 182(1) of the Companies Act, 2013 a company may contribute any amount directly or indirectly to any political party provided that the aggregate of the amount which may be so contributed by the company in any financial year shall not exceed 7.5% of its average net profits during the three immediately preceding financial years.

In the given case the eligible amount comes to 7.5% of Rs 40 lakhs = Rs 3 Lakhs and the amount actually contributed being Rs. 50,000 is well within the power of the Board of Directors of the company. Hence, the Board of Directors is empowered to make a donation by passing a resolution at a Board meeting.

FAQ on Company Law:

Query: The Article of Association of a listed company have fixed payment of sitting fee for each Meeting of Directors subject to maximum of Rs. 40,000/-. In view of increased responsibilities of independent directors of listed companies, the company proposes to increase the sitting fee to Rs. 65,000 per meeting. Kindly advise whether we can do so in the light of the provisions of Companies Act 2013.

Answer: Section 197(5) of the Companies Act, 2013 provides that a director may receive remuneration by way of fee for attending the Board/Committee meetings or for any other purpose as may be decided by the Board, provided that the amount of such fees shall not exceed the amount as may be prescribed. The Central Government through rules prescribed that the amount of sitting fees payable to a director for attending meetings of the Board or committees thereof may be such as may be decided by the Board of directors or the Remuneration Committee thereof which shall not exceed the sum of Rs 1 lakh/- per meeting of the Board or committee thereof.

Further, the Board may decide different sitting fee payable to independent and non-independent directors other than whole-time directors. From the above, it is clear that fee to independent directors can be increased from Rs. 40,000/- to Rs 65,000/- per meeting by passing Board Resolution.

Query: We formed one OPC last year. Now that director cum member wants to transfer his entire shareholding to other person. Can he do so, Please advice?

Answer: OPC being a new class of Company introduced under the concept of Private Limited Companies as per Section 3 of the Companies Act 2013. Thus, the law applicable to Private Limited Companies applies to the OPC as well with certain exceptions as provided under the Companies Act 2013 and rules there under. Thus, Likewise the Private Company, an OPC can also restrict the right of members to transfer the shares by way of an article of association, choice of which is solely available to an OPC itself.

Key Dates:

Obtaining Audit report u/s 92E:  30/11/2015

Filing of I.T Returns by assesses where Transfer pricing provisions are applicable: 30/11/2015.

Annual Filing under Companies Act: 30/11/2015.

Annual returns by units paying duty more than Rs. 1 Crore (Cenvat + Pla): 30/11/2015.

Payment & Monthly Return of Maharashtra PT (Annual Liability 50000 or more): 30/11/2015.

Filing of Wealth Tax Returns (Transfer pricing provisions applicable): 30/11/2015.

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