CORPORATE AND PROFESSIONAL UPDATE APRIL 15, 2016

CORPORATE AND PROFESSIONAL UPDATE APRIL 15, 2016

DIRECT TAX:

• Income Tax: Once the expenditure is found to be allowable as revenue expenditure as per provisions of the Income Tax Act, 1961 (‘Act’), the same is to be allowed as revenue expenditure under the Act while computing income chargeable to tax even if the taxpayer capitalizes such an expenditure in its books of account prepared as per the Companies Act [2016] 68com 181 (Mumbai – Trib.)  Dewanchand  Ramsaran Industries (P.) Ltd. v. ACIT
• An Income Tax:  Where, during proceedings before Supreme Court in famous ‘Best Bakery case’, a VCD was found in which assessee was alleged to have paid money to a witness for becoming hostile and, consequently, Assessing Officer treated said amount as unexplained payment made by assessee on basis of said VCD but did not corroborate said transaction by any other evidence, action of Assessing Officer was not justified
  [2016] 68com 198 (Ahmedabad – Trib.)
• IT: Interest income received by the club from fixed deposit in bank cannot be form the house property and consequently this income is from other sources – there is no principle of mutuality – Patna Golf Club Ltd. Vs. CIT, Patna (2016 (4) TMI 530 – Patna High Court)
• IT: Section 142 of the Act of 1961 allows the assessing officer to make an enquiry before the assessment – AO cannot invoke the provisions of Section 142(1) after an order u/s 143(3)(ii) – Warren Tea Ltd. Vs. ACIT, Cir-5, Kolkata (2016 (4) TMI 529 – Calcutta High Court)
• All ITRs including ITR 6 and ITR-7 for A.Y. 2016-17 are available for E-Filling, NSDL releases e-TDS/TCS RPU version 1.5 from FY 2007-08 onwards on 13/04/2016.
• Invoking the provisions of Section 142(1) – Could the assessing officer invoke the provisions of Section 142(1) after an order under Section 143(3)(ii) by the appellate forum? – Held that – Section 142 of the Act of 1961 allows the assessing officer to make an enquiry before the assessment. In the present case the assessment was contemplated under Section 143(3)(ii) of the Act of 1961 prior to the issuance of the notice under Section 142 of the Act of 1961.
• In fact the appellate authority has also proceeded on the basis of the provisions of Section 143(3)(ii) of the Act of 1961. In such circumstances it would not be permissible for the assessing officer to reopen the assessment for the relevant financial year after having assessed it under Section 143(3)(ii) of the Act of 1961.( M/s. Warren Tea Limited Versus Assistant Commissioner of Income Tax, Circle-5, Kolkata & Others .) – 2016 (4) TMI 529 – CALCUTTA HIGH COURT
• CBDT has released ITR before the start of the A.Y. for the A.Y. 2016-17 and released e-filing utility of all the ITRs within 15 days from the start of A.Y.
• CBEC issued instructions to its office that file and notes on the file should not only be concise but should also contain the details of minutes recorded in a case. Fixing/ re-fixing of personal hearing is a vital step towards the disposal of the case by the quasi judicial / appellate authority.

Indirect Tax:

• Seeks to amend Notification No. 25/2012- Service Tax dated 20.06.2012, so as to exempt from Service Tax, certain services provided by Government or a local authority to business entity-Notification No. 22/2016-Service Tax dt. 13-04-2016 –
• Seeks to amend rule 6 sub-rule (2), of Service Tax (Determination of Value) Rules, 2006 Notification No. 23/2016-Service Tax dt. 13-04-2016 –
• Seeks to amend rule 7 of Point of Taxation Rules, 2011 Notification No. 24/2016-Service Tax dt. 13-04-2016 –
• DVAT amendment in Form 16, 17, 30, 31 w.e.f. 12.04.2016 under DVAT (Amendment) Rules, 2016.
• Activity of deputation of employees to group companies – Manufacturer of pharmaceutical products and having their own marketing network – Whether marketing network services provided by appellant to its group companies comes under Business auxiliary Services – Recovery of expenses in return – Held that – as per the contract, the appellant is only deputing the employees to the group companies and said employees are called back after the job is completed and utilized in the activity of the appellant or deputed to any other group company. So the claim of revenue that such activity would fall under the Business Auxiliary Services , has no lows-standing (Franco Indian Pharmaceutical (P) Ltd. Versus Commissioner of Service Tax, Mumbai.) – 2016 (4) TMI 496 – CESTAT MUMBAI
• ST: Activity of deputation of employees to group companies – No Marketing network services provided to group companies – recovery of expenses in return do not comes under Business Auxiliary Services – not taxable– Franco Indian Pharmaceutical Pvt. Ltd. Vs. CST, Mumbai (2016 (4) TMI 496 – CESTAT Mumbai)
• VAT & Sales Tax: Works contract – a fundamental mistake which is committed by the authorities below is that foundation work or installation work which is even considered as part of works contract by the Assessing Officer himself cannot be treated as goods – Enercon India Ltd. Vs. State of Karnataka (2016 (4) TMI 483 – Supreme Court)
• DVAT has amended Form DVAT-16, 17, 30 & 31 w.e.f. 12 APR 2016.
• Service Tax: CENVAT credit – Information Technology software services – Such services are made taxable by Sec. 65(105) of Finance Act 1994 with effect from 16.5.2008 – Credit allowed -Mportal (India) Wireless Solutions Pvt. Ltd. Vs. CST (2016 (4) TMI 409 – Karnataka High Court)
• VAT : Denial of C Forms – Inter-state sale – If movement of goods is occasioned in the lease agreement and pre-conditions viz. registered dealer and goods mentioned in registration certificate are fulfilled the said transaction is deemed to be an inter-state sale within the meaning of Section 3(a) of CST Act – C Forms cannot be denied -Tata Power Delhi Distribution Ltd. Vs. CST, Delhi (2016 (4) TMI 405 – Delhi High Court).
• Excise & customs : There is distinction between house mark and product mark; a monograph on ‘ayurvedic medicine’, which only identifies manufacturer would not make such medicine a ‘patent or proprietary medicine’ and therefore, said medicine continues to be exempt from duty [2016] 68com 54 (New Delhi – CESTAT) Mayar India Ltd. v. Commissioner of Central Excise

MCA UPDATES :

• MCAhas notified new version of e-forms DIR-12, INC-22 and MGT-7 and have been updated on MCA21 w.e.f 12th April, 2016. Only new version of the eForm will be acceptable.

FAQ on Company Law:

Query:  If a Company appoints First Auditor than any ROC compliance is required by Company in this respect. Kindly clarify?

Answer:  No, a Company is not required to file Form ADT-1 (ROC Compliance) in case of appointing first auditors of the Company.

“Each morning we are born again. What we do today is what matters most.” ~ Gautam Buddha

“ Relationships prosper with love and respect. One does not get better by merely pulling others down or by criticism. One gets better by learning and appreciation.”

“If you have a burning desire and a plan to take actions, there is absolutely nothing you cannot achieve.”

KEY DATES : 

• Payment of ESI of March for ESI: 21/04/2016
• Payment of MVAT and WCT TDS for March for MVAT: 21/04/2016
• MVAT return for March (10 days extra for e-returns): 21/04/2016
• Payment of DVAT TDS for march for DVat: 15/04/2016
• E-Payment of PF for March: 15/04/2016
• Extension of last date to 10.05.16 for various e-forms having due date between 25.03.16 to 30.04.16:MCA circular no. 03/2016.

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