CORPORATE AND PROFESSIONAL UPDATE AUG 22, 2016

Professional Update For the Day:

DIRECT TAX:

• ITAT Chennai held that exemption U/s. 54F will be allowed despite of delayed investment in Capital Gain Account Scheme. The provisions of section 54F are beneficial provisions and are to be considered liberally in the aspect of limitation period [ ACIT vs. Smt. Umayal Annamalai].
• Allahabad HC upholds penalty levy u/s 272A(2)(k) for assessee’s failure to furnish e-TDS quarterly statements within prescribed time for 5 years and also after issue of notice from the IT Department. Further notes that despite various show cause notices issued by AO, it was only before CIT(A) that assessee, for the first time, offered an explanation for such default, remarks that “that adequate opportunity had been granted to the appellant but the appellant failed to utilize the opportunities.[TS-445-HC-2016(ALL)]
• CBDT issues Clarifications on Income Declaration Scheme, 2016. CBDT Circular No.29 of 2016 dated 18.08.16.
• Deduction U/s 35AC available only up to the previous year ending 31-03-2017.

• CBDT has issued a press release regarding the approval of Eligible Projects or Schemes under section 35AC of the Income Tax Act, 1961 dated 19/08/2016. Section 35AC of the Income Tax Act, as amended by the Finance Act, 2016, provides that no deduction under this section shall be allowed in respect of any assessment year commencing on or after 1st April, 2018.(Click here to view)
• In the below citied case it was held that benefit of carry forward losses cannot be denied due to belated receipt of ITR-V acknowledgement-(Fibres & Fabrics International (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 11(3), Bangalore)

INDIRECT TAX:

• Transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer or right to use such goods is a “declared service” and hence liable to service tax.
• Delhi High Court held that service Tax on manufacture of alcoholic liquor for human consumption on job work basis with effect from 1st June 2015 is Constitutionally Valid. ( Carlsberg India Private Limited Vs. Union Of India & Ors)
• Airport runways aren’t roads, their repair and maintenance is liable to service tax. Commercial or industrial construction service was introduced as taxable service under the head “construction service” with effect from 10th September, 2004. The same service was renamed as “commercial or industrial construction service” with effect from 16th June, 2005. Though it refers to repair, alteration, renovation etc., but that does not include such services provided in respect of roads, airports, railways, transport terminal (P. Jain & Company Infrastructure (P.) Ltd. v. Union of India)
• Refund denial business support service services received inside the port Held that – there is no dispute that the services are with reference to export of goods rendered inside the port, the claim cannot be denied on the ground that tax has been paid under different classification by the provider of service. The Board also clarified that there is no requirement of verification of registration certificate of the supplier of service refund allowed.(Natural Slate & Sandstone Exports Pvt. Ltd. Versus C.C.E., Jaipur I – 2016 (8) TMI 547 – CESTAT NEW DELHI – Service Tax
• Disallowance made on account of survey charges – Tribunal deleted addition – Held that – We find that the impugned order of the Tribunal has deducted the disallowance on a finding of fact that the tax has already been offered on the same for the Assessment Year 1999-2000 on receiving it from the successful bidder.(The Commissioner of Income Tax-3 Versus Sicom Ltd). – 2016 (8) TMI 610 – BOMBAY HIGH COURT – Income Tax

FAQ ON GST

Start of GST regime

How will imports be taxed under GST?

Answer : The Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied on imports will be subsumed under GST. As per explanation to clause (1) of article 269A of the Constitution, IGST will be levied on all imports into the territory of India. Unlike in the present regime, the States where imported goods are consumed will now gain their share from this IGST paid on imported goods.

Read our articles:

• E-Invoice Mechanism under the GST
• Blocking/Unblocking the E-Way Bill creation system if fails to file GSTR-3B: GSTN
• Reasons for the Movement of Goods under the GST

How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method?

Answer: In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one State to another. The inter-State seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on his purchases (in that order). The exporting State will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State. The Centre will transfer to the importing State the credit of IGST used in payment of SGST.Since GST is a destination-based tax, all SGST on the final product will ordinarily accrue to the consuming State.

FAQ ON COMPANY LAW:

 Query:   Whether independent director of a company could be appointed by the shareholders in general meeting under the Companies Act, 2013?

Answer:   Appointment of Independent Directors- In terms of paragraph IV of schedule IV of the Companies Act, 2013, appointment of independent directors has to be made by the Board of Directors and approval by the shareholders in general meeting

Query:  Can partly paid shares be issued by the way of preferential issue of shares as per Companies Act 2013?

Answer: The Companies (Share Capital and Debenture) Amendment Rules, 2016 have done away with the requirement of shares allotted under preferential allotment to be fully-paid up at the time of allotment. Accordingly, now partly-paid securities can be allotted by means of a preferential issue.

Query: In case of change in Registered office of LLP within state, whether we are required to file Form 3 as well?

Answer: Yes, you are required to file Form 3 in case of change in Registered office of LLP within state enclosing the copy of Supplementary LLP Agreement.

RBI UPDATE

• SEBI has issued Frequently Asked Questions (FAQs) on SEBI (Alternative Investment Funds) Regulations, 2012.
• Eminent economist and RBI Dy. Governor, Mr. Urjit Patel replaces Raghuram Rajan as RBI Governor.
• SEBI has launched electronic mode for payment of penalties, disgorgement as well as settlement amounts.
• SEBI vide Circular on mutual funds increased the additional exposure limits provided for housing finance companies (HFCs) in financial services sector from 5% to 10%.

Key Dates:

• Issue of DVAT certificate for deduction made for the month of July-22/08/2016
• Payment of ESI for the month of July-21/08/2016
• E-Payment of DVAT & CST tax for the month of July-21/08/2016

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