CORPORATE AND PROFESSIONAL UPDATE DATED FEBRUARY 24, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED FEBRUARY 24, 2016

• IT: CIT(A) was fully justified in deleting the addition made by the AO for alleged bogus purchases particularly when the GP rate declared by the assessee was progressive and was accepted by the AO – ITO, W-2(2), Ghaziabad Vs. Ray Steels (2016 (2) TMI 498 ITAT Delhi)
• IT: As the assessee has executed the project undertaking the risks and rewards and therefore the claim of Sec-80IB (10) is justified. Needless to mention that the appellant need not be the landowner for claiming deduction uls.80-IB(10) – Indra Housing Vs. ACT (2016 (2) TMI 489 ITAT Chennai)
• ST: Claim of refund of service tax paid during April 2011 to March 2012 on services of constructions of college building – Ld. CST (A) by proper application of mind set aside rejection of refund claim and allowed appeal of the respondent. – Refund cannot be denied – CST-VII Vs. SM Sai Construction (2016 (2) TMI 486 CESTAT Mumbai)
• SEBI has reviewed the guidelines to further streamline the process of OFS with an objective to encourage greater participation of all investors.
• MCA invites comments on:

Draft Companies (Incorporation) Second Amendment Rules 2016

A Draft Companies (Authorised to Registered) Amendment Rules 2016

Draft Companies (Auditor’s Report) order, 2016.

Revised Schedule III to the Companies Act, 2013 for a company whose financial statements are drawn up in compliance of companies (Indian Accounting Standards) rules 2015 and as amended from time to time.

• Interest on small saving schemes may fall; Govt. revised framework to fix interest rates
• CBEC tights noose on tax evaders; mandates RBI and Electricity boards to file AIR
  NOTIFICATION NO.4/2016-ST, DATED 15-2-2016
• MCA proposes Ind AS 11 & 18 for revenue recognition, defers Ind AS 115
• Updated guidance note issued for bank audits : ICAI has issued a guidance note on bank audits. The guidance note aims to assist auditors in performing bank audits for FY 2015-16.
• HC directed liquidator to pay overdue bills of security agency appointed for protecting assets of liquidating co.[2016] 66 taxmann.com 162 (Gujarat) United Security Organization (P.) Ltd. v. Official Liquidator of Mardia Steels Ltd. (In Liquidation)

Recent Important Directives Dated 15-02-2016 Of The CBDT On Section 80-IA(5) And Passing Of Section 154 Rectification Orders:-

CBDT Clarifies Meaning Of Term “Initial Assessment Year” In S. 80-IA(5) Of The Income-tax Act

The CBDT has issued Circular No. 1/ 2016 dated 15.02.2016 in which it has clarified the meaning of the term “initial assessment year” in section 80-IA(5) of the Income-tax Act, 1961.

CBDT Directs AOs To Strictly Follow S. 154 Rectification Time Limits

The CBDT has issued Instruction No. 01/2016 dated 15.02.2016 in which it has directed Assessing Officers to strictly follow the time limit of six months prescribed under section 154(8) of the Income-tax Act, 1961 to pass rectification orders.

The CBDT has also directed the supervisory officers to monitor the adherence to the prescribed time limit and initiate suitable administrative action where failure to adhere to the prescribed time limit is noticed.

CBDT Directs AOs To Pass S. 154 Rectification Orders In Writing

The CBDT has issued Instruction No. 02/2016 dated 15.02.2016 in which it has directed Assessing Officers to pass rectification orders in writing and serve a copy on the assessee and not just make an entry on the AST system.

• Refund cannot be denied merely for procedural lapse i.e. if assessee is eligible to get refund, it should be allowed even if there is a delay of 2 days because of the intervening Saturday and Sunday &  the claim was filed on Monday. [Markers Mart And Prince Exports vs C.C.E &  S. Tax, Jaipur II-2016 (2)TMI 258-CESTAT NEW DELHI].
• Interest u/s 234A- Board has clarified that no interest u/s 234A is chargeable on the amount of self assessment tax paid by the assessee before the due date of filing of return of income-HC[Sri Suresh Sharma vs the assistant commissioner of Income Tax -2016 (2) TMI274 – KARNATAKA HIGH COURT]
• When the Assessing Officer and Commissioner concurrently found that there was unexplained expenditure and source of such income was not satisfactorily explained, section 69C of the Act would certainly be application–HC[RAVIKIRAN CERAMICE PVT LTD vs PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2016(2)TMI352- GUJARAT HIGH COUR T]
• Brokerage expenses not allowed against income from House Property.[M/s Radiant Premises Pvt.Ltd. vs. ACIT(ITAT Mumbai), ITA No.5494/MUM/2013,A.Y.2010- 2011]
• Disallowance u/s 14A no separate books of account are maintained for taxable income and exempt income, some expenditure on account of administrative expenses has to be disallowed on reasonable estimate basis- Tribunal [M/s Coated Fabrics Pvt. Ltd. Vs ACIT, Circle -1 (1),Pune -2016(2) TMI 373-ITAT PUNE]
• Procedure, Formats and Standards for ensuring secured transmission of electronic communication including scrutiny assessment u/s 143(3)-Circular-Dated 3-2-2016.
• Income Tax: Amount received on transfer of Bungalow- the presumption under the law is that the assessee had sold his interest in the entire property even if he has acquired such ownership rights after the sale –to be assessed under the head “capital gains”-ITAT Mumbai in case of [ITO ,Mumbai vs Shri Ajit L Verma Mimbai]
• Delhi high court landmark decision in new Skies Satellite case on issue of retrospective operation of Finance act 2012, amendments in section 9 held Retrospective operation a highly contentious issue; held “the parliaments is simply not equipped with the power to, through domestic law, change the terms of a treaty, it is fallacious to assume that any change made to domestic law to rectify a situation of mistaken interpretation can spontaneously further their case in an international treaty . Therefore,mere amendment to section 9(i)(vi) cannot result in a change.
• Rental income from a fully furnished house is taxable as income from other sources if composite rent is inseparable. [ACIT vs Ajay Kalia]
• RBI extends the Date for Withdrawal of pre-2005 Series Bank Notes to June 30,,2016.
• ICAI issues Guidance Note on Audit of Banks released by Auditing and Assurance Standards Board.
• ICAI issues Revised 2016 Guidance Note on Reporting of Fraud under Section 143(12) of the Companies Act, 2013.
• MCA invite comments on Revised schedule III for a co. whose financial statements are drawn up as per IND AS Rules,2015 &Draft CARO,2016 latest by 23.02.16
• Empanelment for audit of PSUs for the year 2016-2017;Online application with C&AG –Last Date extended to 22.2.2016. Last date for receipt of documents 15.3.16. Any change in data occurring after the cut-off date that lead reduction in the rank of applicant firm shall be taken in to account.    
• The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com or call at 011-233 433 33