corporate and professional update dated march 12, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 12, 2016

DIRECT TAX

  • Income Tax: Computation of MAT u/s 15JB – Book Profit – Once it is realized that the assessee had correctly debited the profit and loss account for the loss arising out of the transfer of investment division, there remains no difficulty in realizing that the CIT proceeded on a wrong premise which was responsible for exercise of jurisdiction under Section 263 which he would not have done if he had realized the correct position – HC
  • An Income Tax: Reopening of assessment – The ITAT observed that “just one unrealistic and absurd figure of net profit is taken out from the print out of the rough document from the CPU/hard disk and adopted for assessment of total income. Such an approach cannot be approved – the view taken by the ITAT is a plausible one and cannot be said to suffer from any perversity warranting interference. – HC
  • Income Tax: The addition cannot be sustained only on the basis of admission during the course of survey. – sec.133A does not empower IT authority to examine any person on oath, hence any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. – Tri
  • The Income Tax: Addition made on account of bad debt – It is nothing but the assessee is trying to enjoy the benefit of section 36(1)(vii) of the Act through back door, which is not permissible under law. As per agreement for sale, it is only a money diversion from the accounts of MAX VALUE HOUSING to purchase the land by the individual Mr. M. Khadeer Ahmed and not for the assessee firm. Therefore, any loss incurred by the individual partner, he has to bear the same in view of the terms of partnership deed, so agreed upon by the partners of firm while executing the partnership deed – Tri
  • Income Tax: Disallowance of labour welfare expenses – The Government also recognizes the need and importance of Corporate Social Responsibility to be discharged by the Corporate houses. – the expenditure has to be allowed. – Tri
  • A Income Tax: Addition u/s. 69B – unexplained investment in residential bungalows – the opinion of the DVO per se was not an information and could not be relied upon without books of account, being rejected. Since the books of account had not been rejected in the present case, no addition to be made – Tri
  • Income Tax: Obviously, when the assessee is using patents/trademarks of its parent company, it will have to pay royalty for the same which cannot be disallowed, unless it is not at arm’s length price. – Tri

 

INDIRECT TAX

  • Service Tax: Imposition of Service tax under Business Auxiliary Service – the amount collected as extra charges for RTO registration is not covered under support services of business and commerce – Tri
  • Central Excise: Sanction of a part of the refund amount by way of credit in the cenvat account – granting refund and crediting it to the modvat account will not in effect allow the appellant to utilize the fund which was collected and kept by the Government in excess of legal due – refund allowed in cash – Tri
  • The Central Excise: Whether the appellant are entitle for the Cenvat Credit in respect of the service tax paid by the job worker? – for the purpose of limitation in taking the credit, the period of litigation in the present case shall stand excluded – Tri
  • Central Excise: Whether Due Drop Process on Fabrics will amount to manufacture – It is seen that the Ministry in its wisdom, has accepted the merits of the case and has exempted the process of Dew Drop from levy of Central Excise duty. The demand of Central Excise duty on the process of Dew Drop for the period August 2000 to December 2000 on the Appellant cannot be sustained. – Tri
  • A Central Excise: CENVAT credit of service tax paid under ‘Rent a Cab’ service on account of engaging cabs for transport of children of staff members from resident to school and back – rent a cab service availed for transportation of children of employees from colony to school and back is not an input service in terms of Rule 2(l) of CCR, 2004 – Tri
  • Central Excise: Penalty under Section 11AC – The partner of the partnership firm had already paid the duty before issue of the show cause notice in order to avoid legal proceedings. In such situation, imposition of separate penalty on the partner of the firm is not justified. – Tri
  • Customs: Import of coking coal of Chinese origin – it is found that presence of ash content is more than what is declared by the appellant which results in denial of exemption under the Customs Notification No. 21/2002. – Tri
  • A Customs: Re-export of entire goods – Prohibition on import of goods – Goods involves Toxic and Hazardous Contamination – the portion of goods which contains the bar codes or stickers needs to be segregated and re-exported and the balance portion to be cleared on payment of reduced redemption fine and penalty. – Tri
  • Customs: Classification – Epoxy, parts of Hydro Electric Generator – the goods imported under the Bills of Entries are epoxy stator coils solely designed for power generators for Hydro Power Project and rightly classifiable under 8503 and not under 8544 – Tri
  • The Customs: The classification and assessment of imported goods as “Plant Bio-Fertilizer” was done based on the Test Reports and goods were cleared during the relevant period, so, the question of alleging misdeclaration or suppression of facts by the appellant does not arise. – Tri
  • Customs: Classification – Amezcua Chi Pendant – As, the ‘Chi Pendant’ is not an artificial jewellery worn by any person of any age. Therefore, the imported goods cannot be classified under Chapter 71 as Imitation Jewellery/Articles of Jewellery – Tri

MCA UPDATES

  • Companies Law: Buy-back of shares – calculation – where the audited accounts are more than six months old, the calculations with reference to buy back shall be on the basis of un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company

OTHER UPDATES

  • Allied Laws: Offense punishable under Section 138 of the Negotiable Instruments Act – it is very difficult for the Court to take a view that a partnership firm for the purpose of Section 138 read with Section 141 of the Act is not a legal entity, and therefore, it need not be made an accused in the complaint. – The prosecution launched against only one of the partners of the partnership firm, without joining the partnership firm, cannot be maintainable. – HC

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 9555555480

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