Corporate and Professional Update December 6, 2015
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 the liability 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 sought – 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 that 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 / mantra) (Flipkart Internet (P.) Ltd. Versus State of Kerala, KERALA HIGH COURT).
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 the 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 – an amalgamation of the 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.
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 a maximum of Rs. 40,000/-.
In view of the 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 light of the provisions of the 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 number of such fees shall not exceed the amount as may be prescribed.
The Central Government through rules prescribed that the number 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 fees payable to independent and non-independent directors other than whole-time directors. From the above, it is clear that fees 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 another person. Can he do so, Please advise?
Answer: OPC is a new class of companies 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 thereunder.
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.
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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