corporate and professional update february 10, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 10, 2016

DIRECT TAX:

IT: Mere deposit of surplus funds in FDRs cannot be treated as application of fund for charity as per section 11(1)(a) but there has to be nexus between investment in FDRs and achievement of charitable objects of assessee[2016] 66 taxmann.com 12 (Chandigarh – Trib.) Income-tax Officer (Exemptions) v. S.D. Public School

Omission to produce auditor’s certificate for claiming a deduction is a mistake rectifiable under sec. 154[2016] 66 taxmann.com 37 (Madras) Craftsman Automation (P.) Ltd. v. CIT

TDS certificates under Sec. 195 would now be issued online: CBDT

CBDT directs AOs to request for exchange of info for time barring assessments by 29/2/2016

Interest for late filing of ITR or default in payment of advance tax is mandatorily charged and is not directory

HC grants stay on TDS demand for discount given by ‘Vodafone’ to its dealers as dispute was pending in Supreme Court

HC dismissed winding up plea as petitioner failed to prove definite sum payable by respondent-Co [2016] 66 taxmann.com 44 (Gujarat)  Trident Interiors & Designers (P.) Ltd. v. Shivalik IB Automotive (P.) Ltd.

Disallowance of interest expenditure u/s 57 – nexus between the interest income vis- -vis the interest expenditure – no nexus between the impugned income and interest is forthcoming – Additions confirmed- (ACIT, Navsari Circle, Navsari Versus Shri Jugalkishore K. Agrawal – 2016 (2) TMI 113 – ITAT AHMEDABAD)

Nature of road repairs expenses – assessee is required to incur expenditure every year to maintain the road of huge stretch shows that the assessee is not enjoying enduring benefit. – Claim allowed as revenue expenditure – (M/s Maharashtra State Film Stage and Cultural Development Corporation Limited Versus Asstt. Commissioner of Income Tax 11 (1) , Mumbai – 2016 (2) TMI 88 – ITAT MUMBAI)

INDIRECT TAX:

Successor can use PLA balance of predecessor for payment of its service tax dues
[2016] 66 taxmann.com 34 (Ahmedabad – CESTAT) PSP Projects (P.) Ltd. v. Commissioner of Service Tax

Presence of large players in development of commercial space in Gurgaon rules out abuse of dominance by ‘DLF'[2016] 66 taxmann.com 23 (CCI) Shyam Vir Singh, New Delhi v. DLF Universal Ltd.

Rate of exchange of conversion of the foreign currency notified with effect from 5th February, 2016 vide notification no. 18/2016 customs dated 04/02/2016-

Instruction for Reduction of government litigation- withdrawl of appeals by the department before CESTAT passed vide notification no. F. No. 390/Misc./163/2010-JC –

Recovery of outstanding dues – liability of members of HUF is not joint or several – the property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act- (The State of Gujarat Versus Jwelly Tea Co. – 2016 (2) TMI 94 – GUJARAT HIGH COURT).

Reopening of assessment – mere accounting entry or even if there was some defect in indicating such amount in the accounts presented by the assessee as long as income chargeable to tax had not escaped assessment reopening of the assessment would not be permissible- (KANTI AUTO FABRICATION PVT LTD Versus ASSISTANT COMMISSIONER OF INCOME TAX – 2016 (2) TMI 130 – GUJARAT HIGH COURT)

 Place of registration of motor vehicle would be deemed as place of sale: Apex Court [2016] 66 taxmann.com 91 (SC) Commissioner of Commercial Taxes v. K.T.C. Automobiles

Cenvat Credit : Courier Service used for sending/receiving documents related to business, or for movement of inputs and finished goods is eligible for credit only upto place of removal; credit cannot be allowed for movement of finished goods, after place of removal. [2016]66 taxmann.com 57 (Ahmedabad – CESTAT) Lear Automotive India (P.) Ltd. v. Commissioner of Central Excise & Service Tax

COMPANY LAW:

Query: A Company is registered in March, 2015. It did no business at all till July, 2015. That is, no business was conducted during the FY 2014-15.

Now, is this company required to file its Annual filing for the FY 2014-15 and if yes, then when?

Answer: Section 96(1) of the Companies Act 2013 provides that in case of first Annual General Meeting, it shall be held within a period of nine months from the date of closing of the first financial year and in any case, within a period of six months, from the date of closing of the financial year.

Further, Sec. 2(41) of the Com. Act 2013 defines financial year in relation to any company or body corporate as the period ending on 31st day of March every year and where it has been incorporated on or after 1st day of January of a year, the period ending on 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up.

Thus, the Annual accounts of the company incorporated after 1^st January 2015 shall be required to close their accounts on 31/03/2016. So, Annual filing for F.Y 2014-15 is not required.

OTHER UPDATE

Provision for contingent loss should be made even if amount is not quantifiable
As per AS 4, “Contingencies and Events Occurring After the Balance Sheet Date” if it is likely that a contingency will result in a loss to an entity then it should create provision for that contingency on the estimated basis.

corporate and professional update february

Quarter in DVAT-48: 05/02/2016

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