corporate and professional update february 16, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 16, 2016

Direct Tax

• CBDT directs AOs to pass Sec-154 Rectification Orders in writing and serve a copy on the assessee and not just make an entry on the AST system-Instruction No.02/2016, dt.15.02.   2016
• Securities Premium is not accumulated profits u/s 2(22)(E): ITAT. [M/s Jeans Knit Pvt. Ltd. vs. ACIT (ITAT Bangalore), ITA No.1105/Bang/2013 & ITA No.1244/Bang/2013, AY 2008-09].
• Section 263 valid if AO fails to enquire business exigency of donations. [Shri M.D. Wadhokar vs. CIT (ITAT Pune), ITA No.837/PN/2012, AY 2007-08].
• Revised Return with same info is furnishing of inaccurate particulars.[DCIT vs. M/s. Rattha Citadines (ITAT Chennai); IT Appeal No.-243/2015]
• Daughter have equal rights in parents property prospectively: SC. [Prakash & Ors vs. Phulavati & Ors (Supreme Court), Civil Appeal No.7217 of 2013 & others].
• CBDT (TDS) has received request from field formations and tax payers to provide functionality for issue of online Certificate U/s 195(2) and 195(3) for lower/ no deduction as manual certificates were not being considered during processing of TDS statements by CPC TDS.
• IT: Rental Income and Service Charges from shopping mall/business centre – whether to be assessed as Income from House Property or Business Income – assessee is accordingly eligible to claim depreciation on the asset and other business expenditure – Khandelwal Estates Pvt. Ltd. Vs. ACIT 10(1), Mumbai (2016 (2) TMI 419 ITAT Mumbai)
• IT: Debentures whether fully or partly or optionally convertible are nothing but debt till the date of conversion and any interest paid on these debentures is allowable as normal business expenditure – DCIT, Cir-1(1), New Delhi Vs. Alcobex Metals Ltd (2016 (2) TMI 424 ITAT Delhi)

• IT: Interest being unpaid to the payees suppliers reversed in the books of accounts would not to attract TDS u/s 194A as no income accrued to the payees suppliers – M/s Karnataka Power Transmission Cor. Ltd. Vs. DCIT (2016 (2) TMI 412 Karnataka High Court)
• IT: Expenditure incurred on the issue of Foreign Currency Convertible Bonds (FCCB) is a revenue expenditure allowable under section 37(1) of the I.T. Act – Gati Ltd. Vs. ITO, W – 2(2) Hyderabad (2016 (2) TMI 404 ITAT Hyderabad)
• CBDT directs AOs to pass rectification orderwithin 6 months’ time-limit
• Assessee has option to choose ‘Initial Assessment Year’ for claiming Sec. 80-IA relief: CBDT
• Income-tax officers to maintain confidentiality of info. received under Money Laundering Act: Govt.
• Mere non-compliance with any procedural rule can’t deprive assessee of privilege to claim zero rated sale: HC [2016] 66 151 (Gujarat)  State of Gujarat v. Shandong Tiejun Electric Power Engineering Company Ltd.
• Invocation of Section 263 on mere DCIT Suggestion is invalid. [Span Overseas Ltd vs. CIT (ITAT Pune); ITA No. 1223/PN/2013; Date of pronouncement- December 21, 2015; AY 2008-2009]

Indirect Tax

• ST: Payment of ST on construction of premises intended to put to use as commercial complex and rented out the premises to various entities as Output Services – Credit Allowed – Nirlon Ltd. Vs. CCE, Mumbai (2016 (2) TMI 417 CESTAT Mumbai)
• Service Tax: Repair and maintenance of roads is exempt and not liable to service tax during period prior to 1-7-2012 and even on or after said date [2016] 66  112 (Madras) K.O. Periyakaruppan v. Union of India
• Asset Management Co. is entitled to take credit of ST paid on advertisement services availed to promote mutual fund [2016] 66  129 (Chennai – CESTAT)  Sundaram Asset Management Company Ltd. v. Commissioner of Central Excise & Service Tax.
• IT: It is only Assessing Officer, who has passed original assessment order, is empowered to exercise powers under section 147/148 to reopen that assessment [2016] 66  126 (Delhi) Dushyant Kumar Jain v. DCIT
• Guidance note issued on fraud reporting u/s 143(12) of Companies Act

• ST: CENVAT Credit – duty paying documents – computer generated invoices were not signed by the service provider – the condition of Rule 9(2) fulfilled. It is also noticed that on the identical situation the CCE allowed the credit in respect of the other assessee – Dewshree Network Pvt. Ltd. Vs. CCE&ST, Surat-I (2016 (2) TMI 444 CESTAT Ahmedabad)
• Cenvat Credit utilisation to pay GTA service Tax prior to 01.03.2008. [M/s. Surya Pharmaceuticals Ltd. vs. Commissioner of Central Excise;(CESTAT-New Delhi); FINAL ORDER NO. 53790-53791/2015-ST(Br); Service Tax Appeal Nos. 65 – 652  of 2009]

Other  Update

• ICAI has issued a guidance note on bank audits. This aims to assist auditors in performing bank audits for FY 2015-16.
• Start-ups can issue shares through sweat equity or against any legitimate funds owed to others: RBI

• DIPP: The Department of Industrial Policy and Promotion in discussion with the MCA to improve ease of doing business, will soon introduce Business Identification Number (BIN) for Companies.
• C&AG extended the last date for Online Empanelment of CA Firms / LLPs for the year 2016-17 to 22 FEB 2016.

• NIRC is organizing a Seminar on Direct & Indirect Taxes cum Annual Prize Distribution Function on SAT, 20 FEB 2016 at NDMC Convention Centre, Parliament Street, Opposite Jantar Mantar, New Delhi.

Company Law

• ICAI issues Revised 2016 Guidance Note on Reporting of Fraud under Section 143(12) of the Companies Act, 2013.

• Guidance note issued by ICAI on Depreciation as per Schedule II of Companies Act, 2013The new guidance note deals with following:-
  (i) Determination of useful life of fixed assets;
  (ii) Determination of residual value of fixed assets;
  (iii) Charging of depreciation on continuous process plant;
  (iv) Charging of depreciation in case of use of assets in multiple shifts;
  (v) Charging of depreciation using Unit of Production Method of depreciation;
  (vi) Amortisation of intangible assets as per revenue-based method of amortisation;
  (vii) Charging of depreciation in case of revaluation;
  (viii) Accounting for and charging of depreciation on components of assets; and
  (ix) Depreciation on low value items.
  It is applicable w.e.f1st April, 2016

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