CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 21, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY  21, 2016

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INCOME TAX ACT

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Reassessment : Where assessee had disclosed all material facts relating to tax free dividend income at time of making assessment, initiation of reassessment proceedings merely on basis of change of opinion that assessee did not offer any expenditure for disallowance under section 14A in respect of said income, was not sustainable – [2016] 66 168 (Delhi)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Projected profits of subsequent years can’t be considered for working out the PLI under TNMM – [2016] 66 185 (Delhi – Trib.)

Comparables and adjustments/Comparables – General : Where TPO made addition to assessee’s ALP in respect of pharmaceutical products exported to its AE, since Commissioner (Appeals) deleted said addition without taking into account effect of provisions contained in Chapter X of Act, matter was to be remanded back for disposal fresh – [2016] 66 132 (Mumbai – Trib.)

Comparables and adjustments/Comparables – Illustrations : In case of assessee rendering non-binding investment advisory services to its AE, a company providing services of merchant banking and investment, could not be accepted as valid comparable while determining ALP – [2016] 66  130 (Mumbai – Trib.)

SECTION 153

INCOME ESCAPING ASSESSMENT – TIME LIMIT FOR COMPLETION OF REASSESSMENT

Extended period of limitation : Where in writ petition, High Court gave direction to reconsider matter with regard to auditing books of account under section 142(2A), time taken by Commissioner to decide matter in respect of auditing would stand excluded while computing period of limitation – [2016] 66 taxmann 138 (Allahabad)

COMPANIES ACT

SECTION 235

INVESTIGATION INTO AFFAIRS OF COMPANY

Where as per directions of Court a Special Investigating Team (SIT) was constituted comprising of officers of departments of Serious Fraud Investigation Office (SFIO) of Company Affairs under Ministry of Corporate Affairs, Government of India; Enforcement Directorate, Income-tax Department as well as Central Bureau of Investigation, SFIO segment of SIT would look into violations and would have supremacy over investigations under Companies Act and other constituents would look into violation of provisions of Laws/Acts governing them and they would be within their rights to initiate appropriate actions under their respective Acts – [2016] 66 118 (Punjab & Haryana)

SECTION 391

COMPROMISE AND ARRANGEMENT

Where there was a representative union, duly recognized under Gujarat Industrial Relations Act, 1946, applicant committee of workers not being representative nor recognised union, would have no locus standi to appear as party respondent in company Petition – [2016] 66  170 (Gujarat)

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

CCI rejected the complaint filed by Meru Cabs against Uber for alleged conduct of unfair trade practice by providing heavy discounts to drivers and customers. CCI said that the fluctuating market share figures of the various players show that the competitive landscape in the relevant market is quite vibrant and dynamic and therefore, the radio taxi services market in Delhi is competitive in nature and UBER does not appear to be holding a dominant position in the relevant market therefore, no case of contravention is made out against Uber Group under Sections 3 or 4 of the Act – [2016] 66  199 (CCI)

SERVICE TAX

SECTION 65(90a)

TAXABLE SERVICES – RENTING OF IMMOVABLE PROPERTY SERVICES

Where assessee had provided ‘leased vehicles’ to its officials and had merely recovered from officials excessive expenses incurred on ‘leased vehicles’ beyond entitlement of such officials, such recovery would not amount to ‘vehicle renting services to officials’ and cannot be charged to Service tax – [2016] 66  154 (New Delhi – CESTAT)

SECTION 73

RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED

Where assessee availed cenvat credit on capital goods/services installed/availed in Jammu & Kashmir by including premises of J&K in centralized registration though no taxable services were provided in state of J&K, by virtue of section 64(1) of Finance Act, 1994, extended period was applicable to demand duty tax – [2016] 66 128 (Kolkata – CESTAT)

CENTRAL EXCISE ACT

SECTION 2(f)

MANUFATURE – CLASSIFICATION

Process involved in production of Gulabari & Keora Water amounts to manufacture and these products are classifiable under Heading 33030020 and 33030030 respectively – [2016] 66 155 (New Delhi – CESTAT)

Shilajit Capsules (Ayurvedic medicine) manufactured by assessee as per its own patented formula and not as per formula given in any Authoritative ayurvedic text, would be classified as PP medicine under heading 33049011 and not as generic ayurvedic medicine under heading 30.03 – [2016] 66  155 (New Delhi – CESTAT)

SECTION 4A

VALUATION UNDER CENTRAL EXCISE – RETAIL SALE PRICE/MRP BASED

Where assessee has cleared goods to ultimate customer as per declared RSP (Retail Sale Price) and there is no flowback from retail seller to assessee, then, declared RSP cannot be challenged as incorrect – [2016] 66 136 (Chennai – CESTAT)

CUSTOMS TARIFF ACT

SECTION 3(1)

CHARGE/LEVY – ADDITIONAL DUTY OF CUSTOMS/CVD

For purpose of payment of CVD equal to excise duty based on RSP, since there is no procedure under Customs Act to challenge RSP, hence, RSP can be challenged only as per section 4A of the Central Excise Act and rules made thereunder – [2016] 66 136 (Chennai – CESTAT)

CENVAT CREDIT RULES

RULE 1

CENVAT CREDIT – SHORT TITLE, EXTENT AND COMMENCEMENT OF

Cenvat Credit Rules do not apply on cenvat credit of service tax in state of Jammu & Kashmir and, therefore, credit taken with respect to services availed in state of Jammu & Kashmir has to be denied – [2016] 66 128 (Kolkata – CESTAT)

RULE 9

CENVAT CREDIT – DOCUMENTS AND ACCOUNTS UNDER CENVAT

Where details prescribed in rule 4A(1) of Service Tax Rules are available in a document, it will be a proper document for availing cenvat credit – [2016] 66  128 (Kolkata – CESTAT)

STATUTES

DIRECT TAX LAWS

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – CBDT resolves disputes of RS.5000 crore under Mutual Agreement Procedure (MAP) of tax treaties – PRESS RELEASE, DATED 16-2-2016

CORPORATE LAWS

Review of Offer for Sale (OfS) of Shares through Stock Exchange Mechanism – CIRCULAR NO.CIR/MRD/DP/36/2016, DATED 15-2-2016

Notice inviting comments on the draft rules W.R.T. NCLT related provisions under the Companies Act, 2013 –PRESS RELEASE, DATED 28-1-2016

INDIRECT TAX LAWS (ST,EX,CUS. & (CST & VAT))

Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016 – NOTIFICATION NO.4/2016-ST, DATED 15-2-2016

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: info@carajput.com or call at 011-233 433 33

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

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