corporate and professional update february 27,2016

CORPORATE & PROFESSIONAL UPDATE FEBRUARY 27,2016

Direct Tax

• IT: CPU alone cannot be described as computer; routers and switches being input/output devices, are integral part of computer and, hence, entitled to higher rate of depreciation at 60 per cent[2016] 66 taxmann.com 239 (Mumbai – Trib.) IBAHN India (P.) Ltd. v. DCIT
• Investment in house property need not be sourced from capital gains only for availing of sec. 54F relief
• IT : For availing exemption under section 54F, amount invested in new asset need not be entirely sourced from capital gain[2016] 66 taxmann.com 191 (Punjab & Haryana) CIT v. Kapil Kumar Agarwal
• Calculation of interest u/s 244A – when a refund of tax has to be reduced by refund already granted it is only the tax element which has to be adjusted and not the interest element paid on the delayed refund of the tax.
• This is so as the interest which is paid to the assessee is for the wrongful withholding of the assessee s refund by the revenue – CIT Vs. Tata Power Co. Ltd. (2016 (2) TMI 670 Bombay High Court)
• IT:Non deduction of TDS – Disallowance u/s 40(a)(ia) – payment made on account of offshore supply of equipments – the subject mentioned payments are not chargeable to tax in India in terms of section 195
• Hence no disallowance could be made u/s. 40(a)(i)/40(a)(ia) – Linde India Ltd. Vs. DCIT, Cir-12, Kolkata (2016 (2) TMI 668 ITAT Kolkata)
• IT:Expenditure on construction of house for labourer – the structure does not vest in the assessee and it has to pay monthly rent thereof to the Government the expenditure incurred by the assessee thereon has been rightly treated as a revenue expenditure – CIT, Nagpur Vs. Manganese Ore India Ltd (2016 (2) TMI 711 Bombay High Court)
• Reopening of assessment – charging of share premium over and above the intrinsic value of the share is income which has escaped assessment – the share premium being on the capital amount cannot be subjected to tax as income – Khubchandani Healthparks Pvt. Ltd. Vs. ITO, Mumbai (2016 (2) TMI 710 Bombay High Court)
• Shares Buyback cannot be equated with capital reduction. [Goldman Sachs (India) Securities Pvt. Ltd vs. ITO (ITAT Mumbai)].
• CBDT notifies Atal Pension Yojana u/s 80CCD. Notification No. 7/2016-Income Tax.
• HC denied to admit appeal as assessee changed its stand initially taken before AO
  [2016] 66 taxmann.com 252 (Punjab & Haryana) Maken Cement Industries, Kathua v. CIT
• Rectification of mistake – when the issue has been decided by the CIT(A) then only CIT(A) can rectify the order u/s 154 – AO has no jurisdiction to rectify such order –  Income Tax M/s. NHPC Ltd. Versus Asstt. Commissioner of Income Tax, Circle-II, Faridabad And Vica-Versa- 2016 (2) TMI 676 – ITAT DELHI
• Calculation of interest u/s 244A – when a refund of tax has to be reduced by refund already granted it is only the tax element which has to be adjusted and not the interest element paid on the delayed refund of the tax.
• This is so as the interest which is paid to the assessee is for the wrongful withholding of the assessee s refund by the revenue – HC – Income Tax Commissioner of Income Tax- 2 Versus M/s Tata Power Co. Ltd.- 2016 (2) TMI 670 – BOMBAY HIGH COURT

Indirect Tax

• ST:It was contended that it is under obligation to maintain the building and the appellant being builder only taken re-imbursement of various services which was provided by various service provider, not liable for Service Tax on Management Maintenance or Repair service collected from Flat owners – Omega Associates Vs. CST, Mumbai (2016 (2) TMI 690 CESTAT Mumbai)
• ST: Scientific and Technical Consultancy service to clients located outside India – Refund of CENVAT credit allowed based on place of performance of services – CCE, Pune-I Vs. Sai Life Sciences Ltd. (2016 (2) TMI 724 CESTAT Mumbai)
• CBEC: CBEC has notified and appoints 1st day of April, 2016 as the date on which the provisions of sub-section (1) of section 109 of Finance Act, 2015 shall come into effect. Consequentially, all the services provided by the Government or local authority to a business entity, except the services that are specifically exempted, that is, or are covered by any entry of negative list, shall be liable to service tax from the 1st day of April, 2016.
• Service Tax : Renting out property to hotels is not liable to service tax; further, notional interest on security deposit cannot be added to ‘agreed rent’ for demanding service tax.
  [2016] 66 taxmann.com 254 (New Delhi – CESTAT) Lake Palace Hotel and Motels (P.) Ltd. v. Commissioner of Central Excise
• Service Tax : Burden of proof is on revenue to show that there was wilful suppression of facts by assessee with a view to evade service tax; but, once revenue brings out certain material, then, burden shifts back to assessee [2016] 66 taxmann.com 256 (Gauhati) Bordubi Engineering Works v. Union of India
• A Service export prior to export of service rules, 2005 are eligible for export rebate. [J.P. Morgan Services India Private Ltd. vs. Commissioner of Central Excise (Service Tax) (CESTAT-Mumbai)].
• DVAT E-File Form DP-1 before 29.02.16 positively to give effect to amendments/ information of dealers provided through it, pending and desired from long.
• Appy Fizz is an aerated branded soft drink, taxable at 20 per cent under Kerala VAT
  [2016] 66 taxmann.com 301 (Kerala) Parle Agro (P.) Ltd. v. Commissioner Commercial Taxes
• Application for advance Ruling – Taxability of activity of services for rendering analysis of the drugs and market survey etc. – AAR rejected both the contentions and admitted the application for consideration.
• AAR – M/s Steps Therapeutics Ltd, Hyderabad Versus Commissioner of Customs, Central Excise And Service Tax, Hyderabad-IV – 2016 (2) TMI 692 – AUTHORITY FOR ADVANCE RULINGS
• Extended period of limitation – The initial burden is on the department to prove that the situations visualised by the proviso existed.
• But once the department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualised by the section the burden shifts and then applicability of the proviso has to be construed liberally – HC –  M/s Bordubi Engineering Works Versus Union of India, The Commissioner, Central Excise & Service Tax, The Additional Commissioner, Central Excise & Service Tax, The Superintendent (A/E) , Central Excise, The Joint Commissioner, Central Excise & Service Tax – 2016 (2) TMI 691 – GAUHATI HIGH COURT

MCA Updates

• Purchaser of assets of liquidating -co. in a auction wasn’t liable to pay sales taxes dues of such Co.- HC
• MCA has recently issued a notice inviting comments on the draft Companies (Cost Records & Audit) Amendment Rules, 2016 dated 23.02.2016.
• CL: Sales tax dues of company-in-liquidation could not be termed as taxes in relation to property hence, Appellants who had purchased property of company-in-liquidation in court auction were not required to pay same[2016] 66com 220 (Gujarat) Readymix Concrete Ltd. v.Official Liquidator of Beclawat of India Ltd.
• MCA has recently issued a notice inviting comments on the draft Companies (Cost Records & Audit) Amendment Rules, 2016 dated 23.02.2016.

• MCA invites comments on Draft Companies (Cost Records and Audit) Amendment Rules, 2016, to be submitted latest by 08.03.16.
• The MCA invites comments on draft Companies (Incorporation) second Amendment Rules, 2016 & Companies (Authorized to Register) Amendment Rules, 2016 till 2 Mar 2016.

Company Law

• Query: I have one query as – Company has appointed an auditor within 90 days of incorporation of company but after taking appointment auditor resigns within a week and then company again appointed auditor. WHETHER COMPANY IS LIABLE TO FILE INFORMATION REGARDING APPOINTMENT OF SECOND AUDITOR TO ROC?
• Answer: There is no statutory obligation on Company regarding the intimation of first Auditor, so appointed by the Company.
• In case, Company has filed Form ADT-1 regarding the appointment of first Auditor who was appointed within 90 days of incorporation.
• Then only, Company is required to first file Form ADT-3 regarding resignation of first Auditors, so appointed and then file Form ADT-1 for the appointment of Second Auditor.

In case Company has not intimated about the appointment of first Auditor as well, then statutorily Form ADT-1 is required to be filed within 15 days of the date of AGM of Company.

Other updates

NSE (National Stock Exchange) has issued a Circular stating that ‘One Person Company’ can act as a Stock Broker provided the entity has at least two Directors. However, such broker would not be allowed to trade in his proprietary account.

• SEBI has notified the amendments which may be called as the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2016 and shall come into force on the date of their publication in the Official Gazette.
• Controlled by Delhi based CA firm held as resident in India[2016] 66taxmann.com 283 (Delhi) Commissioner of Income-tax, Delhi v. Mansarovar Commercial (P.) Ltd.

• Get ICAI Now Mobile App for latest ICAI Updates – Available on Android, iOS, Windows and Blackberry 10. To download please visit https://www.icai.org/mobile
• Union Bank invites applications from CA eligible/interested firms/companies for empanelment as Concurrent Auditors for F.Y. 2016-17.
• ICAI Inviting Suggestions on the drafted Background Material of Certificate Course on Derivatives.

• A smile is happiness you’ll find right under your nose.-Tom Wilson
• Don’t cry because it’s over. Smile because it happened. -Dr. Seuss

Key Dates:

• Advance information for 1st fortnight of March of functions with booking cost > Rs 1 lakh in Banquet Halls, hotels etc. in Delhi: 27.02.2016
• 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: singh@carajput.com or call at 011-233 433 33

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