CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 29, 2016

CORPORATE & PROFESSIONAL UPDATE FEBRUARY 29, 2016

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INCOME TAX ACT

SECTION 2(22)

DEEMED DIVIDENDS

Loans and advances to shareholders : Where assessees P and S were directors in two sister companies, namely AE and AI, and AI received Rs. 10 lakh as loan from AE, it would be treated as deemed dividend under section 2(22)(e) in hands of P and S in proportion to their shareholdings in AI – [2016] 190 (Delhi – Trib.)

SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

Plant : Expenditure incurred by assessee-AOP on acquiring trademarks, copyright and know-how of erstwhile firm would come within definition of ‘plant’ and, thus, assessee’s claim for depreciation in respect of same was to be allowed – [2015]  400 (SC)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Legal expenses : Where erstwhile firm’s business was purchased as going concern by assessee-AOP formed by some partners of erstwhile-firm, legal expenses subsequently incurred by AOP for defending business of going concern and for protecting its interests were to be allowed as deduction under section 37(1) – [2015]  400 (SC)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and Adjustments/Adjustments – Interest : Where extended credit period to A.E. for realisation of sale proceeds is directly related to and arising out of sale transaction, sale transaction with A.E. and resultant extended credit period for realisation of sale proceeds being two sides of a coin, are closely linked transactions, and, thus, transaction relating to extra credit period to A.E. has to be aggregated with sale transactions for determining ALP – [2016]  216 (Mumbai – Trib.)

Comparables and adjustments/Adjustments – AMP expensesWhere TPO applied bright line test to benchmark AMP transactions which was not valid in view of Sony Ericsson Mobile Communications India (P.) Ltd. v. CIT [2015] 374 ITR 118/231 Taxman 113/55 taxmann.com 240 (Delhi), matter was remanded to apply ratio of said case – [2016]  218 (Mumbai – Trib.)

SECTION 260A

HIGH COURT – APPEALS TO

Scope of : In absence of substantial question of law being framed, High Court can not upset final finding of fact arrived at by Tribunal – [2015] 400 (SC)

SECTION 268A

FILING OF APPEAL OR APPLICATION FOR REFERENCE BY INCOME-TAX AUTHORITIES

Circular No. 21/2015 : Where tax effect in appeals filed by revenue before Tribunal was less than Rs. 10 lakhs in each case, in view of instructions of CBDT Circular No. 21/2015, dated 10-12-2015 appeals so filed by revenue were to be dismissed as not maintainable – [2016] 189 (Pune – Trib.)

COMPANIES ACT

SECTION 108

TRANSFER OF SHARES – NOT TO BE REGISTERED EXCEPT ON PRODUCTION OF INSTRUMENT OF TRANSFER

Where there was no evidence on record to establish that share transfer deed was executed by petitioner transferring his shares, shareholding of petitioner in company was to be restored – [2016] 223 (CLB – New Delhi)

SECTION 284

DIRECTORS – REMOVAL OF

Where no special notice as per section 284(2) was given for holding EGM to remove petitioner as director of company, his removal was patently illegal – [2016] 223 (CLB – New Delhi)

SECTION 399

OPPRESSION AND MISMANAGEMENT – RIGHT TO APPLY

Petition for rectification of register of member alleging illegal transfer of petitioner’s share could not be challenged on ground of lack of required member of shareholding – [2016] (CLB – New Delhi)

SECTION 433

WINDING UP – CIRCUMSTANCES IN WHICH COMPANY MAY BE WOUND UP

Where there was no privity of contract between petitioner and respondent-company, and respondent had also not acknowledged its debt, it was not liable to make any payment to petitioner, hence petition for winding up respondent-company at instance of petitioner was not maintainable – [2016] (Gujarat)

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

Mere recruitment of pilots by an airline by another airline will not bring about structural changes in the operations of the market, rules CCI – [2016] (CCI)

SERVICE TAX

SECTION 65(25)

TAXABLE SERVICES – CLEARING AND FORWARDING AGENT’S SERVICES

Agents procuring orders and exploring potential customers for their principal are more appropriately classifiable under ‘Business Auxiliary Services’ and not under ‘Clearing and Forwarding Agent’s services’ – [2016] (Chennai – CESTAT)

CST & VAT

SECTION 11 OF GUJARAT VALUE ADDED TAX ACT, 2003

TAX INCIDENCE AND LEVY – TAX CREDIT

Where assessee purchased castor oil seeds for manufacture of castor oil and after crushing same obtained castor oil as well as deoiled cake (waste) and it used deoiled cake in furnace as a fuel in manufacture of castor oil, action of Assessing Authority in disallowing input tax credit for use of deoiled cake was not proper – [2016] (Gujarat)

CENVAT CREDIT RULES

RULE 9

CENVAT CREDIT – DOCUMENTS ON WHICH CREDIT MAY BE TAKEN

Where there is no dispute about receipt of material and payment of duty thereon, credit taken based on ‘endorsed bill of entry’ is valid – [2016] (Mumbai – CESTAT)

STATUTES

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

Delhi VAT -Framing of central assessments – CIRCULAR NO.38 OF 2015-16 [NO.F.3(636)/POLICY/VAT/2016/1463-69], DATED 18-2-2016

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

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