CORPORATE AND PROFESSIONAL UPDATE JANUARY 5, 2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 5, 2016

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INCOME TAX ACT

SECTION 2(22)

DEEMED DIVIDEND

Loans and advances to shareholders : SLP dismissed against High Court’s order wherein it was held that amount advanced to assessee-partner by firm could not be taxed as deemed dividend merely on ground that some amount lying in firm’s account was collected by firm on behalf of company of which assessee was a MD-cum-shareholder

SECTION 5

INCOME – ACCRUAL OF

Interest on share application money : Interest earned on application money deposited in bank is taxable in year of allotment of shares –

SECTION 10B

EXPORT ORIENTED UNDERTAKING

Reconstruction of business: Where Assessing Officer disallowed assessee’s claim for deduction under section 10B on plea that assessee was formed by reconstruction of business of one ‘F’ and Commissioner (Appeals) allowed claim of deduction holding that there was no transfer of old plant and machinery by ‘F’ to assessee and manufacturing activity carried on by assessee was by use of new plant and machinery, since said findings had not been rebutted by revenue, order of Commissioner (Appeals) deserved to be upheld

Manufacture activity: Where assessee imported standard gold into India and then converted it into jewellery or ornaments and exported those ornaments, said activity amounted to manufacture/production of articles or things for export which qualified for deduction under section 10B

SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

ReassessmentWhere while sending proposal for approval of reassessment, Assessing Officer maintained that audit objection raised by audit party that assessee being contractor, depreciation on dumper, lorries, etc. could not be allowed at rate of 30 per cent but at 15 per cent, was not acceptable, but he recorded said objection as reason to believe, re-assessment was not valid

SECTION 36(1)(iii)

INTEREST ON BORROWED CAPITAL

Applicability of : Where assessee advanced money to unrelated company ‘V’ for purchase of a property and money was retained by company ‘V’ till legal notice was sent, same could not be said to be an interest free loan or advance for disallowing interest under section 36(1)(iii)

SECTION 37(1)

BUSINESS EXPENDITURE – ALLOWABILITY OF

Penalty : Where in respect of contract for providing coverage of Commonwealth Games, assessee had to pay certain amount to PrasarBharati as performance bank guarantee on account of inadequate performance of said contract, it was to be allowed as deduction under section 37(1)

SECTION 50C

CAPITAL GAINS – SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES

Applicability of : Substitution of ‘full value of consideration received’ with ‘stamp value’ in terms of section 50C is applicable only in hands of seller of property who has to compute capital gain under section 48 pursuant to transfer of a capital asset

SECTION 56

INCOME FROM OTHER SOURCES – CHARGEABLE AS

Gifts : Section 56(2)(vii) is applicable on cases in which individual or HUF receives immovable property on or after 1-10-2009 and, therefore, where property was purchased by assessee in financial year 2007-08, mandate of section 56(2)(vii) could not be applied retrospectively

SECTION 69A

UNEXPLAINED MONEY

Firm, in case of : Where in support of capital introduced by partners of firm, assessee filed additional evidence before Tribunal in shape of confirmations from both partners and source of capital introduced by them with help of their bank pass books, since said evidence was not available before authorities below, matter was to be remanded back for disposal afresh

SECTION 69B

UNDISCLOSED INVESTMENTS

Immovable property : In case of purchase of property by assessee, in absence of any positive material on record, mere higher value of property estimated by DVO or Registered valuer could not form basis for making addition under section 69B

SECTION 73

LOSSES – IN SPECULATION BUSINESS

Raising of claim : Mere fact that assessee has not disclosed speculative loss in specified column of return would not give right to revenue authorities to disallow claim of assessee of set off of brought forward loss

SECTION 194A

DEDUCTION OF TAX AT SOURCE – INTEREST OTHER THAN INTEREST ON SECURITIES

None of the State or Central enactments make any distinction between a co-operative society engaged in carrying on banking business and a co-operative bank. Section 7(1) of the Banking Regulation Act,1949 which obliges co-operative society carrying on the business of banking to use the words “bank”, “banker” or “banking” as part of its name clinches the issue. Therefore, a co-operative bank will be covered under the category “co-operative society engaged in carrying on banking business” and will be exempt from deducting TDS u/s 194A only if interest paid does not exceed the limit of Rs.10,000 during the financial year as specified in section 194A. A co-operative bank cannot avail the general unlimited exemption from TDS on interest u/s 194A available to co-operative societies

SECTION 253

APPELLATE TRIBUNAL – APPEALS TO

Scope of : In case of order passed by DRP, right to file an appeal by department does not extend to a point decided either way by Assessing Officer/TPO himself, which remains intact even after direction given by DRP

INTEREST-TAX ACT

SECTION 2(7)

INTEREST

Delayed payment of bills of exchange : Interest payable on default in payment of amounts due under a discounted bill of exchange being a compensation amount received by bank for delayed payment of bills of exchange, is not chargeable as interest under Interest Tax Act)

WEALTH-TAX ACT

SECTION 34AB

VALUER, REGISTERED – REGISTRATION OF VALUER

To get registration as a ‘valuer of immovable property’ under section 34AB of Wealth-tax Act it is not necessary for applicant to gain experience of ten years as consulting engineer or valuer under Wealth-tax Rules, after acquisition of educational qualifications; experience gained prior thereto can also be considered for that purpose

COMPANIES ACT

SECTION 403

OPPRESSION AND MISMANAGEMENT

Where son with a view to defraud his father collided with directors of father’s old company and claimed possession of company’s properties, CLB was justified in directing removal of directors of old company to handover charge of company’s properties and assets to its newly appointed directors

SECURITIES CONTRACTS (REGULATION) ACT

SECTION 2(j)

STOCK EXCHANGE – PETITIONER WAS A STOCK EXCHANGE

Where in a money suit filed by respondent company, petitioner stock exchange filed application seeking to summon record of business transactions of respondent-company, application was to be dismissed as documents were not relevant having regard to nature of suit

SERVICE TAX ACT

SECTION 65(3)

TAXABLE SERVICES – ADVERTISING AGENCY’S SERVICES

 Where assessee : (a) took certain prominent places in city on rental basis, (b) installed infrastructure/boards thereon, (c) displayed advertisement of clients in form of billboards thereon, and (d) collected rent for such display, then, said rental could not be charged to service tax under ‘advertising agency’s services’

SECTION 65(12)

TAXABLE SERVICES – BANKING AND OTHER FINANCIAL SERVICES

Mark-up earned by credit card companies on foreign currency conversion in case of cardholders visiting outside India, is not taxable under Banking and Other Financial Services. Moreover, same is a service received, rendered and consumed abroad and accordingly, outside scope of service tax in India

CENTRAL EXCISE ACT

SECTION 11B

LEVY AND COLLECTION OF DUTY – CLAIM FOR REFUND OF DUTY

Where assessee’s refund claim filed within period of limitation was rejected by both probable jurisdictional Commissionerates, such rejection was unsustainable

SECTION 35C

APPEALS – RECTIFICATION OF MISTAKES/REVIEW – APPELLATE TRIBUNAL

Non-consideration of issue of time-bar raised by assessee would amount to a mistake apparent from record and same can be rectified by Tribunal and would not amount to ‘re-appreciation of evidence’

CENVAT CREDIT RULES

RULE 5

CENVAT CREDIT – REFUND OF

Where assessee, a provider of rent-a-cab service and outdoor catering service, claimed refund of cenvat credit against export of service, payment received by assessee in Indian rupees through foreign bank was receipt of payment in convertible foreign exchange and further above services would qualify as input service – [2016] 65taxmann.com 7 (Mumbai – CESTAT)

STATUTES

CORPORATE LAWS

Enemy Property (Amendment and Validation) Ordinance, 2016

Setting up of IFSC Banking Units (IBUS) – Permissible Activities

Non-Fund based Facility to Non-Constituent Borrowers of Bank

Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by FIS – Amendment in Master Circular DBR.No.FID.FIC.3/01.02.00/2015-16, Dated 1-7-2015

One thought on “CORPORATE AND PROFESSIONAL UPDATE JANUARY 5, 2016

  1. Thank you so much for update of professional and corporate law.

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