CORPORATE AND PROFESSIONAL UPDATE JANUARY 15,2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 15,2016

INCOME TAX ACT

SECTION 2(15)

CHARITABLE PURPOSE

Object of general public utility/Trade promotion association : Where assessee-association was formed with an object to promote leather trade, in view of fact that assessee’s receipt of rent from non-members by allowing them to keep their stalls in trade fairs organised by assessee was negligible in comparison to total trade receipts, assessee’s case could not be said to be covered under proviso to section 2(15) – [2015] 406 (Kolkata – Trib.)

SECTION 10(23C)

EDUCATIONAL INSTITUTIONS

Profit motive : At stage of registration, under section 10(23C) authority is only required to examine nature, activity and genuineness of institution and mere existence of some profit does not disqualify applicant if sole purpose of its existence is not profit making but educational activities – [2016] 30 (Allahabad)

SECTION 44AD

CIVIL CONSTRUCTION BUSINESS

Merely because, assessee’s income from civil construction work had been accepted at six per cent of contract receipt in earlier year, it could not be ground to claim that for relevant year also, assessee’s income was to be assessed at six per cent of contract receipt – [2016]  19 (Patna – Trib.)

SECTION 69

UNEXPLAINED MONEY

Seized books : Addition to assessee’s income merely on basis of papers seized from possession of assessee’s brother was unjustified when material sought to be relied on was not corroborated – [2016]  29 (Calcutta)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments – Method of computation/RPM v. TNMM : Where Tribunal held in earlier year in assessee’s case that RPM was appropriate method as assessee was distributor, but prima facie facts of relevant year suggested that assessee was not merely a distributor, matter should be reconsidered afresh –[2016]  21 (Mumbai – Trib.)

SERVICE TAX

SECTION 65(25b)

TAXABLE SERVICES – COMMERCIAL OR INDUSTRIAL CONSTRUCTION SERVICES

Abatement in respect of construction services cannot be denied where ‘minor credit’ inadvertently taken by assessee has been reversed with interest – [2016]  27 (Ahmedabad – CESTAT)

SECTION 80

PENALTY – NOT TO BE IMPOSED IN CERTAIN CASES

Where internal auditor of company perpetrated fraud by booking ‘service tax due’ as ‘income’/’commission’ in books of account and it was found that directors of company were aware thereof, company was liable to evasion penalty for consequent non-payment of service tax – [2016] 25 (Mumbai – CESTAT)

Where delayed payment was not due to any bona fide confusion occurring in prevalent statue and related provisions were quite crystal clear, penalty cannot be waived merely on ground of ignorance of law, as it is not a reasonable cause under section 80 – [2016]  23 (Ahmedabad – CESTAT)

IT: Reopening of assessment – mere accounting entry or even if there was some defect in indicating such amount in the accounts presented by the assessee as long as income chargeable to tax had not escaped assessment reopening of the assessment would not be permissible – Kanti Auto Fabrication Pvt Ltd Vs. ACIT(Gujarat High Court)

IT: Entitlement to exemption u/s 11 – payment was for the purpose of the education of the Fathers who serve in various schools run by the assessee as teachers supervisors and principals etc. – expenditure have been incurred for charitable purposes allowed – ACIT, Hoshiarpur Vs. M/s. Carmelite Charitable Society (ITAT Amritsar)

IT: TDS u/s 195 – carrier payments made to M/s. Clikatel South Africa without deduction of tax at source – these services do not involve human intervention and these services cannot be regarded as fee for technical services – DCIT, Corporate Cir-1(1), Chennai Vs. M/s. Velti India Pvt. Ltd. (ITAT Chennai)

 IT: Addition on account of Capital Subsidy u/s. 41(1) – to encourage the setting up of wind mill to promote generation of energy through non conventional sources – the subsidy received by the assessee is not taxable u/s 41(1) neither u/s 43(1) and nor u/s 50 – M/s. UniDeritend Ltd Vs. ACIT, Range – 1 (3) , Mumbai (ITAT Mumbai)

Addition on account of Capital Subsidy s.u/ 41(1) – to encourage the setting up of wind mill to promote generation of energy through non conventional sources – the subsidy received by the assessee is not taxable u/s 41(1) neither u/s 43(1) and nor u/s 50- (M/s. UniDeritend Limited Versus The Additional Commissioner of Income Tax, Range – 1 (3) , Mumbai – 2016 (2) TMI 117 – ITAT MUMBAI)

Disallowance u/s 14A – the expenditure relatable to making the investment and taking steps for its redemption and reinvestment involved an element of expenditure and in view of the provisions of Rule 8D(2)(iii) of the Rules such expenditure is disallowable in the hands of the assessee- (M/s Thermotech Engineering Versus The Asstt. Commissioner of Income Tax, Circle- 8, Pune. – 2016 (1) TMI 979 – ITAT PUNE)

INDIRECT TAX:

CST & VAT

SECTION 8 OF KERALA VALUE ADDED TAX ACT, 2003

TAX INCIDENCE AND LEVY – COMPOUNDED TAX RATES

Where for assessment years 2005-06 and 2006-07, assessee applied for payment of tax on compounded basis at lower rate under section 8(a)(i) and in meanwhile section 8(a)(i) was amended on 28-8-2005 with effect from 1-4-2005 and assessee in order to satisfy conditions laid down in amended section 8(a)(i) applied for cancellation of its central sales registration for assessment year 2005-06 after 28-8-2005 and for assessment year 2006-07 at commencement of said year, assessee was not entitled to concessional rate of tax for assessment year 2005-06 but not for assessment year 2006-07 – [2016]  22 (Kerala)

 

CENVAT CREDIT RULES

RULE 2(l)

CENVAT CREDIT – INPUT SERVICE – INSURANCE SERVICES

Mediclaim of employees is in nature of welfare measure and is voluntary and is not taken in compliance with any statutory requirement; therefore, a provider of advertising services cannot take input service credit of mediclaim insurance premium – [2016]  26 (Ahmedabad – CESTAT)

ST: Demand of interest on reversal of cenvat credit – reversal of credit against refund claim where the service tax was paid wrongly – provisions of Rule 14 of CENVAT Credit Rules 2004 for recovery of interest on the subject CENVAT credit amount will not be attracted – M/s. TNT (India) Pvt Ltd Vs. CCE&ST, Bangalore-III (CESTAT Bangalore)

Revenue not justified in declining Form-C issuance for non-inclusion of interstate purchases in revised returns, when assessee offered a valid explanation for such omission- [TS-26-HC-2016(DEL)-VAT]

VAT & ST: Recovery of outstanding dues – liability of members of HUF is not joint or several – the property of the individual member of the Hindu Undivided Family could not be attached under section 45 of the GVAT Act – The State of Gujarat Vs. Jwelly Tea Co (Gujarat High Court)

DVAT: Today (05 FEB 2016) is the last date for filing DVAT return in form DVAT-16, DVAT-17, & DVAT-48 for Q3FY2015-16. Cir.No.36 of 2015-16, dt.28 JAN 16.

STATUTES

CORPORATE LAWS

Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Amendment Regulations, 2016 – Amendment in Regulations 5, 6, 9, 13, 14, Schedule I & Form I and Omission of Regulation 31 – NOTIFICATION F.NO.CCI /CD /AMEND / COMB.REGL./2016, DATED 7-1-2016

Establishment of Local Office of SEBI at Jammu – NOTIFICATION NO.SEBI/LAD-NRO/GN/2015-16/028, DATED 1-1-2016

Payment of Contribution by Employers by 15th of following Mont H – Removing of Grace Period of 5 Days –CIRCULAR  NO.WSU/9(1)2013 / SETTLEMENT, DATED 8-1-2016

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2016 – Amendment in Regulation 2 – NOTIFICATION NO.SEBI/LAD-NRO/GN/2015-16/29, DATED 11-1-2016

Query: Kindly let us know the procedure for changing the Address of a director which is attached automatically with his DIN?

Answer: Director is required to download and fill up eForm DIR-6 for such changes and follow the same process for uploading the same as mentioned for eForm DIR-3.

Further duly attested copy of Verification as per Prescribed format Form DIR-7 by Practising Professional, copy of Self attested & attested by Practising Professional PAN Card & copy of Self attested & attested by Practising Professional Address Proof (Latest Electricity bill/ Gas bill/ Water bill/ Bank statement) is required to be attached with e Form DIR-6.

Comapny Law: Wherever necessary to give effect to the policy of law, sale of shares of a company may be regarded as sale of its assets by piercing the corporate veil (Supreme Court)

MCA-NCLT: MCA has invited applications to fill up, on deputation basis, for the posts including Deputy Registrar, Assistant Registrar, Court Officer at Delhi, Mumbai, Chennai, Kolkatta, Bengaluru, Ahmedabad, Allahabad & Hyderabad.

OTHER UPDATE

ICAI issues Standard on Assurance Engagement (SAE) 3420, Assurance Engagements to Report on the Compilation of Pro-Forma Financial Information Included in a Prospectus.

ICAI revised Standard on Auditing (SA) 610 – Using the Work of Internal Auditors.

C&AG Online Empanelment of CA Firms / LLPs for the year 2016-17 started on 01 JAN 16 is available atwww.saiindia.gov.in till 15 FEB 2016.

 

KEY DATES:

E-Payment of Service Tax for January by Cos: 06/02/2016

Submission of forms received in January to IT Commissioner: 07/02/2016

Payment of TDS/TCS deducted/collected in January: 07/02/2016

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