CORPORATE AND PROFESSIONAL UPDATE JANUARY 17, 2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 17, 2016

INCOME TAX ACT

SECTION 2(42C)

CAPITAL GAINS – SLUMP SALE

Where assessee sold its entire shareholding in its subsidiary company to a third party, since sale consideration was received by assessee itself and not by said subsidiary, it could not be treated as slump sale within meaning of section 2(42C) – [2016]  161 (Mumbai – Trib.)

SECTION 13

CHARITABLE OR RELIGIOUS TRUST – DENIAL OF EXEMPTION

Sub-section (1)(c) : Where there was failure by Assessing Officer to indicate in assessment order that salary paid by assessee-society to executive director was unreasonable, no violation of provision of section 13(1)(c) could be alleged and exemption could not be denied – [2016]  95 (Hyderabad – Trib.)

SECTION 40A(2)

BUSINESS DISALLOWANCE – EXCESSIVE OR UNREASONABLE PAYMENTS

Others : Where assessee had sold molasses to its sister concern at sale price varied between Rs. 6,000 to Rs. 3,500 per metric ton and Assessing Officer adopted Rs. 6,000 as being uniform price throughout year and Tribunal confirmed this, since assessee had sold molasses only at rate being fixed by Sales Committee, order of Tribunal was erroneous – [2016] 108 (Karnataka)

SECTION 119

CENTRAL BOARD OF DIRECT TAXES – INSTRUCTIONS TO SUBORDINATE AUTHORITY

Delay in filing return : Where assessee had miserably failed to convince that he had any ‘genuine hadrship’ in filing his income-tax return late by 30 months, no benefit of section 119(2) could be given to him to claim any refund – [2016]  104 (Punjab & Haryana)

SECTION 145

METHOD OF ACCOUNTING – REJECTION OF ACCOUNTS

Qualitative records : Books of account could not be rejected merely because qualitative records was not maintained – [2016]  106 (Rajasthan)

METHOD OF ACCOUNTING – VALUATION OF STOCK

Illustrations : Where assessee adopted cost value for purpose of computation of closing stock of molasses and bagasse and Assessing Officer held that assessee should have adopted market value and Tribunal confirmed this, since Tribunal had overlooked material available, matter required reconsideration – [2016]  108 (Karnataka)

SECTION 234E

DEDUCTION OF TAX AT SOURCE – FEES FOR DEFAULTS IN FURNISHING STATEMENTS

Position prior to 1-6-2015 : Prior to 1-6-2015, there was no enabling provision in section 200A for raising demand in respect of levy of fees under section 234E in respect of default in furnishing TDS statements – [2016]  105 (Amritsar – Trib.)

SECTION 255

APPELLATE TRIBUNAL – PROCEDURE OF SPECIAL BRANCH

Special Bench : Where Competent Authority placed matter before a Division Bench of Tribunal for giving effect to majority opinion of Accountant Member and Third Member and assessee raised objections urging to adjourn matter or refer matter to President for Constitution of a Special Bench, objections were liable to be rejected and majority view deserved to be confirmed – [2016]  109 (Ahmedabad – Trib.)

SECTION 256

HIGH COURT

In a reference u/s 256,it is not permissible for High Court to make a fresh determination of facts found by ITAT. However, HC can take into account additional facts already on record but not taken note of by ITAT to arrive at its findings.

HC can also construe certain facts found by ITAT of significance as against the contrary view of ITAT that they were of no significance.

There is all the difference between making determination of new or additional facts by HC(which is not permissible) and emphasis on facts found by ITAT on which there is no dispute(which is permissible) – [2016] 194 (SC)

CENVAT CREDIT RULES

RULE 3

CENVAT CREDIT – UTILIZATION OF, IN CASE OF REVERSE CHARGE

In case of import of services under section 66A, assessee is deemed to be service provider only for purpose of paying service tax; insofar as Cenvat credit is concerned, imported service cannot be regarded as output service and, therefore, credit balance cannot be used to pay service tax under reverse charge on imported services. – [2016]  100 (New Delhi – CESTAT)

STATUTES

DIRECT TAX LAWS

Sovereign Gold Bond Scheme, 2016 – NOTIFICATION [F.NO.4(19)-W&M/2014], DATED 14-1-2016

CORPORATE LAWS

Guidance note on meeting of the Board of Directors (SS-1) and General Meetings (SS-2) PRESS RELEASE DATED 18-01-2016

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

Filing of Reconciliation Return for the Year 2014-15 – CIRCULAR NO.34 OF 2015-16, DATED 15-1-2016

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