corporate and professional update june 24 2016

Corporate And Professional Update For the Day:

DIRECT TAX:

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Registration u/s 12AA cannot be denied on town planning activities continuing from earlier years.[ ITO vs. Moradabad Development Authority (ITAT Delhi)].

where Assessing Officer of the person searched and such other person is same, then also, first while making an assessment in case of the person searched, Assessing Officer has to record such satisfaction, then, copy of this satisfaction note is to be placed in file of such other person and relevant document should also be transferred from file of person searched to file of such other person.

Thereafter, incapacity of Assessing Officer of such other person, he has to issue notice under section 153A, read with section 153C – [2016] 70 taxman 156 (Delhi – Trib.)

Registration u/s 12AA cannot be denied on town Planning Activities continuing from earlier years [ITO vs. Moradabad Development Authority (ITAT Delhi)].

Income Tax: CBDT clarifies that the higher turnover threshold of Rs. 2 crores for non-audit of accounts is granted only to assesses, opting for a presumptive taxation scheme u/s 44AD.

The Income Tax : Interest U/s. 244A on excess self-assessment tax payment cannot be denied. [CIT vs. Birla Corporation Limited].

Income tax :  ITAT can examine whether AO has rightly exercised discretionary powers to extend due date of Special Audit Report
Principal Commissioner of Income-tax v. Nilkanth Concast (P.) Ltd.
[2016] 70 taxmann.com 157 (Delhi)

Income Tax: Reassessment held as invalid as notice was affixed at the wrong address Income-tax Officer, Ward 2 (3), Chandigarh v. Om Parkash  Kukreja [2016] 70 taxmann.com 147 (Chandigarh – Trib.)

A Income Tax: Tax audit threshold of Rs 2 cr. only applicable to taxpayers opting for presumptive tax scheme: CBDT

Income Tax: Proceedings can be initiated against the amalgamated company on account of the failure of the amalgamating company to distribute the statutory percentage of the accumulated profits.

In the given case Calcutta High Court held that Tribunal was not right in holding that the proceedings against the amalgamated company could not be initiated on account of the failure of the amalgamating company to distribute the statutory percentage of the accumulated profits.( CIT Vs. M/s. Shaw Wallace Distilleries Ltd.)

Income Tax: CBDT vide Notification No. 45/2016 dated 14-th June , 2016 has exempted the tax in the hand of the resident on the investment made in the shares issued by the start-up companies, if the consideration is in excess of the face value for issue of shares  of the “start-up” companies.

For the purposes of this notification, “startup” shall mean a company in which the public are not substantially interested and which fulfills the conditions specified in the notification of the Government of India.

Further the Central Government hereby notifies the ‘classes of persons’ for the purposes of the said clause as being the ‘person’ defined under sub-section (31) of section 2 of the said Act.

Income Tax: CBDT has made 15th Amendments Rules, 2016 vide Notification No. 48/2016 dated 20th June, 2016.

CBDT has made amendments in FATCA rules for registration, Due Diligence &information maintenance. Further, in the said rules, in Appendix-II Form 61B has been substituted with the new amended form with effect from 1st January, 2017.

Income Tax: CBDT has issued clarification regarding Threshold limit of tax audit under section 44AB and section 44AD vide press release dated 20th June 2016.

The higher threshold for non-audit of accounts has been given only to assessee opting for presumptive taxation scheme under section 44AD.

CBDT vide Notification No. 46/2016 dated 17th June 2016 has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in clause (23DA) of section 10 of the said Act received by any securitization trust as defined in clause (d) of the Explanation to section 115TC of the said Act.

Deferred consideration contingent on the uncertain future event cannot be taxed before vesting of right to receive via {CIT vs. Mrs. Hemal Raju Shete (Bombay High Court)}

Where the Assessee uses a network of computers for its business purposes, the LAN/WAN equipment is an essential part and to be regarded as computer peripherals. Hence depreciation will be allowed @ 60%.- (Global Trust Bank Limited, New vs. Department Of Income Tax) Delhi

Income tax:-

Income Tax: New Explanation to sec. 263 doesn’t give unfettered powers to CIT to revise every order of AO Narayan Tatu Rane v.  Income-tax Officer, Ward 27(1)(1), Mumbai [2016] 70 taxmann.com 227 (Mumbai – Trib.)

Income Tax: Deeming fiction of sec. 50 won’t be triggered on transfer of rights in land Smt. Devindraben I. Barot v. Smt. Devindraben I. Barot  [2016] 70 taxmann.com 235 (Ahmedabad – Trib.)

CBDT vide Notification No. 47/2016 dated 17th June 2016 has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in the notification, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934CBDT vide Notification No. 47/2016 dated 17th June 2016 has notified that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in the notification, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934

Income tax: Whereas per sale agreement, transaction of sale of the property was to be completed after five years of agreement at buyer’s option but possession of the property was allowed to be taken over by buyer on next day of agreement in part performance of the agreement, transfer within the meaning of section 2(47) took place when possession was taken over by buyer and not when buyer exercised an option to buy said property after five years – [2016] 70 taxman 118 (Panaji – Trib.)

Income Tax: Where the issue of allowability of MAT credit was decided by AO by order dated 8-12-2011, even though the issue of surcharge and cess was also allowed to be carried forward by AO by order dated 29-11-2012, revisional order passed on 30-3-2015 denying MAT credit would be time-barred [2016] 70 taxmann.com 155 (Kolkata – Trib.)

SLP dismissed against High Court’s ruling that even if assessee voluntarily disclosed a sum subsequent to search and offered said sum to tax, the penalty levied under section 271(1)(c) was justified
[2016] 70 taxmann.com 175 (SC)/[2015] 373 ITR 681 (SC)/[2015] 279 CTR 536 (SC)

Income Tax: Recording of satisfaction by Assessing Officer of the person searched that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized belong to a person other than person searched is a sine qua non for initiating action under section 153C.

INDIRECT TAX:

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CENVAT: Refund claims under rule 5 of the CENVAT Credit Rules, 2004: This scheme is applicable only to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on the date of the issue of the circular dated 10-11-2015.

As clarified therein, claims which have been remanded are out of the purview of this scheme

There is no provision to send the matter back merely because of differences between assessee and department – [2016] 70 taxman 168 (Delhi)

Central Excise: Valuation – excise duty on the sample bottles under Rule 8 of the Valuation Rules – nothing is flowing back to the manufacture from the distributors – the genuineness of transaction not doubted by the revenue – no demand can be raised – Tri

VAT: Non-production of ‘C’-Forms – Demanding a higher rate of tax under the CST Act, 1956 due to the nonproduction of ‘C’ Forms – The appellants and petitioners are not entitled to the reliefs prayed for – HC

An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

It was held in the given case that Nortel India is an independent company and a separate taxable entity under the Act.

There is no material on record that would indicate that its office was used as an office by the Assessee or Nortel Canada the same cannot lead to the conclusion that Nortel India was acting as a sales outlet. (M/S Nortel Networks India International Inc. Vs DIT)

Holds that such Cesses can only be levied on duties of excise and merely because machinery provisions of Central Excise Act have been incorporated in OID Act for collection and refund of Cess, it cannot be inferred that Oil Cess assumes the character of ‘excise duty.

Notes that Oil Cess is levied and administered by the Ministry of Petroleum and Natural Gas, whereas conditions precedent for levy of said Cesses are that excise duty should be levied and collected by Ministry of Finance.Gujrat High Court

Excise Duty

Excise: Activities of image scanning, editing and loading on CD are classifiable as photography services Global Digital Color Lab v. Commissioner of Central Excise, Jaipur-I   [2016] 70 taxmann.com 226 (New Delhi – CESTAT)

The Excise: Dept. can’t revoke excise registration on allegations of fraud without hearing assessee Commissioner, Central Excise Commissioner ate, Udaipur v. Mangalam Cement Ltd., Kota [2016] 70 taxmann.com 241 (Rajasthan)

Excise: Service of notice by registered post without acknowledgment due isn’t a valid service under excise: HC RP Casting (P.) Ltd. v. Customs, Excise & Service Tax Appellate Tribunal, New Delhi[2016] 70 taxmann.com 242 (Rajasthan)

Excise: Settlement Commission can reject application only in two cases : (a) assessee has not made full and true disclosure [section 32F], or (b) assessee has not co-operated in proceedings before it [section 32L].

Gujarat HC grants refund of Education Cess & Secondary and Higher Secondary Education Cess (‘ paid by the assessee under a mistake of law on Oil Cess levied u/s 15 of Oil Industry Development Act.

service tax:-

Service tax : No service tax on under construction flats if price includes land value via {Suresh Kumar Bansal vs UOI (Delhi High Court)}

Service tax : No service tax audit by service tax department or CAG via {Mega Cabs Pvt. Ltd. Vs. Union of India & Ors. (Delhi High Court)}

Penalty couldn’t be waived off on grounds of financial hardship if taxpayer failed to deposit collected tax Amcon Engineers (P.) Ltd. v. commissioner of Service Tax, Delhi [2016] 70 taxmann.com 217 (New Delhi – CESTAT

OTHER UPDATES :

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RBI : RBI decides to simplify and rationalise the process of registration of new NBFCs In order to make the process of registration of new NBFCs smoother and hassle free, the application form for registration of new NBFCs and the checklist of documents to be submitted have been revised.

The number of documents to be submitted by the NBFC applicants has been reduced from existing set of 45 documents to 7-8 in the revised process.

Secondly, from now onwards, there would be two different types of applications for non-deposit taking NBFCs (NBFC-ND) based on Sources of Funds & Customer Interface as follows:

a) Type I – NBFC-ND not accepting public funds1 / not intending to accept public funds in the future and not having customer interface2 / not intending to have customer interface in the future

b) Type II – NBFC-ND accepting public funds/ intending to accept public funds in the future and/or having customer interface/intending to have customer interface in the future The processing of cases for Type I – NBFC-ND applicants would be on fast track mode.

SEBI : SEBI invites applications from CA firms, for empanelment to take up assignments relating to forensic audit of SEBI registered RTA/STA.

Central Depository Services (India) Limited [CDSL] has launched ‘m-Voting’, a mobile app for e-Voting. This m-Voting app enables Android based smart phone users to cast their vote on company resolutions even while they are on the move.

The m-Voting can also be used for voting at the AGM/EGM venue. The m-Voting app can be downloaded from Google Play Store for Android based phones, while the app for iPhone and Windows Phone would be released shortly and can be downloaded from the App Store and Windows Phone Store, respectively.

Govt. allows 100% FDI in e-commerce, aviation and defense

Sebi : SAT sets aside 5 years ban on merchant banker who failed to examine bank statement of issuer Co. Almondz Global Securities Ltd. v. Securities and Exchange Board of India [2016] 70 taxmann.com 222 (SAT – Mumbai)

MCA : Construction carried out by builder under joint development agreement amounts to construction services N. Bala Baskar v. Union of India, Ministry of Finance [2016] 70 taxmann.com 151 (Madras)

MCA : Ministry of Corporate Affairs has notified that Annual Filing Forms for Companies Act, 1956 – 23AC (Form for filing balance sheet and other documents with the Registrar), 23ACA (Form for filing Profit and Loss account and other documents with the Register), 23B (Information to the Registrar by company for appointment of auditor), 20B (Form for filing annual return by a company having a share capital with the Registrar), 21A (Particulars of annual return for the company not having share capital) are likely to be available on MCA21 portal by mid-August 2016.

The Ministry had earlier removed these e-forms due to maintenance of the website. Stakeholders are requested to plan accordingly.

The NDA government on Monday announced relaxed foreign direct investment (FDI) norms in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products.

 It has allowed up to 100% foreign direct investment (FDI) in defence through the approval route, 100% FDI in food product e-commerce, 100% FDI in greenfield pharma via the automatic route, 100% in browfield pharma – of which 74% will be through automatic route – 100% FDI in scheduled airlines, and up to 49% FDI in airlines through automatic route.

While FDI in defence beyond 49% was already allowed through approval route and up to 49% through automatic route, the new norms have done away with the condition of access to ‘state-of-art’ technology in the country for FDI more than 49%.

Sebi : SAT sets aside 5 years ban on merchant banker who failed to examine bank statement of issuer Co. Almondz Global Securities Ltd. v. Securities and Exchange Board of India [2016] 70 taxmann.com 222 (SAT – Mumbai)

The Ministry had earlier removed these e-forms due to maintenance of the website. Stakeholders are requested to plan accordingly.

The NDA government on Monday announced relaxed foreign direct investment (FDI) norms in single brand retail, civil aviation, airports, pharmaceuticals, animal husbandry and food products.

 It has allowed up to 100% foreign direct investment (FDI) in defence through the approval route, 100% FDI in food product e-commerce, 100% FDI in greenfield pharma via the automatic route, 100% in browfield pharma – of which 74% will be through automatic route – 100% FDI in scheduled airlines, and up to 49% FDI in airlines through automatic route.

 While FDI in defence beyond 49% was already allowed through approval route and up to 49% through automatic route, the new norms have done away with the condition of access to ‘state-of-art’ technology in the country for FDI more than 49%.

PPF : The Central Government has amended Public Provident Fund Scheme, 1968. This Scheme may be called Public Provident Fund (Amendment) Scheme, 2016.

It shall come into force on the date of its publication in the Official Gazette. The Government changed the norms for Public Provident Fund deposits, allowing the subscribers of the scheme to prematurely close their accounts and withdrawal the complete amount after five years.

However, the withdrawal will be allowed for expenditure towards higher education or medical treatment. Currently, the lock-in-period for complete withdrawal from PPF accounts is 15 years.

Annual filing forms for Companies Act, 1956 – 23AC, 23ACA, 23B, 20B, 21A are likely to be available on MCA21 portal by mid-August 2016.

Interest rate on PPF retains at 8.1% for quarter ending September, 2016, same as stayed in 1st Quarter of 2016-17.

Only new version of e-form will be acceptable. Stakeholders are requested to plan accordingly and ensure that latest version of form is downloaded for e-filing. Form- wise date of last version change is available at on the website of MCA.

MCA Updates:-

MCA : Construction carried out by builder under joint development agreement amounts to construction services N. Bala Baskar v. Union of India, Ministry of Finance [2016] 70 taxmann.com 151 (Madras)

MCA : Ministry of Corporate Affairs has notified that Annual Filing Forms for Companies Act, 1956 – 23AC (Form for filing balance sheet and other documents with the Registrar), 23ACA (Form for filing Profit and Loss account and other documents with the Register), 23B (Information to the Registrar by company for appointment of auditor), 20B (Form for filing annual return by a company having a share capital with the Registrar), 21A (Particulars of annual return for the company not having share capital) are likely to be available on MCA21 portal by mid-August 2016.

A MCA has changed Version of e-forms MR-1 (Return of Appointment of MD/WTD/Manager), CHG-1 (Application for Registration of Creation, Modification of charge other than those related to debenture), CHG-4 (Particulars for satisfaction of charge thereof), MGT-14 (Filing of Resolutions and Agreements to the Registrar) w.e.f 7th June, 2016. The form has been updated on MCA Portal.

MCA : Forms AOC-4 XBRL, GNL-1, INC-6, INC-2 and CRA-2 are likely to be revised on MCA21 Company Forms Download page w.e.f 25th June 2016. Stakeholders are advised to check the latest version before filing.

KEY DATES

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Payment of ESI for the month of May- 21-06-2016

E-Payment of DVAT & CST tax for the month of May -21-06-2016

Issue of TDS certificate in case of payment/credit made in the month of May for purchase of property u/s 194IA -22-06-2016

Issue of DVAT certificate for deduction made in month of May -22-06-2016

Advance Information for 1st fortnight of July of functions with booking cost more than Rs. 1 lakh in Banquet halls; hotels etc. in Delhi in form No. BE-2 under DVAT Act. – 27-06-2016

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