corporate and professional update may 31, 2016

Professional Update For the Day

Direct Tax:

CBDT Clarification regarding no cancellation of registration u/s 12AA in certain circumstances: CBDT issues beneficial circular No. 21/2016 dt. 27 May 2016, clarifies that where charitable trust engaged in ‘advancement of object of general public utility’ crosses the threshold of 20% or Rs. 25 lakhs for prescribed commercial activities under proviso to Sec. 2(15), it shall not be mandatory to cancel the Sec. 12AA registration.

 It is clarified that it shall not be mandatory to cancel the registration already granted u/s 12AA to a charitable institution merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution.

If in any particular year, the specified cut-off is exceeded, the tax exemption would be denied to the institution in that year, and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act.

This circular was much needed due to the introduction of Chapter XII-EB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions.

wherein cancellation of registration granted u/s 12AA may lead to a charitable institution getting hit by sub-section (3) of section 115TD and becoming liable to tax on accreted income.

Therefore, any cancellation of registration in cases as above would have caused additional hardship to an assessee institution due to the attraction of tax liability on accreted income.

It has been further advised to the field authorities so far as not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play.

The process for cancellation of registration is to be initiated strictly in accordance with sections 12AA(3) and 12AA(4) after carefully examining the applicability of the relevant sections of the act.

Delhi HC allows assessee’s writ & quashes assessment u/s 143(3) read with Sec 144C for AY 2009-10,  presumes that order was not passed within the prescribed time-limit as Revenue could not prove service of final assessment order u/s 144C on assessee As Revenue could not produce any proof of dispatch of the assessment order soon after it was passed, HC accepts assessee’s contention that final assessment order was not passed on the date mentioned therein and was probably antedated in order to avoid the expiry of the limitation period.[TS-285-HC-2016(DEL)]

Cracking The Conundrum: Appearance Clause Under Taxation Statutes

CBDT invites comments on GAAR to provide a fillip to its implementation 

Indirect Tax:

CBEC provides that  Notification No. 30/2012 – Service Tax, dated the 20th June 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20th June 2012 shall be applicable mutatis mutandis for the purposes of Krishi Kalyan Cess vide Notification No. 27/2016 dated 26/05/2016. This notification shall come into force from the 1st day of June 2016.

CBEC provides vide Notification No. 28/2016 dated 26/05/2016 that Krishi Kalyan Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in notification No. 26/2012-Service Tax, dated 20th June 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June 2012. This notification shall come into force from the 1st day of June 2016.

CBEC has inserted a new clause in Explanation 1, after clause (d ) in notification 39/2012- service tax dated 20/06/2012 vide Notification No.29/2016 dated 26.05.2016. The new clause is “(e)Krishi Kalyan Cess as levied under sub-section (2) of section 161 of the Finance Act, 2016 (28 of 2016).” 

Company Law:

Query: In case of striking off the name of the Company under Fast Track Exit mode, what if any of the stakeholders raise objection for Striking off the name of the Company?
Answer: If any of the stakeholders raise an objection, the applicant Company can reply to that. There is no time period for giving of reply by the applicant Company.

However, the applicant Company needs to note that if the validity of the Fast track exit mode is expired before resolving all the queries, then the procedure under fast track exit mode may not be undertaken by the ROC.

Query:  We filed Form FTE with the ROC in the month of March 2016 which was pending approval since then. Now we have received Resubmission but when we are entering the date of Statement of Accounts of March 2016 in Form FTE, there is a pop-up error which is coming as –Date of Statement of accounts cannot be older than 30 days of filing Form FTE. Kindly advise us on what should be done.
Answer: As in your case, you have originally filed Form FTE in March 2016, so it is quite obvious that the Statement of Accounts would be of March 2016 only.

In case you are getting this error in the preparation of the Resubmission form, you should raise the ticket with MCA Portal and mail the detail of the problem being faced toappl.helpdesk@mca.gov.in as this is a technical issue on the part of the MCA Portal.

Key Dates:

Statement by Non-Resident having Liaison Office in India (u/s 285): 31.05.2016

Today 30/05/16 is the last day for the Issue of TDS/TCS certificate (Form 16A/27D) for Q4 of 2015-16 by all deductors.

31.05.16 is the last date for the issue of the TDS certificate to employees (Form 16), for the F.Y. 2015-16 by all deductors.

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Overview of Tax Audit

Amendment in Tax Audit u/s 44AB

Limit Applicable for tax Audit U/S 44 AB under Income Tax