CORPORATE AND PROFESSIONAL UPDATE OCT 26, 2016

CORPORATE AND PROFESSIONAL UPDATE OCT 26, 2016

Direct Tax:-

• Karnataka High Court held that Sale consideration received by the assessee is entitled to benefit under Section 54 of the Income Tax Act, even though the transaction for purchase of new property was not completed and possession was also not handed over to the assessee within 2 years- (CIT Vs Mrs. Shakuntala Devi (Karnataka High Court)

• Compensation received by flat owner from builder for hardship caused due to redevelopment of the building is a non-taxable receipt and has to be reduced from the cost of the flat-(Jitendra Kumar Soneja vs. ITO (ITAT Mumbai)
• FM: Better tax payer services key to direct tax reforms; Launches SMS Alert Service for about 2.5 crore private and Government salaried employees in order to directly inform them about the deposit of tax deducted at the end of every quarter. Press Information Bureau 24­October­2016 19:26 IST
• IT: Repayment of loan – violation u/s 269SS – journal entries – there was no payment in cash either by the assessee or on its behalf. No penalty – CIT-II, Kanpur Vs Apex Finlease Ltd. C/O M/s M.L. Puri & Co. (2016 (10) TMI 636 – Allahabad High Court)
• IT: When the property was shown as stock in trade it should not be considered for the purpose of exemption u/s 54F – CIT, ACIT Vs Shri Gregory Mathias (2016 (10) TMI 635 – Karnataka High Court)

Purchase of Stock-in-Trade & Provisions of 40A(3)

• CBDT extended the ‘due date’ for filing ITR and Tax Audit Reports for AY 2016-2017 for all categories of taxpayers in the state of J&K to 31. 12. 2016.
• Bompaby High Court in the below citied case held that AO cannot rely on Instruction No.1/2015 dated 13.01.2015 to withhold refunds as the same has been struck down by the Delhi High Court in Tata Teleservices & the same is binding on all AOs across the Country. Action of the AO in not giving reasons for not processing the refund application is “most disturbing” and stating that he will wait till the last date is “preposterous”. Action of the AO suggests that it is not enough that the deity (Act) is pleased but the priest (AO) must also be pleased.(Group M. MediaIndia Pvt. Ltd. Vs. UOI)
• Bangalore ITAT allows exemption u/s 11 to assessee-trust for AYs 2004-05 to 2007-08 despite Sec 12A registration granted only w.e.f. April 1, 2008, holds first proviso to Sec 12A(2) inserted vide Finance Act, 2014 (which provides for roll-back of registration for earlier years) as retrospective in nature. [TS-561-ITAT-2016(Bang)]
• CBDT issues the income-tax (28th Amendment), rules, 2016, effective from 01.06.2016. Final rules on buy-back of shares notified. CBDT notification of 17.10.2016.
• CBDT issued Circular No.35 of 2016 dated 13.10.2016 on applicability of TDS provisions of section 194-I of the income-tax act, 1961 on lump sum lease premium paid for acquisition of long term lease-regarding.
• Section 14A cannot be invoked, where no regular activities were undertaken by the assessee in respect of the investments to earn exempt income and no change in the investments during the year.[M/s Power Grid Corp of India Ltd. vs. DCIT, ITAT – Delhi].
• Taxability- compulsory acquisition of capital asset
• More than one business & filing of tax audit report with return
• High Court in the below citied case held that Statement of 22-year-old partner should be considered in search if he is actively involved in business of firm.( Classy the Antique Disigned Furniture v. Deputy Commissioner of Income-tax, Central Circle-2, Kozhikade.)
• Bombay High Court in the below citied case held that Income Escaping Reassessment will be void Void if Reasons are not supplied to the assessee- (CIT (Large Tax Payer Unit), Mumbai IDBI Ltd.)
• IT: TDS u/s 192 or 194J – merely because doctors are subject to the payment of PF or other retirement benefit TDS u/s 194J is not deductible – Sir Hurkisondas Nurrotumdas Hospital & Research Centre Vs DCIT (TDS)-3 (2), Mumbai (2016 (10) TMI 432 – ITAT Mumbai)
• IT: No TDS liability u/s 194-I on lump sum lease premium or one-time upfront lease charges which are not adjustable against periodic rent paid or payable for acquisition of long-term leasehold rights over land – CBDT Circular No. 35 of 2016, dt.13 OCT 2016.
• CBDT restricts acceptance of contributions by electoral trust by amending Rule 17C to provide that   (a)  from an individual who is not a citizen of India (b) from any electoral trust registered u/s 25 of the Co Act.
• ITAT Ahemdabad in the below mention case confirmed the addition u/s 68 on unexplained share capital and premium received as assessee has been able to just prove the identity of the company but unable to prove the genuineness & creditworthiness the parties.( ACIT, Ahmedabad Vs. Nakoda Fashion Pvt. Ltd.)

ITAT Kolkata in the below mwntioned case held that the assessee under consideration has one truck only and the same was being used for purpose of business, hence depreciation should be allowed to the assessee – since the truck are not used for renting, provisions of presumptive income U/s 44AE not applicable – [M/s Northern Services & Supply Co. (P) Ltd. Vs. DCIT, Jalpaiguri]

 IT: Assessee is required to prove the source of huge Cash Deposit in Bank even if he has declared his income u/s 44AF – Naresh Kumar Vs CIT, Patiala (2016 (10) TMI 252 – Punjab & Haryana High Court).

IT: Levy of interest u/s 234C is an automatic, it cannot be restricted to the tax due on Returned income as referred u/s 139(1) – Sree Meenakshi Reltors Vs ITO, W-II (3), Coimbatore (2016 (10) TMI 215 – ITAT Chennai)

IT: TDS u/s 195 – AMC contract – non-resident payee as no PE in India therefore his business income not taxable in India – No TDS liability – ACIT, Cir-12(1), New Delhi Vs HCL Comnet Ltd. (2016 (10) TMI 175 – ITAT Delhi)

IT: Reference to DVO – AO strongly disputes the correctness sales consideration and must be allowed free hand to complete the assessment as per law – Kanaiyalal Dhansukhlal Sopariwala Vs DVO, Valuation Cell And 1 (2016 (10) TMI 407 – Gujarat High Court)

Indirect Tax:-

• Allahabad High Court in the below mentioned case held that the assessee cannot be forced to pay entire disputed amount when the assessment proceedings are pending. The department can only take action to ensure compliance of order passed by the Court-(Prosper Build Home Pvt. Ltd. V/s. Union Of India (Allahabad High Court)
• AAR held that Processing of steel scrap into blended steel scrap amounts to manufacture-(T.T. Recycling Management India Private Limited (Authority for Advance Rulings)
• Draft rules for prescribing the method of valuation of fair market value in respect of the trust or the institution ceases to exist as charitable organization or converts into a non-charitable organization have been prescribed.
• Quarterly returns under DVAT Act and CST Act for dealers registered in Delhi or the 2nd quarter of 2016 ended on 30.9.2016 is due to be filed on or before 28.10.2016 along with details of closing stocks as at 31.3.2016
• SC allows Revenue appeal, sets aside CESTAT order to the extent penalty levied u/s 11AC of Central Excise Act was reduced as against confirmed duty demand. [TS-418-SC-2016-EXC]
• CESTAT holds that financial advisory services in respect of energy, banking, transport & urban infrastructure shall be taxable as “Banking and Other Financial Services” (BoFS) w.e.f. August 2002, cannot be classified as “Management Consultancy Services” (MCS) for prior period . [TS-416-CESTAT-2016-ST]
• ST/ED: CENVAT credit – capital goods – installation of bulk milk coolers & DG sets at milk collection centres to store milk – Credit allowed – Glaxo Smithkline Consumer Health Ltd. Vs CCE, Chandigarh-II (2016 (10) TMI 649 – CESTAT Chandigarh)
• CBEC issued instructions for rationalization of procedures regarding handling exporters obligations under EPCG authorizations.
• CBEC mission zero has been launched there with the objective of sharply reducing the pendency of adjudications, refunds, rebates and drawback in a time bound manner.
• CESTAT denies CENVAT Credit on capital goods received in FY when final product (asbestos cement sheet) was chargeable to Nil rate of excise duty; Notes that assessee claimed credit i.r.o. capital goods and services upon obtaining Central Excise Registration consequent to final product becoming exigible to 18% duty. [TS-409-CESTAT-2016-EXC]
• The government has doubled the limit of excise duty evasion for arrest and prosecution of accused to Rs 2 crore and also asked officials not to resort to penal provision in cases of technical nature.
• ST: Levy of service tax – security services – sovereign functions – After choosing one particular remedy the plaintiff cannot avail the other remedy as well in respect of the same relief founded on same cause of action – State of Rajasthan Vs Union of India & Others (2016 (10) TMI 462 – Supreme Court)
• Indirect Tax collections up to September, 2016 show an increase of 25.9% over the net Indirect Tax collections for the corresponding period last year(2015-16)
• Bombay HC grants interest on delayed CENVAT Credit refunds u/s 11BB of Central Excise Act; Notes that original refund application was initially rejected by Revenue on merits and not on basis of incomplete application. [TS-410-HC-2016(BOM)-EXC]
• Madras High Court in the below case held that encashment of bank guarantee doesn’t amount to payment of duty:(Nizamabad Agro (P.) Ltd. v.Assistant Commissioner of Customs –EODC)
• period of limitation where refund claim was filed electronically within prescribed time – They later submitted in physical form all these documents with Jurisdictional officer – refund cannot be rejected on the ground of time bar – Tri – Service Tax(M/s Boston Scientific India Private Limited Versus CST, Delhi-IV, Gurgaon)
• ST: Refund claim filed electronically within prescribed time later submitted in physical form – refund cannot be rejected on the ground of time bar – M/s Boston Scientific India Private Limited Vs CST, Delhi-IV, Gurgaon (2016 (10) TMI 281 – CESTAT Chandigarh)
• VAT & ST: Principle of lifting of the corporate veil – recovery of duty / tax from the director cannot be made merely on the basis of allegation – The test of fraudulent conduct not satisfied so as to attract the principle of lifting of corporate veil – Shri Harbhajan Singh Vs C.T.T., U.P. Lucknow (2016 (10) TMI 260 – Allahabad High Court)
• DVAT: Circular No.15 of 2016-17 relating to disposal of refunds in the stipulated time stands withdrawn and shall be considered void ab initio – Circular No.16/2016-17.
• ST: Service for loading goods by the contractor on weight basis – the activity of loading/unloading cannot be termed as supply of Manpower Recruitment Agency Service – M/s Radiant Textiles Ltd. Versus CCE, Chandigarh-II (2016 (10) TMI 242 – CESTAT Chandigarh)
• DVAT refunds to be disposed in the stipulated time period – Circular No.15/2016-2017, dt.03.10.2016
• ST: Classification of service – credit rating activity – the advisory service provided by the appellant does not fall under the category of Management Consultancy Service however it is correctly classifiable under Banking and Other Financial Services – M/s CRISIL Ltd. Versus Commissioner of Central Excise, Thane (2016 (10) TMI 390 – CESTAT Mumbai)
• ED: Area based exemption- if the exemption is extended to one unit the change in ownership would not jeopardize the admissibility of exemption – M/s. Khurana Oleo Chemicals Vs CCE, Chandigarh (2016 (10) TMI 382 – CESTAT Chandigarh)
• VAT & ST: Input tax credit – whether the Hon ble Tribunal was justified in rejecting the claim of the assessee for the Input Tax Credit even though such purchases are not disqualified as per Schedule- E attached to the Haryana VAT Act 2003 – Held NO -Modern Dairies Ltd. Vs State of Haryana and another (2016 (10) TMI 374 – Punjab & Haryana High Court)

GST Updates:

• GST: Portal of GST Registration would be open for the existing taxpayer from Nov’ 2016 – GSTN Chairman
• GST law to be passed in winter session of parliament commencing from 16 Nov 16 and ending on 16 Dec 16.
• Under GST amount paid by assessee is used first for self assessment tax and interest of earlier periods, then current period & then other amounts e.g. demand.
• Under GST normal & compounding taxpayer to file annual return. Not to be filed by casual / Non-resident taxpayers, ISDs & persons liable to deduct TDS.
• GST Council meet ended in New Delhi after the States failed to come to a consensus on the rates, will meet again in the first week of  Nov’ 2016.
• Under GST large taxpayer units to be shut down under GST at all locations i.e. Bengaluru, Chennai, Delhi, Kolkata & Mumbai, due to their failure.
• Under GST every advance receipt against supplies shall get a transaction id which is to be mentioned against invoice issued later in GSTR-1.
• Under GST Summary of invoices issued to be given in GSTR-1(including invoices issued for inward supplies from Unregistered Persons liable to Reverse Charge).
• Central Govt proposes 26% peak rate for GST as Four-tier structure may be proposed at GST Council meet started; almost 20-25% of all taxable goods may come under the maximum rate.
• Under GST a taxable person who has taken registration voluntarily cannot apply for cancellation before completion of one year from date of registration.
• Aprox 80 lakhs of the existing assessees of excise, customs, service tax and VAT will start shifting to GSTN Portal on 8th November 2016. This is going to be one of the biggest moves for GST implementation.
• Under GST every taxable person (other than Composition Supplier) has to submit final return before cancellation of registration.

FAQ ON GST

Concept of Input Service Distributor in GST

Q 8. Whether SGST credit can be distributed as IGST credit by an ISD to units located in different States?

Ans. Yes, an ISD can distribute SGST credit as IGST for the units located in different States.(Section 17(2)

Q 9. Whether the ISD can distribute the CGST and IGST Credit as CGST credit?

Ans. Yes, CGST and IGST credit can be distributed as CGST credit by an ISD for the units located in same State.

Q 10. Whether the SGST and IGST Credit can be distributed as SGST credit?

Ans. Yes, ISD can distribute SGST and IGST credit for the units located in same State.

Q 11. What are the documents through which the credit can be distributed by an ISD?

Ans. The document under which the credit can be distributed is yet to be prescribed. The Act provides that the credit can be distributed only through prescribed document.

Q 12. How to distribute common credit among all the units of an ISD?

Ans. The common credit used by all the units can be distributed by ISD on pro rata basis i.e. based on the turnover of each unit to the aggregate turnover of all the units to which credit is distributed.

FAQ on Company Law:

• Query Can an Indian company be amalgamated with another foreign company?

Answer: Yes, subject to the provisions of Section 234 of the Companies Act 2013, an Indian company can be amalgamated with another foreign company. Provided that prior approval of Reserve Bank of India should have been obtained by the foreign company in this behalf.

• Query : Can an Independent director be reappointed after the term for he was appointed is complete?

Answer: As per the provisions of section 149 (10), an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Board’s report.

Query: Can a foreign resident form an OPC in India with Indian resident as his nominee?

Answer: As per Rule 3(1) of the Companies (Incorporation) Rules 2014, only a natural person who is an Indian citizen and resident in India shall be eligible to incorporate OPC .

No Body Corporate and Foreign Citizen resident in India is allowed to form OPC.

MCA UPDATE:

• After taking the bold initiative by coming up with SPICe, now MCA has notified that e-Form INC-29 (Integrated Incorporation Form) will be withdrawn w.e.f. 1st November, 2016.
• Accordingly, e-Form INC-29 will no longer be available on the MCA21 portal and stakeholders will not be able to file any previously downloaded versions from this date. Stakeholders are requested to plan accordingly and use SPICe (Simplified Proforma for Incorporating Company electronically), INC-2 (One Person Company), or INC-7 (Incorporation of Company) e-Forms, as applicable for incorporation of Companies under the Companies Act, 2013. MCA had recently released SPICe forms where the entire process of incorporation was made electronic.
• The e-Form INC-29 (Integrated Incorporation Form) will no longer be available on the Ministry’s portal and stakeholders will not be able to file any previously downloaded versions from 1st November, 2016. The e-Form INC-29 (Integrated Incorporation Form) will be withdrawn w.e.f. 1st November, 2016.
• Only Forms INC-32 i.e. SPICE (Simplified Proforma for Incorporating Company electronically), INC-2 (One Person Company), or INC-7 (Incorporation of Company) are applicable for incorporation of Company.
• MCA has notified that e-Form INC-29 (Integrated Incorporation Form) will be withdrawn w.e.f. 1 .11. 2016.
• MCA revised Forms 23AC XBRL,23ACA XBRL & AOC-4 XBRL,w.e.f. 5.10.16,& Forms MGT-15, FC-3, INC-4, MGT-14, 23C,23D,A-XBRL,I-XBRL w.e.f. 8.10.16.
• MCA is likely to update LLP Forms, LLP 3 & LLP 4 w.e.f. TODAY (20 Oct  2016)
• E-forms- (SPICe) Simplified Proforma for Incorporating Companies Electronically and electronic AOA (SPICe AOA) revised on MCA portal w.e.f. 18.10.2016.
• MCA is expected to revise the version of e-Forms: Form CHG-8, Form AOC-4 and Form 20-B  w.e.f. 22.10.2016.

OTHER UPDATE :

Bank of Baroda, invites proposal (RFPs) for appointment of concurrent auditors for branches for south Gujarat zone (Baroda) Last Date : 07.11.2016.

Ministry of labour and employment invites comments on increasing limit for ESI coverage from INR 15,000 to INR 21,000.

ICAI request members to improve annual ROC filing compliance to promote high standard of integrity and professionalism it is an essential part of the professional duty of the Chartered Accountants.

ICAI UPDATES

• ICAI : has issued Guidance Note on audit of Consolidated Financial Statements (Revised 2016).
• ICAI issued guidance note on audit of consolidated financial statements (Revised 2016). For details visit www.icai.org
• NCLT has designated its members in different branches of the tribunal to hear appeal against order of registrar or such other officer officiating as the registrar of the Bench

SEBI Update :

• SEBI in it’s circular stated that exclusively listed co (ELCs) will be required either raise capital for listing or exit from the dissemination board.
• The special investigation team (SIT) on black money has asked the SEBI to furnish the details of P-Note data for black money investigation.
• SEBI issued disclosure norms for listed insurance companies in respect to their quarterly results. Besides, additional disclosures should be made as prescribed by IRDAI.
• SEBI introduced an online system for investment advisers and research analysts which aims to ease the operations in terms of registration and compliance reporting, etc.
• SEBI has issued a circular easing rules on bullion as collateral now keep a higher quantum of up to 30 per cent of their total liquid assets bullion as commodities collateral.

OTHER UPDATE

• Compulsory acquisition of non-agricultural land is also tax-free under new Land Acquisition Act: CBDT Circular No. 36/2016 Dated 25th October 2016
• Haryana government has revised minimum wages for different categories of workers, in exercise of the powers conferred by Sub-Section (2) of Section 5 of the Minimum Wages Act, 1948.
• ESIC Hikes wage ceiling from Rs.15000 to Rs.21000 w.e.f 1st Oct 2016

SEBI UPDATE:

SEBI in its  Circular stated that exclusively listed companies (ELCs) on the Dissemination Board will be required to exercise one of the two options — either raise capital for listing on nation-wide stock exchanges or exit from the dissemination board.

Key Dates:

• Payment of DVAT TDS for the month of September-15/10/2016
• Form 27EQ (TCS return) by all deductor-15/10/2016
• Issue of TDS Certificate in case of payment/credit made in the month of august for purchase of property u/s 194IA-15/10/2016
• Statement by bank in Form no. 15CC in respect of foreign remmitence during the quarter-15/10/2016
• E-Payment of PF for the month of September-15/10/2016
• Payment of DVAT TDS for the month of September-15/10/2016
• Form 27EQ (TCS return) by all deductor-15/10/2016
• Issue of TDS Certificate in case of payment/credit made in the month of august for purchase of property u/s 194IA-15/10/2016
• Statement by bank in Form no. 15CC in respect of foreign remmitence during the quarter-15/10/2016
• E-Payment of PF for the month of September-15/10/2016
• Advance information for 1st fortnight of Nov of function with booking cost more than Rs. 1 Lakh in Banquet halls, hotels etc in Delhi-27.10.2016
• Filling of DVAT Return verification form for quarter ended September where return not signed with digital signature:- 28.10.2016
• Return of TDS for September quarter in DVAT-48 -28.10.2016
• Return by scheduled bank branches in Delhi engaged in sale of silver, gold, repossessed vehicle for quarter ended September:-28.10.2016
• Payment of ESI for the month of September :-21/10/2016
• E-Payment of DVAT & CST tax for the month ended September- 21/10/2016
• Issue of DVAT Certificate for deduction made in the month of September-22/10/2016

• Silence is the strong fence around wisdom, if your foot slips, you can re-gain your balance, but if your tongue slips, you can never re-build your image again.
• Patience is a great quality. we should learn it from the sun and the moon.  both patiently wait for their turn.
• It doesn’t matter if the glass is half empty or half full. Be thankful that you have a glass & grateful that there is something in it.
• If you think positively sound become music, movement becomes dance, smile becomes laughter, mind becomes meditation and life becomes a celebration.
• Acceptance is a great quality that we need to possess because life never accepts how we  are  but we need to accept how life is.
• Always have a successful exit than a favorable entrance. Because, what matters is not being clapped when we arrive but being remembered when we leave .

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