CORPORATE AND PROFESSIONAL UPDATE SEPT 3, 2016

Professional Update For the Day:

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Direct Tax:

IT: TDS u/s 194C – non tds on Vehicle / dumper Hire Charges – No contract either verbal or written is entered into with the owners / drivers in these cases of purely temporary transporting arrangements – No disallowance – ACIT, Cir-1, Asansol Vs. Raja Transport (2016 (8) TMI 1046 – ITAT Kolkata)

CBDT: Income Tax Notices mandatorily to have email IDs & contact details to reduce interaction with the officials.

Sum received from developer due to hardship caused on redevelopment of flat not a revenue receipt Jitendra Kumar Soneja v. Income-tax Officer, Ward 6(3)(3), Mumbai[2016] 72 taxmann.com 318 (Mumbai – Trib.)

Sec. 50(1)(iii) doesn’t contemplate usage of acquired property falling within the block of assets Indogem v. Income-tax Officer- 19 (1) (5), Mumbai [2016] 72 taxmann.com 315 (Mumbai – Trib.).

Secured asset rightly taken by Commissioner as tenant failed to show that tenancy existed prior to mortgage Otoklin Global Business v.State of Maharashtra [2016] 72 taxmann.com 213 (Bombay).

No tax on income from offshore supplies as supplier had no agency PE in India Ion Geophysical Corporation v. Deputy Commissioner of Income-tax, Circle-2, Dehradun [2016]2 taxmann.com 298 (Delhi – Trib.)

 IT: Reopening of assessment – the information was available only in the valuation report. Giving the information in this manner shall be of no help to the appellant as the AO was not expected to go through the said information available in the valuation report for the purpose of ascertaining the actual construction of the plot – M/s Girilal & Company Vs. ITO, Mumbai & Others (2016 (8) TMI 1010 – Supreme Court).

IT: Addition u/s 68 – the loan which has been returned to the respective creditors cannot be taxed in the hands of assessee as its income – DCIT, Cir-6(1), New Delhi Vs. Minda Investment Ltd. and Vica-Versa (2016 (8) TMI 1007 – ITAT Delhi)

SC dismisses Revenue’s appeal against Rajasthan HC ruling in Hissaria Brothers deleting penalty u/s 271D/E for Sec 269SS/T default (accepting/repaying loan in cash). HC had held that penalty order was barred by limitation under clause (c) of Sec. 275(1) which prescribes six months’ time-limit rejecting Revenue’s contention that the case would fall under clause (a) of Sec. 275(1) which provides for extended period of limitation commensurating with completion of appellate proceedings.[TS-471-SC-2016]

IT: Addition u/s 145A – inclusion of service tax as part of trading receipts – ection 145A of the Act would have no application in cases where service is provided by the Assessee – CIT-2, Mumbai Vs Knight Frank (India) Pvt. Ltd. (2016 (8) TMI 1096 – BOMBAY HIGH COURT)

IT: Exemption u/sec. 54F – net consideration computation to be invested or value fixed u/s 50C as stamp valuation – Under provisions of Sec. 54F of the Act net consideration has to be invested in the Residential property but not the deeming value being fiction – Shri. R. Srinivasan (HUF) Vs ITO, Ward-I (1), Trichy (2016 (8) TMI 1092 – ITAT CHENNAI

Indirect Tax:

ST: CENVAT credit CHA services are utilized by the appellant before the goods were loaded on to the ship and therefore the same falls within the definition of input services- Kennametal India Ltd. Vs. CST, Large Taxpayers Unit (2016 (8) TMI 1031 – CESTAT Bangalore)

No penalty will be imposed on non filling of ER-5 and ER-6 returns within the period prescribed – contravention is only a procedural violation and subsequently the required return has been filed.(M/s Dharampal Satyapal Ltd. Versus C.C.E. Delhi-II) – 2016 (8) TMI 1021 – CESTAT NEW DELHI – Central Excise

HC rules in favour of assessee, directs unconditional release of seized imported goods u/s 110(2) of Customs Act absent show cause notice within 6 months from seizure as contemplated u/s 124(a); Rejects Revenue’s ‘strange’ stand that there was no seizure at all and hence, the limitation for notice would not apply, in view of the order passed in application for provisional release u/s 110-A. [TS-336-HC-2016(MAD)-CUST]

FAQ on Company Law:

Query :  One of our client companies is a section 8 company, and its AGM is scheduled to be conducted in September, and company has sent notice of AGM with proxy form. A member of the company has appointed another as proxy to present in AGM on his behalf and such person is not a member of the section 8 company. Whether such person can be appointed as proxy or membership is precondition to be eligible to be proxy ?

Answer : As per SS-2, a member of section 8 company may appoint proxy on his behalf to another person if such person is also a member of the section 8 company, no other person can be appointed as proxy if such person is also not a member.

Therefore, only a member of the section 8 company may be appointed as proxy for another member.

Here, in this case, member of the company cannot appoint such person.

Query:   An Indian registered Private Limited company has transferred their shares, which were rightly held by its two directors equally, to an Australian company and company further wants to issue shares to that Australian company also, means FDI which is covered under automatic route.

Now my question is whether company required to open share application account separately for that transaction or can get share capital in its current account. Is it mandatory to open share application account?

Answer:  After the transfer of shares to that Australian company, that company has become the shareholder of the company.

Now, if company allots further shares to it through Rights issue of shares, then there shall not be any requirement of opening any account separately.

But if company wants to allot shares through Private placement, then as per section 42(6) of the companies act 2013, monies received on application shall be kept in a separate bank account in scheduled bank and which shall not be utilized for any purpose other than –

(i)    For adjustment against allotment of securities; or

(ii)  For the repayment of monies where the company is unable to allot securities.

Key Dates:

Filing of ITR returns by Individuals, HUF (With Audit): 30/09/2016

Filing of ITR returns by all companies (except TP audit): 30/09/2016

E-Payment of Service Tax for August by Companies: 06/09/2016

E-Payment of TDS for August : 07/09/2016

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