Corporate and Professional updates 12th oct 2018

DIRECT TAX

• CBDT lays down the functionality for processing of Returns having Refund Claims which were not processed within the time allowed u/s 143(1) due to some technical or other reasons.
• Bombay High court held that reassessment for non-disclosure of bank A/C which was disclosed during original assessment is invalid. Akshar Developers Vs Assistant Commissioner of Income-tax (Bombay High Court)
• Reopening of assessment – If the Assessing Officer is prevented from carrying out assessment, the serious question of such assessment getting time barred by the time the petitioner’s litigation before the Civil Court achieves finality  – Gujarat High Courtin case of [Abha Vinaykumar Jain Vs. ITOWard 4 (1) (4))
• Assessment in the hands of representative assessee – The ITAT made a clear mistake in believing that since it was held in an earlier proceeding that the income in question arose in India, a representative assessee could not be liable because it was only liable according to it in respect of the income which was deemed to have arisen in India  – Calcutta High Courtin case of [Director Of Income Tax (International Taxation) Vs. Board Of Control For Cricket In Sri Lanka And Ors. Through Pilcom)
• Reopening of assessment u/s 147 – bogus purchases – to what exact income had escaped assessment may be open for argument, nevertheless, would not be a ground to quash the notice of reopening  – Gujarat High Courtin case of [Lalitkumar Babubhai Patel Vs.. DY. CIT, Circle 4 (2) Or His Successor )

DIRECT TAX

• Denial of deduction/exemption under section 54EC – advance received in specified assets before the date of transfer of asset – the Board have decided that if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption under section 54E  – ITAT Ahmedabadin case of [Rahul G. Patel Vs. DCIT, CIR. 1 (2) , Baroda)
• CBDT notifies Ex-Servicemen Contributory Health Scheme for purpose of section 80D of the Income Tax Act, 1961 vide notification number 50/2018 dated 26th September, 2018
• Penalty under section 271B justified on Assessee who was Partner in M/s. Price Waterhouse which is a partnership firm for his Failure to get his accounts audited as his remuneration was exceeding the limit specified U/s. 44AB.Sagar Dutta Vs DCIT (ITAT Kolkata)
• Gujarat High Court directs CBDT to respond on Tax Audit Due date Extension filed by All Gujarat Federation of Tax Consultants Versus Union of India (Gujarat High Court)
• ITAT Kolkata held that partner to get his A/Cs audited if his remuneration from firm exceed audit limit. Sagar Dutta Vs DCIT (ITAT Kolkata)
• ITAT Delhi held that reassessment on mere audit objections without any tangible material is invalid.Siddhi VinayakAeromatics (P) Ltd. Vs ACIT (ITAT Delhi)

INDIRECT TAX

• Internal Auditor cannot undertake GST Audit simultaneously : ICAI in an announcement dated 28th September 2018 has clarified that Internal Auditor cannot undertake Goods and Service Tax (GST) Audit simultaneously.
• Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved increasing of Government ownership in Goods and Services Tax Network (GSTN) and change in the existing structure with transitional plan.

• CBEC has amend the Central Goods and Services Tax Rules, 2017. These rules may be called the Central Goods and Services Tax (Eleventh Amendment) Rules, 2018 which shall be deemed to have come into force with effect from the 23rd October, 2017. Vide notification no 53/2018, dated 9th October 2018.
• CBIC amends Rule 96, refund of integrated tax paid on goods or services exported out of India: Notification No. 53/2018 – Central Tax dated 9th October 2018.
• CBEC has clarified that both the state and central authorities handling the goods and services tax have enforcement powers over all assessees in a state, triggering fears that the industry may get caught in a crossfire between the two.
• National anti-profiteering authority (NAA) orders to Companies or dealers may have to cut prices of each stock keeping unit (SKU) of their products to pass on the benefits of any lower GST rate. in a case related to a Maggi noodles (Nestle’s) dealer.
• CBIC clarifies that both the State and Central Authorities handling the GST have Enforcement Powers over All Assessee in a State. Both the Central Tax and State Tax Authorities are allowed to Initiate Intelligence-Based Enforcement Action on the entire taxpayer base, irrespective of the administrative assignment of the taxpayers to any authority.

FAQ on GST Audit:

• Query:What is the legal recourse available in respect of a person who is liable to pay tax but has failed to obtain registration?
• Answer:Section 63 of CGST/SGST Act provides that in such a case, the proper officer can assess the tax liability and pass an order to his best judgment for the relevant tax periods. However, such an order must be passed within a period of five years from the due date for furnishing the annual return for the financial year to which non-payment of tax relates.

• Query:Is summary assessment order to be necessarily passed against the taxable person?
• Answer: In certain cases, like when goods are under transportation or are stored in a warehouse, and the taxable person in respect of such goods cannot be ascertained, the person in charge of such goods shall be deemed to be the taxable person and will be assessed to tax (proviso to Section 64 of CGST/SGST Act).

RBI Update:

• The Reserve Bank of India (RBI) has imposed, by an order dated September 25, 2018, a monetary penalty of Rs 50 million on KarurVysya Bank Limited (the bank) for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms, reporting of frauds, and on need for discipline at the time of opening of current accounts. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

SEBI UPDATES

• The Securities and Exchange Board of India (SEBI) has sent letters to mutual funds seeking details about their exposure to all NBFCs and housing finance companies, regulatory and industry sources said.
• SEBI has allowed eligible foreign entities including stock exchanges to hold 15 per cent stake in depository participants in India. Earlier, foreign players were allowed to hold 15 per cent in domestic stock exchanges but none of them have scaled up their holdings to that mark so far as India’s exchange space is considered heavily regulated
• The National Academy of Customs, Indirect Taxes and Narcotics (NACIN) is conducting an examination for confirmation of enrollment of Goods and Services Tax Practitioners (GSTPs) enrolled on the GST Network under sub-rule (2) of Rule 83 and covered by clause (b) of  sub-rule (1) of Rule 83 of Central Goods and Service Tax Rules, 2017. Such GSTPs are required to pass the examination before 31 December, 2018. The examination will be held on 31.10.2018 from 1100 hrs to 1330 hrs at designated examination centers across India. In this matter kindly refer Press Release dated 17 September 2018.The registration for this exam by the eligible GSTPs has already started on 25 September, 2

OTHER UPDATES

• Finance Minister launched a transformative initiative in MSME credit space. The webportal  psbloansin59minutes.comwill enable in principle approval for MSME loans up to Rs. 1 crore within 59 minutes from SIDBI and 5 Public Sector Banks (PSBs).
• CCI amends its regulations to make it easier for corporations to Secure Approvals for Mergers and Acquisitions (M&A). It allows companies to Voluntarily Divest Assets for M&A Approvals.
• ICAI releases Exposure Draft on Accounting Standard (AS) 40:  Investment Property, which is slightly different from the Indian Accounting Standards (Ind-AS) of the Ministry of Corporate Affairs (MCA).The stakeholders can submit their comments on or before 10th November 2018
• ICAI has made it mandatory for its members to get a unique document identification number, or UDIN, a move to identify and weed out fake chartered accountants. From January 1, 2019, all paperwork for clients will need to show UDIN of the CA.
• As per Govt. Sources, IL&FS will be New Audit Watchdog NFRA’s First Test Case. Set up recently, NFRA has the powers to launch a Sue Moto Investigation on Suspected Accounting Irregularities. It is also empowered to penalize Chartered Accountants and Audit Firms
• With an aim to deepen the Commodity Derivatives Market, SEBI allows trading in this segment by Foreign Entities with exposure to the Indian Physical Commodity Market.

KEY DUE DATES

Due Dates of October 2018 :

• 14th October- ADT 1 for Appointment of Auditor
• 15th October- TCS Return for Jul to Sep 2018
• Tax Audit & ITR for FY 2017-18
• 18th October- GSTR 4 for Composition Dealer for Jul 2017 to Sep 2018
• 20th October- GSTR 3B – Sep 2018 Month
• 30th October- AOC 4 for FY 2017-18
• 31st October- GSTR 1 for July 2017 to Sep 2018
• 31st Oct- TDS Return for Jul to Sep 2018
• GST Return :
  • GSTR-3B (SEP  2018)-OCT 20th, 2018
  • Quarterly return for registered persons with aggregate turnover up to Rs. 1.50 Crores- GSTR-1 (JULY- SEP, 2018)-OCT 31ST, 2018.
  • GSTR-5 (SEP 2018)-OCT 20th, 2018
  • GSTR-4 (JULY-SEP, 2018)-OCT 18th, 2018
  • GSTR-5A (SEP 2018)-OCT 20th, 2018
  • Quarterly return for registered persons with aggregate turnover more than Rs. 1.50 Crores- GSTR-1-(SEP 2018)-OCT 31ST  2018

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