CORPORATE AND PROFESSIONAL UPDATES 13TH AUG 2018

Direct Tax :

• Bombay HC dismisses Revenue’s appeal, upholds ITAT’s exclusion of 4 comparables on grounds of functional dissimilarity, abnormal profit etc. for assessee providing software development services to AE for AY 2008-09; States that “Revenue has failed to show as to how the finding arrived at by the Tribunal is perverse in any manner. Nor has the Revenue even attempted to demonstrate that analysis done by the Tribunal while excluding the aforesaid four companies from the list of comparables, was in any manner contrary to the settled position in law”, thus holds that there is no reason to entertain this appeal; [TS-787-HC-2018(BOM)- TP]
• Cochin ITAT holds that compensation of Rs. 40 cr. received by assessee (a Geojit group of company) during AY 2009-10 from BNP Paribas (a French Bank) for discontinuing commodity trading business is taxable u/s 28(va); Rejects assessee’s stand that compensation was towards loss of source of income /profit earning apparatus and therefore, it was a non-taxable capital receipt; Observes that a new company under the same group `Geojit’ was incorporated by common promoters whereby assessee’s commodity trading was transferred entirely along with its clientele to the new floatedcompany GCL, notes that in the eyes of the clients, the business is carried on in the same name;[TS-439-ITAT-2018(COCH)
• Mumbai ITAT deletes Sec 80IC disallowance made by AO in the final assessment order, over and above the amount disallowed in the draft assessment order for AY 2008–09, rejects Revenue’s plea that since enquiry was incomplete at the time of passing of draft assessment order, AO was competent to make addition/disallowance in variance with draft assessment order; Explaining the scheme of Sec 144C, which is a code by itself, ITAT opines that “… where the Assessing Officer passes the final assessment order under sub–section (3) of section 144C of the Act, he has no such power to deviate from the draft assessment order and can pass the final assessment order only on the basis of draft assessment order”;[TS-441-ITAT-2018(Mum)]
• Chennai ITAT reverses CIT(A) order for AY 2014-15, holds that payment made by partnership firm (assessee) to retiring partner consequent to family settlement, is deductible from taxable income; Notes that restaurant business run by assessee firm was originally established by an individual and after his death, his legal heirs formed a partnership firm to run the inherited restaurant business, however, on account of family dispute, one of the partners decided to retire from the partnership firm and accordingly, payment was made to him and his wife which was disallowed by AO;[TS-442-ITAT-2018(CHNY)]
• CBDT clarified that income tax department would scrutinise only 0.35% of returns filed for the last fiscal, down from 1% earlier. While the department would repose faith in taxpayers, the enforcement action would be severe on tax evaders.

INDIRECT TAX

• Karnataka Authority for Advance Rulings has held that deposit of goods to a custodian with obligation to return on submission of electronic receipts would not be liable for GST.
• CBEC has extends the time limit for furnishing the details of outward supplies in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017, by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from July, 2018 to March, 2019 till the eleventh day of the month succeeding such month.

FAQ on GST Audit:

• Query: Can a customer who buys from a taxable person who is under composition scheme claim composition tax as input credit?

• Answer: No. The recipient is not eligible to take input tax credit of composition tax paid.Moreover, a taxable person paying taxes under composition scheme is not entitled to collect taxes from the recipient in terms of Section 10(4) of the CGST Act, 2017.Accordingly, there does not arise a question for the recipient to claim input tax credit.
• Query: Can a company be proceeded against or prosecuted for any offence under the CGST/SGST Act ?
• Answer: Yes. Section 137 of the CGST/SGST ACT provides that every person who was in-charge of or responsible to a company for the conduct of its business shall, along-with the company itself, be liable to be proceeded against and punished for an offence committed by the company while such person was in-charge of the affairs of the company. If any offence committed by the company.

Read more about: What is core Business Activity GST

Read more about: All about GST Offenses, Penalties, and Appeals

MCA UPDATES

• MCA through RoC, Delhi and Haryana strikes off names of 24,280 registered  Companies under Section 248 of Companies Act, 2013 for non-compliances of Company law effective 8th August, 2018.
• Form DIR3-KYC is likely to be revised on MCA21 Company Forms Download page w.e.f 13th AUG 2018. Stakeholders are advised to check the latest version before filing.

SEBI UPDATES

• SEBI panel recommends seeking powers to tap phone callsto aid investigations and also grant immunity to whistle-blowers blowing the lid off frauds and other violations.
• SEBI has constituted a Committee on Fair Market Conduct in August, 2017 has invited Comments from public are invited on the recommendations given by the Committee on Fair Market Conduct, in the prescribed format, latest by August 24, 2018.

RBI Update:

• The Reserve Bank released data on the performance of the private corporate sector during 2017-18 drawn from abridged financial results of 3,096 listed non-government non-financial (NGNF) companies. Data pertaining to 2016-17 are also presented in the tables to enable comparison.
• The on India’s inward remittances in 2016-17, the fourth in the series.It captures various aspects relating to remittances – source; destination; purpose of inward remittances; size; prevalent mode of transmission; and receivers’/ senders’ cost of remittances.

KEY DUE DATES

• GSTR-3B (JULY 2018)-AUG 20th, 2018
• GSTR-5 (JULY 2018)-AUG 20th, 2018
• GSTR-6 (JULY 17 – AUG’18)- SEP 30TH, 2018
• GSTR-4 (JULY-SEP, 2018)-OCT 18th, 2018
• GSTR-5A (JULY 2018)-AUG 20th, 2018
• Quarterly return for registered persons with aggregate turnover up to Rs. 1.50 Crores- GSTR-1 (JULY- SEP, 2018)-OCT 31ST  2018.