Corporate and professional updates 29th sep 2018

CORPORATE AND PROFESSIONAL UPDATES 29TH SEP 2018

DIRECT TAX

• Income Tax:  Disallowance of artificial loss made on account of fictitious transactions – CIT(A) has deleted the addition merely by observing that the books of accounts of the assessee were audited and have not been rejected by the AO. – Matter restored before the CIT(A)  – ITAT Mumbai in case of [ACIT 12 (2) (2), Mumbai Vs. M/S. Highland Industries Ltd.]

• Income Tax: TDS Credit – Wherever the payer-deductor had made the payment to the company but by error deposited the tax in the account of the firm, the petitioner company must get the benefit of such tax deducted at source  – Gujarat High Court in case of [Anish Infracon India Pvt. Ltd. Vs. DCIT]

Income Tax:

• The claim of credit of TDS deducted on salary – Employer failed to deposit the TDS amount with the Government – Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years.
• The credit of such tax would be given to the petitioner for the respective years  – Gujarat High Court in case of [Devarsh Pravinbhai Patel Vs. ACIT Circle5 (1) (1)]
• Income Tax: Addition u/s 41 – remission or cessation of liability – when the software library was capitalized, it cannot be said that any benefit or remission or cessation of liability occurred  – Madras High Court in case of [The CIT Vs. Smt. R. Radhika]

• The credit of TDS deducted from salary – Revenue directed to give the credit even if the employer failed to deposit TDS amount with the Government – Devarsh Pravinbhai Patel Vs ACIT (2018 (9) TMI 1635 – Gujarat High Court).

Calculation of Turnover for Tax Audit  u/s 44 AB of Income Tax Act, 1961: 

For Assessee in share trading business to give them a clear understanding of whether they are liable to get their accounts audited for tax audit u/s 44AB of the Income Tax Audit. So, let’s check what law dictates about it.

Tax Audit Applicability under section 44AB:

• An individual who is engaged in business and the annual turnover of his/her business is Rs 1 crore and above.
• Determination of turnover u/s 44ab of the income tax act,1961, in case of trading of shares either on speculation or nonspeculation basis
• “As per Section 43(5) of the Income Tax Act, 1961, INTRA-DAY TRADING shall be considered as SPECULATIVE BUSINESS TRANSACTIONS and the income therefrom would be either speculation gains or speculation losses. Income from speculation gains is taxed at the normal rates.”
• However, Income from trading F&O (both intraday and overnight) on all the exchanges is considered as NON-SPECULATIVE BUSINESS TRANSACTIONS as it has been specifically defined this way.
• Income from shorter-term equity delivery-based trades (held for between 1 day to 1 year) are also best to be considered as non-speculative business income if the frequency of such trades executed by you is high or if investing/trading in the markets is your main source of income.

Turnover or gross receipts in respect of transactions in shares, securities, and derivatives may be determined in the following manner:

• As per  Para 5 of “Guidance Note on Tax Audit under Section 44AB of the Income Tax Act,1961″ issued by The Institute of Chartered Accountants of India (ICAI):

(a) For Speculative Transactions:

“The Turnover is net of all positive and negative income from the various transactions and not total of all Sales transaction. So if your Net Income > 1 Crores rs., you are liable to tax audit.”

(b) Derivatives, Futures, And Options (Non- Speculative Transactions)

“The turnover in such types of transactions is to be determined as follows:
(i) The total of favorable and unfavorable differences shall be taken as turnover. (i.e suppose in 1st transaction you have incurred a loss of Rs 65 Lacs and after that, you entered in profit transaction in which you have earned Rs 36 lacs, Then as per this guidance note you are liable to tax audit because the total of Profit and Loss a/c exceed Rs 1 Crore)

(ii) Premium received on sale of options is also to be included in turnover. (Call or Put Premium paid/received)

(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.”

INDIRECT TAX

• MoF issues circular clarifying applicability of GST on Residential programs or camps meant for advancement of religion, spirituality, or yoga by religious and charitable trusts – Circular No. 66/2018, dt.26.09.2018.
• Marg Sudharan Shulk – charged and collected by the applicant for the maintenance of forest road, from non-government, private, and commercial vehicles engaged in mining work in lieu of the use of forest road – Levy of GST confirmed – AAR, the UK in Divisional Forest Officer, Dehradun (2018 (9) TMI 1647).
• CBEC has issued a circular regarding GST on Residential programmers or camps meant for the advancement of religion, spirituality, or yoga by religious and charitable trusts. Vide circular no 66/40/2018-GST, dated 26th September 2018.

• GST: Post GST regime, the pending refund claim of CENVAT credit under Central Excise, if sanctioned, will necessarily have to be paid in cash –Toshiba Machine (Chennai) Pvt. Ltd. Vs CCE (2018 (9) TMI 1576 – CESTAT Chennai).

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 the 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.

RBI Update:

• The Reserve Bank of India has issued notification regarding the Voluntary Transition of Primary (Urban) Co-operative Banks (UCBs) into Small Finance Banks (SFBs). Vide notification no RBI/2018-19/52, dated 27th September 2018.

OTHER UPDATES

• ICAI Elections 2018: Nominations for 32 Central Council (CC) Seats and 64 Regional Council (RC) Seatshave been completed y’day. The Region-wise list of valid candidates is expected soon.
• ICAI has launched a unique and exclusive Job Portal for Chartered Accountants https://cajobs.icai.org where no. of companies and vacancies increasing every day. Members can find the best job on this portal that matches their interests.

KEY DUE DATES

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

  What are the interim dividend and final dividend?

  What is the Process to get back shares from IEPF

  CLOSURE OF SUBSIDIARY COMPANY

  Compliance for Foreign Subsidiary Companies in India

  Key Highlights of RACP Bill, 2020 and Companies (Amendment) Bill,2020