Corporate and Professional Updates on 11th June 2019

Direct Tax:

Income Tax : Pune ITAT allows deduction to assessee for interest paid on Share application money received from shareholders pending allotment. [TS-304-ITAT-2016(PUN)]

Income Tax  :  Compensation and interest awarded by the Motor Accident Claims cannot be categorized or even described as income – TDS is not liable to be deducted – Chinnadurai Vs. Tamil Nadu State Transport Corporation, Salem (Madras High Court)

Income Tax : Cancellation of the lease and the payments of the consideration – It is clearly a capital asset has come into existence in the hands of the assessee which is of enduring benefit for the business of the assessee and consequently the expenditure is liable to be treated as capital expenditure – Depreciation to be allowed – Hotel La Paz Gardens Ltd. Vs. ACIT, Cir-2(1), Panaji, Goa (ITAT Panaji)

Income Tax : Where assessee, a charitable trust, incurred expenditure in excess of income in previous year relevant to assessment year for charitable purposes, out of accumulated charity fund, it could not be denied benefit of exemption under section 11(1)(a) in respect of income of previous year relevant to assessment year, which had been admittedly applied for charitable purposes – [2016] 69 taxmann 425 (Rajasthan)

INDIRECT TAX:

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Service Tax: services rendered by director aren’t liable to service-tax if his remuneration is taxed as salary Rent Works India (P.) Ltd. V. Commissioner of Central Excise, Mumbai-V [2016] 70 taxmann.com 38 (Mumbai – CESTAT)

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Service Tax :  Cenvat credit ALLOWED for all the input services pertain to the manufacturing activity and the respective services were input for the said activity for which that was utilised – M/s Sundaram Clayton Ltd. Vs.CCE, Chennai (CESTAT Chennai)

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Service Tax :   CBEC notifies 100% reverse charge on representational service provided by Senior Advocate before any court, tribunal, authority etc., directly or indirectly, to any business entity who is litigant, applicant or petitioner in such case and such business entity shall be the person liable to pay service tax in the government exchequer – Notification No.33 & 34/2016-ST, dt.06 JUN 2016.

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Service Tax: Service tax department cannot conduct audit of assessee. Delhi High Court has held as Under after hearing the revenue and assessee and considering their submissions. Resultantly, the Court: (i) declares Rule 5A(2) as amended in terms of Notification No. 23/2014- Service Tax dated 5th December 2014 of the Central Government, to the extent that it authorises the officers of the Service Tax.( Mega Cabs Pvt. Ltd. Vs. Union Of India & Ors.)Delhi High Court

 

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Service Tax :  Short payment of Service tax in the month of July 2011 made due to the adjustment of service tax paid in excess in the month of May 2011. Section 13 of the General Clauses Act 1897 provides that singular include the plural.Further it is a well settled legal principle that the statue should be interpreted as it is even if the intention isimperfect, accordingly month includes months.(M/s. Schwing Stetter (India) Pvt. Ltd. Versus CCE, LTU, Chennai) – 2016 (6) TMI 239 – CESTAT CHENNAI

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VAT : Department of Trade & Taxes has issued a circular for requirement of item wise details in Forma Annexure -2A, Annexure 2B, DVAT 30 and DVAT 31 Vide circular No. 9/2016 of 2016-17 dated 6/06/2016. Delhi Govt. clarifies that furnishing of item-wise details of sales and purchases in DVAT Returns and Forms DVAT 30 and 31 (Sales & Purchases Registers) is mandatory for tax period commencing from April 1, 2016. However, same is optional for last quarter of FY 2015-16.

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CENTRAL EXCISE : Procuring various components of lamp shades and chandeliers from different sources and thereafter, assembling and packing same in cartons with logo and code number of product does not give rise to a ‘new product’ and therefore, does not amount to manufacture – [2016] 70 taxmann 20 (Punjab & Haryana)

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CENTRAL EXCISE : When condonation of delay is sought on ground that delay occurred due to mistake of counsel, then, such plea cannot be accepted without affidavit of such counsel; hence, appeal was dismissed as time-barred – [2016] 70 taxmann 18 (Punjab & Haryana)

• The GST Council, which will meet on June 20, will take a final decision on the turnover threshold for issuance of e-invoice for B2B sales after consultation with states.
• State governments clearly rely heavily on their own revenue raising capabilities. However, a state’s ability to raise revenue varies sharply across India, shows a new study, authored by Sacchidananda Mukherjee, associate professor at the National Institute of Public Finance and Policy (NIPFP). Mukherjee shows that, in addition to the size of the economy, a state’s tax base— the amount a government can raise through taxes—depends heavily on the structural composition of the economy.
• For instance, the tax base is lower in states that have a larger share of manufacturing and mining or industrial firms, vis-à-vis states where agriculture is more important. And, in states where services are more important than agriculture, the tax base is higher. To show this, Mukherjee analyzes value added tax (VAT) data for states between 2001 and 2016, when VAT was the most important source of revenue for states. Mukherjee also reveals that tax efficiency— that is, how effectively a state can tax its tax base—has a dynamic relationship with income levels. Tax efficiency initially increases with percapita income of states, before reaching a plateau, following which any further rise in per capita income is associated with a fall in tax efficiency.

• The amendment to Section 17 (5) of the Central Goods and Services Tax (CGST) Act deals with blocked credit. “Section 17 (5) of the CGST Act and the respective state Acts have led to a paradoxical situation by denying credits as the objective of the GST is free flow of credits when the output is in the course or furtherance of business,” said Abhishek A Rastogi, partner at law firm Khaitan & Co, who filed the writ petition on behalf of real estate companies.
• “The impugned provisions are against the objectives of GST and have accordingly been challenged on the grounds of arbitrariness and vagueness.” Tax experts said the phrase ‘on his own account’ in the GST law will need to be interpreted differently if one were to take input tax credit. Input tax credit refers to a mechanism under the GST framework wherein the tax a company pays when it purchases raw materials or other services can be passed on to the buyer when the goods or services are sold.

• Read more about: What is core Business Activity GST

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

RBI Updates:

• RBI has eased the rules for classifying borrowers as defaulters. Promoters struggling to repay their loans now have 30 days before banks classify them as defaulters and the ‘one-day default’ rule has been done away with. However, banks need to act fast to find a resolution else they would have to make increasingly larger provisions.
• The Reserve Bank of India (RBI) on Monday said commercial banks need to offer holders of basic savings bank deposit (BSBD) accounts, a minimum of four withdrawals in a month, including automatic teller machine (ATM) withdrawals. The rules will come into force from 1 July. In its earlier direction on 10 August 2012, the central bank had said while there will be no limit on the number of deposits that can be made in a BSBD account each month, account holders will be allowed up to four withdrawals in a month, including ATM withdrawals.
• The BSBD account was designed as a savings account that will offer certain minimum facilities, free of charge, to the holders. Such accounts are primarily aimed at enhancing financial inclusion among the economically weaker sections. There is no need for a minimum balance even at the time of opening the account and a customer is provided with an ATM-cum-debit card without any fees. Deposit and withdrawal services are free of cost. Also, the bank cannot levy charges for non-operation or activation of an inoperative account.

SEBI Updates:

• • The Securities and Exchange Board of India on Monday came out with a discussion paper highlighting proposals for allowing a start-up listed on the Innovators Growth Platform (IGP) to trade under the regular category of the main board. According to the proposals, the company should have listed on the IGP for a year and have a minimum of 200 shareholders for making the shift. The company, or any of its promoters, promoter group or directors, should not have been debarred from accessing the capital market or been a willful defaulter.
  • Minimum promoters’ contribution should be 20 per cent of the total capital. In case of a shortfall, alternative investment funds, foreign venture capital investors, scheduled commercial banks, public financial institutions or insurance companies can step in, subject to a maximum of 10 per cent of the total capital. This capital shall be locked in for three years from the date on which trading approval on the main board is granted, and any excess over and above the 20 per cent of promoter’s holding shall be locked-in for one year. The lock-in would not apply for companies listed on the IGP for three years or more.
• SEBI issued show-cause notices to five Asset Management Companies (AMC) on charges of the use of price-sensitive information and an alleged breach of insider trading regulations. Among the list : SBI Fund Management, ING Mutual Fund (now Birla Sunlife) and BNP Paribas.
• The Securities and Exchange Board of India has proposed rules that will allow employees to expose fraud and wrongdoing in a company and get a reward for it. “Since company employees are likely to be acquainted with the devilry of the management or the promoters, certain routes need to be established through which such irregularities may be exposed,” SEBI said in a discussion paper on Monday seeking public comments by July 1. “Simultaneously, companies also need to ensure that there is an easy and a smooth route to raise such concerns or else the workforce could also become silent perpetrators, when the issues become public.” The regulator said it faces several challenges while investigating insider trading cases as direct evidence is not easily available. Most of the time its circumstantial evidence which is available. SEBI proposed to set up a dedicated reporting window where any person who observes an unethical behavior or suspects violation of insider trading rules can report.
• The regulator said it will provide adequate safeguards against victimisation of the informant. “The confidentiality regarding the identity of the informant and information provided shall be protected through the OIP and shall be maintained throughout as well as during any proceeding initiated by Sebi except where the evidence of the informant is required during such proceedings,” Sebi said. The original information may be shared with other regulators and law enforcement authority within or outside India at Sebi’s discretion. The information provided by the informant under this policy would be exempted from disclosure.

Other Updates:

• Aluminium body cautions govt about China
• WTO warns trade weakness to continue in Q2
• Australian election results bode well for Adani
• India adopts new standards for measuring units
• Irdai proposes to increase 3rd-party insurance premium
• MNC boardrooms open doors to Indian women leaders
• Power sector’s outstanding regulatory assets at Rs76,963 cr
• Full blow trade war will push world towards recession: Morgan Stanley
• Auditor exits mount at listed SMEs as scrutiny increases after IL&FS crisis
• Torrent Pharma reports Q4 net loss of Rs 152 crore, cites drug recall
• Lakshmi Vilas rejects Religare Finance’s disclosure, threatens action
• US seeks to join Japan-India consultations on IT product tariffs
• Tata Motors profit dips 47 % in Q4
• WTO quarterly trade growth indicator still at nine-year low
• HPCL Q4 net profit jumps 70% on inventory gains
• Gold imports rise 54% to $ 3.97 billion in April
• Ford to cut about 10% of global salaried workforce
• ICICI Bank to buy stake in BSE subsidiary INX for ₹31 crore
• BPCL Q4 net profit rises 16% to ₹3,125 cr; revenue up 10% at ₹83,942 cr
• JLR posts 1st profit in four quarters despite China woes
• Adani Green Energy’s 8.75 crore shares to be offered for sale on Tuesday
• Bitcoin roars back from ‘flash crash’ to breach $8,000 once more
• Bank credit to infra sector grows 18.5% in FY19: RBI data
• TRAI says up to government to take a call on Huawei issue
• ArcelorMittal to pay Rs 42,000 crore for Essar Steel takeover: Company tells NCLAT
• Dr Reddy’s to spend $300 million on R&D in FY 20
• Rupee records biggest gain in 2 months after exit poll results
• Gold loses sheen, falls Rs 150 on lacklustre demand
• Investor wealth soars Rs 5.33 lakh cr as exit polls predict return of NDA govt.
• Need to relook at regulation of NBFCs: RBI Governor
• BoB puts accounts worth over Rs 9k cr on block
• SIAM, CII urge govt to follow practical approach on EV
• Whistleblower sought to uncover it in 2017
• ONGC, Vedanta set to win 9 oil, gas blocks each
• G20 takes note of trade wars hurting growth
• India looks to finalise list of 5G spectrum bands for meet
• RIL-BP wins first block under OALP rounds, Oil India, Vedanta bag the most
• DHFL aims to clear all dues by the end of ‘cure period’, rescale business
• Industry blames policies, USFDA probes for 73% drop in pharma FDI
• India is the third-most appealing bond market for FIIs, says study
• GST Council may fix Rs 50 cr turnover limit for e-invoice in June 20 meet
• NITI Aayog’s electric mobility proposal irks India’s auto industry
• WTO reform should not undermine its basic principles, says Piyush Goyal
• Pre-Budget consultations: Finance Minister to meet economists, industry
• BPCL to invest ₹6,877 crore to revamp Mumbai refinery complex
• Reliance Power records loss of ₹3,558 crore in fourth quarter
• Land request for shore-based plant: SAIL gets positive response from Odisha govt
• Coal India to hire merchant bankers for acquiring stakes in Australian coal assets
• Divided G20 admits worsening trade wars pose risk to world economy
• Delay in monsoon pushes rainfall deficiency to 45% in first 9 days of June: IMD
• Developing nations call for balanced approaches in e-commerce, proposed reforms
• Investors cheer as Adani Ports cuts related-party loans, steps up dividends
• MFs reduce exposure to shadow banks by ₹67,000 crore since September
• RBI’s 12 February circular makes a comeback with a dash of humility
• Free flow of data powers higher productivity, innovation but raises challenges as well, says G20
• IMF’s Lagarde urges G20 to prioritise resolving trade tensions
• G20 to wrap up digital tax by 2020 for tech giants reducing their corporate taxes
• Central Bank of India plans to raise Rs 5,000 cr this fiscal to meet Basel III norms
• Power minister positive on achieving 175 GW renewable energy target
• Govt mulls national institute for valuers

Case Law:

• Income Tax Notice u/s 148 issued to a dead person instead of legal heir was not valid. Case Name : Sri Aemala Venkateswara Rao Vs ITO.

MCA UPDATES  :

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MCA has notified new versions of e-forms AOC-4, INC-6, INC-12 and INC-29.

Key Due Dates:

• The Due Date of GSTR-1  For the Month Of May is 10th June 2019.
• The Due Date of GSTR-3b For the Month Of May is 20th June 2019.
• The Due Dates for the Deposit of TDS/TCS for the Purchase of Property 30th June 2019.\
• Annual Return For Registered Tax Payers is 30th June 2019.

• The Due Date of GSTR-3b For the Month Of May is 20th June 2019.
• The Due Dates for the Deposit of TDS/TCS for the Purchase of Property 30th June 2019.\
• Annual Return For Registered Tax Payers is 30th June 2019.
• Return filling for non SSI assessee for may in form ER-1-10/06/2016
• Return filling for EOU for Month of March in form ER-2- 10/06/2016
• Return filling in form no ER-6 by the units paying duty more than 1 crore (Cenvat + PLA) for may -10/06/2016

Read more about: GST on the real Estate  Sector

Read more about: Applicability of GST Provisions on Non-Residents Taxable Person

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