Corporate And Professional updates on 17th January 2019

Direct Tax updates:

• The Return Of Income tax may get processed In 1 day now while earlie rafter 63 days, making refunds more expeditious, after a proposed integrated e-filing and Centralised Processing Centre.
• The New system will permit issue of refunds to the taxpayer’s bank account without any face to face communication with Government. The tax department, provide processing status updates, and speedy communication using mobile app, email, SMS and on the department website to ensure transparency and accountability. This will assure fairness in tax treatment to every taxpayer irrespective of their status.
• The cabinet has approved the expenditure sanction for the consolidated cost of Rs.1,482.44 crore of the existing CPC-ITR 1.0 project up to 2018-19. The Centralised Processing Centre in Bangalore, which processes paper-based and e-returns, has processed 23 crore returns so far.
• The startups commenced before April 2016 covered,” Department of Industrial Policy and Promotion (DIPP) secretary Ramesh Abhishek told ET. To claim the exemption startups and investors need to make an application from DIPP in a prescribed format along with necessary documents. The Central Board of Direct Taxes will then issue certificate of exemption within 45 days of the application.
• The application will no longer be required to be cleared by the interministerial committee. The application only seeks justification for the valuation of shares along with supporting document.
• “A simplified form to be filled by startups, which needs only the PAN details from investors, and some other simplified and basic information which can be easily provided to the regulators,” said Rajat Tandon, president of IVCA.

Indirect Tax:

• The GST Council constitutes an Eight-Member Group of Ministers which will suggest whether a Uniform Tax Rate should be imposed on Lotteries or the current differential tax rate system be continued. Currently, a State-Organised Lottery attracts 12% GST while a State-Authorised Lottery attracts 28% tax.

SEBI UPDATES:

• SEBI issues norms for Mutual Funds’ Investments in Derivatives & allows Mutual Funds to write Call Options subject to certain conditions. Currently, mutual fund schemes are permitted to undertake transactions in equity derivatives but cannot write options or purchase instruments with embedded written options.
• The Security Exchange Board of India may strict the norms for liquid funds, the most popular mutual fund product among institutional investors with average assets under management. The Proposal that the capital market regulator is considering for liquid schemes are mandatory minimum investments in short-term government bonds, a plan to introduce a lock-in for investments in liquid funds is also being discussed.
• The Security Exchange Board of India, appointed by the regulator to decide on reforms for mutual funds, is yet to formally meet to discuss these measures it is not clear how the final rules would take shape. The regulator’s decision to tighten rules for mutual funds comes in the wake of the crisis at the IL&FS Group, which defaulted on its payments to various investors including mutual funds.
• The Regulatory yet has to decide the investment, but as Per the Professionalist the scheme is required to invest minimum 15-20% of the assets under management in treasury bills with 90 days maturity. “It will be prudent because with treasury bills, mutual funds can always tap the CBLO market to borrow.
• The plan of introducing a minimum investment period for liquid funds there was a suggestion to bring in a seven-day lock-in for liquid funds to ease the volatility in flows, but this proposal has met with maximum opposition from the MFAC and the industry.
• According to Fund Manager Borrowers would reduce dependence on Liquid funds due to pressure on retiring debt in 30 days. “Borrowers can effectively keep the money for 21-22 working days. It is going to be stressful for companies,”

Case Laws on Income Tax:

Case 1:

Supreme Court in case of [CIT (Exemptions) –Pune Vs. Progressive Education Society

Condonation of delay – delay of 362 days – the main cause of delay was difference of opinion between the two Officers and ultimately legal opinion was taken and it was decided to file the appeal – delay condoned.

Case 2:

Madras High Court in case of [CIT, Chennai Vs. M/S. Savera Industries Ltd.

Nature of expenditure – expenditure for re-place of flooring and purchase of air conditioner, dish washing machine, and audio/video equipments in the pub etc. – Held as revenue expenditure allowable as deduction u/s 37.

Case 3:

ACIT, Central Circle 6 (1), New Delhi Vs.Maruti Countrywide Auto Financial Services Pvt. Ltd.

Loss on foreclosure of loans – Whether equivalent to write off of an asset which is capital in nature and not allowable u/s. 37(1) since it is not a Revenue write off? – The assesse satisfies all the conditions of allowabaility of this sum as deduction u/s 36(1) (vii) rws 36(2).

Case 4:

CEC International Corporation (INDIA) Pvt. Ltd. Vs. The DCIT, Circle-3 (1), New Delhi

Allowable expenditure u/s 37(1) – The assessed at the initial stage could not file any reply on this issue. The DRP has given a specific finding that this amount have been incurred on salary advance and other payments which are neither in the nature of trading loss nor the bad debts

FAQ’s on GST:

QUES. What will be the “place of supply of services” in case of stock brokers?

ANS. In case of stock broking, the details of the address of the client are required to be updated with the Stock Exchange as part of the “Unique Client Code” details. Therefore, in case of domestic supplies of such services, address on record with the stock brokers shall be the “location of the recipient of services” in terms of section 12(12) of the IGST Act, 2017. However, in cases where the the location of the recipient is outside India, the place of supply shall be determined as per section 13(8) of the IGST Act, 2017 i.e. as an intermediary.

QUES. What is the “place of business” for a stock broker?

ANS. Section 2(85) of the CGST Act, 2017 defines “place of business” to include: (i) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or (ii) a place where a taxable person maintains his books of account; or (iii) a place where a taxable person is engaged in business through an agent, by whatever name called. In case of operations of a stock broker, it is required by law that all transactions would be via screen based trading on the Stock Exchanges. Therefore, the Page 29 of 32 following would be the “place of business” in case of stock brokers: (i) All the branches of the stock broker where the Stock Exchange Trading terminals are located and where trade is carried out on behalf of clients; (ii) Main office/ Head office/ Registered Office/ Branch office where back office operations are carried out including issuing of bills/ contracts/ tax invoices/ account statements to the clients. In case of sub-brokers’ / Authorised Person office, where the premises are neither owned by the stock broker nor rented/ leased in favour of the stock broker and there are no employees on the payroll of the stock broker in such an office, then such premises shall not be considered a place of business of the stock broker.

Key Due Dates:

• Quarterly return for composition dealer GSTR-4 is 18-01-2019.
• GSTR-3B for the m/o December 2018 is 20-01-2019.

Other Industry Updates:

• RBI further eases External Borrowing Norms.
• Shares of IDFC First Bank, combined entity formed after the merger of Capital First with IDFC Bank, got listed on the NSE & BSE yesterday.
• Microsoft to include India in Venture Fund.
• Mukesh Ambani in Top Global Thinkers list of Foreign Policy.
• Infosys gets Mandate for next-gen ITR filing system.
• Ashok Leyland set to ply 50 Electric Buses for Ahmedabad BRTS by May.
• Skoda India Profit after Tax plunges 66% in FY18, hit by Higher Expenses and Lower Financial Support from the Parent Entity.
• India to bar Private Refiners from tapping Iran Oil Quota.
• Patanjali only suitor for Ruchi Soya as Adani opts out.
• Bond slide in India reflects fiscal jitters about Farm Stimulus.
• Maha Govt keen on buying Air India building in Mumbai.
• Fortis Healthcare completes acquisition of Religare Health Trust’s Indian Assets.
• Cabinet clears Rs 22,594 Crore plan for expansion of Numaligarh refinery.
• SBI-led Consortium of Lenders likely to bag biggest stake in Jet Airways, Founder Chairman Goyal’s stake could possibly fall to around 24 %.
• Cabinet approves Rs 6,000 Recapitalisation of EXIM Bank.
• E-comm curbs could hit Online Sales by $46-bn: PwC.