CORPORATE TAX UPDATE FOR THE MONTH OF OCTOBER FIRST WEEK

Corporate tax Update for the Month of October first week

DIRECT TAXES:

1. TDS liability on advertisement – There is no contract between the assessee and these two payee firms for providing any space/land/building, machinery etc.
2. so as to fall in the realm of “rent” as stated in section 194I. Here it is a pure case of advertising contract for which TDS has rightly been deducted u/s 194C. –(Dy. Commissioner of Income-Tax, TDS-1 (1) , Mumbai Versus Group M. Media India Pvt Ltd and Vica-Versa – ITAT MUMBAI)

2. Addition made on account of performance related pay provisions to directors and staff – ascertained liability – there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. – (DCIT, Circle-6 (2) ,MumbaiVersus M/s Credit Ana. and Res. Ltd, ITAT MUMBAI)

3. TDS liability on advertisement – There is no contract between the assessee and these two payee firms for providing any space/land/building, machinery etc.
4. so as to fall in the realm of “rent” as stated in section 194I. Here it is a pure case of advertising contract for which TDS has rightly been deducted u/s 194C. –(Dy. Commissioner of Income-Tax, TDS-1 (1) , Mumbai Versus Group M. Media India Pvt Ltd and Vica-Versa – ITAT MUMBAI)

4. Addition made on account of performance related pay provisions to directors and staff – ascertained liability – there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. – (DCIT, Circle-6 (2) ,MumbaiVersus M/s Credit Ana. and Res. Ltd, ITAT MUMBAI)

 INDIRECT TAX:

1. Amendment in notification no. 12/2012 customs dated 17.03.2012 soa s to increase the basic custom duty on ghee, butter and butter oil from the present rate of 30% to 40% up to 31^stMarch 2016.
2. Circular no. regarding service tax levy on services provided by a goods transport agency.

3. Denial of CENVAT Credit – invoice issued in the name of head office and endorsed to the appellant’s unit – Revenue has not made out a case that the appellant had availed CENVAT Credit which is within the restriction of the ISD registration and therefore, there is no reason to deny the CENVAT Credit – (Commissioner, Central Excise & Service Tax, Vapi Versus M/s Smita Conductors Ltd. CESTAT AHMEDABAD)
4. Denial of CENVAT Credit – whether CENVAT credit of duty paid on Trolleys, used in the assembly line of ACs, is admissible to the appellant or not – cenvat credit is admissible to the appellant. (M/s. Hitachi Life and Solution India Limited Versus Commissioner of Central Excise & S.T., Ahmedabad – CESTAT AHMEDABAD)

5. Amendment in notification no. 12/2012 customs dated 17.03.2012 soa s to increase the basic custom duty on ghee, butter and butter oil from the present rate of 30% to 40% up to 31^stMarch 2016. (click here to view)

6. Circular no. regarding service tax levy on services provided by a goods transport agency. (click here to view)

7. Denial of CENVAT Credit – invoice issued in the name of head office and endorsed to the appellant’s unit – Revenue has not made out a case that the appellant had availed CENVAT Credit which is within the restriction of the ISD registration.
8. Therefore, there is no reason to deny the CENVAT Credit – (Commissioner, Central Excise & Service Tax, Vapi Versus M/s Smita Conductors Ltd. CESTAT AHMEDABAD)

8. Denial of CENVAT Credit – whether CENVAT credit of duty paid on Trolleys, used in the assembly line of ACs, is admissible to the appellant or not – cenvat credit is admissible to the appellant. (M/s. Hitachi Life and Solution India Limited Versus Commissioner of Central Excise & S.T., Ahmedabad – CESTAT AHMEDABAD)

COMPANY  LAW:

Query: With respect to section 143 (12), is it that only material frauds should be made reportable and the materiality should be left to auditors’ discretion?

Answer: Section 143(12) casts duty on the auditor to report fraud to the Central Government. Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014 states that for the purpose of sub-section (12) of section 143, in case the auditor has sufficient reason to believe that an offence involving fraud, is being or has been committed against the company by officers or employees of the company, he shall report the matter to the Central Government immediately but not later than sixty days of his knowledge.

Query: With respect to section 143 (12), is it that only material frauds should be made reportable and the materiality should be left to auditors’ discretion?

Answer: Section 143(12) casts duty on the auditor to report fraud to the Central Government. Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014 states that for the purpose of sub-section (12) of section 143, in case the auditor has sufficient reason to believe that an offence involving fraud, is being or has been committed against the company by officers or employees of the company, he shall report the matter to the Central Government immediately but not later than sixty days of his knowledge.

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