CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 3, 2016

CORPORATE AND PROFESSIONAL UPDATE DATED MARCH 3, 2016

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INCOME TAX ACT

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustments – Illustrations : Where business operation of assessee could not be carried on without services in question and same was to be outsourced and ostensible benefits were received from services rendered by AE, value of payments made to AE could not be taken as nil; consequent addition was to be deleted – [2016] 221 (Jaipur – Trib.)

Comparables and adjustments/Methods – General : Where in respect of international transactions entered into with AE, assessee was changing its stand with regard to application of most appropriate method from stage to stage, i.e., from TP study report to proceedings before Assessing Officer and DRP, matter was to be remanded back for disposal afresh – [2016] 234 (Pune – Trib.)

SECTION 115JB

MINIMUM ALTERNATE TAX

Computation of book profit : While computing book profit under section 115JB, Assessing Officer has no power to embark upon a fresh enquiry with regard to entries made in books of account of assessee-company; he has to rely upon authentic statements of accounts of company, being scrutinized and certified by statutory auditors – [2016]233 (Karnataka)

COMPANIES ACT

SECTION 397

OPPRESSION AND MISMANAGEMENT

Where pursuant to increase in their shareholding petitioners sought for reconstitution of board of directors but same was refused, petitioners were entitled to seek redressal under sections 397 & 398 against act of oppression and mismanagement – [2016]  219 (Bombay)

SEBI ACT

REGULATION 7 OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997

ACQUISITION OF 5 PER CENT AND MORE SHARES OR VOTING RIGHTS OF A COMPANY

No penalty could be imposed on failure to make disclosure of ‘sale’ under regulation 7(1A) within two days –[2016]  224 (SAT – Mumbai)

CENTRAL EXCISE ACT

SECTION 9

OFFENCES AND PENALTIES – CENTRAL EXCISE

Where prima facie quantification of duty shows alleged evasion of duty of Rs. 10 crores, offence is cognizable and non-bailable; therefore, arrests can be made by Intelligence Officers of department – [2016]  226 (Jharkhand)

SECTION 21

ARRESTS – CENTRAL EXCISE

In case of arrested persons, only Superintendent and higher officers of Central Excise have power to send them to Magistrate as per sections 19 and 21; since Intelligence Officers have not been empowered in this behalf, judicial remand ordered at request of Intelligence Officers is void – [2016]  226 (Jharkhand

CST & VAT

SECTION 6A OF CENTRAL SALES TAX ACT 1956

BURDEN OF PROOF, ETC., IN CASE OF TRANSFER OF GOODS CLAIMED OTHERWISE THAN BY WAY OF SALE

Assessee was converting spent catalyst into support catalyst (‘goods’) for its customers. It received spent catalyst from various customers from outside and within the State of Maharashtra and after processing the same, support catalyst were returned back to the customers. The assessee claimed that it had charged only for job work done for the customers and goods were not sent back by way of sale –  261 (Bombay)

CENTRAL EXCISE RULES

RULE 173Q

PENALTY – GENERAL

In absence of any specific provision for levy of penalty under Automobile Cess Rules or under parent Act Industries (Development and Regulation) Act, 1951, no penalty can be levied for failure to pay automobile cess –[2016] 227 (Jharkhand)

STATUTES

DIRECT TAX LAWS

Section 10(46) of the Income-tax Act, 1961 – Exemptions – Statutory Body/Authority/Board/Commission – Notified Body or Authority – NOTIFICATION NO. SO 530(E) [NO.8/2016 (F.NO.196/32/2014-ITA-I)], DATED 19-2-2016

Section 80CCD of the Income-tax Act, 1961 – Deduction – Contribution to Pension Scheme of Central Government – Notified Pension Scheme – NOTIFICATION NO. SO 529(E) [NO.7/2016 (F.NO.173/394/2015-ITA-I)], DATED 19-2-2016

Section 10(15) of the Income-tax Act, 1961 – Exemptions – Interest on Bonds, Debentures, Securities, etc. – Notified Bonds or Debentures issued by public sector Companies under section 10(15)(iv)(h) – NOTIFICATION NO. SO 520(E) [NO.6/2016 (F.NO.178/1/2016-ITA-I)], DATED 18-2-2016

Income-Tax (Second Amendment) Rules, 2016 – Amendment in Rules 10THB, 10THC 10THD and Form No.3CEFB – NOTIFICATION NO.SO 502(E) [NO.5/2016 (F.NO.142/7/2014-TPL)], DATED 17-2-2016

CORPORATE LAWS

Insurance (Appeal to Securities Appellate Tribunal) Rules, 2016 – NOTIFICATION NO. GSR 179(E) [F.NO.12018/1/2015-INS.II], DATED 17-2-2016

Insurance (Procedure for Holding Inquiry by Adjudicating Officer) Rules, 2016 – NOTIFICATION NO. GSR 178(E) [F.NO.12018/1/2015-INS.II], DATED 17-2-2016

FEM (Transfer or Issue of Security by A Person Resident Outside India) (Second Amendment) Regulations, 2016 – Amendment in Regulations 2, 14, Schedule 1, Schedule 9 and Substitution of Schedule 11 –NOTIFICATION [NO.FEMA.362/2016-RB]/GSR 166(E), DATED 15-2-2016

FEM (Transfer or Issue of Security by A Person Resident Outside India) (Amendment) Regulations, 2016 – Amendment in Regulations 2, 5 and Substitution of Schedule 3 & Schedule 4 – NOTIFICATION [NO.FEMA.361/2016-RB]/GSR 165(E), DATED 15-2-2016

Section 46 of the Prevention of Money-Laundering Act, 2002 – Special Courts – Application of Cr. PC, 1973 to proceedings before Special Court – Appointment of Special Public ProsecutorS – NOTIFICATION NO. S.O. 506(E) [F.NO.C-18016/7/2015-AD.ED], DATED 17-2-2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 23, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 23, 2015

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INCOME TAX ACT

SECTION 2(22)

DEEMED DIVIDEND

Inflated Purchases : Payment of money by inflating purchases cannot be construed as loan or advance within meaning of section 2(22)(e) – [2015] 64  88 (Chennai – Trib.)

SECTION 28(i)

BUSINESS INCOME – YEAR IN WHICH CHARGEABLE

Year of accrual : Where assessee advanced individual home loans, profits could be brought to tax only when recoveries are made from individual borrowers – [2015] 64  90 (Ahmedabad – Trib.)

SECTION 32

DEPRECIATION – ALLOWANCE/RATE OF

Leased assets : Where an assessee is a legal owner of assets covered by sale and lease back transactions and has used it in course of his business, he is eligible to depreciation; use in leasing business is also a use of the asset – [2015] 64  90 (Ahmedabad – Trib.)

SECTION 36(1)(vii)

BAD DEBTS

For the purpose of business : Where assessee-company advanced money to another company in ordinary course of its business activity of finance and interest on it was assessed as its business income and on issue of debenture by said company amount due to said company could be written off under section 36(1)(vii) – [2015] 64 90 (Ahmedabad – Trib.)

SECTION 43B

BUSINESS DISALLOWANCE – CERTAIN DEDUCTION TO BE ALLOWED ONLY ON ACTUAL PAYMENT

Payment, connotation of : When pursuant to settlement creditor agreed to convert a portion of interest into shares, it must be treated as extinguishment of liability for purpose of section 43B – [2015] 64  65 (Delhi)

SECTION 47

CAPITAL GAINS – TRANSACTIONS NOT REGARDED AS TRANSFER

Reassessment : Where assessee had shown gift of shares to a company, merely because assessee had been called upon by Assessing Officer for verification of value of shares in terms of section 47(iii), it would not enable revenue to resort to section 147 – [2015] 64  92 (Bombay)

SECTION 69

UNEXPLAINED INVESTMENTS

Borrowed funds : Where Commissioner (Appeals) held that investment in properties were made out of borrowed funds, but details of borrowed funds and its nexus for making investments were not examined, addition under section 69 could not be made – [2015] 64  88 (Chennai – Trib.)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Where the Revenue has been unable to demonstrate some tangible material that there is an international transaction involving AMP expenses between Indian subsidiary and foreign parent, the Revenue cannot proceed to determine ALP of AMP expenses by inferring the existence of an international transaction based on the bright line test – [2015] 64  324 (Delhi)

Comparables and adjustments/Comparables – Illustrations : Assessee, which was rendering engineering support services including related design and drawing as per specification of its foreign AE, could not be compared with a company which was engaged in functions of Third Party Inspections (TPI), certification of equipment supplied by vendors and installation of work of contractors of ONGC, other government departments and private sector undertakings – [2015] 64  160 (Delhi – Trib.)

SECTION 201

DEDUCTION OF TAX AT SOURCE – CONSEQUENCE OF FAILURE TO DEDUCT OR PAY

Before 1.4.2010, there was no limitation period under Section 201 of the Act for initiating action on TDS default. It was only by the Finance Act, 2009, the sub-section (3) to section 201 was inserted to provide for a period of limitation of – [2015] 64  325 (Karnataka)

SECTION 254

APPELLATE TRIBUNAL – POWERS OF

Power of rectification : Where on merits Tribunal had recorded finding that order passed by Assessing Officer was one within provisions of section 237, revenue could not challenge said finding in guise of rectification of order – [2015] 64  63 (Madras)

COMPANIES ACT

SECTION 397

OPPRESSION AND MISMANAGEMENT

Disputes raised in a properly filed petition under sections 397, 398, 402 and 403 are not referable to arbitration in accordance with agreement between parties – [2015] 64  176 (CLB – New Delhi)

SARFAESI ACT

SECTION 2(zd)

SECURED CREDITOR

Whether the respondent-debenture trustee of three debenture holders viz., (LIC, Canara Band and Oriental Bank of Commerce), which was neither a bank nor a financial institution and was not even registered as Securitisation company u/s 3 of SARFAESI could be treated as a secured creditor within the meaning of section 2(zd) of the SARFAESI Act? If yes, whether it can invoke the provision of SARFAESI for enforcement of security interest? –[2015] 64  326 (Andhra Pradesh)

CENTRAL EXCISE ACT

SECTION 3A

CHARGE/LEVY – EXCISE DUTY BASED ON PRODUCTION CAPACITY

In context of capacity based excise duty, there is difference between ‘temporary non-production for 15 days or more’ and ‘closure of factory’; in case of ‘closure of factory’ for even 6 days, assessee cannot be made liable to pay duty and if duty has already been paid, same is liable to be refunded back to assessee – [2015] 64 102 (Ahmedabad – CESTAT)

SECTION 11AA

INTEREST – ON DELAYED PAYMENT OF DUTY/TAX

Where assessee asks department to clarify applicability of exemption and in absence of clarification, proceeds with payment of duty along with benefit of Cenvat credit, then, assessee cannot be said to have ‘wrongly taken’ credit; hence, even if said goods are later clarified to be exempted and assessee is made to reverse credit, assessee is not liable to pay interest on reversed Cenvat credit – [2015] 64  148 (Andhra Pradesh)

CUSTOMS ACT

SECTION 14

VALUATION OF IMPORTED GOODS – TRANSACTION VALUE – GENERAL

In case of undervaluation of goods imported at Chennai port, imports of same goods made by assessee himself at Mumbai port may be regarded as ‘identical/similar goods’ and may be used to determine customs value of imports at Chennai – [2015] 64  24 (SC)

CENVAT CREDIT RULES

RULE 2(1)

CENVAT CREDIT – INPUT SERVICE – EVENT MANAGEMENT SERVICES

Event management services availed by advertising agency to procure advertising space in shows, etc. organized by such event managers, is eligible for input service credit in hands of such advertising agency – [2015] 64 153 (New Delhi – CESTAT)

STATUTES

DIRECT TAX LAWS

Section 6 of the Income-tax Act, 1961 – Residential Status – Draft guiding Principles for determination of Place Of Effective Management (Poem) Of A Company – LETTER [F.NO.142/11/2015-TPL], DATED 23-12-2015

CORPORATE LAWS

SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2015 – Amendment in Regulation 34 – NOTIFICATION NO.SEBI/LAD-NRO/GN/2015-16/27, DATED 22-12-2015

IRDAI (Issuance of Capital by Indian Insurance Companies Transacting other than Life Insurance Business) Regulations, 2015 – NOTIFICATION F.NO.IRDAI/REG/21/111/2015, DATED 15-12-2015

Registration and submission of information to CBDT for compliance with obligations under Foreign Account Tax Compliance Act (FATCA)/Common Reporting Standards (CRS) – CIRCULAR NO.IRDA/F&A/CIR/GLD/222/12/2015, DATED 21-12-2015

Sixth Meeting of International Advisory Board of SEBI – PRESS RELEASE NO.297/2015, DATED 23-12-2015

Debts Recovery Appellate Tribunal, Allahabad (Court Master) Recruitment Rules, 2015 – NOTIFICATION NO. GSR 960(E) [F.NO.5/3/2015-DRT], DATED 11-12-2015

Debts Recovery Appellate Tribunal, Mumbai (Court Master) Recruitment Rules, 2015 – NOTIFICATION NO. GSR 961(E) [F.NO.5/3/2015-DRT], DATED 11-12-2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

COMPANIES ACT, 2013

COMPANIES ACT

Untitled37ASECTION 397

OPPRESSION AND MISMANAGEMENT

Where CLB passed status quo order in respect of subject property to restrain creation of third party rights, construction done by respondent tenant to repair that property could not be considered as detriment to interest of anybody and, therefore, contempt application filed to restrain construction by respondent was to be dismissed –[2015] (CLB – New Delhi)

COMPETITION ACT

SECTION 3

PROHIBITION OF AGREEMENTS – ANTI-COMPETITIVE AGREEMENTS

Where real estate developers i.e., Jaiprakash Associates (JAL) and JaypeeInfratech (JIL) did not have ability to influence conditions of competition in relevant market for provision of services for development and sale of residential apartments in Noida and Greater Noida and there were several established real estate players offering world class amenities, JAL/JIL was not in a dominant position in relevant market and, therefore, question of examining alleged abusive conduct did not arise – [2015] (CCI)

Where evidence available on record was insufficient to hold Opposite Parties responsible for having colluded in tenders for supply of AMDBS, a critical safety item required for railway coaches, complaint of alleged unfair business practices made by Informant against Opposite Parties was to be dismissed – [2015] (CCI)

FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992

SECTION 5

EXPORT AND IMPORT POLICY

Notification No. 48/2005 dated February 20, 2006 and Notification No. 8/2006 dated June 12, 2006 amending ‘Target Plus Scheme’ under EXIM Policy/Foreign Trade Policy 2004-2009 to restrict/reduce benefit to exporter retrospectively from 1-4-2005 were ultra vires, as already accrued benefit cannot be taken away by retrospective amendment; therefore, the said notifications were read down to be effective only from dates they are issued –[2015] (SC)

CUSTOMS ACT

SECTION 129A

APPEALS – RESTORATION OF – APPELLATE TRIBUNAL

Issue ‘whether Tribunal can restore appeals even when assessee made pre-deposit only after due date specified by High Court’ was referred to Third Member owing to difference of opinion – [2015] (Mumbai – CESTAT)

CUSTOMS TARIFF ACT

SECTION 3

LEVY OF ADDITIONAL DUTY EQUAL TO EXCISE DUTY

In view of Explanation 1 to Section 3 of Central Excise Act, 1944, in case of DTA clearances by 100% EOUs, CVD portion equal to excise duty is leviable at highest of excise duty rates in India. Thus, in case of goods liable to excise duty at different rates owing to exemptions or otherwise, CVD portion would be computed using highest rate of excise duty. This principle is analogous to principles in Section 3(1) of Customs Tariff Act, 1975 – [2015] (Mumbai – CESTAT)

SECTION 9A

CHARGE/LEVY – ANTI DUMPING DUTY

Where: (a) provisional anti-dumping was levied on 2-5-2002 and same became ineffective on completion of 6 months on 1-11-2002, and (b) final anti-dumping was levied only on 1-5-2003, then, no anti-dumping duty could be levied during gap period, viz., 2-11-2002 to 30-4-2003 – [2015] (SC)

CST & VAT

SECTION 2(xv) OF THE KERALA VALUE ADDED TAX ACT, 2003

DEALER

‘Flipkart’ is merely facilitating sales, purchase and delivery of goods, it can’t be considered as dealer of goods under Kerala VAT Act – [2015] (Kerala)

SECTION 6 OF UTTAR PRADESH VALUE ADDED TAX ACT, 2008

TAX INCIDENCE AND LEVY – COMPOSITION OF TAX LIABILITY

Compounding Scheme dated 9-6-2009 (Int Bhatta Samadhan Yojna) announced under section 6 for seasons 2007-08 (1-1-2008 to 31-9-2008) and 2008-09 (1-10-2008 to 31-9-2009) is not ultra vires to Constitution – [2015] (Allahabad)

CENVAT CREDIT RULES

RULE 2(l)

CENVAT CREDIT – INPUT SERVICE – GENERAL

Dealers of SIM Cards/Recharge vouchers cannot be regarded as ‘recipients of telecom services’ provided by telecom companies; hence, said dealers cannot take input service credit of service tax paid by telecom companies – [2015] (New Delhi – CESTAT)

STATUTES

DIRECT TAX LAWS 

Section 245R of the Income-tax Act, 961 – Procedure on receipt of application – Representation of cases before Authority for Advance Ruling – LETTER F.NO.225/261/2015/ITA.II, DATED 28-10-2015

Section 54EC of the Income-tax Act, 1961 – Capital Gain not to be charged on Investment in certain Bonds – Taxation of income from offshore rupee denominated bonds – PRESS RELEASE, DATED 29-10-2015

Section 92C of the Income-tax Act, 1961 – Transfer Pricing – Computation of Arm’s Length Price – Notified Tolerance Limit – NOTIFICATION NO.86/2015 [F.NO.500/1/2014-APA-II], DATED 29-10-2015

CORPORATE LAWS

IRDAI (Registration and Operation of Branch Offices of Foreign Reinsurers other Than Lloyd’s) Regulations, 2015 – NOTIFICATION F.NO.IRDAI/REG/17/107/2015, DATED 19-10-2015

Clarifications on Applicability of Provisions of section 45 of Insurance Act, 1938 in various scenarios – CIRCULAR NO. IRDA/LIFE/GDL/MISC/186/10/2015, DATED 28-10-2015

SEBI (Issue of Capital and Disclosure Requirements) (Seventh Amendment) Regulations, 2015 – Amendment in Regulation 58 and Schedule VIII – NOTIFICATION NO.SEBI/LAD-NRO/GN/2015-16/025, DATED 27-10-2015

IRDAI (Acquisition of Surrender and Paid Up Values) Regulations, 2015 – NOTIFICATION F.NO.IRDAI/REG/15/105/2015, DATED 16-9-2015

INDIRECT TAX LAWS (ST./EX./CUS. & (CST & VAT)

Extension of Filing of Online Return for Second Quarter 2015-16 –CIRCULAR NO.27 OF 2015-16 [NO.F.7(420)/VAT/POLICY/2011/PF/955-961], DATED 28-10-2015

Extension of time limit for Filing of Annual Return and Filing of Audit Report by a Dealer – NOTIFICATION NO.FTX.49/2014/88, DATED 12-10-2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com  or call at 9555555480