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CORPORATE AND PROFESSIONAL UPDATE ON DECEMBER 3, 2015

CORPORATE AND PROFESSIONAL UPDATE ON DECEMBER 3, 2015

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www.caindelhiindia.com; Registration

DIRECT TAXES:

  • Rejection of book results u/s 145 – estimating the income at 5 percent of gross receipts – no material was brought to establish that the purchases and expenses had been inflated or the sales had been suppressed and in the absence of any such material or finding given there was no justification in invoking the provisions of Section 145(2)–(Mehta Construction Co. Versus Income Tax Officer, Ward-38 (2) , New Delhi And Vica-Versa, ITAT DELHI).
  • Rejection of TDS credit – the corresponding receipt has not been offered to tax – it clear that if there was no liability to pay tax the TDS paid is liable to be refunded- (M/s Elsamex TWS- SNC Joint Venture Versus Commissioner of Income Tax, Asstt. Commissioner of Income Tax, ITAT BANGALORE).
  • Importer not guilty for wrongly declaring Country of origin if it was made as per supplier’s assertion [2015] 356(SC) Commissioner of Customs (Import) v. Wings Electronics.
  • Time-limit to deposit TDS/TCS extended to 20th Dec. 2015 in the state of Tamil Nadu.
  • No TDS liability on reimbursement of exp. incurred by C&F agent if separate bill was raised by him, [2015]  16 (Gujarat) Pri. CIT v. Consumer Marketing (India) (P.) Ltd.
  • Correctness of law laid down by Bombay High Court in Ace Builder 281 ITR 210 that deduction u/s 54EC is available to short-term capital gains computed u/s 50 doubted by Tribunal- (ITO vs. Legal Heir of Shri Durgaprasad Agnihotri- (ITAT Mumbai).
  • Making allegations of fraud against Dept’s Counsel and claiming that they deliberately presented weak case seeks to prejudice and interfere with due course of judicial proceedings & prima facie constitutes criminal contempt of court- (CIT vs. Escorts Limited (Delhi High Court).

INDIRECT TAXES: 

  • Valuation of goods – Under valuation – whether the value of the software was to be included while arriving at the transaction value of the cellular phones and for the purpose of payment of duty – larger bench of the tribunal to decide the matter afresh–(Commisioner of Central Excise, Goa Versus Bhagyanagar Metals Limited, SUPREME COURT).
  • Refund of sales tax – some price variation is there in the shape of reduction of the value – it cannot be said to be a case of reduction/discount as everything has happened after delivery which cannot be said to be price reduction or discount- (Universal Cylinders Limited Versus Commercial Taxes Officer, Anti Evasion, Alwar, RAJASTHAN HIGH COURT).
  • Demand of service tax – activity of preparation of vegetables, fruits by processing the same & packing in consumer packs for their clients is in relation to agriculture – Not liable to service tax- (Tasty Bite Eatables Ltd. Versus Commissioner of Central Excise, Pune-III, CESTAT MUMBAI).
  • Service Tax : Engaging cricketers to endorse products and brand of Hero by such cricketers through various mediums viz. television, radio, display on cricket bats etc., amounts to ‘advertisement services’ and is liable to service tax [2015]  71 (Mumbai – CESTAT) Percept D Mark (India) (P.) Ltd. v. Commissioner of Service Tax.

FAQ ON COMPANY LAW:

Query Answer
As per Companies Act 2013, it is mandatory to attend the Annual General Meeting but it has certain exemptions. How can company give exemption to auditor to attend Annual General Meeting. Please give suggestion as soon as possible? Section 146 of Companies Act, 2013 provides for the exemption to Auditor to attend the General Meeting. However, the company may provide for the exemption to the Auditor of Company to attend General Meeting of Company on the request of Auditor. The Auditor may request the Company, as & when he receives the Notice of General meeting, for granting exemption to attend General Meeting and Company may, on being satisfied, grant exemption to attend the same.
Mr. X was appointed on 21st April, 2013 as the Whole-time Director of ABC Ltd. Now the company is not in a position to pay any remuneration but he was paid Rs. 50 lacs for the financial year 2014-15. Currently, the effective capital of the company is Rs.150 crores. Referring to the provisions of Companies Act, 2013, as contained in Schedule V, examine the validity of the above payment of remuneration to Mr. X.
  • Under Part II of Schedule V to the Companies Act, 2013, the remuneration payable to managerial personnel is linked to the effective capital of the company. Where in any financial year during the currency of tenure of a managerial person, a company has no profits or its profits are inadequate, it may, without Central Government approval, pay remuneration to the managerial person not exceeding Rs. 60 Lakhs in the year in case the effective capital of the company is between Rs. 100 crores to Rs.250 crores. The limit will be doubled if approved by the members by special resolution and further if the appointment is for a part of the financial year the remuneration will be prorated.
  • From the foregoing provisions contained in schedule V to the Companies Act, 2013 the payment of Rs. 50 Lacs in the year as remuneration to Mr. X is valid in case he accepts it as under the said schedule he is entitled to a remuneration of Rs. 60 Lakhs in the year and his terms of appointment provide for payment of the remuneration as per schedule V.

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