CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 19, 2016

CORPORATE AND PROFESSIONAL UPDATE FEBRUARY 19, 2016

INCOME TAX ACT

SECTION 4 

INCOME – CHARGEABLE AS

Interest : Where assessee engaged in generating electric power, kept margin money in form of fixed deposits for procurement of various capital goods for setting up of power project, interest earned on said deposits would be in nature of capital receipt not liable to tax – [2016] 66  178 (Delhi)

SECTION 9 

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

Interest : TDS is not required to be deducted on payment by foreign bank’s Indian branch to its overseas head office and, therefore, disallowance of such payment under section 40(a)(i) is not valid – [2016] 66 173 (Mumbai – Trib.)

SECTION 50

CAPITAL GAINS – COMPUTATION IN CASE OF DEPRECIABLE ASSETS

Cost of shares allotted pursuant to corporatization of BSE would be calculated as per Section 50 and not as per Section 55(2(ab) if depreciation was claimed on BSE membership. Further, indexation benefit on sale of such share would be available from the date of corporatization of BSE and not from the date of acquisition of original membership of BSE – [2016] 66 258 (Mumbai – Trib.)

SECTION 54F

CAPITAL GAINS – EXEMPTION OF, IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE

Conditions precedent : For availing exemption under section 54F, amount invested in new asset need not be entirely sourced from capital gain – [2016] 66 191 (Punjab & Haryana)

SECTION 92C

TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Comparables – Illustrations : In case of assessee rendering software development services to its AE, company which was developing its own software products and company which had undergone business restructuring process during relevant year, could not be accepted as comparables while determining ALP – [2016] 66 192 (Delhi – Trib.)

Comparables and adjustments/Comparables – Illustrations : In case of assessee providing IT Enabled Services (ITES) to its AE, a company in whose case extraordinary event of amalgamation took place, a company which had huge brand value and a company engaged in business of BPO service and providing high-end technology services such as software testing and validation, could not be accepted as comparables for determining ALP – [2016] 66 192 (Delhi – Trib.)

Comparables and adjustments/Comparables – Illustration : A merchant banker and investment banker and portfolio manager cannot be compared to a company rendering non-binding advisory support services – [2016] 66 193 (Mumbai – Trib.)

SECTION 271C

PENALTY – FOR FAILURE TO DEDUCT TAX AT SOURCE

Illustrations : Where Assessing Officer levied penalty upon assessee under section 271C and Appellate Authorities deleted levy of penalty, as facts and law having properly and correctly been assessed and approached by Commissioner (Appeals) and Tribunal, no substantial question of law arose in matter – [2016] 66 175 (SC)

NEGOTIABLE INSTRUMENTS ACT, 1881         

SECTION 138

DISHONOUR OF CHEQUE FOR INSUFFICIENCY ETC., OF FUNDS IN ACCOUNT

Where cheques issued by respondent in connection with discharge of outstanding liability of ‘N’ had been dishonoured for insufficiency of funds in account, respondent was to be convicted for offence punishable under section 138 – [2016] 66 186 (SC)

SERVICE TAX

SECTION 86

APPEALS – ORDERS OF – APPELLATE TRIBUNAL

Where written submissions filed by assessee were not considered by Tribunal in passing final order, Tribunal order was liable to be set aside – [2016] 66 197 (Madras)

CENTRAL EXCISE ACT

SECTION 2(f)

MANUFACTURE – DEEMED MANUFACTURE

Removal of moisture content is also a process that renders product marketable to consumer; hence, same together with repacking, quality control and relabelling would amount to deemed manufacture under Note 10 to Chapter 29 – [2016] 66 195 (Mumbai – CESTAT)

SECTION 5A

EXEMPTIONS – CENTRAL EXCISE – SSI / THRESHOLD EXEMPTION 

‘Exports to Nepal’ would be treated at par with other exports from 1-3-2012 and would not form part of turnover limit of Rs. 400 lakhs or Rs. 150 lakhs for SSI-exemption purposes accordingly, words ‘and Nepal’ in Explanation (G) to SSI Notification No. 8/2003-CE to treat exports to Nepal as clearance for home consumption, were struck down – [2016] 66  259 (Gujarat)

SECTION 11A

RECOVERY – OF DUTY OR TAX NOT LEVIED/PAID OR SHORT-LEVIED/PAID OR ERRONEOUSLY REFUNDED – INVOCATION OF EXTENDED PERIOD OF LIMITATION

Where, at one point of time, Tribunal had opined in assessee’sfavour on merits and subsequently said judgment was reversed by High Court to hold in favour of revenue, then, issue was debatable and extended period of limitation cannot be invoked to raise demand alleging evasion – [2016] 66 196 (Gujarat)

STATUTES

DIRECT TAX LAWS

Section 285BA of the Income-tax Act, 1961 – Furnish statement of financial transaction or reportable account – Obligation to – Clarification for Implementation of FATCA and CRS – LETTER [F.NO.504/090/2007-FTD-I], DATED 19-2-2016

CORPORATE LAWS

Startup India – Identified Enterprises – NOTIFICATION NO. GSR 180(E) [ F.NO.5(91)/2015-BE.I], DATED 17-2-2016

Guidelines on product filing procedures for general insurance products – CIRCULAR NO.IRDAI/NL/GDL/F&U/030/02/2016, DATED 18-2-2016

Review of NBFC – Factors (Reserve Bank) Directions, 2012 – CIRCULAR DNBR (PD) CC.NO.074/03.10.01/2015-16, DATED 18-2-2016

Section 4 of the Securities & Exchange Board of India Act, 1992, read with Rule 3 of the SEBI (Terms & Conditions of Service of Chairman and Members) Rules, 1992 – Board – Management of – Re-Appointment of Shri U.K. Sinha as Chairman, SEBI W.E.F. 18-2-2016 To 1-3-2017 – NOTIFICATION NO.SO 524(E) [F.NO.2/10/2015-RE], DATED 18-2-2016

Undertaking of Point of Presence (Pop) Services under Pension Fund Regulatory and Development Authority for National Pension System (NPS) – CIRCULAR DNBR (PD) CC.NO.073/03.10.001/2015-16, DATED 18-2-2016

Frauds – Future approach towards monitoring of frauds in NBFCs – CIRCULAR DNBR (PD) CC.NO.075/03.10.001/2015-16, DATED 18-2-2016

SEBI (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2016 – Insertion of Regulations 69A, 69B, 69C, 69D, 69E, 69F and 69G – NOTIFICATION NO.SEBI/LAD-NRO/GN/2015-16/036, DATED 17-2-2016

SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2016 – Amendment in Regulation 3 – NOTIFICATION NO.SEBI/LAD-NRO/GN/2015-16/035, DATED 17-2-2016

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