CORPORATE AND PROFESSIONAL UPDATE FEBRUAY 7,2016
Table of Contents
CORPORATE AND PROFESSIONAL UPDATE FEBRUAY 7,2016
Direct Tax
- IT-HUF: Society is in Transition and so the Law – Woman can be Karta of a family (Delhi High Court).
- IT:TDS u/s 194J – Non deduction of TDS on payment towards Internet Band Width charges – Although the amendment was given retrospective effect legal maxim lex non cogit ad impossibillia meaning thereby that the law cannot possibly compel a person to do something which is impossible to perform-ACIT (TDS), Mumbai Vs. Rediff.Com India Ltd. (ITAT Mumbai)
- IT:Unexplained Money – in cases where unaccounted entries are found recorded in the books or documents seized, Section-69A cannot be invoked. This provision can be invoked only when unaccounted cash bullion jewellery or any other valuable article or thing is found during search or otherwise – Gardenia India Limited Vs. DCIT, CC-7, New Delhi (ITAT Delhi).
- IT:Deptt brings 11.77 Lac more into tax net by tracking high spending individuals who were not filing ITRs and served notices.
- IT:Taxability of Settlement amount – TDS u/s 195 – The settlement amount payable / paid by Satyam under the stipulation to the QSF pursuant to the judgment and final approval of the US Court cannot be regarded as sum chargeable under the Act – A. A. R.
- IT:Unexplained Investment u/s. 69 – the Difference in opening balance of loan should be considered only in the year in which the difference and not in the current year – DCIT, Cir-8, Kol Vs. Medpat Finance Ltd. (ITAT Kolkata)
- CBDT entered into 7 unilateral Advance Pricing Agreements (APAs) with the taxpayer – CBDT Press Release dated 22.01.2016
- IT:Reopening of Assessment – allotment of shares at high premium – Prima facie the facts appear to be glaring – We are not inclined to terminate the assessment proceedings at this stage on the grounds pressed in service by the petitioners – Olwin Tiles (India) Pvt. Ltd. Vs. DCIT, (Gujarat High Court)
- IT:It is settled position of law that a short deduction of TDS by itself does not result in a legally sustainable demand under Sec.201(1) & 201(1A) – Rashtriya Ispat Nigam Ltd. Vs. Addl. CIT, R-6 (TDS), Visakhapatnam (ITAT Visakhapatnam).
- IT:Gift of property so purchased to the daughter is exempt u/s 54 subject to that during the restriction period the daughter shall not transfer the property by any means-ITO, Chennai Vs. Shri Abdul Hameed Khan Mohammed (ITAT Chennai)
- CBDT allows generation of EVC using details of bank account and Demat account. (Tax Payers can now e-verify ITR’s using bank, Demat a/c details)
- Sum paid to power transmission Co. for using its transmission network isn’t liable to Sec. 194J TDS.
- Compensation for breach of contract for sale of land, is not liable to income tax either as a revenue receipt or as a capital receipt [C.I.T. vs sterling Investment Corporation Ltd., 123 I.T.R. p.441 (Bombay.)]
- Expenses relating to setting up of new service lines – revenue v/s capital – all these expenses have been recovered subsequently in the normal billing cycle of the assessee – held as revenue in nature- (J.P. Morgan Services India P. Ltd. Versus ITO RG 8 (2) (2) , Mumbai and Vica-Versa – 2016 (1) TMI 1021 – ITAT MUMBAI)
- Assessee would be liable to deduct tax at source under section 194C on payments made as transportation charges to intermediate parties who arranged actual transporters from open market for carriage of goods by transport for assessee, even if there was no written contract between assessee and intermediary party
- Off-shore under-construction installations or incomplete structures do not form part of ‘India’/ ‘taxable territory’; hence, services imported by them are not liable to service tax under reverse charge
- HC denied to order valuation of goodwill as it arises on acquisition of business in slump sales
- Reopening of assessment – allotment of shares at high premium – Prima facie the facts appear to be glaring – We are not inclined to terminate the assessment proceedings at this stage on the grounds pressed in service by the petitioners- (Olwin Tiles (India) Pvt. Ltd. Versus Deputy Commissioner of Income Tax – Morbi Circle – 2016 (1) TMI 992 – GUJARAT HIGH COURT)
Indirect Tax
- ST:Point of Taxation Rules (POT) – Service Tax is payable by the appellant on the basis of the demand letters even if formal invoices were not issued – Vodafone Cellular Ltd. Vs. CCE, Pune (CESTAT Mumbai)
- ST:Rule Job work – Business Auxiliary services – it is seen that the appellant has collected service tax along with consideration from its principals for service rendered but failed to deposit the same in the government account. By this act of omission the plea of leniency in the matter of penalties will not evoke a sympathetic response – Mohtamaan Industries Vs. CCE, Customs & Service Tax, Pune-I (CESTAT Mumbai)
- ST:Revenue was of the view that allowing use of capital assets amounts providing of services namely supply of tangible goods service – stay granted partly–Dabur Research Foundation Vs. CCE&ST, Ghaziabad (CESTAT Allahabad).
- ST:Rule 6 of Cenvat Credit Rules 2004 cannot be used as tool of oppression to extract the amount which is much beyond the remedial measure – M/s Tata Technologies Ltd Vs. CCE, Pune-I (CESTAT Mumbai)
- Classification of service – Business Auxiliary Service (BAS) or Clearing and Forwarding agent (C&F) service – the taxing entry most specifically attracts an activity shall bring that service into the same class and no other class by any remote construction- (M/s. Raja Charity Trust Versus CCE. Tirunelveli – 2016 (1) TMI 975 – CESTAT CHENNAI).
- Cenvat Credit: Where principally agreement is to appoint agent/stockist for storing and selling goods of assessee, such stockist would be ‘commission agent’ and not ‘sales promotion agent’; hence, commission so paid to him is ineligible for credit.[2016] 65 taxmann.com 283 (Gujarat) Gujarat State Fertilizers & Chemicals Ltd. (Fiber Unit) v. Commissioner of Central Excise, Customs & Service Tax
- CBEC’s circular prevails over Education guide for valuation of flats given by builders to landowners
- Cenvat Credit : If assessee has not lapsed/reversed credit under rule 11 of CENVAT Credit Rules, 2004 on opting for exemption, then, for violation of CENVAT Credit Rules, action may be taken under CENVAT Credit Rules, but, exemption itself cannot be denied
[2016] 65 130 (Ahmedabad – CESTAT) Sunflag Filaments Industries v. Commissioner, Central Excise & Service Tax - Payment of tax demand raised by the taxation authority is not an extra ordinary expenditure
- The Goverment has released the new integrated Central Excise and Service Tax Audit Manual (CESTAM, 2015). The purpose of this manual is to outline the principles and policies of audits conducted under Excise and Service Tax rules.
Vat
DVAT Department has decided that all refunds pending upto the tax period ending 31st March, 2015 and having amount upto Rs. 10,000 in a tax period, would be processed expeditiously Vide Circular No. 37 of 2015-16 dated 29.01.2016.
- VAT & ST:Maintenance of records for 5 years – The five year period to be reckoned from the last day of the financial year concerned or not – Revision proceedings based of records on the file is valid – M/s Rohil Zinc Ltd. Versus The State of Maharasthra & Others (Bombay High Court)
- VAT & ST:DC amended the Central R/C and deleted two items – deep-freezer and tricycle on the ground that the petitioner is not re-selling the said items – Order of DC is wrong and incorrect – directed to issue Form-C – Vadilal Enterprises Ltd. Vs. State of U.P. and anr (Allahabad High Court)
Company Law
- MCA-NCLT:The draft rules on NCLT/NCLAT have been placed on the Ministry’s website for suggestions/comments from the stakeholders.
- MCA:Versions of Forms INC-23 and MGT-14 is modified w.e.f TODAY (30 JAN 2016).
- CLB: The office of the Company Law Board has been shifted at Ground, 6th & 7th Floor of Block No. 3, C.G.O. Complex, New Delhi.
- MCA has issued a Circular in and clarified that a HUF or its Karta can’t become Partner or Designated Partner in LLP. Meaning thereby only Individuals and Corporate can become partner in LLP.
- MCA has issued General Circular No. 01/2016 dated 12.01.2016 on FAQs with regard to Corporate Social Responsibility u/s 135 of the Companies Act, 2013 clarifying many grey areas.
Other Updates
- NIRC is inaugurating a New Reading Room at F6-7 (3rd Floor), Vijay Chowk, Laxmi Nagar, New Delhi-110092 on 1st FEB 2016.
- ICAI is launching a new certificate Course and invites Suggestions on the drafted Background Material on Financial Markets and Securities Laws .
- SEBI looking to lower expense charges for mutual funds.
- Prime Minister Narender Modi announced that the controversial retrospective taxation is a thing of the past and this chapter will never be opened again in India, a statement aimed at addressing the concerns of foreign investors over predictability in the tax regime.
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