CORPORATE AND PROFESSIONAL UPDATE JANUARY 18, 2016
Table of Contents
CORPORATE AND PROFESSIONAL UPDATE JANUARY 18, 2016
DIRECT TAX:
- Making of fresh claim during assessment proceedings allowed [Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC)].
- Proposal to not to retain Income Tax Refund for Completion of Scrutiny Proceeding.
- HC allows depreciation on ROC fee after capitalizing it in cost of plant [2016] 125 (Punjab & Haryana) Rana Polycot Ltd. v. CIT
- Non deduction of TDS u/s 194A – compensation (damages) paid in the form of interest by the appellant to various allottees for delays occurred in delivering the respective plots – the amount in question cannot be characterised as interest within the meaning of section”- (West Bengal Housing Infrastructure Development Corporation Ltd. – Versus – Dy. C.I.T., Circle-11, Kolkata And I.T.O., Ward-11 (1) , Kolkata And Vice-Versa – 2016 (1) TMI 682 – ITAT KOLKATA)
- Penalty u/s Sec. 271C – non deduction of tds on five foreign remittances u/s 195 – there was reasonable cause as envisaged u/s 273B for not deducting tax at source by the assessee on the aforesaid payments and therefore the assessee was not liable for levy of penalty u/s 271C- (ADIT (IT) , 4 (1) , Mumbai Versus Leighton Welspun Contractors P. Ltd. – 2016 (1) TMI 680 – ITAT MUMBAI)
- TDS u/s 194H – non deduction on bank guarantee commission – While it is termed as guarantee commission it is not in the nature of commission as it is understood in common business parlance and in the context of the section 194H. – demands under section 201(1) and 201(1A) r.w.s. 194H quashed- (ITO (TDS) (OSD) -Range-2, Mumbai Versus M/s Nimbus Communications Ltd. – 2016 (1) TMI 678 – ITAT MUMBAI).
- Disallowance of loss shown by the assessee in Film business – Having regard to the facts and circumstances in which the investment was made and loss claimed the entire transaction was a sham transaction and was a calculated device to avoid tax liability- (M/s Ganapathy & Co., Bangalore Versus The Commissioner, Income Tax Bangalore – 2016 (1) TMI 675 – SUPREME COURT).
- IT:Additions u/s.68 – Failure on the part of the buyers of the flat to establish their source of income cannot be made as the reason to make addition in the hands of the assessee without examining them when they themselves had admitted for having advanced the amount to the assessee – ITO, Madras Vs. Shri M. Selladurai (ITAT Chennai)
- IT: TDS Credit – Assessee was given an advance and the actual remuneration was to be quantified at the completion of the project, he was justified in not offering the said amount as income for the year – credit not denied – ITO Vs. Trendsetter Construction Pvt. Ltd. (ITAT Mumbai)
- IT: Disallowance on account of bogus purchases – Merely because notices u/s 133(6) could not be served on the suppliers assessee- buyer cannot be put to an inconvenience of disallowance when he has provided the correct address of those parties – DCIT Versus Norma India Ltd. (ITAT Delhi)
INDIRECT TAX:
- ST:Demand of Service Tax against the assessee for the cost of the goods supplied during repair does not appear sustainable – M/s Tanya Automobiles Pvt Ltd. Vs. CCE&ST, Meerut-I (CESTAT Allahabad)
- Cenvat Credit is allowable of Service Tax paid on the insurance premium to the Insurance Company for Group Insurance and medi-claim policies taken for existing employees as well as for the retired employees [Reliance Industries Ltd. vs. Commissioner, CEST (LTU), Mumbai].
- DVAT Authorities has mandated for all Government Entities having their offices functioning within the NCT of Delhi, to furnish an online quarterly return by Feb 15, 2016 of purchases made by them for the purpose of consumption or use by them (i.e. not for the purpose of making a sale) from the dealers registered under the said Act and having a valid TIN/Registration Number in the format ‘Form GE-II’.
- It is seeked to further amend notification no. 21/2012 of customs dated 17.03.2012.
- It is seeked to make further amendments to the Notification No.12/2012-Customs dated 17.03.2012.
- Notification of Corrigendum to notification no. 43/2014-Cus (NT).
- Service tax demand under Construction Service (CS) / Commercial or Industrial Construction Service (CICS) / Works Contract (WC) – The demand relating to denial of abatement on the ground that the value of material supplied free of cost by the service recipient was not included in the assessable value set aside- (M/s Larsen And Toubro Ltd. Versus Commissioner Of Service Tax, Delhi – 2016 (1) TMI 655 – CESTAT NEW DELHI)
- Levy of penalty for Delay of payment of service tax due to Bank refused to take deposit of tax in absence of PAN based registration number – no case of deliberate default or contumacious conduct is made out against the Appellant – Penalty dropped- (M/s Gurucharan Motors, Manipuri Versus Commissioner Of Central Excise And Service Tax, Kanpur – 2016 (1) TMI 654 – CESTAT ALLAHABAD)
- ST: Refund – service tax was mistakenly paid – amount paid by the appellant under Manpower Recruitment Agency Services is required to be refunded because no tax can be collected without the authority of law -Sharam Sewa Associates Vs. CCE, Allahabad (CESTAT Allahabad)
- Free warranty services provided by vehicle-dealers to vehicle-buyers out of their dealer’s margin/handling charges is not liable to Service Tax [Chowgule Industries (P.) Ltd. vs. Commissioner of Central Excise, Pune III].
- Service Tax: Where sale of study materials was shown separately in invoice, assessee was eligible for benefit of exemption in respect of said sale under Notification No. 12/2003-ST; hence, value of study material would not form part of value of coaching services[2016] 112 (New Delhi – CESTAT) Mastermind Classes (P.) Ltd. v. Commissioner of Central Excise
- Promotion or advertisement of products of ICICI Bank amounts to Business Auxiliary Services [2016] 65 taxmann.com 113 (New Delhi – CESTAT) Commissioner of Central Excise v. Patiala Marketing Services (P.) Ltd.
- Service used to control pollution in factory area is eligible for Cenvat Credit [2016] 121 (Chennai – CESTAT) Dalmia Cement (Bharat) Ltd. v. Commissioner of Central Excise
- Committee of set up by ministry of finance filed its report; recommendation regarding valuation of flats for levy of Service Tax vide instruction no. F.No.354/311/2015-TRU
- Classification of taxable service – Job work – activity of re-rubberisation of old worn out rubberized rollers – inasmuch as the Business Auxiliary Service came into existence before the Management Maintenance or Repair Service the same has to be adopted- (Zenith (Bangalore) Rollers Pvt. Ltd. (Now Zenith Rubber Pvt. Ltd.) And Neodam Rubber Products Pvt. Ltd. Versus Commissioner of Customs, Central Excise and Service Tax Hyderabad-IV – 2016 (1) TMI 651 – CESTAT BANGALORE).
- Cenvat Credit – Input service – maintenance and repair services of windmill farm – Rule does not say that input service received by a manufacturer must be received at the factory premises- (Bajaj Auto Ltd. Versus Commissioner of Central Excise& ST (LTU) , Mumbai – 2016 (1) TMI 593 – CESTAT MUMBAI).
COMPANY LAW:
Query: How can companies with small CSR funds take up CSR activities on a project ?
Answer: There is provision (Rule 4 of Companies (CSR) Rules, 2014) in the CSR Policy Rules, 2014 that such companies can combine their CSR programs with other similar companies by way of pooling their CSR resources.
Query: Our query is – whether a holding or subsidiary company which fulfils the criteria under Section 135(1) has to comply with Section 135, even if the holding and subsidiary itself does not fulfill the criteria.
Answer: Holding or subsidiary of a company does not have to comply with Section 135(1) unless holding or subsidiary itself fulfills the criteria.
MCA UPDATES:
- In the situation of outstanding liability of rent, company cannot proceed to wind up [Raju Jhurani Appellant vs. M/s. Germinda Pvt. Ltd. Respondent- SC].
- Clarified whether Hindu Undivided Family(HUF)/Its Karta can become partner (DP) in Limited Liability Partnership (LLP) vide circular no. 2/2016.
- Roadmap for implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS) drawn by MCA for Scheduled Commercial Banks (Excluding RRB’s, Insurer’s/Insurance Companies and Non Banking Financial Institutions from 1April 2018 onwards. However, for NBFC having Net Worth of less than 500Crores IND AS based financial accounting standards would be applicable from 1 April 2019 onwards. Draft Instructions/Rules would be issued by MCA, RBA & IRDA in due course in this regard.
- MCA has released the proposed Road map drawn-up for implementation of Indian Accounting Standards (Ind AS) converged with International Financial Reporting Standards (IFRS) for Scheduled Commercial Banks (Excluding RRBs), Insurers/Insurance Companies and Non-Banking Financial Companies (NBFC’s).
OTHER UPDATES
- Flipkart, Amazon, Snapdeal and Jabong under scanner for FEMA violation
- Coaching institute not liable to service-tax on book sold to students if same is separately invoiced
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