CORPORATE AND PROFESSIONAL UPDATE JANUARY 9,2016

CORPORATE AND PROFESSIONAL UPDATE JANUARY 9,2016

INCOME TAX ACT

SECTION 9

India as ‘fee for technical services’; however in view of law as it existed at an earlier point of time when payments were made, it was not possible to comply with tax withholding liability.

 SECTION 48

CAPITAL GAINS – COMPUTATION OF COST OF IMPROVEMENT

Assessee’s claim towards cost of improvement while computing capital gain on sale of a flat was rejected where assessee failed to establish his claim of renovation being carried out in said flat with any cogent or reliable evidence.

SECTION 54

CAPITAL GAINS – PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE

Condition precedent : Where construction of new residential flat was not complete by end of three years from transfer, assessee would not be entitled to exemption under section 54.

SECTION 92C

TRANSFER PRICING-COMPUTATION OF ARM’S LENGTH PRICE

Comparables and adjustments/Adjustments : Capacity Utilization: While computing arm’s length price of international transaction, adjustment should be allowed on account of lower capacity utilization.

Comparables and adjustment/Comparables – Illustrations : A company should be perpetual loss making company for being excluded from comparable list.

 SECTION 115BBC

ANONYMOUS DONATIONS TO BE TAXED IN CERTAIN CASES

Where assessee trust was established for charitable and religious purposes and anonymous donation was received by it without any specific direction that such donation was for any university or other educational institutions or any hospital or other medical institutions run by assessee-trust, such donation could not be taxed by invoking provisions of section 115BBC.

 SECTION 245D

SETTLEMENT COMMISSION – PROCEDURE ON APPLICATION UNDER SECTION 245C

General Principles : Normally, income offered for tax in an application for settlement would bind parties concerned and any revision thereof, would prima facie, be evidence of original application for settlement not declaring full income, however in a case where correct determination of income is dependant upon application of appropriate transfer pricing rule which to an extent is subjective, if an additional income is declared during course of hearing in view of what emerges during debate before Commission, it cannot be said that original application did not make true and full disclosure of its undisclosed income.

COMPANIES ACT, 2013

SECTION 167

VACATION OF OFFICE OF DIRECTOR

Where petitioner filed an application contending that all erstwhile directors of Respondent Company vacated their offices in terms of section 167(1) read with section 164(2) due to default committed by erstwhile directors in filing financial statements of Respondent Company for years 2010-11, 2011-12 and 2012-13 but it was found that there had been restraint order whereby interim injunction had been imposed from holding general meetings of Company and, consequently, financial statements for years 2010-11, 2011-12 & 2012-13 had not been filed, prayers made in Company Application were to be disallowed as petitioner was not having control over respondent company and action under section 167 (3) would accrue on non-filing of financial statements for three years commencing from 1-4-2014 and, hence, erstwhile Directors continued to be validly and legally appointed directors.

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

 Where complainant had failed to adduce cogent corroborative evidence to prove booking of flat in building proposed to be constructed by respondent and execution of agreement for delivery of said flat, respondent could not be held guilty of unfair trade practice on its failure to deliver said flat.

SECTION 19

INQUIRY INTO CERTAIN AGREEMENTS AND DOMINANT POSITION OF COMPANIES

Post decisional attempt made by applicant to procure documents which could have been available to it by exercising due diligence even before filing of information under section 19(1)(a) could not justify taking into consideration of those documents for purpose of reconsideration of a well-reasoned order passed by Tribunal declining to entertain prayer made in appeal.

SERVICE TAX

SECTION 65(12)

TAXABLE SERVICES -BANKING AND OTHER FINANCIAL SERVICES

Charges recovered by clearing house for clearance of cheques of member-banks are taxable under Banking and Other Financial Services.

STATUTES

CORPORATE LAWS

Sugar Cess (Amendment) Act, 2015 – NO.9 OF 2016, DATED 11-1-2016

Mandatory Requirements/Exit Policy for Commodity Derivatives Exchanges – CIRCULAR NO.CDMRD/DEA/01/2016, DATED 11-1-2016

 FAQs on SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 – PRESS RELEASE, DATED 8-1-2016

SEBI Board Meeting – Review of Prudential Limits on investments by mutual funds; Introduction of Primary Market Debt offering through Private Placement on Electronic Book; Exit opportunity to dissenting shareholders under Companies Act, 2013 etc. – PRESS RELEASE NO.10/2016, DATED 11-1-2016

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