CORPORATE AND PROFESSIONAL UPDATE JANUARY 07,2016
CORPORATE AND PROFESSIONAL UPDATE JANUARY 07,2016
DIRECT TAX:
- Issues Guidance Note on FATCA.
- Disallowance of deduction of interest expenditure from interest Income – there is a director nexus between the interest earned from the company and the interest paid to the bank. Under these circumstances the interest expenditure in our opinion was rightly allowed.
- Condonation of delay – delay in filing appeal – The assessee has therefore not been vigilant in challenging the re-assessment proceedings as well as the penalty proceedings. The assessee s explanation is common for all the appeals proceedings. – Condonation of delay not allowed.
- Amendment of Forms No. 60, 61 and 61A pursuant to CBDT wherein quoting PAN is mandatory for transactions exceeding Rs. 2 lakhs. w.e.f. 01.01.2016.
- Reimbursement of salary cost of high level managerial personal can be treated as FTS. [Food world Supermarkets Ltd. vs. DCIT- ITAT Bangalore].
- IT: Institution established for the sole purpose of imparting specialised education and Certificate u/s 12A, already issued hence Certificate U/s 10(23C)(vi) can’t be refused
- CBDT: Rules 114B, 114C, 114D, 114E has been amended w.e.f. 01/04/2016 – all assessees liable for Tax Audit u/s 44AB to file Annual Information Return (AIR) in Form 61A, in case of receipt of Cash payment exceeding Rs.2 Lac for Sale of Goods/Services of any nature
- IT: Deemed dividend u/s 2(22)(e) – non deduction of TDS – looking to large number of adjustment entries in the accounts between two entities the amounts were not in the nature of loan or deposit but merely adjustments application of section 2(22)(e) of the Act would not arise – CIT (TDS) Vs. Schutz Dishman Bio-Tech Pvt. Ltd. (2016 (1) TMI 84 – Gujarat High Court)
- IT: Deemed dividend u/s 2(22)(e) – non deduction of TDS – looking to large number of adjustment entries in the accounts between two entities the amounts were not in the nature of loan or deposit but merely adjustments application of section 2(22)(e) of the Act would not arise – CIT (TDS) Vs. Schutz Dishman Bio-Tech Pvt. Ltd. (2016 (1) TMI 84 – Gujarat High Court).
- Deemed dividend u/s 2(22)(e) – non deduction of TDS – looking to large number of adjustment entries in the accounts between two entities the amounts were not in the nature of loan or deposit but merely adjustments application of section 2(22)(e) of the Act would not arise- (The Commissioner of Income Tax (TDS) Versus Schutz Dishman Bio-Tech Pvt. Ltd. – 2016 (1) TMI 84 – GUJARAT HIGH COURT)
- Clarification on the question of liability to deduct tax at source arising out of the amended section 194A w.e.f 01.06.2015 – TDS on interest on payment of compensation awarded by the Motor Accident Claims Tribunals to the claimants – This Court would not act as advisory jurisdiction in abstract. – HC – Income Tax- (New India Assurance Company Ltd. And 1 Versus Commissioner of Income Tax (TDS) – 2016 (1) TMI 83 – GUJARAT HIGH COURT)
- Income tax department extends ITR-V verification deadline till 31st January, 2016.
- Settlement commission have no jurisdiction to direct special audit u/s 142(2A). [Delhi High Court: Agson Global Pvt. Ltd. vs. Income Tax Settlement Commission].
- Deemed dividend u/s 2(22)(e) – non deduction of TDS – looking to large number of adjustment entries in the accounts between two entities the amounts were not in the nature of loan or deposit but merely adjustments application of section 2(22)(e) of the Act would not arise- (The Commissioner of Income Tax (TDS) Versus Schutz Dishman Bio-Tech Pvt. Ltd. – 2016 (1) TMI 84 – GUJARAT HIGH COURT)
- Clarification on the question of liability to deduct tax at source arising out of the amended section 194A w.e.f 01.06.2015 – TDS on interest on payment of compensation awarded by the Motor Accident Claims Tribunals to the claimants – This Court would not act as advisory jurisdiction in abstract. – HC – Income Tax- (New India Assurance Company Ltd. And 1 Versus Commissioner of Income Tax (TDS) – 2016 (1) TMI 83 – GUJARAT HIGH COURT)
- Mere common address shared by several companies may not be sole ground to doubt identity or creditworthiness u/s 68 of the Income Tax Act.[CIT vs. Matchless Glass Services Pvt. Ltd. (Delhi High Court)].
- Recording of satisfaction u/s 153C is mandatory even if searched person and assessee are under common jurisdiction. [Delhi High Court: Pr CIT vs. Nikki Drugs & Chemicals Pvt. Ltd].
- Amount received in pursuance of agreement of construction of additional area, not assessable as business income. [Delhi High Court: Raj Dulari Bhasin vs. CIT].
- Goodwill value cannot be challenged where slump sale includes sale of goodwill & such agreement is beyond any doubt. [Delhi High Court: Triune Energy Services Pvt. Ltd. vs. DCIT].
- Mere revised return riling will not invalidate notice u/s 143(2) issued in pursuance of original return. [Delhi High Court :Vinod Kumar Khatri vs. DCIT].
- No disallowance of interest unless AO proves that interest free loan is given from borrowed funds [2015]64 358(Rajasthan)CIT v. Ram Kishan Verma
- Until reassessment on basis of first notice is completed, fresh reassessment notice can’t be issued[2015] 64 334 (Delhi) CIT v. Sanjay Kumar Garg
- In the financial statement current and non-current investments should be disclosed separately
- Settlement commission has no jurisdiction to direct special audit u/s 142(2A).[Delhi High Court: Agson Global Pvt. Ltd. vs. Income Tax Settlement Commission].
- Diagnostic Labs to deduct TDS on discount given to hospitals/laboratories u/s 194H.[ DDRC SRL Diagnostic Pvt. Ltd. vs. ITO (ITAT MUMBAI)].
- The Finance Ministry will exempt payments to Iran from hefty withholding tax if the Persian Gulf nation were to receive full payment for oil it sells to India in rupees.
- AO not permitted to make additions beyond revision order issued u/s 263. [Sri Manoj Murarka vs. ACIT (Kolkata ITAT)]
INDIRECT TAX:
- ST: Levy of service tax on incentive received – the same is more in the nature of a prize money for a good performance by the appellant and are in no way linked to the value of the services – AMR India Ltd. Vs. C.C.E.C.&S.T., Hyderabad-II (2016 (1) TMI 67 – CESTAT Bangalore)
- VAT & ST: Recovery of tax when the appeal is pending before the appellate authority – deposit of 50% dues followed by Bank guarantee – appeals are to be disposed of within a stipulated time and the recovery proceedings shall be kept in abeyance till the disposal of the appeals – M/s Philips India Ltd. Vs. DC (CT)-II, Large Tax Payers Units, Egmore, JC (CT) Appeals (2016 (1) TMI 49 – Madras High Court)
- Method of vaulation – Transaction value u/s 4 or MRP based value u/s 4A – manufacture and clearance of chocolates individually weighing 3.9 gms and 14 gms. – putting the individually small pieces into big jar would not make them liable to duty subject to MRP based duty. Cadbury India Ltd. Versus Commissioner of Central Excise, Pune-I – 2016 (1) TMI 20 – CESTAT MUMBAI
- Cenvat Credit – Eligible input services – nexus with manufacturing activity – any services which are considered for pricing of final product CENVAT Credit should be allowed. Commissioner of Central Excise (LTU) , Mumbai Versus M/s Reliance Industries Ltd. – 2016 (1) TMI 19 – CESTAT MUMBAI
- Delhi VAT– DP-1 to be submitted online by all dealers latest by 31.01.2016. Notification No No.F.3(352) Policy /VAT/2013/1210-21 Dated: 31.12.2015.
- ST: No Levy of Service Tax on the proposed car lease scheme of providing vehicles to employees U/S 66B of the Finance Act 1994 – applicant is an employer giving option to provide some services to all of its employees to avail a car under lease – M/s J. P. Morgan Services India Private Ltd, Mumbai Vs. C.S.T. (2016 (1) TMI 25 – Authority for Advance Rulings)
- VAT & ST: Whether the Hon’ble Tribunal has erred in permitting adjustment of input tax credit arising from Value Added Tax Act to the Central Sales Tax Act – Held Yes – State Of Gujarat Vs. Rajashree Polyfil (2016 (1) TMI 4 – Gujarat High Court)
- DVAT: Form DP-1 shall be submitted online by all the dealers registered upto 31/10/2015, latest by 31/01/2016. Notification dt.31 DEC 2015.
- No SSI exemption on manufacture of branded goods;Comm of Central Excise, [Chennai vs Nebulae Health Care Ltd. Supreme Court].
- The Central Government has delegated the powers vested in it under Section 208 of the Companies Act, 2013 to the Regional Directors for receiving the report from the Registrar.
- Process of cold-rolling of hot-rolled stainless steel patta/patti amounts to manufacture. [Gujarat Industries & Ors. vs Comm of Central Excise (Supreme Court of India)].
- Income tax department advisory for deductors while deducting TDS at lower rate u/s 197 certificates.
- Compensation on termination of Joint venture agreement not liable to capital gain tax if received / accrued before 01.04.2003. [CIT vs. HCL Infosystem Ltd. (Delhi High Court)].
- No capital gain accrues until right to receive compensation confirmed in proceedings under Land Acquisition Act [CIT vs. Suman Dhamija (Delhi High Court)].
- Refund of service tax – period of limitation – whether protest is required to submitted at every time of making payment of service tax – Held No – it is not understood why the department had been insistent on separate written protest for each payment against the said services which were not liable for payment of service tax- (Bharath Auto Cars Pvt Ltd Versus Commissioner of Central Excise And Service Tax Mangalore – 2016 (1) TMI 68 – CESTAT BANGALORE)
- No MVAT on drugs and medical equipments used in dialysis of patients suffering from kidney disease.
- Levy of service tax on incentive received – the same is more in the nature of a prize money for a good performance by the appellant and are in no way linked to the value of the services. – Tri – Service Tax- (AMR India Ltd. Versus Commissioner of Central Excise, Customs And Service Tax Hyderabad-II – 2016 (1) TMI 67 – CESTAT BANGALORE)
- Service Tax : Uplinking of own TV channels and earning ‘airtime and uplinking charges’ is prima facie taxable under Broadcasting services [2015] 64 125 (Chennai – CESTAT)
- 6th January, 2016 is the last date for e-payment of service tax.
- DVAT Authorities have clarified the position relating to the registration of dealers who are using e-commerce platform.
- CST & VAT : Central Sales Tax – Where assessee, a works contractor, applied for inclusion of construction equipment, plant, machinery and tools used in process of execution of works contract in certificate of registration under Central Sales Tax Act, said items were eligible for inclusion[2015] 64 323 (Calcutta) Nagarjuna Construction Co. Ltd. v. Assistant Commissioner of Commercial Taxes
- CBEC increase in department appeal filing limit applies to pending appeals also vide instruction No. F. No. 390/Misc./163/2010-JC.
OTHER LAW
- RBI has issued master direction on compounding direct investment by residents in joint venture / wholly owned subsidiary abroad.
- RBI has reviewed the existing guidelines, which permits banks in India to extend funded and/or non-funded credit facilities to step-down subsidiaries of the overseas subsidiaries of Indian companies that may not be wholly owned, subject to certain conditions.
- RBI permits setting up of IFSC Banking Units (IBUs). Notification No. DBR.IBD.BC. 8536/23.13.004/2015-16.
- SEBI establishes of local office of the Board at Jammu. Circular No.SEBI/LAD-NRO/GN/2015-16/28.
- SEBI issued revised contents of application cum bidding form and Manner of disclosure vide Circular no .CIR/CFD/POLICYCELL/11/2015 dated 10.11.2015.
- RBI notifies debit cards, ATM cards etc. which can be used to create a financial liability. Notification No. FEMA 15/ 2000-RB.
- SEBI issues list of 221 companies issuing shares / debentures in violation of law.
- SEBI has issued frequently asked questions on Listing Regulations, 2015 touching upon the aspects which had ambiguities over the itemized regulations.
- ICAI-MEF has updated the Draft Bank Branch Auditor’s Panel 2015-2016 available for verification. http://meficai.orgCovering Letter for Hosting MEF 2015-2016.htm.
- DGFT has issued permission for export of finished leather, wet blue and EI tanned leather through ICDs.Public Notice No. 55(RE-2015)/2015-2020.
- Employee with salary upto 21,000 is entitled to bonus; President clears amended Payment of Bonus Act.
- The EPFO has removed the grace period of 5 days for depositing PF. So w.e.f February.2016 the due date shall be 15th instead of 20th. Circular No. WSU/9(1)2013/35031 dated .08.01.2016.
- Delhi Sugam-2 (DS2) to be one of the documents to be carried by the person who is bringing the goods into Delhi w.e.f. 08-01-2016 Notification No. No.F.7 (433)/Policy-ll/V AT/2012/PF / 1259-70.
- PAYMENT OF BOUNS ACT: W.e.f. 1st April, 2014, Payment of Bonus to be calculated on Rs.7,000/- as against Rs.3,500/- earlier. The Bonus Coverage Salary increased from Rs.10,000/- to Rs.21,000 (Notification 6/2016, dt.31 DEC 2015 – Ministry of Law & Justice).
COMPANY LAW:
Query: XYZ Ltd. maintains the Minutes Book of the Board Meetings in loose-leaf system and get them bound once in three months. Can it do so? Board meetings were held on 2nd April, 2014 and 28th April, 2014. Mr. A, who was the Chairman of these two Board Meetings died on 21.5.2014, without signing the Minutes. How should be the Minutes be signed and by whom?
Answer: As per Companies (Management and Administration) Rules, 2014:
- The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within 30 days of the conclusion of the meeting.
- Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed by the chairman of the said meeting or the chairman of the succeeding meeting.
Thus, from the clear provisions of the above referred section the Minutes must be kept in books form for that purposes with consecutively numbered pages. Therefore, Minutes cannot be kept in loose leaf system.
- In case the chairman passes away before signing the Minutes, the chairman of the succeeding Board meeting shall sign the Minutes.
- MCA: LLP Services on MCA Portal will not be available on 03-Jan-2016 (1:00 PM to 5:00 PM).
- MCA has notified the new version of e-form 3 LLP and Form 4 LLP is likely to be modified w.e.f 9th Jan 2016 and the same will be available on MCA21 Portal.
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