Daily Updates and News

DELHI VAT

The Government of Delhi has announced its Budget for Financial Year 2016-17 has proposed to reduce the Value Added Tax (VAT) rates from 12.5 percent to 5 percent. VAT on sweets and snacks, ready-made garments, footwear and school bags has also been proposed to be reduced from 12.5% to 5%. Textile and fabric are to be taxed at 5% however VAT rates for khadi and handloom fabrics remain unchanged. It has been proposed to increase the threshold limit of Luxury Tax from existing ₹ 750 to ₹ 1500 thereby reducing tax burden on citizens and tourists. The Government announced that a separate Stamp Act for Delhi is on the anvil and amendments have been proposed in Section 17 of Registration Act so as to make compulsory registration of several new instruments.

 

RBI

Reserve Bank of India has clarified the provisions of Reserve Bank of India (Interest Rate on Advances) Directions, 2016 relating to the Marginal Cost of Funds based Lending Rate (MCLR) system. MCLR is a new method that banks will adopt to declare the lending rates, and it will replace the base rate. The new rate has to be a tenor-linked rate with a reset clause at least once a year. Earlier, for the customer, the MCLR, that is prevailing on the day the loan is sanctioned will be in application till the next reset even if the benchmark rate changes but now it is clarified, that MCLR that prevails on the date of first disbursement, whether partial or full, shall be applicable on the floating rate loan and future reset dates shall be determined accordingly. The RBI has also uploaded FAQs on MCLR.

Thanks & Regards,

Meetesh Shiroya

Daily Updates and News

INCOME TAX ACT

SECTION 4

FIRM - ASSESSABLE AS

Assessment as AOP : Where show-cause notice was issued under section 251(1)(a) intending (i) to make addition to income of firm as AOP as maximum number of members in firm exceeded prescribed number of twenty and (ii) for addition of disallowed expenditure, writ petition against it would not have any merit; objections were to be raised in appeals filed under Act - [2016] 67 taxmann.com 233 (Madras)

SECTION 36(1)(ii)

BONUS OR COMMISSION

Commission : Where assessee paid commission to its staff which was disallowed by Tribunal, matter required re-examination in view of ratio laid down in ShahzadaNand& Sons v. CIT AIR 1977 SC 1182 wherein it was held that there could be cases where commission could be paid to staff for carrying out extra services - [2016] 67 taxmann.com 234 (Bombay)

SECTION 37(1)

BUSINESS EXPENDITURE - ALLOWABILITY OF

Provision : Where assessee was managing consumer loyalty programs for its partner whose customers would be entitled to loyalty points on purchase of certain goods or services and audit objection was raised in respect of allowability of provision towards unredeemed loyalty points, same being addressed by Assessing Officer, there would remain no basis for initiating reassessment - [2016] 67 taxmann.com 232 (Karnataka)

Commission : Where assessee paid commission to taxi drivers and travel agents to procure more business, action of Tribunal to disallow said commission without scrutinizing material on record was not justified - [2016] 67 taxmann.com 234 (Bombay)

COMPANIES ACT

SECTION 530

WINDING UP - PREFERENTIAL PAYMENTS

If, in course of winding up, that is to say, after passing of winding up order but before company is actually wound up, Official Liquidator requires and uses licensed premises for beneficial winding up, licence fees payable during period of such beneficial use must rank as liquidation expenses and be accorded top priority, i.e., even over priority claims under sections 529, 529A and 530 - [2016] 67 taxmann.com 242 (Bombay)

STATUTES

DIRECT TAX LAWS

Section 197A of the Income-tax Act, 1961 - Deduction of tax at source - No deduction in certain cases - Inclusion of interest income in return of income filed by persons liable to pay Tax - PRESS RELEASE, DATED 23-3-2016

Section 194-IA of the Income-tax Act, 1961 – Payment on transfer of certain Immovable Property other than Agricultural Land – Correction and statement cum challan relating to TDS on sale of property under Section 194-IA – Withdrawal of Standard Operating Procedure (SOP) - LETTER F.NO.DIT(S)-2/FORM 26QB/100/2015, DATED 22-3-2016

CORPORATE LAWS

Section 396 of the Companies Act, 2013 - Registration Offices - Further Empowerment of Central Registration Centre (CRC) - NOTIFICATION [F. NO. A-42011/03/2016-AD.II], DATED 23-3-2016

Consolidated FDI Policy Circular 2015 - Review of FDI Policy on Pension Sector - Amendment in Paragraph 6.2.18.7 Bis. - PRESS NOTE NO.2 (2016 SERIES), DATED 23-3-2016

Consolidated FDI Policy Circular 2015 – Review of FDI on Insurance Sector - Amendment in Paragraph 6.2.18.7 - PRESS NOTE NO.1 (2016 SERIES), DATED 23-3-2016

Carriage by Air (Amendment) Act, 2016 - [NO.12 OF 2016], DATED 21-3-2016

Companies (Incorporation) Second Amendment Rules, 2016 - Substitution of Form INC-11 - NOTIFICATION [F.NO.01/13/2013 CL-V (PT-I)], DATED 23-3-2016

Bureau of Indian Standards Act, 2016 - [NO.11 OF 2016], DATED 21-3-2016

Liquidity Risk Management & Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards - CIRCULAR DBR.BP.BC.NO.86/21.04.098/2015-16, DATED 23-3-2016

Diamond Dollar Account (DDA) - Reporting Mechanism - A.P. (DIR SERIES 2015-16) CIRCULAR NO.54, DATED 23-3-2016

High Court and the Supreme Court Judges (Salaries and Conditions of Service) Amendment) Act, 2016 - [NO.13 OF 2016], DATED 21-3-2016 Thanks & Regards, Meetesh Shiroya

Daily Updates and News

INCOME TAX ACT

SECTION 12A

CHARITABLE OR RELIGIOUS TRUST - REGISTRATION OF

Condition precedent : While granting registration to a trust, authorities is empowered to examine only genuineness of trust and its activities; during assessment only eligibility in terms of sections 10, 11 and 12 is to be verified as to whether or not what was professed was indeed in Deed of trust - [2016] 67 taxmann.com 230 (Kerala)

SECTION 69C

UNEXPLAINED EXPENDITURE

Reassessment : Where assessee had furnished its explanation on each and every seized document and after considering same Assessing Officer completed original assessment, reopening of assessment on basis of observation of first appellate authority in subsequent assessment year that for relevant assessment year, Assessing Officer should work out exact figure of bogus purchase on basis of seized bill book, was invalid -[2016] 67 taxmann.com 231 (Allahabad)

SECTION 115JB

MINIMUM ALTERNATE TAX

Where assessee company incurred loss on transfer of its investment division to another company which was debited to profit and loss account, said loss could not be added back for computation of its book profit under section 115JB and, thus, revisional order passed by Commissioner on aforesaid basis deserved to be set aside -[2016] 67 taxmann.com 281 (Calcutta)

SECTION 253

APPELLATE TRIBUNAL - APPEAL TO

Cross objections : No cross objections are maintainable in an appeal against order of revision in terms of section 253(4) - [2016] 67 taxmann.com 229 (Karnataka)

SECTION 263

REVISION - OF ORDERS PREJUDICIAL TO INTEREST OF REVENUE

Scope of jurisdiction : Where original assessment order had been revised under section 264 and, thus, no longer existed, order passed by Commissioner under section 263 revising original assessment was void ab initio -[2016] 67 taxmann.com 229 (Karnataka)

COMPANIES ACT

SECTION 391

COMPROMISE AND ARRANGEMENT

Where a company sought sanction of de-merger of its real estate divisions, as company had no operative real estate business or undertaking, scheme of de-merger appeared to be a plain transfer of land to avoid tax, capital gains and stamp duty and hence could not have been sanctioned - [2016] 67 taxmann.com 227 (Rajasthan)

STATUTES

DIRECT TAX LAWS

Section 10(46) of the Income-tax Act, 1961 - Exemptions - Statutory Body/Authority/Board/Commission - notified body or Authority - NOTIFICATION NO. SO 1139(E) [NO.15/2016 (F.NO.196/6/2015-ITA.I)], DATED 16-3-2016

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – Agreement for avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries – Indonesia - NOTIFICATION NO. SO 1144(E) [NO.17/2016 (F.NO.503/4/2005-FTD-II)], DATED 16-3-2016

Senior Citizens' Welfare Fund Rules, 2016 - NOTIFICATION NO.GSR 322(E) [F.NO.13/20/2014-NS.II], DATED 18-3-2016

INDIRECT TAX LAWS (ST./EX./CUS. & (CST & VAT))

Review under section 129A(2) or section 129D of Customs Act, 1962; section 35B(2) or section 35E of Central Excise Act, 1944 and section 86(2A) or section 86(2) of Finance Act, 1994 - INSTRUCTION F.NO.390/REVIEW/36/2014-JC, DATED 17-3-2016 Thanks & Regards, Meetesh Shiroya

Daily Updates and News

SEBI

The Securities and Exchange Board of India has cautioned the investors that some unlisted companies are luring retail investors by issuing securities including non-convertible and convertible debentures/ non-convertible and convertible preference shares/ equity shares in the garb of private placement, without complying with the provisions of Companies Act, 1956 read with the Companies Act, 2013, SEBI (Issue and Listing of Debt Securities), Regulations, 2008, SEBI (Issue and Listing of Non Convertible Redeemable Preference Shares), Regulations, 2013 and SEBI (Issue of capital and Disclosure Requirements) Regulations, 2009. SEBI has taken action against 233 (as on March 15, 2016) such entities for issuance of such securities without complying with the prescribed provisions of law. List of Companies against whom orders have been passed by SEBI is provided in the said press release.

RBI

RBI has instructed banks to keep their branches open, which conduct government business. Banks will remain open for full day on March 30 and till 8 pm on March 31 to facilitate the transactions before annual closing of government accounts as the government expects all government transactions with banks must be accounted for within the same financial year.  Further, all electronic transactions would, however, continue till midnight on March 31, 2016.

Thanks & Regards,

Meetesh Shiroya

Daily Updates and News

MCA

MCA in its continuous endeavor to serve the stakeholders better is launching a new MCA21 portal for Company users. The new portal is likely to be launched on 27th March 2016. In order to implement the new portal, theoffline payment methods – Challan, NEFT, Pay Later have been disabled for Company services w.e.f. March 19, 2016. Online Payment methods to be effective until the new portal is launched. All Stakeholders are advised to make use of online payment methods until the new portal is launched

 

RBI - MSME

The Ministry of Micro, Small & Medium Enterprises has notified a Framework for Revival and Rehabilitation of MSMEs to address the stress in the accounts of MSMEs so that incipient sickness can be detected by banks in the units and a corrective action plan can be set in motion for them. The salient features of the framework are identification of incipient stress; formation of committees for distressed micro, small & medium enterprises (MSMEs); and a Corrective Action Plan by the Committee. Under the framework, before a loan account of an MSME turns into a Non Performing Asset (NPA), banks/creditors are required to identify incipient stress in the account. Any MSME may also voluntarily initiate proceedings if enterprise reasonably apprehends failure of its business or its inability or likely inability to pay debts and before the accumulated losses of the enterprise equals to half or more of its entire net worth. Moreover, banks shall constitute one or more Committees at such locations as may be considered necessary by the board of directors to provide reasonable access to all eligible MSMEs which have availed credit facilities from such bank. The Ministry added that during the period of operation of Corrective Action Plan (CAP), the enterprise shall be allowed to avail both secured and unsecured credit for its business operations.

  

News from NIRC of ICSI

1.  Today, 21st March, 2016, NIRC of ICSI is organizing PCS Meeting on the topic "PREPAREDNESS FOR NCLT" at 3:30 PM at ICSI-NIRC Building, 4, Prasad Nagar Institutional Area, New Delhi. Participation is FREE: Program Credit Hours  - 2. The program will be followed by Holi Celebrations with Chandan & Gulal.

2.  The Corporate Membership Scheme of NIRC of ICSI is open for the Financial Year 2016-17 and the last date for receipt of Corporate Membership fee with early bird incentive is 31.3.2016. The scheme is available for two options  - Option-I : Corporate Membership Scheme –(Delhi); Option-II : Corporate Membership Scheme – (Delhi & Chapters). Anyone becoming a member under the Scheme shall be entitled to attend all the paid programs (Except workshops and residential programs) organized by NIRC (& Chapters) free of charge throughout the year. The payment for Corporate Membership can be made through following options:

Option 1 – Cash deposit at NIRC Building, 4 Prasad Nagar Institutional Area, New Delhi. 

Option 2- NEFT transfer to NIRC- ICSI Saving Bank Account No. SB- 90062010039267 Syndicate Bank, East Patel Nagar, New Delhi – 110008, RTGS/ NEFT IFSC – SYNB0009006. 

Option 3 - Online payment through payment gateway.

Option 4 - Cheque/DD towards the Corporate Membership Fee for the requisite amount be drawn in favour of “NIRC of the ICSI” and sent to Regional Director, NIRC of ICSI, 4, Prasad Nagar Institutional Area , New Delhi-110005.

Thanks & Regards,

Meetesh Shiroya

Daily Updates and News

SEBI

SEBI in its Board Meeting and decided on various important issues relating to governance and willful default by the promoters. With the objective of restricting access to capital markets for raising funds from public, by willful defaulters, prohibited public issue of equity securities / debt securities / non-convertible redeemable preference shares, if the issuer company or its promoter or its director is in the list of the willful defaulters, prohibited to take control over other listed entity if any company or its promoter or its director is categorized as willful defaulter. However, if a listed company or its promoter or its director is categorized as willful defaulter, and there is a take-over offer in respect of the listed company, they may be allowed to make competing offer for the said listed company in accordance with SEBI (SAST) Regulations, 2011. SEBI also announced that the criteria for determining a ‘fit and proper person’ in SEBI Regulations will be amended to include that no fresh registration shall be granted to any entity if the entity or its promoters or its directors or key managerial personnel, as defined under SEBI (ICDR) Regulations, 2009, are included in the list of willful defaulters.

 

SEBI

SEBI has issued a Master Circular for Listing Requirements which is a compilation of all checklist/requirements list as on March 11, 2016 for listing/further listing/delisting/forfeiture etc., of securities on the exchange. SEBI lays down guidelines for listing of securities that are revised from time to time as per requirements of law and the stock exchange. Also, on the basis of the criteria laid down, the Exchange periodically issues checklists /requirements lists on its website to enable issuers for listing/further listing/delisting/forfeiture etc., of the securities to understand the requirements and submit the appropriate requirements. However, It may be noted that the documents and requirements mentioned in the Master Circular (checklists) are the basic requirements and that in certain cases, further documents/requirements may be called for as and when deemed necessary, in the interests of proper scrutiny and public disclosure.

INCOME TAX ACT
SECTION 158B
BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOSED INCOME
Where assessees had never filed their regular returns of income, amount found deposited in their bank accounts during search would be assessed as undisclosed income in block assessment and mere statement recorded under section 131 prior to search giving details of such bank accounts would not amount disclosure of income so as to tax said amount in regular assessment - [2016] 67 taxmann.com 102 (Delhi)
SECTION 234B
INTEREST, CHARGEABLE AS
Waiver of : Where assessee sought for waiver of interest under section 234B on basis of Notification F No. 400/234/95-IT(B), dated 23-5-1996, Chief Commissioner was empowered to decline said claim by applying subsequently issued Order-F. No. 400/234/95-IT(B) - [2016] 67 taxmann.com 98 (Kerala)
SERVICE TAX
SECTION 65(64)
TAXABLE SERVICE - SERVICE OF MANAGEMENT, MAINTENANCE OR REPAIRS
Service provided for management, maintenance and repairs of roads during the period 16-6-2005 to 25-7-2009 was exempted from payment of tax vide amendment to Finance Act, 2012 inserted with effect from 28-5-2012 -[2016] 67 taxmann.com 92 (Madhya Pradesh)
STATUTES
CORPORATE LAWS
Section 1 of the Election Laws (Amendment) Act, 2016 - Act - Enforcement of - Notified Date on which Provisions of said Act shall come into force - NOTIFICATION NO. SO 665(E) [F.NO.H-11027(2)/2015-LEG.II], DATED 4-3-2016
SEBI Board meeting - Imposing Restrictions on Wilful Defaulters; SEBI Budget for 2016-17; Review of Manner of Dealing with Audit Reports Containing Qualifications Etc. - PRESS RELEASE NO.56/2016, DATED 12-3-2016 Thanks & Regards, Meetesh Shiroya

Daily Updates and News

INCOME TAX ACT

SECTION 11

CHARITABLE OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Depreciation : Section 11(6) inserted by Finance (No. 2) Act, 2014 denying depreciation while computing income of charitable trust, is prospective in nature and operates with effect from 1-4-2015 - [2016] 67 taxmann.com 160 (Karnataka)

SECTION 92C

TNMM method : Where TPO applied base of capital employed under TNMM method without segregation of capital employed in respect of AE and non-AE transactions, action of TPO was not justified - [2016] 67 taxmann.com 86 (Bombay)

Comparables & adjustments/Adjustments – General : Where assessee entered into both international as well as domestic transactions, Tribunal was justified in restricting adjustment only on international transactions -[2016] 67 taxmann.com 86 (Bombay)

SECTION 245D

SETTLEMENT COMMISSION - PROCEDURE ON APPLICATION UNDER SECTION 245C

Objection at initial stage : Adjudication is not required on Commissioner's report which is submitted in first instance objecting settlement application on ground that there was no full and true disclosure as Settlement Commission has to pass final order after obtaining further report of Commissioner and after being satisfied that there was full and true disclosure - [2016] 67 taxmann.com 77 (Karnataka)

SECTION 249

COMMISSIONER (APPEALS) - FORM OF APPEAL AND LIMITATION

Stay of demand : Where against order of Assessing Officer, assessee filed appeal before Commissioner (Appeals) along with application for stay of demand and submitted that it fell within illustration (a) contained in Para C of Instruction No. 1914, since assessee failed to show that it fell within ambit and scope of Instruction No. 1914, it could not take any benefit from said instruction - [2016] 67 taxmann.com 67 (Karnataka)

COMPETITION ACT

SECTION 4

PROHIBITION OF ABUSE OF DOMINANT POSITION

Where MRTP Commission without returning a finding that there was any unfair trade practice or any restrictive/monopolistic trade practice by DDA compensated respondent with higher rate of interest while refunding registration amount, Commission erred in its order and same was to be set aside - [2016] 67 taxmann.com 83 (SC)

SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985

SECTION 22

SUSPENSION OF LEGAL PROCEEDINGS, CONTRACT, ETC.

Registration of a reference is an important step under SICA as protection under section 22 is available upon such registration - [2016] 67 taxmann.com 84 (Bombay)

CENTRAL EXCISE ACT

SECTION 35G

HIGH COURT - APPEAL TO - MONETARY LIMIT FOR TAX APPEAL

Court can give retrospective effect to Government Policy that in cases of tax effect below Rs. 2 lakhs appeals should not be filed - [2016] 67 taxmann.com 74 (Madras)

STATUTES

DIRECT TAX LAWS

Section 199 of the Income-tax Act, 1961 - Deduction of Tax at Source - Credit for tax deducted - Non-Deposit of tax deducted at source by the deductor- Recovery of demand against deductee - assessee - OFFICE MEMORANDUM F.NO.275/29/2014-IT(B), DATED 11-3-2016

CORPORATE LAWS

Frequently Asked Questions on SEBI Circular No.CIR/MIRSD/29/2016, Dated 22-1-2016 on Know your client requirements - Clarification on voluntary adaptation of Aadhaar based E-KYC process - PRESS RELEASE, DATED 11-3-2016

Section 68 of the Companies Act, 2013 - Power of Company to purchase its own securities - Notified Debt to Capital and free reserves ratio for Government Companies which carry on Non-Banking Finance Institution Activities and housing Finance activities - ORDER [F.NO.01/04/2013 CL-V(PT-II)], DATED 10-3-2016

INDIRECT TAX LAWS (ST./EX./CUS. & (CST & VAT))

Valuation of imported set top boxes under Section 4 of Central Excise Act, 1944 - CIRCULAR NO.1020/8/2016-CX, DATED 11-3-2016

Thanks & Regards,

Meetesh Shiroya

Daily Updates and News

INCOME TAX ACT

SECTION 37(1)

BUSINESS EXPENDITURE - YEAR IN WHICH DEDUCTIBLE

Licence fee : Where assessee obtained a licence from NDMC for running a cinema hall against payment of licence fee and NDMC at stage of renewal of licence enhanced licence fee and Sub Judge restrained NDMC from recovering enhanced amount of licence fee till disposal of suit, assessee following mercantile of accounting was entitled for deduction of certain amount towards licence fee and interest on arrears of licence fee payable to NDMC - [2016] 67 taxmann.com 63 (Delhi)

SECTION 244

REFUND - INTEREST WHERE NO CLAIM IS NEEDED

Question whether assessee is entitled to interest on refund of self assessment tax and further, if so, date, from which such interest would be payable, was referred to a Larger Bench for decision - [2016] 67 taxmann.com 76 (Delhi)

STATUTES

DIRECT TAX LAWS

Section 92C of the Income-tax Act, 1961 – Transfer Pricing - Computation of Arm's Length Price -Guidelines for Implementation of Transfer Pricing Provisions – Replacement of Instruction No.15/2015 - INSTRUCTION NO.3/2016 [F.NO.500/9/2015-APA-II], DATED 10-3-2016

Section 2(1A) of the Income-tax Act, 1961 - Agricultural Income - Verification of genuineness of Agricultural Income shown in Income Tax Return by Assessees for Assessment years 2011-12 to 2013-14 - LETTER F.NO.DGIT(S)/DIT(S)-3/AST/PIL MATTER/AGRICULTURAL INCOME/97/2015-16, DATED 10-3-2016

CORPORATE LAWS

Companies (share Capital and Debentures) Amendment Rules, 2016 - Amendment in Rule 17 - NOTIFICATION [F.NO.01/04/2013 CL-V (PART-II)] [10-03-2016] Thanks & Regards, Meetesh Shiroya