Pages

Monday, March 30, 2015

Circular clarification on Deposit by Ministry of Company affairs


---------- Forwarded message ----------
From: Desai Seksaria <desaiandseksaria@gmail.com>
Date: Mon, Mar 30, 2015 at 4:08 PM
Subject: Fwd: Circular clarification on Deposit by Ministry of Company affairs


---------- Forwarded message ----------
From: CA PRIYAM Shah <ca.priyamrshah@gmail.com>
Date: 30 March 2015 at 15:50
Subject: Circular clarification on Deposit by Ministry of Company affairs
To:


Respected  Members,

Amounts received by Private Limited Companies  prior to 1st April 2014 shall not be treated as deposit under new Companies Act 2013.

 circular of Ministry of Company Affairs is attached herewith.


Regards


Friday, March 27, 2015

Exemption from stamp duty, in case transfer of property to relative

महाराष्ट्र सरकारचा एक चांगला निर्णय अभिनंदन सरकारचे रक्ताच्या नातेवाईकांसाठी स्टॅम्पड्युटी माफ, महसूलमंत्र्यांची महत्वपूर्ण घोषणा
गुरूवार, 26 मार्च 2015
मुंबई : आपल्या रक्ताच्या नातेवाईकाला स्थावर मालमत्तेची मालकी हस्तांतरित करताना आता स्टँम्पड्युटी द्यावी लागणार नाही. राज्य सरकारने मालकी हस्तांतरणाच्या नियमात बदल करुन ही स्टँम्पड्यूटी रद्द करण्याचा महत्वपूर्ण निर्णय घेतला आहे.
स्टँम्प ड्यूटी रद्द करण्याच्या या निर्णयामुळे अवघ्या पाचशे रुपयांच्या स्टँम्प पेपरवर वडिलांची मालमत्ता मुलाला किंवा मुलाची मालमत्ता वडिलांना हस्तांतरित करणं शक्य होणार आहे.
आतापर्यंत या हस्तांतरणावर पाच टक्के स्टँम्प ड्यूटी महसूल विभागात जमा करावी लागत होती. पण या निर्णयाने आता रक्ताच्या नात्यांतलं हस्तातरण जवळपास मोफत होणार आहे.

-Regards
CA. C. V. PAWAR

Bank Branch Audit Update 2014-15 allotment status

(update shared on whatsapp)
FYI - Bank Branch Audit Update:-

List of auditors released by RBI and mail received in few banks and in remaining it will reach today itself.
👇 👇 👇
http://www.casansaar.com/news-Bank-Branch-Audit/News-about-Bank-Branch-Audit-Allotment-of-Branches/6685.html

-Regards
CA. C. V. PAWAR

Thursday, March 26, 2015

Link follow Format for Auditors certificate DPT4



 



 
 
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Posted by: Dipakkumar Shah <cadjshah@yahoo.com>

Judgments and Information [4 Attachments]


 
[Attachment(s) from Dipakkumar Shah cadjshah@yahoo.com [SolapurCAs] included below]

PFA

E-voting rules change – A new mess a new day !

by CA Sandeep Kanoi
CS Nidhi Bothra, CS Vinita Nair Metamorphosis of Company law rules that went bad, changed a caterpillar into an ugly frog. Under the erstwhile (read outdated) system of holding general meetings where the resolutions were put to vote by way of show of hands or a poll could be demanded. Since only such members who […]

PFA

List of Implementation Agencies for Corporate Social Responsibility (CSR)

by CA Sandeep Kanoi
List Of Implementation Agencies For Corporate Social Responsibility Available On Website Of Indian Institute Of Corporate Affairs , Ministry Of Corporate Affairs. The Companies Act 2013 makes it mandatory for corporate houses to spend 2% profit on CSR activities. The government has prepared a list of sanitized Non-Governmental Organisations (NGOs), free of any terrorist links […]


PFA

Analysis of SEBI Board meeting held on 22.03.2015

by CA Sandeep Kanoi
SEBI has approved SEBI (International Financial Services Centres) Guidelines, 2015. ♥ As per this guidelines, Indian as well as foreign stock exchanges, clearing corporations and depositories are permitted to set up subsidiaries to undertake the same business in IFSC subject to certain relaxed norms on shareholding and net worth, etc

PFA

S. 36(1)(iii)/ 37(1): Normally revenue expenditure incurred in a particular year has to be allowed in that year and if the assessee claims that expenditure in that year, the Department cannot deny the same. Fact that assessee has deferred the expenditure in the books of account is irrelevant. However, if the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of 'Matching Concept' is satisfied
The assessee issued debentures in which two options as regards payment of interest were given to the subscribers/debenture holders. They could either receive interest periodically, that is every half yearly @ 18% per annum over a period of five years, or else, the debenture holders could opt for one time upfront payment of Rs. 55 per debenture. In the second alternative, 55 per debenture was to be immediately paid as upfront on account of interest. At the end of five years period, the debentures were to be redeemed at the face value of Rs. 100. The assessee paid to the debenture holder the upfront interest payment and claimed the same as a deduction. In the accounts, the interest expenditure was shown as deferred expenditure. However, the AO, CIT(A), ITAT and High Court rejected the assessee's claim and held that though the amount was paid, the same was only allowable as a deduction over the tenure of the debentures. On appeal by the assessee to the Supreme Court HELD allowing the appeal:
(i) U/s 36(1)(iii) when the interest was actually incurred by the assessee, which follows the mercantile system of accounting, the assessee would be entitled to deduction of full amount in the assessment year in which it is paid. While examining the allowability of deduction of this nature, the AO is to consider the genuineness of business borrowing and that the borrowing was for the purpose of business and not an illusionary and colourable transaction. Once the genuineness is proved and the interest is paid on the borrowing, it is not within the powers of the AO to disallow the deduction either on the ground that rate of interest is unreasonably high or that the assessee had himself charged a lower rate of interest on the monies which he lent;
(ii) The High Court wrongly applied the "Matching Concept" to deny the deduction of the upfront interest payment in the first year. As per the terms of issue, the interest could be paid in two modes. As per one mode, interest was payable every year and in that case it was to be paid on six monthly basis @ 18% per annum. In such cases, the interest as paid was claimed on yearly basis over a period of five years and allowed as well and there is no dispute about the same. However, in the second mode of payment of interest, which was at the option of the debenture holder, interest was payable upfront, which means insofar as interest liability is concerned, that was discharged in the first year of the issue itself. By this, the assessee had benefited by making payment of lesser amount of interest in comparison with the interest which was payable under the first mode over a period of five years. We are, therefore, of the opinion that in order to be entitled to have deduction of this amount, the only aspect which needed examination was as to whether provisions of Section 36(1)(iii) read with Section 43(ii) of the Act were satisfied or not. Once these are satisfied, there is no question of denying the benefit of entire deduction in the year in which such an amount was actually paid or incurred;
(iii) The moment second option was exercised by the debenture holder to receive the payment upfront, liability of the assessee to make the payment in that very year, on exercising of this option, has arisen and this liability was to pay the interest @ Rs. 55 per debenture. In Bharat Earth Movers v. Commissioner of Income Tax [2000] 6 SCC 645, this Court had categorically held that if a business liability has arisen in the accounting year, the deduction should be allowed even if such a liability may have to be quantified and discharged at a future date. The present case is even on a stronger footing inasmuch as not only the liability had arisen in the assessment year in question, it was even quantified and discharged as well in that very accounting year;
(iv) The principle that emerges from Madras Industrial Investment Corporation Limited v. Commissioner of Income Tax [1997] 4 SCC 666 is that normally the ordinary rule is to be applied, namely, revenue expenditure incurred in a particular year is to be allowed in that year. Thus, if the assessee claims that expenditure in that year, the IT Department cannot deny the same. However, in those cases where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of 'Matching Concept' is satisfied, which upto now has been restricted to the cases of debentures. In the instant case, the assessee did not want spread over of this expenditure over a period of five years as in the return filed by it, it had claimed the entire interest paid upfront as deductible expenditure in the same year. In such a situation, when this course of action was permissible in law to the assessee as it was in consonance with the provisions of the Act which permit the assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was given in the books of account cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. It has been held repeatedly by this Court that entries in the books of account are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act [See – Kedarnath Jute Manufacturing Co. Ltd. v. Commissioner of Income Tax (Central), Calcutta [1972] 3 SCC 252; Tuticorin Alkali Chemicals & Fertilizers Ltd., Madras v. Commissioner of Income Tax, Madras [1997] 6 SCC 117; Sutlej Cotton Mills Ltd. v. Commissioner of Income Tax, Calcutta [1978] 4 SCC 358; and United Commercial Bank, Calcutta v. Commissioner of Income Tax, WB-III, Calcutta [1999] 8 SCC 338;
(v) At the most, an inference can be drawn that by showing this expenditure in a spread over manner in the books of account, the assessee had initially intended to make such an option. However, it abandoned the same before reaching the crucial stage, inasmuch as, in the income tax return filed by the assessee, it chose to claim the entire expenditure in the year in which it was spent/paid by invoking the provisions of Section 36(1)(iii) of the Act. Once a return in that manner was filed, the AO was bound to carry out the assessment by applying the provisions of that Act and not to go beyond the said return. There is no estoppel against the Statute and the Act enables and entitles the assessee to claim the entire expenditure in the manner it is claimed.

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Attachment(s) from Dipakkumar Shah cadjshah@yahoo.com [SolapurCAs] | View attachments on the web

4 of 4 File(s)


Posted by: Dipakkumar Shah <cadjshah@yahoo.com>

Important Judgement Of Supreme Court On 'Matching Concept' And Deferred Revenue Expenditure

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


Taparia Tools Ltd vs. JCIT (Supreme Court)

S. 36(1)(iii)/ 37(1): Normally revenue expenditure incurred in a particular year has to be allowed in that year and if the assessee claims that expenditure in that year, the Department cannot deny the same. Fact that assessee has deferred the expenditure in the books of account is irrelevant. However, if the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of 'Matching Concept' is satisfied

U/s 36(1)(iii) when the interest was actually incurred by the assessee, which follows the mercantile system of accounting, the assessee would be entitled to deduction of full amount in the assessment year in which it is paid. The High Court wrongly applied the "Matching Concept" to deny the deduction of the upfront interest payment in the first year.


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Transfers Of Two More Hon'ble Members Of The ITAT (March 2015 -II)



CBDT Takes Stern View Of Laxity By Counsel And CIT In Court Matters

 

Dear Subscriber,

CBDT Takes Stern View Of Laxity By Counsel And CIT In Court Matters

The CBDT has issued two letters, both dated 20th March 2015, in which it has referred to an incident in the Delhi High Court where the Court had sought information relating to a case. Though the Standing Counsel communicated the directions of the Court to the concerned CIT, this was done in a "routine manner" and without any "follow up". The result is that the Court issued directions and possibly strictures against the department.

In the first letter, the CBDT has made it clear that it is the responsibility of the Standing Counsel to obtain the information called for from the concerned CIT and to communicate the same to the Court. If the issue is not resolved, the Counsel is required to bring the issue to the attention of the CCIT. It is sternly stated that "The Counsel can not absolve himself from his responsibility to get the directions of High Court complied with under any circumstances".

In the other letter, the CBDT has made it clear that it is the responsibility of the CIT to ensure that whenever the Departmental Counsel seeks Instructions/ clarifications in a case the same are attended to by the officers concerned promptly. It is also stated that the Counsel should be briefed properly to strengthen Revenue's case and that the CIT should personally involve himself in cases involving intricate issues of facts/law having wide ramifications or involving high revenue stake.

The letters end with the grim warning that "Any laxity in adherence to this instruction will be viewed adversely against the erring officers".


Regards,

 

Editor,

 

itatonline.org

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Latest:

Sardar Balbir Singh vs. ITO (ITAT Lucknow)

S. 147/ 151: Sanction of CIT instead of JCIT renders reopening void. The error cannot be saved u/s 292BB



Sunday, March 22, 2015

Judgments and Information [4 Attachments]



 
[Attachment(s) from Dipakkumar Shah cadjshah@yahoo.com [SolapurCAs] included below]






Lessons for Entrepreneurs from Guy Kawasaki

by CA Sandeep Kanoi
Recently gave a test for knowing my entrepreneur quotient on a websitehttp://guykawasaki.com/, what I ended up learning about few lessons about entrepreneurship is being presented in this small article. Hope you will like it and will be benefited by the same.

Lessons for Entrepreneurs from Guy Kawasaki

Posted In CA CS ICWA |  | No Comments » Print Friendly and PDF
Recently gave a test for knowing my entrepreneur quotient on a website http://guykawasaki.com/, what I ended up learning about few lessons about entrepreneurship is being presented in this small article. Hope you will like it and will be benefited by the same.
1. Similarities in Founders: Following two major similarities should be there in the founding team members
a. Vision for the future of the company
b. Level of Commitment to the company
2.  Panel Discussions: The following things are recommended if you want to rock as a panelist in a discussion
a. While responding to the questions of the moderator, look at the audience and not the moderator
b. Provide plain, simple and short answers
c. Try to entertain the audience and not just inform them
d. Fake the interest in other panelists (even if you are not interested), you are not the only one who is going to speak throughout the panel discussion.
3. Writing a Business Plan: It is no longer necessary to write a business plan in order to get a venture capital investment
4. Board Qualities: Your board should at least consist of people with different qualities such as
a. Geek : A person who is an expert or enthusiast or a person obsessed with a hobby or intellectual pursuit
b. Customer: Someone who can look at the products/services from customer/client's perspective and give feedback for further improvements
c. Dad: A person who can tell or direct fiercely about the overall direction of the venture and keep everyone focused
d. Jerry Maguire: A person who finds meaning in work and directs the efforts of the team to create valuable product/services for the customers (Reference to a movie called Jerry Maguire – http://www.imdb.com/title/tt0116695/ )
5. Pitching your Ideas in Speeches: When it comes to pitching, don't think that giving more is good, an effective pitch contains only enough information to keep people interested.
6. Optimal number of slides in a presentation should be around 10. (each slide with around 3 points in small sentences or combination of words and font size of 24-32 and titles of the slide in 36-44)
7. What to tell about competitionWhen potential investor asks about competition, explain what you can do that they can't and you can't do that they can.
8. Marketing on Social Media: Optimal Mixture of content and promotion on social media is 95% great content and 5% promotion.
9. What is not a business defense: The following does not ensure that your company will become sustainable
a. Non-Compete Agreements
b. Intellectual property lawyers
c. Patents
d. Non-Disclosure Agreements
Compiled by CA Rajesh Pabari, Partner at DreamOptimus Consulting LLP (dreamoptimus.com). For any further communication regarding the article, am an email away rajesh@dreamoptimus.com or can reach me on WhatsApp, +919022780919
 
 
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Recently gave a test for knowing my entrepreneur quotient on a website what I ended up learning about few lessons about entrepreneurship is being presented in this ...
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Addition cannot be made by AO merely based upon DVO's report in absence of any material pointing to under valuation

CIT Vs. Nishi Mehra & Others (Delhi High Court), ITA. No. 120-125 of 2000, Date of Pronouncement: 19.02.2015

All the appeals arise out of the common order made by the ITAT. The Revenue contends that the direction of the ITAT to delete the amounts sought to be brought to tax under Section 153A of the Income Tax Act was unjustified. The assessees had purchased eight different properties; they are related to each other. The search operations were conducted in the premises of M/s Mehra Art Palace and its partners Arun Mehra, Subhash Mehra and Sushil Mehra on 27.03.1996. Mehra Art Palace was used to export as well as sell handicrafts in the domestic market. The allegations made by the Revenue against the firm and its partners were that the high profit margins enjoyed by it were concealed and only modest amounts were disclosed in the ITRs. After issuing notice, the AO taking into consideration the materials brought on the record referred the properties for valuation to the District Valuation Officer under Section 142A of the Income Tax Act. Based upon the report received which was considered after hearing counsel for the assessee, the AO made additions. The AO concluded that a comparison between declared value and the value determined (by the DVO) disclosed serious discrepancy. He, therefore, added the difference and brought them to tax in the block assessment orders.
Held by ITAT
 The ITAT considered the submissions and concluded that the AO could not have brought to tax the amounts that he ultimately did merely based upon the DVO's report in the absence of any material pointing to under valuation.
Held by Hon'ble High Court
We have considered the submissions. As apparent from the factual narrative, the materials collected in the search operations impelled the AO to complete the block assessment in this case. Conspicuously, however, there was no material in the course of the search or collected during the proceedings post search, pointing to under valuation of the assessees' properties which were ultimately held to have been the subject of under valuation. Again, significantly the assessees had at relevant time when the actual purchases were effected disclosed the transactional value of those assets; the AO has then unreservedly accepted them. Wealth Tax authorities too had accepted the valuation. In almost identical circumstances, this Court in Navin Gera (supra) recollected the previous rulings – including the judgment of the Supreme Court in K.P. Varghese v. ITO, (1981) 131 ITR 597 (SC) and held as follows: -
"9. We do not  find merit in the submission made by Ms. Suruchi Aggarwal that the concealed income was detected during the course of search or any evidence was found which would indicate such concealment. The seized material containing the sale deeds of the properties, which have been relied upon to make reference to the DVO, had already been declared to the Revenue by the respondent-assessee under the VDIS. We are also in agreement with the submission made by Mr. Piyush Kaushik that it is settled law that in the absence of any incriminating evidence that anything has been paid over and above than the stated amount, the primary burden of proof is on the Revenue to show that there has been an understatement or concealment of income. It is only when such burden has been discharged, would it be permissible to rely upon the valuation given by the DVO. Further, the opinion of the DVO, per se, is not an information and cannot be relied upon in the absence of other corroborative evidence (See K.P. Varghese v. ITO (1981) 131 ITR 597 (SC), Civil Appeal No.9468 of 2003 (Asstt. CIT v. Dhariya Construction Co. (2010) 328 ITR 5151 (SC) decided by the apex court on February 16, 2010, CIT v. Shakuntala Devi (2009) 316 ITR 46 (Delhi), CIT v. Ashok Khetrapal (2007) 294 ITR 143 (Delhi) and CIT v. Manoj Jain (2006) 287 ITR 285 (Delhi)."
Likewise in Bajrang Lal (supra), too it was held that "it is settled law that the primary burden to prove understatement or concealment of income is on the Revenue and it is only when such burden is discharged it would be permissible to rely upon the valuation given by the DVO."
The decision in Lahsa Constructions (supra), which is of more recent vintage also rules to the same effect: –
"Whether an addition can be made solely and on the basis of the report of the Departmental Valuation Officer, is no longer res integra and is covered by the decisions of this court in CIT v. S.K. Construction Co. (2008) 167 Taxman 171, CIT v. Navin Gera (2010) 328 ITR516/(201 1) 198 Taxman 93 (Delhi), CIT v. Smt. Suraj Devi, (2010) 328 ITR 604/(2011) 197 Taxman 173 (Delhi) (Mag.), and CIT v. Bajrang Lal Bansal (2011) 335 ITR 572/200 Taxman 188 (Mag.)/12 Taxmann 88 (Delhi). It has been repeatedly held that addition cannot be justified solely relying upon the valuation report. Decision of the Supreme Court in the case of K.P. Varghese v. ITO (1981) 131 ITR 597/7 Taxman 13 has been followed.
In view of the above decisions, it is held that the question of law formulated has to be answered against the Revenue and in favour of the assessees.
 
 
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Addition cannot be made by AO merely based upon DVO's...
The ITAT considered the submissions and concluded that the AO could not have brought to tax the amounts that he ultimately did merely based upon the DVO's repor...
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Opinion of DVO cannot be relied upon in absence of other corroborative evidence

by CA Sandeep Kanoi
We are also in agreement with the submission made by Mr. Piyush Kaushik that it is settled law that in the absence of any incriminating evidence that anything has been paid over and above than the stated amount, the primary burden of proof is on the Revenue to show that there has been an under-statement or concealment of income. It is only when such burden has been discharged, would it be permissible to rely upon the valuation given by the DVO.

Railways Cash-on-Delivery Service for E-Tickets

by CA Sandeep Kanoi
Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), a public sector undertaking of the Ministry of Railways, has launched Cash on Delivery (CoD) service for e-tickets w.e.f. 01.01.2015 on pilot basis. The salient features of the scheme are as under:

Railways Cash-on-Delivery Service for E-Tickets

Posted In Corporate Law |  | 5 Comments » Print Friendly and PDF
Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), a public sector undertaking of the Ministry of Railways, has launched Cash on Delivery (CoD) service for e-tickets w.e.f. 01.01.2015 on pilot basis. The salient features of the scheme are as under:
♠ Under this scheme, the customer books the tickets online through the following channels and opts for Cash on Delivery service or may make online payment:
ii.    Bookmytrain App on Android platform.
iii.   Bookmytrain App on Windows platform.
iv.   Bookmytrain App on BlackBerry platform.
v.    Bookmytrain App on iOS platform.
♠ The customer can book tickets up to five days prior to commencement of journey.
Introduction of the scheme for facilitating the passengers and its proliferation based on feedback is a continuous and ongoing process.
This information was given by the Minister of State for Railways Shri Manoj Sinha in written reply to a question in Lok Sabha today. (Source-PIB)
 
 
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Railways Cash-on-Delivery Service for E-Tickets
Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), a public sector undertaking of the Ministry of Railways, has launched Cash on Delivery (CoD) service f...
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CBDT notifies rules & forms for rollback of Advance Pricing Agreement

by CA Sandeep Kanoi
 Income-tax (Third Amendment) Rules, 2015  Income Tax Notification No. 23/2015 Dated- 14th day of March, 2015 S.O. 758(E).- In exercise of the powers conferred by sub-sections (9) and(9A) of section 92CC read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further […]

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Attachment(s) from Dipakkumar Shah cadjshah@yahoo.com [SolapurCAs] | View attachments on the web

4 of 4 File(s)


Posted by: Dipakkumar Shah <cadjshah@yahoo.com>

Judgments and Information


 




Closes predatory pricing information against CRISIL; Allegations have mere 'moral value'

CCI closes information filed against CRISIL Limited (Opposite Party, 'OP') alleging that it abused dominant position by indulging in unfair/ predatory pricing, exclusionary conduct in public procurement and exploitative behaviour in stopping switching by customers, absent prima facie case; States that "information appears to be of general and generic nature without having been supported by any data or costs involved to establish predatory pricing etc., and as such do not seem to raise competition issues"; Rejects informant's allegation that OP acted in anti-competitive manner by pricing too low to woo customers and oust competitors from market, states that "there are instances where bidders quote very less amount to win the bids and price competition appears to be the norm for tenders"; Further rejecting Informant's allegations relating to predatory pricing, states that "Informant itself has based its case on 'too low' pricing by OP 1 instead of establishing predation"; On Informant's allegation that OP while imparting consultancy service made PSUs change their eligibility standards to keep informant out of tenders, CCI states that Informant is more concerned about 'moral value' than on any alleged anti-competitive issue:CCI

The Order was passed by Shri Ashok Chawla (Chairperson), Shri S.L. Bunker, Shri Sudhir Mital, Shri Augustine Peter and Shri U.C. Nahta (Members).
Advocate Avinash Kumar, Shri Vivek Kulkarni, Managing Director and Shri D. Ravishankar, 

RBI discontinues Stat 5 and Stat 8 returns for reporting non-resident deposits data

RBI notifies all banks authorised to deal in foreign exchange to discontinue reporting of Stat 5 and Stat 8 returns (both hard and soft copies) wherein data of Non-resident Deposits in eXtensible Business Reporting Language (XBRL) was submitted; Observes that such decision is taken as submission of such data in XBRL has stabilised; XBRL-based data submission was introduced in 2013 to improve data quality, enhance security-level in data submission etc.

Click here to read more.

RBI liberalises process of opening bank accounts of proprietary concerns

RBI eases process of opening bank accounts of proprietary concerns, liberalises requirement of furnishing two documents as activity proof; States that where banks are satisfied that it is not possible to furnish two such documents, they would have discretion to accept only one of the documents as activity proof; However, clarifies that in such cases banks would have to undertake contact point verification, collect such information as would be required to establish the existence of such firm, confirm, clarify and satisfy themselves that business activity has been verified from proprietary concern's address

Click here to read more.

Goods and Services Tax – Need, Necessity, Highlights and overview of Dual GST Model

Posted In GST |  | No Comments » Print Friendly and PDF
We have presented below three video of CA Bimal Jain on Goods and Service Tax(GST). Video with following titles –
1. Goods and Services Tax – Need and Necessity    (Part – 1)
2. Overview of Dual GST Model   (Part – 2)
3. Highlights of 122nd Constitutional Amendment Bill
Goods and Services Tax – Need and Necessity    (Part – 1)
Overview of Dual GST Model   (Part – 2)
Highlights of 122nd Constitutional Amendment Bill  (Part – 3)
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)
 
 
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Goods and Services Tax – Need, Necessity, Highlights and...
We have presented below three video of CA Bimal Jain on Goods and Service Tax (GST). Video with following titles - 1. Goods and Services Tax – Need and Necessity   ...
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Even though contract is awarded to assessee, the income is assessable only in the hands of person which has executed the work

by CA Sandeep Kanoi
The assessee, a joint venture company, was awarded a project work. However the assessee did not execute the contract and the said work was done by one of its constituents namely SMS Infrastructure Limited ('SIL'). Accordingly, receipts from the said project work were reflected in the books of account and return of income of SIL and the same was also accepted by the Assessing Officer ('AO') in the assessment made under section 153A read with 143(3) of the Income-tax Act, 1961.

Full Text of Judgment already sent earlier......

Even though contract is awarded to assessee, the income is assessable only in the hands of person which has executed work

CA Mayank Parekh
CIT vs. M/s. SMSL-UANRCL (JV) 2015 (ITA No.: 44/2013) (Bombay High Court) , Dated: 02nd March, 2015.   
Facts:
The assessee, a joint venture company, was awarded a project work. However the assessee did not execute the contract and the said work was done by one of its constituents namely SMS Infrastructure Limited ('SIL'). Accordingly, receipts from the said project work were reflected in the books of account and return of income of SIL and the same was also accepted by the Assessing Officer ('AO') in the assessment made under section 153A read with 143(3) of the Income-tax Act, 1961.
Further, the assesee had filed return of income of Rs 2,19,990/- and erroneously claimed full TDS of Rs 30,14,718/- pertaining to contract awarded to it and executed by SIL. During the assessment proceedings a query was raised by the AO for non-disclosure of receipts of the said project work and TDS claimed by the assessee.
The assessee submitted that due to oversight and inadvertently the credit of TDS was shown by it. It further requested and sought leave to withdraw the claim of TDS. However, the AO worked out income tax at 3% of the contract value in the hands of the assessee.
On appeal made by the assessee, the Commissioner of Income-tax (Appeals) ['CIT(A)'] passed order in favor of the assessee. The department relying on the decision of the Apex court in the case of C. H. Achhaiya (218 ITR 239) and Madras High Court in the case of Murugesa Naicker Mansion (244 ITR 461) wherein it was held that, AO is not precluded from taxing the right person merely on the ground that a wrong person is taxable, filed an appeal before the Income-tax Appellate Tribunal ('ITAT'). However, the ITAT upheld the order of the CIT(A).
Being aggrieved by the order of the ITAT the department filed an appeal before Hon'ble Bombay High Court ('Bombay HC').
Judgment:
After hearing both the sides the Hon'ble Bombay HC rejected the appeal based on following findings of the CIT(A) and ITAT:
1. If the TDS claim was not erroneous, the income could have been shown in the account of the assessee. If leave to withdraw was being sought with some ulterior motive, the income would have been reflected in the account of the assessee. The consideration either by the AO or appeal authorities does not show this position.
2. Further, guess work done by the AO in working out 3% tax of the contract value would not have been essential, had the assessee actually received the amounts and those amounts would have been reflected in the books of accounts.
3. The department would have procured some material to show receipts by the assessee towards contract. However, there is no finding of receipt of any income by joint venture assessee on account of said contract.
 
 
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Even though contract is awarded to assessee, the income ...
The assessee, a joint venture company, was awarded a project work. However the assessee did not execute the contract and the said work was done by one of its consti...
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Service tax on distributor's commission by Mutual Fund Industry – What happens to commission accrued prior April 2015 but paid post April 2015

by CA Sandeep Kanoi
With the introduction of the Negative List of Services, all eyes, including those of the taxmen and the taxpayers were looking forward to a simplified tax regime. To add to the work of the taxmen and the worries of the taxpayers, the Government had introduced the reverse charge mechanism which has been made applicable to […]

Service tax on distributor's commission by Mutual Fund Industry – What happens to commission accrued prior April 2015 but paid post April 2015

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With the introduction of the Negative List of Services, all eyes, including those of the taxmen and the taxpayers were looking forward to a simplified tax regime. To add to the work of the taxmen and the worries of the taxpayers, the Government had introduced the reverse charge mechanism which has been made applicable to certain specified services. These specified services did not enjoy the threshold limit of exemption and an additional onus was placed on the service recipient for discharging the liability of service tax. Three years and several amendments later, those eyes are now glaring into the near future to welcome Goods and Service Tax (GST). Till the same is introduced and enacted, there have been several services which were earlier exempt and are now being brought into the service tax net.
On February 28, 2015, the Finance Minister expressed his intent to widen the service tax base by 'slightly pruning the negative list of services and withdrawal of certain other exemptions'. In the said context, with effect from April 1, 2015, the following services were isolated from the service tax exemptions list and were made taxable
  • Services provided by a mutual fund agent or a distributor to a mutual fund or assets management company and
  • selling or marketing agent of lottery ticket to a distributor
Further, the aforesaid services (herein after also referred to as 'subject services') have been brought under the pre-existing list of services which are subjected to tax under the Reverse Charge Mechanism.
While the rest of the country was debating on the applicability of cesses and the increase in Service Tax rate to 14%, an important concern area appears to have been overlooked. What would be the position of tax for the aforesaid services which have been provided in the months of March, but payment for the service has been received in April. At which point would these services be subjected to tax and in whose hands?
Under the applicable charging section which governs taxation of services, all services other than those mentioned under the negative list, provided or agreed to be provided in the taxable territory by one person to another shall be subjected to service tax.
Notwithstanding the fact that the subject services for the months prior to April 2015 were exempted on account of exemption notification, if one has to determine the point when the service is deemed to be provided, reference needs to be sought to the Point of Taxation Rules, 2011 ('POTR'). As per the generalised rule (i.e. Rule 3) of POTR, the point of taxation shall be the time when the invoice for services provided or agreed to be provided is issued. In the present case, prior to the Budgetary Amendments, the point of taxation, shall be the date of issuance of the invoice for services provided by Mutual Fund Agents and marketing agents of lottery tickets (i.e March 2015). Therefore, services shall be deemed to be provided prior to the date from when they were subjected to tax. Further, on account of the exemption prevailed prior to April 2015, the issue of determining the onus of tax would not arise.
Insertion of the aforesaid services into the tax regime under the reverse charge mechanism brings us to Rule 7 of the POTR, which specifically provides for the point of tax applicable under the said mechanism. The said Rule commences with a 'Notwithstanding clause' which has precedence over the generalised Rule 3 and states that the point of taxation in such cases shall be the date on which payment is made to the service provider, considering the same is made within 3 months of the date of invoice.
On the basis of a combined reading of the above provisions read with the Budgetary Amendments, it is pertinent to note that removal of an exemption and subjecting it to tax under the reverse charge mechanism has caused the point of taxation to migrate from the date of raising the invoice (i.e. prior to April 1, 2015) to the date of payment by the Service recipient (i.e. post April 2015). On account of the above, would a delay in payment of consideration by the service recipient subject the same to tax under the reverse charge mechanism?
Seeking recourse to the aforesaid query, a reference is sought to the Taxation of Service – An Education Guide which clarifies that the onus of payment of tax for a service provider and a service receiver when a service is governed under Rule 7. The illustration mentioned therein pertains to a scenario where a service is subjected to partial reverse charge and the onus to discharge tax rests on the service provider and service receiver. Accordingly the point of taxation for the recipient of services shall be the date of payment whereas the service provider would be liable to tax on the date of issue of invoice. Further for services whose point of taxation has been determined and whole liability has been affixed before the introduction of the reverse charge mechanism, the service recipient shall not be subjected to any 'additional' liability under the subject tax regime. Both the aforesaid clarifications do not cover a scenario where a service, earlier exempt, is now taxable in the hands of the service recipient. The clarification pertaining to additional liability would not apply, since the subject service, which was earlier exempt, shall now be taxed in the hands of the service recipient.
Concluding from the above, one wonders if it is a prudent business practice to make payments to the service provider before April 1, 2015, whilst the mega exemption still covers the subject services or would it be beneficial to pay the service tax under the reverse charge mechanism and avail the credit of the same by the recipient of services. Service providers too have some thing to consider, as to whether treating their output service as an exempt service is more beneficial or not, in line with Rule 6 of the Cenvat Credit Rules. A clarification from department to curve out the said issue is expected by the MF industry.
While the above pruning carried out to the mega exemption list, uncovers more hurdles for the taxpayers, all one can do is hopefully look towards the horizon for the State of the Art indirect tax regime, called Goods and Service Tax. Existence and applicability of the reverse charge mechanism under the proposed legislation still awaits some light.
(The article is written by Jigar Doshi and Farhad Dalal working as Senior Manager and Manager at SKP Business Consulting LLP.)
 
 
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Service tax on distributor's commission by Mutual Fund I...
With the introduction of the Negative List of Services, all eyes, including those of the taxmen and the taxpayers were looking forward to a simplified tax regime. T...
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