Wednesday, 30 September 2015

Supreme Court disposes off the Castleton's SLP against AAR Ruling on MAT




The Government had recently decided1 to amend the income tax law to clarify non-applicability of Minimum Alternate Tax ('MAT') provisions for the period prior to April 01, 2015 on:

  • Foreign Portfolio Investors (FPIs) that do not have place of business in India and
  • Other foreign companies that do not have place of business in India or are not required to seek registration under the Indian Companies Act.

CBDT Extends Due Date For Filing ROI ONLY For Assessess In P&H And Gujarat Subject To Outcome Of Appeal In Supreme Court



The Central Board of Direct Taxes, in compliance to the orders of Hon’ble Punjab and Haryana High Court dated 28.09.2015 in case of Vishal Garg & Ors. vs. Union of India & Anr.; CWP 19770-205 and order of Hon’ble Gujarat High Court dated 29.09 .2015 in case of All Gujarat Federation of Tax Consultants vs. CBDT; Special Civil Application No. 15075 of 2015 and in exercise of powers conferred under section 119 of the Income-tax Act , 1961 (‘Act’), hereby orders that the returns of income due to be E-filed by 30th September, 2015 may be filed by 31st October, 2015 in cases of Income-tax assessees of the State(s) of Punjab and Haryana and Union Territory of Chandigarh and the State of Gujarat. This order shall be subject to the outcome of any further appeal/SLP which the CBDT may file against the said judgment

India Taxes- Due Date Alert for the month October 2015



No
Due Date
Related to
Compliance to be made
1
05.10.2015
 
Service Tax
Payment of Service Tax for the Month of September 2015
2
07.10.2015
 
TDS/TCS
(Income Tax)
·        Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of September 2015.
 
·        Deposit TDS from Salaries  deducted during the month of September 2015
 
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of September 2015, if any
 
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of September 2015, if any
3
15.10.2015
 
TDS/TCS
(Income Tax)
Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended September 2015 in Form 24Q / 26Q / 27Q / 27EQ.
4
20.10.2015
 
VAT
Payment of VAT & filing of monthly return for the month of September 2015
5
25.10.2015
 
Service Tax
Filing of Service Tax return for the First half year ended  in Form ST-3
6
30.10.2015
 
TDS/TCS
(Income Tax)
Issue of TDS Certificate - Non Salary for Q2 FY 2015-13
7
20.09.2015
STPI
Filing of monthly softex forms
 

Whether if an expenditure has been incurred for business purpose, even if it has not been incurred under any legal obligation, yet it is allowable on grounds of commercial expediency - YES: HC

THE issue before the Bench is - Whether if an expenditure has been incurred as a prudent businessman for business purpose, even if it has not been incurred under any legal obligation, yet it is allowable on grounds of commercial expediency. YES is the verdict.
Facts of the case
The assessee is engaged in the business of providing cellular services in the Delhi Region. It had

Government clarifies non-applicability of MAT to foreign companies in the absence of place of business in India


Background

The Finance Act, 2015 (FA 2015) inserted a new clause to the Minimum Alternate Tax (MAT) provision, w.e.f. 1 April 2015, to exclude certain income of foreign companies from the MAT regime. These provisions are effective from tax year 2015-16 and are prospective in nature. The amendment was the subject matter of a lot of discussion and a three-member committee (Committee) headed by Justice (Retd.) A.P. Shah was formed

Tuesday, 29 September 2015

CARO 2015

Even though, Companies (Auditor’s Report) Order, 2015 is placed along with Removal of difficulty orders, both are complete of different genre.
Companies (Auditor’s Report) Order, 2015 is issued in exercise of powers conferred by Section 143(11). The Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters

Supreme Court Round Up - Recent Cases

Customs - shoddy and slipshod investigation.
THE Supreme Court observed, "It appears that the allegations were very serious but no cogent material was collected to substantiate these allegations and that is the result of shoddy and slip shod investigation. In normal course, we would have remitted the case back for further investigation. However, it is a matter of the year 1997 and it seems that such an exercise may be futile. Moreover, we may record at this stage that during these proceedings the respondent herein had paid certain amounts to the Department."

Whether when parting of technical knowhow was linked to providing aid to transferee in installation and commissioning of plant, assessee is to be faulted with for claiming transfer of knowhow as independent transaction - YES: HC

THE issue before the Bench is - Whether when the parting of technical knowhow was linked to providing assistance to the transferee in renovation, installation and commissioning of the plant, assessee is to be faulted with for claiming transfer of knowhow as an independent transaction. YES is the answer.
Facts of the case

Service tax form for the period April 15 to Sep 15 released.


Service Tax Return (ST-3) for Apr 15 to Sept 15 period will be made available for e-filing by the assessees in both offline and online modes. The last date for filing the returns for the said period is 25th October, 2015. The assesses can file return online or use the offline utility by downloading the latest version (V1.4) from http://acesdownload.nic.in/ or from DOWNLOADS Section of ACES website.  For details on how to e-file in ACES or any further information/assistance, you may visit www.aces.gov.in or contact your jurisdictional Service Tax Officer. Please file your returns in ACES well in advance to avoid rush and inconvenience at the last moment.

Document on which PAN required to be quoted

PAN should be quoted on all:
  1. Income-tax / TDS / TCS Returns
  2. Correspondence with tax department,
  3. Tax challans,
  4. Correspondence, bills, vouchers and other documents which are send by deductee of tax to deductor,
  5. Documents pertaining to prescribed transactions
  1. Sale & purchase of immovable property valued Rs 500,000 or more
  2. Sale & purchase of motor vehicle other than two wheelers
  3. Time deposits with bank or banking institution exceeding Rs 50,000
  4. Any deposits exceeding Rs 50,000 with post office
  5. Purchase or sale of securities contract exceeding Rs 100,000
  6. Opening account with bank or banking institution
    PAN of father or mother or guardian can be quoted, in case minor’s account.

Monday, 28 September 2015

Entire law on the taxation of deceased persons and their estate explained in the context of the Income-tax Act and the Central Excise Act

The Supreme Court had to consider whether a dead person’s property, in the form of his or her estate, can be taxed without the necessary machinery provisions in a tax statute. The question was whether an assessment proceeding under the Central Excises and Salt Act, 1944, can continue against the legal representatives/estate of a sole proprietor/manufacturer after he is dead. HELD by the Supreme Court:

Important principles relating to valuation of property subject to the Land Ceiling Act explained in the context of the Wealth-tax Act

The Supreme Court had to consider whether for the purposes of Wealth Tax Act, the market value of the vacant land belonging to the assessee should be taken at the price which is the maximum compensation payable to the assessee under the Urban Land Ceiling Act, 1962?

CIT vs. Vijay Singh Kadan (Delhi High Court)

S. 2(14)(iii)(b): To determine whether the “agricultural land” is situated within 8 km of the municipal limits so as to constitute a “capital asset”, the distance has to be measured in terms of the approach road and not by the straight line distance on horizontal plane or as per crow's flight

Whether payment of roaming charges to other service providers can be considered as 'rent', within ambit of TDS provision u/s 194I - NO: ITAT


THE issue before the Bench is - Whether payment of such roaming charges to other service providers can be considered as 'rent', within the ambit of TDS provision u/s 194I. NO is the answer.
Facts of the case
A) The assessee is a subsidiary of Vodafone Essar Ltd., engaged in providing cellular mobile telephony services (CMTS) in Kolkata Telecom Circle. It had incurred domestic roaming charges of Rs.55,41,01,320/- towards roaming facility provided by other telecom operators to the

Ahmedabad Tribunal upholds salary taxation net of refund of excess salary of past years





 

This Tax Alert summarizes a recent ruling of Ahmedabad Tribunal, in case of Vrajeshwari B. Parikh (Taxpayer) v. ITO on the issue of tax treatment of refund of excess salary paid in earlier years.

 

Saturday, 26 September 2015

Private Provident Fund Trusts: Issues and Challenges

In 1952, the Indian Government introduced a mandatory savings scheme for non-government employees known as Employees� Provident Funds Scheme (�EPFS�). In this scheme, employees and their employers are required to make a contribution to the Employees� Provident Fund. The Government has also permitted employers to establish and manage their own private PF schemes, subject to certain conditions prescribed under the Employees� Provident Funds and Miscellaneous Provisions Act, 1952 (�EPF Act�). One such condition was that such private PF trust were required to seek

Government provides immunity under FEMA in respect of assets declared under one-time compliance scheme of the Black Money Taxation Act




In brief

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Black Money Taxation Act or the Act) has been made effective from 1 July 2015. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (the Black Money Taxation Rules) were issued on 2 July 2015, which provided for the valuation of foreign assets. The government also issued a circular providing details about the one-time compliance scheme, in which individuals, apart from relief from certain penalties, will also obtain immunity from prosecution under other laws. This window is set to close on 30 September 2015.

In connection with the declarations under the one time compliance window, the Reserve Bank of India (RBI) has issued a press release dated 24 September 2015, providing clarifications in respect on applicability of Foreign Exchange Management Act, 1999 (FEMA) provisions on the assets declared and disposed thereof.

In detail

The press release has clarified the following in relation to assets disclosed under the one-time compliance window -

a) No proceedings shall lie under the FEMA against the declarant with respect to an asset held abroad, for which taxes and penalties under the provisions of Black Money Taxation Act have been paid.

b) No permission under FEMA will be required to dispose of the asset so declared and bring back the proceeds to India through banking channels within 180 days from the date of declaration.

c) In case the declarant wishes to hold the assets so declared, she/ he may apply to the RBI within 180 days from the date of declaration if such permission is necessary as on date of application. The RBI will deal with such applications as per extant regulations. In case such permission is not granted, the asset will have to be disposed of and proceeds brought back to India.  An inference may be drawn that if permission is not required to hold such assets, such assets could be held without approval from the regulator.  

Key takeaways

Assets declared under the one-time compliance scheme will have immunity from penal consequences under the FEMA. A detailed notification explaining the operational mechanism of the press release is expected to be issued separately, which is likely to provide more guidance.

Friday, 25 September 2015

Whether it is fair on part of AO to treat opening debit balance in books as loan & every payment made thereafter is to be treated as repayment of loan - NO: HC

THE issue before the Bench is - Whether it is fair on part of AO to treat opening debit balance in books as loan and every payment made thereafter is to be treated as repayment of loan. NO is the answer.
Facts of the case
The assessee is a shareholder of Dhir International Private Limited having substantial interest of

Supreme Court admits appeal to determine the eligibility to avail CENVAT credit of duty paid on telecom towers




 
This Tax Alert gives an update on the issue regarding the eligibility to avail CENVAT credit of duty paid on mobile towers (in CKD/SKD form) and parts thereof and in respect of shelters/prefabricated buildings used for providing telecommunication (telecom) service.
 
In the appellant’s case, the Bombay High Court, relying on the decision of its division bench in the case of Bharti Airtel Ltd vs Commissioner of Central Excise, held that CENVAT credit cannot be availed on the said mobile towers and parts thereof and shelters/ prefabricated buildings. It did not accept the appellant’s plea to review the decision of Bharti Airtel (supra).
 
The appellant, being aggrieved by the order of the Bombay High Court, filed an appeal before the Supreme Court which has been admitted by order dated 21 September 2015.

Government clarifies non-applicability of MAT to foreign companies in the absence of place of business in India





 

The Finance Act, 2015 (FA 2015) inserted a new clause to the Minimum Alternate Tax (MAT) provision, w.e.f. 1 April 2015, to exclude certain income of foreign companies from the MAT regime. These provisions are effective from tax year 2015-16 and are prospective in nature. The amendment was the subject matter of a lot of discussion and a three-member committee (Committee) headed by Justice (Retd.) A.P. Shah was formed by the Ministry of Finance (MoF) to give recommendations on the subject of levy of MAT on Foreign Institutional Investors (FIIs)/Foreign Portfolio Investors (FPIs) for the period prior to 1 April 2015. The Committee recommended that the provisions of MAT may not be made applicable to FIIs/FPIs for the period prior to 1 April 2015 . Furthermore, vide Press Release dated 1 September 2015, the Government of India (GOI) had expressed its acceptance of the recommendations and decided that an appropriate amendment will be carried out in the Indian Tax laws (ITL). However, the issue of applicability of the MAT provisions to foreign companies, other than FII/FPIs, not having place of business or permanent establishment (PE) was still perceived to be ambiguous.

 

The MoF has issued a Press Release dated 24 September 2015, expressing its intent of amendment to the ITL w.e.f. 1 April 2001. According to that, the MAT provisions shall not be applicable to a foreign company which does not have a PE/place of business in India. This Tax Alert summarizes the said Press Release.

Thursday, 24 September 2015

Income Tax Return - Due Date Extension - Delhi High Court declines to interfere

THE Delhi High Court dismissed a writ petition seeking a direction to the Government to extend the due date, which is 30th September 2015 for filing income tax returns by assessees whose accounts are required to be audited. The High Court observed, "Such decisions of the Government, is a matter of policy and which the Government is best entitled to take and with

High Court rules that “in-transit sale” in turnkey contracts not eligible for exemption under Section 6(2) of the Central Sales Tax Act





 

This Tax Alert gives an update on the decision of the Andhra Pradesh & Telangana High Court with respect to “in-transit sale” in case of inter-state supply of goods under turnkey contracts.

 

The High Court (HC) held that supply of goods under the contract cannot be considered as subsequent sales in terms of Section 6(2) of the Central Sales tax, 1956 (CST Act). It was further observed that the title to the goods was not transferred during its movement from one state to another, but only after the goods were incorporated in the works in the State of Andhra Pradesh.

 

Wednesday, 23 September 2015

Whether loan taken at higher rate of interest from sister concern can be allowed even if residential project for which such loan was taken has not been sanctioned by competent authorities - NO: HC

THE issue before the Bench is - Whether loan taken at a higher rate of interest from a sister concern can be allowed even if the residential project for the purpose of which such loan was taken has not been sanctioned by the competent authorities. NO is the answer.
Facts of the case

Understanding the Section 265 of the company act in the practical manner:



First of all, we check that what the section 265 says:
Section 265 : Option to company to adopt proportional representation for the appointment of directors

Notwithstanding anything contained in this Act, the articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a public company

Tuesday, 22 September 2015

Motor Car perquisites.


Taxability of the perquisite in the hands of employees towards the facility of motor-car, reimbursement of fuel expenses, etc., are discussed in this article. Hope this helps.
 
Car is used exclusively for official purposes – fully exempt
Where the car is used exclusively in the performance of official duties, irrespective of who owns the car i.e., employer or employee, no taxable perquisite arises in the hands of employee. But how to establish that the car is

Sec 80C deductions: Know the restrictions before you leap

Around this time of the year, the smart of the tax payers plan their investments for tax purposes.  Section 80C allows you deduction upto Rs. 1.50  lakh in respect of some investments and expenses. Though every one uses this benefits only a few are aware that these  deductions are subject to some restrictions with respect to qualifying persons and the period for which you need to hold the same.  Let us discuss these now. 




Service PE case law decesion.

Income Tax Appellate Tribunal - Delhi
Convergys Customer Management ... vs Assessee on 28 January, 2015

Payment for leased line is not Fees for technical Service - Bangalore ITAT


Income Tax Appellate Tribunal - Bangalore

Taxation of Reimbursement of expenses


Taxability of Reimbursement of expenses has always been a contentious issue. In most of the cases, assessee get away with non-taxability of reimbursement of expenses on the plea of no profit element. However, in some cases, even without profit element, tax authorities and courts have held reimbursement of expenses as income of recipient liable for TDS and taxability in India. Also,

Filing of documents and forms in XBRL

Ministry of Corporate Affairs placed on its web site a DRAFT notification on 9th September 2015 which proposed the Companies (Filing of documents and forms in Extensive Business Reporting Language) Rules, 2015.
These rules shall come into force from the date of their publication in the Official Gazette.

Whether amount payable by assessee u/s 140A, over and above shortfall arising after credit for TDS payment and advance tax, can be considered as tax before processing of return u/s 143(1) - NO: ITAT

THE issue before the Bench is - Whether the amount payable by the assessee u/s 140A, over and above the shortfall arising after the credit for payment of TDS and advance tax, can be considered as tax before the processing of return u/s 143(1). NO is the answer.
Facts of the case
The assessee company has wrongly mentioned 'excess' in place of 'shortfall' of advance tax & TDS paid in the computation of income. This had resulted in less payment of Self assessment

Sunday, 20 September 2015

Introduction of FATCA in India.



The Indian Cabinet, chaired by Prime Minister Narendra Modi, approved signing of an Inter-Governmental Agreement (IGA) between India and the U.S. for implementation of the U.S. Foreign Account Tax Compliance Act (FATCA). 

Friday, 18 September 2015

E-book "Guidance Note on Audit of Internal Financial Controls Over Financial Reporting" Free Download

Recently, The Pulication Department on behalf of the Institute of Chartered Accounts of India has been published a book  on "Guidance Note on Audit of Internal Financial Controls Over Financial Reporting" which helps us to auditing.

Download e-Book (Click Here)

Important Guidelines for payment towards liability on account of Tax Deducted / Collected at Source

Important Guidelines for payment towards liability on account of Tax Deducted / Collected at Source

Your attention is drawn towards some relevant guidelines related to payment of TDS/ TCS liability.

A. Central Government Account ( Receipts and Payments ) Rules, 1983:

Whether especially-designed ponds for rearing prawns are to be construed as 'Plant' within Sec 32 - YES: Supreme Court

THE issue before the Bench is - Whether especially-designed ponds for rearing prawns could be treated as 'plant' within Section 32 for the purpose of allowing depreciation thereon. YES is the answer.
Facts of the case

Mergers and Acquisitions – Indirect Tax Perspective

THE process of mergers and acquisitions has gained considerable importance in today's corporate world where in order to keep pace with the existing competitive environment and looking on to gain on the synergy effect, companies worldwide either opt for friendly mergers or acquire other companies in a hostile takeover bid.

Thursday, 17 September 2015

FDI Policy – Facility Sharing Arrangements between Group Companies/Issuance of Partly Paid up shares and Warrants




 
This Regulatory Alert summarizes the (i) Clarification issued by Department of Industrial Policy & Promotion (DIPP) on the foreign direct investment (FDI) Policy on facility sharing arrangement between group companies; and (ii) Review of FDI Policy by DIPP on issuance of party paid shares and warrants.
 

Clarification regarding determination of turnover for the purpose of LBT in Maharashtra





 

 

This Tax Alert summarizes a recent clarification issued by Urban Development Department (UDD) vide Notification No. LBT. 2015 / C.R. 42 / UD-32 dated 15 September 2015 in Maharashtra. The UDD has stated that the turnover of the dealer within the municipal corporation area is required to be considered.

 

Whether fact that availability of REC bonds was only for limited period can prejudice assessee's right to exercise same upto last date even as bonds were not available during the said period - NO: HC

THE issue before the bench is - Whether the fact that the availability of the REC bonds was only for a limited period of time can prejudice the assessee's right to exercise the same up to last date, in case the bonds were admittedly not available during the said period. NO is the answer.
Facts of the case

Revised Disclosure Formats under SEBI Insider Trading Regulations


SEBI has issued revised disclosure formats as required under  SEBI (Prohibition of Insider Trading) Regulations, 2015.

A copy of the aforesaid SEBI circular dated 16th September, 2015 and formats are attached for your reference.

The same could also be viewed and downloaded using the following link



Non Compete fees – Taxability issues



 
The question whether a particular receipt has been a revenue receipt or a capital receipt has constantly been inviting the attention of tax payers, the law makers, the tax advisors and the Courts. The controversy around this concept has been there in the taxing laws, occupying a long list of litigation judgment by various Courts. Before going ahead for discussion on this issue one has to look and understand the exact meaning of a capital receipt and a revenue receipt.
 

Wednesday, 16 September 2015

TAX AUDIT MANUAL

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TAX AUDIT MANUAL


 


Contents


CH No.
Description
Page No.
I
INTRODUCTION
2
II
PROVISIONS OF SECTION 44AB
3
III
BUSINESS AND PROFESSION
5
IV
SALES, TURNOVER, GROSS  RECEIPTS
7
V
TAX AUDITOR
12
VI
AUDIT REPORT
14
VII
PARTICULARS TO BE FURNISHED IN FORM NO. 3CD
17
VIII
FORM NO. 3CD
63
IX
Key Difference between old Form 3CD and new Form 3CD
76
X
CORRESPONCENCE
79
XI
HOW TO E FILE FORM 3CD
92


 

No TDS unless the parties are identifiable and amount is quantiafiable

DRAFT ICAI GUIDELINES ON MANAGERIAL REMUNERATION

Guidance on Managerial Remuneration under the Companies Act, 2013
Provisions Relating to Appointment:

FRRB's observation on Non-Compliance in relation to AS-18


The non-compliance's found by Financial Reporting Review Board (FRRB) on review of 
general-purpose financial statements 
of certain enterprises is regularly published in the ICAI Journal. January 2013 edition of  the journal has the compilation of FRRB's compilation of discrepancies so found with respect to 
Related Party Disclosure given by AS18. 
The results of my efforts to summarize the 
Financial Reporting Review is this post all about.