Central Excise Update

Cash Discount deductible from Transaction Value under new Section 4 also – Supreme Court in yesterday's judgement

The Supreme Court, on 25 August, 2015, has held that cash discount isdeductible from transaction value under new Section 4 of Central Excise Act, 1944 also as amended in the year 2000. [PurolatorIndiaLtd.vs.Commissionerof CentralExcise]

· According to the Supreme Court, for excisable goods, determination of price is only “at the time of removal” and this basic feature has not changed despite amendments in 1973 and 2000.

· The Supreme Court held that under Section 4, one needs to arrive at the assessable value based on transaction value as at the time of clearance of goods from the factory or depot. It held that basis for transaction value is the agreed contractual price and the term “whensold” does not indicate time at which goods are sold but goods are subject matter of an agreement of sale.

· The Apex Court held that cash discount is something known at or prior to clearance of goods as the same is contained in sale agreement and therefore, such cash discount must be deducted from sale price to arrive at value“at the time of removal”.

· The Supreme Court relied upon its own judgments in the cases of Union of India v. Bombay Tyre International and Government of India v. Madras Rubber Factory wherein the Supreme Court allowed deduction of trade discounts and year-end discounts & prompt payment discount respectively. The Court noted that ratio of these rulings will remain valid under amended Section 4 also.

· The Tribunal in its order had held if the buyer makes the prompt payment which entitles him to discount, the sale price will stand reduced by the amount of cash discount, whereas if payment is not made within the stipulated time, higher price recovered from the buyer will be considered as the assessable value. On this issue of cash discount, the Supreme Court set aside the order of the Tribunal.

· In this case, the Supreme Court was concerned with the period prior to as well as post 2000 i.e. both the normal price and the transaction value regimes. It distinguished the judgment rendered in the case of Commissioner of Central Excise v. Super Synotex wherein the Apex Court had dealt with amount of sales tax retained by the assessee on account of incentive scheme.

The conclusions emerging from this judgment are:

- Price at the time of removal is relevant under new Section 4 also.

- Cash discount is deductible from transaction value under new Section 4 also.

- Basis for transaction value is price as agreed or contracted as per sale agreement.

- Expression “actually paid or payable for the goods, when sold” in Section 4 means whatever is agreed to as the price whether such price has been paid or part paid or not paid at all.

- Price at the time of removal is not discounted or not determined is not fatal to deduction of cash discount

- CA Kasliwal Ambar

Service Tax on Home Delivery of Food not applicable

As per Govt norms, Service Tax is levied if the Food is served in an Air Conditioned Restaurant.

However, there has been a lot of confusion regarding levy of Service Tax on Home Delivery of Food as such food is not being eaten in a AC Restaurant.

A clarification in this regard was sought from the office of the Deputy Commissioner of Central Excise and Service Tax Division (Chandigarh) in this regard.

It has in a written communication replied that in the case of Transaction involving Pick-up/ Home Delivery of food sold by a Restaurant, the dominant nature of the transaction is that of Sale and not service as the Food is not served at the Restaurant.

Moreover, no element of service is being offered at the Restaurant, be it ambience, live entertainment, air conditioning, personal hospitality etc. The Service Tax can only be levied if there is an element of "Service" involved which would typically be the case where the food is served in a Restaurant.

Therefore, the above transaction is not chargeable to Service Tax, being sale in nature, only if, no amount is charged for such free delivery of food.

- CA Kasliwal Ambar

Useful Information for CA Beginners or a reminder to Seniors

This may be useful for beginners or a reminder to seniors

Appointment of Welfare Officer under Factories Act, 1948 is compulsory where 500 employees are employed.

Crèche is mandatory under the Factories Act where 30 womenworkers are employed

A canteen for use of workers providing subsidized food is statutory under the Factories Act where 250 workers are employed.

Under Factories Act, appointment of a Safety Officer is mandatory where the no. of employees exceeds 1000

Under Plantation Labour Act, 1951 a Welfare Officer is required to be appointed where the no. of workers is 300

Under Plantation Labour Act, crèche is to be set up where 50 women workers are employed or the no. of children of women workers exceeds 20

Under Plantation Labour Act, canteen is compulsory where 150workers are working

An adult worker under the Factories Act is eligible for leave with wages @ 1 day for every 20days worked during the preceding year

Under the Factories Act no worker is permitted to work for more than 9 hours in a day

Under the Factories Act, white washing of the factory building should be carried out in every 14months

Repainting or re varnishing under the Factories Act is required to be carried out in every 5 years

Certification of Standing Orders under the Industrial Employment (Standing Orders) Act, 1946 is mandatory where 100 workers are employed

In order to be eligible for maternity benefit under the Maternity Benefit Act, 1961, a woman worker should have worked for not less than 80 days in the 12 months immediately preceding the date of delivery

Under the Maternity Benefit Act, a woman worker is eligible for 12weeks leave with wages

In case of miscarriage, a woman worker shall be allowed 6 weeks leave with wages

Under the Payment of Wages Act, 1936 payment of wages of establishments employing not more than 1000 employees shall be paid within 7th day of the wage month

Under the Payment of Wages Act, payment of wages of establishments employing not less than 1000 employees shall be paid within 10th day of the wage month.

An employee is eligible to get bonus under the Payment of Bonus Act, 1965 if he had worked for not less than 30 days in the preceding year

An employee whose salary does not exceed Rs.10000 is eligible for Bonus under the Payment of Bonus Act.

The statutory minimum bonus is8.33%

Maximum bonus under the Payment of Bonus Act is 20%

In order to be eligible for Gratuity under the Payment of Gratuity Act, 1972, an employee should have a minimum continuous service of 5 years.

Under the Payment of Gratuity Act, the rate of gratuity is 15 Dayssalary for every completed year of service

A news paper employee is eligible for gratuity if he has 3 years continuous years of service

Employees who are drawing salary not more than 15000 are covered under the Employees State Insurance Act, 1948.

Employees’ share of contribution under the ESI Act is 1.75%

The employer’s share of contribution under the ESI Act is4.75%

Employees who are getting a daily average wages up to Rs.70/- are exempted from contributing employees’ share of ESI contribution.

Employees Provident Fund and Miscellaneous Provisions Act, 1952 is applied to establishments employing not less than 20 Employees

An employee whose salary at the time of joining does not exceed15000 shall become a member of the provident fund under the Act.

Employees’ share of provident fund contribution is 12%

Employer’s share of contribution to the provident fund is 3.67%

Employer’s contribution to Employees Pension Scheme is8.33%

Employer’s contribution to Employees’ Deposit Linked Insurance is 0.5%

Prior intimation to the appropriate Govt to lay off, retrench or close down an establishment is required under the Industrial Disputes Act, 1947 where there are 50 workers

Prior permission from the appropriate Govt to lay off, retrench or close down an establishment is required under the Industrial Disputes Act where there are 100 workers

Forming of a Works Committee under the Industrial Disputes Act, is mandatory where the no. employees is 100

Lay off compensation is to be paid @ 50% of average wages

The minimum no. of workers required to register a Trade Union under the Trade Unions Act, 1926 is 10% or 100 whichever is less

Continuous Service under major labour legislations means work of 240 days if work is above the ground and 190 days if work is below the ground Equal Remuneration Act, 1976prohibits discrimination in fixing salary to men and women engaged in the work of similar nature

Subsistence Allowance @ 75% shall be paid if suspension extends to a period beyond 90 days

The wages under the Minimum Wages Act, 1948 shall include a basic rate of wages and dearness allowance variable according to cost of living (

Employees State Insurance Actabsolves the employer’s liability under the Maternity Benefit Act and Workmen’s Compensation Act.

Any amount due froym an employer under settlement or award can be recovered following the procedures laid down in section 33 (C) of the Industrial Disputes Act.

The following amendments and latest provisions related under Labour Laws.

1.The Factories Act -1948 : Lot of changes to be comes under such as in Welfare Measures i.e.Canteen, Creche etc., Appointment of Safety Officers etc., Do not take any action against the employer by Police to FIR, If any accident takes place leads to death etc.

2. The ESI Act - 1948 : 1.Wage ceiling for coverage of employees is up to Rs.15,000/-per month.Conveyance Allowance is excluded under the part of wage.3. Maintenance of Previous Records for Inspection up to 5 years only.

3. The EPF Act - 1952 :1.Under EDLI - The Benifit has been extended from Rs.1,00,000/- to Rs.1,30,000/-

4. The Workmen Compensation Act - 1923 : Compensation under1. Death i.e.Minimum is 1,20,000, Maximum is Rs.4,25,000/- 2. Permanent Disablement - Minimum - Rs.1,40,000, Maximum is 5,40,000/- 2. Computation for calculation of compensation on wages has been extended from Rs.4,000/- to Rs.8,000/-.3. The Act can be amended as Employees Compensation Act. 4. Casual Labour are also covered under the act as per latest amendment.

5. The Payment of Wages Act - 1936 : Wages to be paid either through deposit in Bank or by cheque.

6. The Payment of Bonus Act - 1965 : Amendment has been proposed to extend wage ceiling from Rs.10,000/- to Rs.15,000/- and also for computation of Bonus from Rs.3,500/- to Rs.5,000/-.Minimum Bonus has also extended from 8.33% to 11%.

7. The Payment of Gratuity Act - 1972 : Maximum Payment under Gratuity has been extended from RS.3,50,000 to Rs.10,00,000/- 2. Compulsory Insurance coverage for employees under Gratuity Act.

8. The Industrial Dispute Act - 1947 : U/s 11a and impact of Sec2 a, any workmen will directly approaches to Labour Court and Tribunal Directly with out concilliation , if they are discharged, dismissed, terminated from service.

9. The Contract Labour Act - 1970 : Non Compliance under statutory provisions , contract labour to be deemed as employees of the priniciple employer.

- CA Kasliwal Ambar

IMPORTANT UPDATES FOR CHARTERED ACCOUNTANTS - 24 Aug 2015

➡ IMPORTANTS NEWS

1. Govt. enables online filing of form FC-TRS for transfer of shares between NRs and Residents via e-Biz portal

➡ INCOME TAX

1. Even if advance forfeited by supplier wasn't allowable as bad-debt, yet it could be considered as business loss. 60 taxmann.com 82 (Guwahati - Trib.)

2. 60 taxmann.com 206 (Bombay)Where assessee- joint venture company did not execute contract work on its own and same was done by one of its constituents, as there was no finding of receipt of any income by assessee on account of said contract, same would not be taxable in its hands.

➡ BANKING AND CORPORATES LAWS
1. SEBI proposes to allow Infra Investment Trusts to invest in two level SPVs and to reduce sponsor's commitment.

➡ CST AND VAT LAWS
1. August 22, 2015[2015] 60 taxmann.com 191 (Karnataka) CST & VAT: Karnataka VAT - Only condition for making further reassessment under section 39(2) in addition to earlier reassessment is when authority takes notice of further evidence

2. The purchaser need not to reversed input tax credit unless seller has claimed refund in case of incentive given or credit note issued ruled by Delhi high Court.

➡ SERVICE TAX AND EXCISE LAWS.

1. Service Tax could not be levied to indivisible works contract prior to 1-6-2007.

2. 59 taxmann.com 460 (Bombay) Excise & Customs : Tribunal does not have power to dismiss appeal for default or for want of prosecution, without adjudication on merits; and if appeal has been so dismissed, Tribunal must restore same subject to reasonable conditions.

- CA Kasliwal Ambar

Important Announcement for Final Course Students - November 2015 Examinations

Subject: Revised Reading Material on the Insurance Act, 1938 incorporating Insurance Laws (Amendment) Act, 2015 - Relevant for the Final Examination to be held in November 2015.

Students are quite aware that for the purpose of Examination a cut off period of six months would be applicable in case of any legislative amendment(s) in the relevant subject(s) for the purpose of applicability to the relevant examination. In this connection, we wish to inform to inform you that the Insurance Laws (Amendment) Act, 2015 an act further to amend the Insurance Act, 1938 will be applicable for the November, 2015 examination. This Amendment Act is deemed to have come into force on 26th December, 2014 though it was passed by the Lok Sabha on 4th March, 2015, by the Rajya Sabha on 12th March, 2015 and receiving the assent of the President on 20thMarch, 2015.The Amendment Act, 2015 paved the way for major reforms in the Insurance Act, 1938, the General Insurance Business (Nationalization) Act, 1972 and the Insurance Regulatory and Development Authority (IRDA) Act, 1999.

Keeping in view of the applicability for the November, 2015 (Final Examinations), the Board of Studies has revised the existing reading material in the relevant Chapter 23 of Module 2 of Paper 4 (Corporate and Allied Laws) for the Final Course. Students appearing for the November, 2015 Final examinations may kindly download the said revised reading material from the BOS (Knowledge Portal) straightway without waiting for the publication of the revised reading material which is likely to be published only in January, 2016. This will enable them to facilitate reading and understanding of the latest amendments in the existing Insurance Act, 1938 keeping in view the forthcoming November, 2015 Final Examination. Accordingly, the existing material on the Insurance Act, 1938 in the study Module No. 2 stands withdrawn and revised material on this Chapter would be applicable for the November, 2015 examination.

Rtp for Nov'15 attempt is hosted in institute website.

-CA Kasliwal Ambar

Interesting Audit Update

In Bank Audit we study that NPA is biggest problem of banking system. To get rid of NPAs we have SARFESIA, Sale of NPAs, Corporate Debt Restructuring.

Now RBI has come up with BAZOOKA of all

"Strategic Debt Restructuring Norms", it is going to blow away defaulters.

As per RBI banks can convert there loan into equity shares upto 51% take control from promoters appoint temporary management, sell shares to new management and recover there money. 

Within few weeks it has started happening and now Lenders of Lanco-Teesta power of 3500 crores plant will be converting loan into 51% equity shares " It made ET headlines few days back "

Budding CAs should be aware of these big changes in banking and finance sector.

m.economictimes.com/industry/banking/finance/lanco-lenders-to-acquire-teesta-hydro-power-through-debt-equity-conversion/articleshow/48417058.cms

- CA Kasliwal Ambar

Rule-21A, Income-tax Rules

Rule-21A, Income-tax Rules

30[Relief when salary is paid in arrears or in advance, etc.

21A. 31[(1) Where, by reason of any portion of an assessee's salary being paid in arrears or in advance or, by reason of any portion of family pension received by an assessee being paid in arrears or, by reason of his having received in any one financial year salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the relief to be granted under sub-section (1) of section 89 shall be—

(a) where any portion of the assessee's salary is received in arrears or in advance or, any portion of family pension is received by an assessee in arrears, in accordance with the provisions of sub-rule (2);(b) where the payment is in the nature of gratuity in respect of past services of the assessee extending over a period of not less than five years, in accordance with the provisions of sub-rule (3);(c) where the payment is in the nature of compensation received by the assessee from his employer or former employer at or in connection with the termination of his employment after continuous service for not less than three years and where the unexpired portion of his term of employment is also not less than three years, in accordance with the provisions of sub-rule (4);(d) where the payment is in commutation of pension, in accordance with the provisions of sub-rule (5); and(e) where the payment is not in the nature of salary paid in arrears or in advance or gratuity in respect of past services or compensation received at or in connection with the termination of employment or in commutation of pension, in accordance with the provisions of sub-rule (6).

(2)(a) In a case referred to in clause (a) of sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the salary is received in arrears or in advance or, in which the family pension is received in arrears (such salary or family pension being hereafter in this sub-rule referred to respectively as the additional salary or additional family pension, as the case may be, and such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by theamount, if any, by which the tax on the additional salary or additional family pension, calculated in the manner specified in clause (b), exceeds the tax or the aggregate tax on the additional salary or additional family pension, calculated in the manner specified in clause (c) or clause (d), as the case may be.

(b) Tax shall be calculated on the total income of the relevant previous year as reduced by the additional salary or additional family pension, as the case may be, as if the total income so reduced were the total income of the assessee, and the amount by which the tax so calculated falls short of the tax on the total income before such reduction shall, for the purposes of clause (a), be taken to be the tax on the additional salary or additional family pension, under this clause.

(c) Where the additional salary or additional family pension, as the case may be, relates to only one previous year, tax shall be calculated on the total income of the said previous year as increased by the additional salary or additional family pension, as if the total income so increased were the total income of the assessee, and the amountby which the tax so calculated exceeds the tax payable by the assessee in respect of the total income of the said previous year shall, for the purposes of clause (a), be taken to be the tax on the additional salary or additional family pension, under this clause.

(d) Where the additional salary or additional family pension, as the case may be, relates to more than one previous year,—

(i) the previous years to which the additional salary or additional family pension relates and the amount relating to each such previous year shall first be ascertained;(ii) tax shall, then, be calculated on the total income of each such previous year as increased by the amount relating to such previous year ascertained under sub-clause (i); as if the total income so increased were the total income of that previous year, and the amount by which the aggregate amount of tax in respect of the aforesaid previous years as calculated under sub-clause (ii) exceeds the aggregate amount of tax payable by the assessee in respect of the total income of the said previous years shall, for the purposes of clause (a), be taken to be the aggregate tax on the additional salary or additional family pension, under this clause.]

(3) (a) In a case referred to in clause (b) of sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the payment by way of gratuity is received (such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by theamount, if any, by which the tax on theamount of the gratuity included in the total income of the relevant previous year, calculated at the average rate of tax applicable to such total income, exceeds the tax on the amount of such gratuity, calculated at the rate of tax determined under clause (b) or, as the case may be, clause (c).

(b) Where the payment by way of gratuity is made in respect of past services of the assessee extending over a period of not less than five years but less than fifteen years,—

(i) the total income of the assessee in respect of each of the two previous years immediately preceding the relevant previous year shall be increased by an amount equal to one-half of the amount of the gratuity included in the total income of the relevant previous year, and the average rate of tax for each of the said two previous years shall be calculated as if the total income so increased were the total income of that previous year; and(ii) the average of the average rates of tax for the two previous years immediately preceding the relevant previous year, calculated in accordance with sub-clause (i), shall, for the purposes of clause (a), be the rate of tax determined under this clause.

(c) Where the payment by way of gratuity is made in respect of past services of the assessee extending over a period of not less than fifteen years,—

(i) the total income of the assessee in respect of each of the three previous years immediately preceding the relevant previous year shall be increased by an amount equal to one-third of the amount of the gratuity included in the total income of the relevant previous year, and the average rate of tax for each of the said three previous years shall be calculated as if the total income so increased were the total income of that previous year; and(ii) the average of the average rates of tax for the three previous years immediately preceding the relevant previous year, calculated in accordance with sub-clause (i), shall, for the purposes of clause (a), be the rate of tax determined under this clause.

(4) (a) In a case referred to in clause (c) of sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the payment by way of compensation is received (such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by theamount, if any, by which the tax on theamount of the compensation included in the total income of the relevant previous year, calculated at the average rate of tax applicable to such total income, exceeds the tax on the amountof such compensation, calculated at the rate of tax determined under clause (b).

(b) The total income of the assessee in respect of each of the three previous years immediately preceding the relevant previous year shall be increased by an amount equal to one-third of the amount.

- CA Kasliwal Ambar

SEBI imposed a penalty of Rs. 10 lakhs on the Director of Manappuram Finance Limited for breach of SEBI Regulations.

SEBI vide its order dated August 19, 2015 imposed a penalty of Rs. 10 lakhs on the Director of Manappuram Finance Limited for breach of SEBI (Prohibition of Insider Trading) Regulations. The brief facts of the case are as follows :

1. The wife of the Directors sold shares of the Company without seeking pre-clearance from the Compliance Officer.

2. The Director submitted that (i) his wife was financially independent (ii) trading without pre-clearance was only a technically slip that would not warrant any penalty - an opinion from Amarchand Mangaldas was also submitted to support these views. (iii) he had discussed at the board meeting of the Company about the intention of his wife to sell the shares of the Company.

3. SEBI observed and ruled that (i) financial independence is immaterial in case of spouse (ii) trading without pre-clearance is a violation of regulation and hence penalty would follow (iii) the discussion of the wife proposed trade at the board meeting is not substantiated with agenda or minutes of the meeting and (iv) penalized the Director for violation of Regulations and Internal code of conduct.

Key Take-away – Personal Transaction Policy and SEBI Insider Trading norms need to be followed in letter and spirit. SEBI does not take into account any technicalities or intention of the parties. You may note that the Director in this case was about 90 years old retired civil servant without any blemish but still had been penalized for the unintentional error.

Daily CA Updates - 21st August 2015

PROFESSIONAL UPDATES:
21st August, 2015

► Govt. has notified challan no ITNS 284 for depositing taxes under the black money Act.

► ITR E-Verification is possible through

i. authenticate your Aadhaar and link it with your PAN,

ii. Net-banking account and get redirected to the efiling,

iii. E-filing OTP (available only if the Returned Income is below Rs 5 Lakh and no refund is claimed).
► With effect from 1st SEP'15, all 2nd & 4th Saturdays, declared as Public Holiday for all Banks and 1st and 3rd Saturday full working days.
► FAST TRACK EXIT (FTE) FOR DEFUNCT COMPANIES U/s Sec 248 of 2013 Act if The Co have “Nil” Assets & Liabilities and not carrying any business activity except Listed Companies by application Form FTE with fees of Rs. 5,000/-.
► CBEC clarifies on Show Cause Notice issuance & proceedings conclusion as per amended penal provisions in Service Tax and Central Excise.
► Supreme Court on 20th Aug 2015 in the case of CCE Kerala vs Larsen & Toubro Ltd. held that Service Tax can not be levied on indivisible contracts prior to the introduction on 1st June 2007 which expressly makes such works contracts liable to service tax.

- CA Kasliwal Ambar

Tax benefits notified in the state of Bihar

Income-Tax Act 1961 Amended Through Finance Act 2015 to Provide Certain Tax Benefits to Notified Backward Areas in Specified States Including State of Bihar to Give

- These Areas an Opportunity to Grow Faster; 

- 21 Districts of Bihar Notified as Backward Areas; 

- Any Manufacturing Undertaking or Enterprise Set-Up During the Period From 01.04.2015 to 31.03.2020 in the Aforesaid Backward Areas of Bihar will be Eligible for 15% Additional Depreciation and 15% Investment Allowance Under the Income-Tax Act, on the Cost of Plant and Machinery Acquired and Installed by it During the Said Period

The provisions of the Income-tax Act 1961 have been amended through Finance Act 2015 to provide certain tax benefits to notified backward areas in specified States including State of Bihar to give these areas an opportunity to grow faster. To give effect to the amendment, the following 21 districts of Bihar have been notified as Backward Areas vide Notification No. S.O. 2241(E) dated 17.08.2015:

1. Patna
2. Nalanda
3. Bhojpur
4. Rohtas
5. Kaimur
6. Gaya
7. Jehanabad
8. Aurangabad
9. Nawada
10. Vaishali
11. Sheohar
12. Samastipur
13. Darbhanga
14. Madhubani
15. Purnea
16. Katihar
17. Araria

18. Jamui
19. Lakhisarai
20. Supaul
21. Muzaffarpur

Any manufacturing undertaking or enterprise set-up during the period from 01.04.2015 to 31.03.2020 in the aforesaid backward areas of Bihar will be eligible for 15% additional depreciation under Section 32(1)(iia) and 15% investment allowance under Section 32AD of the Income-tax Act, on the cost of plant and machinery acquired and installed by it during the said period. The aforesaid incentives are in addition to other tax benefits available under the Income-tax Act. Thus a manufacturing undertaking/enterprise set up in any of these areas during the aforesaid period will be eligible for 35% (instead of 20%) of additional depreciation. This would be over and above the normal depreciation of 15%. Besides, a company engaged in manufacturing will also be eligible for 30% (instead of 15%) of investment allowance if its investment in new plant and machinery during the period 1.4.2015 to 31.3.2017 exceeds Rs.25 crore.
Notification No. S.O. 2241(E) dated 17.08.2015 to this effect is available.

-CA Kasliwal Ambar

IMPORTANT NEWS & UPDATES FOR CHARTERED ACCOUNTANTS - 20th Aug 2015

➡ IMPORTANTS NEWS

1. Govt. notifies 'Challan No. ITNS 284' for depositing taxes under Black Money Act.

2. RBI grants approvals for 11 payment banks including Reliance, Airtel, Vodafone

➡ INCOME TAX

1. Compounding fee paid to Municipal Corporation is in nature of penalty disallowable.

2. 60 taxmann.com 287 (Chennai - Trib.) ITAT allows sec. 11 tax exemption to Tamil Nadu Cricket Association.

3. High Court has inherent power to review its own judgment, says Supreme Court.

4. 60 taxmann.com 135 (Bombay) No concealment penalty if sum treated as capital receipt was disclosed in notes to accounts and return.

➡ BANKING AND CORPORATES LAWS
1. 60 taxmann.com 285 (SAT - Mumbai) Where in guise of running real estate business, PACL was running sham Collective Investment Schemes (CIS) which were detrimental to interest of investors, decision of SEBI directing PACL to wind up existing CIS and refund money collected from investors with promised return could not faulted.

➡ CST AND VAT LAWS
1. 60 taxmann.com 123 (Gujarat) Gujarat VAT - Where Assessing Authority cancelled registration certificates of assessee on ground that alleged purchases made by it from two dealers were bogus and not genuine and even assessee had indulged into billing activities only, registration certificates had been rightly cancelled.

➡ SERVICE TAX AND EXCISE LAWS.
1. 60 taxmann.com 122 (SC): Wharfage charges and lease rent recovered by port authorities cannot be regarded as 'service' in relation to 'a vessel or goods' and cannot be said to be a service provided by 'port or person authorised by it'; hence, same is not liable to service tax under port services.

2. Excise :No personal penalty on directors where issue relates to interpretation of law and situation is revenue neutral.

- CA Kasliwal Ambar

Your purchase on a foreign website can attract the taxman.

Domestic I-T laws require you to deduct tax on software, e-books and music albums; must report every such transactions while filing returns.

You pay Rs 250 to purchase your favourite artist's album from his or her website and save it on your device. According to new taxation laws, you will need to deduct a withholding tax on it. The amount that needs to be deducted is in itself a complex computation. The person will need to refer to the procedure mentioned in the Income Tax Act (chapter XVIIB) or 20 per cent of the amount paid, whichever is higher. To calculate the liability, you will also need to consider if India has any taxation agreement with the country called as Double Taxation Avoidance Agreement.

To complicate the matters further, the new rules also require individuals as well as businesses to report every transaction they make with a non-resident person or entity. This means, if you purchase from Apple App Store, iTunes, Amazon’s global websites, or on eBay Global EasyBuy, you will need to tell the tax authority on each and every transaction done, irrespective of the amount, while filing your returns. And if you don't follow the laid down procedures, the assessing officer can slap a penalty of Rs 1 lakh for non-compliance.

If you are wondering how to determine if the payment was made directly to the company abroad or if it was routed through the Indian entity, tax experts say the person should refer to their bank and credit card statements. These clearly show if the transaction was domestic or international.

The amendment is part of the section 195(6) of the Income Tax Act. Vishweshwar Mudigonda, partner, Deloitte Haskins & Sells, said while the section was changed, the rule (37BB), which covers the specifics of the section is still old and so are the forms (15 CA and 15CB) in which details need to be filled up. Earlier, individuals and businesses were only required to report if the single transaction was above Rs 50,000 or payment to one person/entity crosses Rs 2.5 lakh a year.

“This has created a lot of confusion. Even if some decides to follow the law, he or she can’t do it as there are no provisions made of it,” says Mudigonda. He added thankfully the government has not tinkered with the exempted transactions in the last Budget. Any payments made for medical emergencies, donations, gifts, business-related travel, and so on remain exempted.

While tax experts called the amendments ‘impractical’ and illogical’, all of them said they were hoping that the Central Board of Direct Taxation will clarity the issue because even if someone decides to follow the law, he or she might not be able to do it unless the government brings about changes to the rule and forms. Their advice to taxpayers: wait and watch.

- CA Kasliwal Ambar

PROFESSIONAL UPDATES & CA NEWS by CA Kasliwal Ambar- 20th August 2015

# IT: Interest u/s 234B - no direction had actually been given in the assessment order for payment of interest - Form I.T.N.S.150 contained a calculation of interest payable on the tax assessed - this Form must be treated as part of the assessment order in the wider sense - levy of interest confirmed (Supreme Court)

# ST: Franchise service - Nature of Receipt of course fees - Only because all the fees are provided in one Agreement does not necessarily lead to a conclusion that the different components of fees are only for the purpose of grant of franchise (CESTAT Mumbai)

# IT: Finance ministry mulls 1% Income Tax rebate for credit/debit card payments.

# IT: CBDT amends IT Rules to notify that computation of Period of Stay in India of an Indian Citizen being Member of Crew of a Ship shall be as per Voyage Discharge Certificate (VDC).

# IT: CBDT to clarify on the period for which foreign bank account details disclosures required under black money law through second set of FAQs on the black money.

# GST: Government pushing ahead with GST; Two verticals created for implementation.

# Vacancies: HDFC bank needs Credit Manager in Punjab, Haryana & Rajasthan. Contact: Mr. Raghav Mahajan (+917307211397) / Email: raghav.mahajan1@hdfcbank.com

- CA Kasliwal Ambar

Services which can be rendered by the Auditors

As per Provisions of Section- 144 of companies Act, 2013, Statutory Auditor of a Company can not provide certain kind of Services to following Companies :

1. A Company2. It’s Holding Company, and

3. It’s Subsidiary Company

Services which a Statutory Auditor can’t provide directly or indirectly to above mentioned Companies:

(a) Accounting and book keeping services;
(b) Internal audit;
(c) Design and implementation of any financial information system;
(d) Actuarial services;
(e) Investment advisory services;
(f) Investment banking services;
(g) Rendering of outsourced financial services;
(h) **MANAGEMENT SERVICES; AND (Its Dangerous, Must be taken care)
(i) Any other kind of services as may be prescribed. Etc.

Meaning of MANAGEMENT SERVICES::

Management services means services rendered on behalf of Management, which management itself is oblige to do. E.g.

• Preparation and filling of:

1. Income Tax Return
2. ROC Return
3. Service Tax Return
4. VAT Return
5. TDS Return
6. Excise Return
7. Maintenance of Books and Accounts
8. Preparation of Balance Sheet etc.

Above mentioned services can’t be rendered either directly or indirectly:

DIRECTLY OR INDIRECTLY:

A. In case of auditor being an individual:

• either himself or
• through his relative or
• any other person connected or associated with such individual or through any other entity, whatsoever, in which such individual has significant influence or control, or
• whose name or trade mark or brand is used by such individual;

**RELATIVE MEANS:

Relatives include:

1. Father and Mother
2. Brother and Sister
3. Son and Son’s Wife
4. Daughter and Daughter’s Husband

Relatives don’t include the following :1. Brother’s Wife and Brother’s Children
2. Sister’s Husband and Sister’s Children
3. Wife’s Father, Mother, Brother and Sister
4. Grand Sons and Grand Son’s Wife
5. Daughter’s Children and Spouse of Daughter’s Children

B. In case of auditor being a firm,

• either itself or
• through any of its partners or
• through its parent, subsidiary or associate entity or
• through any other entity, whatsoever, in which the firm or any partner of the firm has significant influence or control, or
• whose name or trade mark or brand is used by the firm or any of its partners

MOST IMPORTANT:

The Statutory auditor of the company can provide services except mentioned above “ONLY AFTER GETTING APPROVAL OF BORD OF DIRECOTRS OR AUDIT COMMITTEE”

Therefore, If Statutory Auditor want to provide services other than services not permissible u/s 144 then he need the Approval of Board of Director by passing of Resolution by board of Director in favor of auditor for providing such services.

AUDIT OF BRANCH OFFICE:

Where a company has branch office, the account of that office shall be audited by either by the statutory auditor of company or by any other person qualified for appointment as auditor of the company.

RESPONSIBILITY OF STATUTORY AUDITOR UNDER COMPANIES ACT, 2013:

A. Signing of Auditor Report: (As per Section – 145)

The person appointed as an auditor of the company shall

• Sign the auditor‘s report; or
• Sign other document; or
• Certify any other document of the company

Note:

a) Where a firm including a limited liability partnership is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorized to act and sign on behalf of the firm.

b) The qualifications, observations or comments on financial transactions or the matters, which have any adverse effect on the functioning of the company mentioned in the auditor‘s report shall be read before the company in general meeting and Open for inspection by any member of the company.

Attendance in General Meeting: (As per Section–146 of Companies Act, 2013)

This Section will be applicable on all the General Meeting including Annual General Meeting.

As per Language of Section:

• All the Notice and other Communications relating to General Meeting shall be forwarded to the Auditor of the Company.
• The Auditor will attend all the General Meeting of the Company.

Exempted Only

• When auditor will send letter for exemption from attendance in General Meeting to Company and Company will grant leave to him for not attending the General Meeting.
• If auditor is not exempted by the Board then Auditor himself or his authorized representative (who shall also be qualified to be an auditor) will attend the general meeting and will heard at such meeting on any part of the business which concerns him as auditor.

- CA Kasliwal Ambar

The Reserve Bank of India (RBI) today granted in-principle nod to 11 payment banks applicants.

RBI grants in-principle nod to 11 cos for payment banks. The central bank has approved applications of National Securities Depository Limited (NSDL), Reliance Industries, Aditya Birla Nuvo, Airtel M Commerce among others.

A payment banks differs from conventional banks as it cannot lend to its customers. It is allowed to take deposits, allow remittances and provide simple financial products.

Name of other applicants that have received nods:

- Department of Posts

- Fino PayTech

- Tech Mahindra

- Vodafone m-pesa

- Cholamandalam Distribution Services

- Paytm's Vijay Shekhar Sharma

- Sun Pharma's Dilip Shanghvi.

The RBI's “in-principle" approval will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the central bank.
These companies selected will be given "in-principle" approval for 18 months, after which they will be given licences if they fulfil all conditions stipulated by the RBI.

A total of 41 companies had applied for the permit, the RBI said, adding "some of the entities who did not qualify in this round, could well be successful in future rounds."

Payments banks can accept deposits of up to Rs 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.

They are part of India's financial inclusion push, meant to bring banking services to a country where less half the adult population has a bank account.

Dos of payments banks

* Has to use the word ‘Payments Bank’ in its name to differentiate from other banks

* Accept demand deposits, i.e., current deposits, and savings bank deposits from individuals, small businesses and other entities

* To hold a maximum balance of Rs one lakh per individual customer.

* Will be allowed to set up branches, ATMs, BCs

* Allowed to issue debit cards also offer internet banking

* Can accept a large pool of money to be remitted but at the end of the day the balance should not exceed Rs one lakh

* Can accept remittances to be sent to or receive remittances from multiple banks

* Permitted to handle cross border remittance transactions in the nature of personal payments / remittances on the current account

* Allowed to distribute mutual fund products, insurance products and pension products

* Bank can also undertake utility bill payments

Don’ts of payments banks

* No NRI deposits should be accepted    

* Cannot issue credit card

* Not allowed to set up subsidiaries to undertake non-banking financial services activities    

* Other financial and non-financial services activities of the promoters should not be mingled with the working of payment banks

Daily CA Updates - Wednesday - August 19

IMPORTANTS NEWS 

1. Last date for filing Dvat return for Q1 again extended to August 25,2015

➡INCOME TAX

1. CBDT notifies rules to determine period of stay of crew members of foreign bound ships in India. notification no 70/2015 dt Aug 17
2. 60 taxmann.com 246 (Uttarakhand).The amount of interest received on the refund of Income Tax is not includible in the amount on which the assessee is liable taxed under Section 44BB of the Act. B J SERVICES COMPANY vs ACIT
3. 60 taxmann.com 55 (Bombay) Where motive of assessee is not generation of profit but to provide training to needy women in order to equip or train them and make them self-confident and self-reliant and occasional sales or trust's own fund generation was for furthering objects of trust, proviso to section 2(15) would not apply.

Dit vs women's India trust

➡ BANKING AND CORPORATES LAWS

1. Investment by Category I and II AIFs in shares of start-ups shall be deemed to be investment in unlisted shares.
2. Takeover code not applicable to startups that are listed without making a public issue.
3. Delisting norms not applicable to securities listed by start-ups without making a public issue

➡CST AND VAT LAWS

1. Govt. tweaks Rules relating to reduction of tax credit under Delhi VAT in case sale at discount or incentive through credit note is recd . Notification dt Aug 12 no 650.
2. Officer-in-charge has no power to seize goods-in-transit with valid documents.Reckitt Benckiser india ltd vs state of tripura.

➡ SERVICE TAX AND EXCISE LAWS.

1. Delhi High Court asks dept. to respond to challenge made against amended provisions of Service Tax Audit in section 94(2)(k)and rule 5A(2). Mega cabs p ltd vs union of india.
2. Cement/steel used in construction of storage facility is eligible for Cenvat credit. Grasim Industries Ltd Vs Comm Excise Jaipur

- CA Kasliwal Ambar

Birla Corp to acquire Jojobera and Sonadih cement businesses from Lafarge 

 Birla Corp will acquire the Acquisition Business, which comprises of an integrated cement unit at Sonadih (Chhattisgarh), a cement grinding unit at Jojobera Qharkhand), along with Concreto and PSC brands and an excellent management team.



Birla Corporation Limited (Birla Corp) today announced that it has agreed to a  transaction with Lafarge India Private Limited (Lafarge India), whereby Birla  Corp, either directly or through its wholly owned subsidiary, shall acquire both the Jojobera and Sonadih cement businesses (Acquisition Business) from Lafarge India for an Enterprise Value of Rs. 5,000 crores. The transaction would be funded through existing cash reserves and incremental debt, and is subject to approval of Competition Commission of India and other relevant regulatory approvals .

Under this transaction, Birla Corp will acquire the Acquisition Business, which comprises of  an integrated cement unit at Sonadih (Chhattisgarh), a cement grinding  unit  at Jojobera  Qharkhand), along with Concreto and PSC brands and an excellent management team. Acquisition Business has a cement capacity of -5.15 million tonnes per annum (mtpa), with mineral rights over  adequate reserves of limestone. The Acquisition Business has a demonstrated track record of operational and commercial excellence with profitability amongst the highest in the industry aided by raw material linkages, strong distribution networks and excellent brand loyalty in the attractive Eastern  India cement market. Upon completion of this transaction, Birla Corp will consolidate its position in the Eastern India cement market where demand supply scenario and outlook con.tinue to remain buoyant.

Birla Corp, established in 1919, is part of the MP Birla Group with presence across cement and jute; cement constitutes over 90% of the company's revenues with a total operational cement capacity of -10 mtpa, it has units in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal. Post completion of this transaction, Birla Corp will have a total capacity of -15 mtpa. With addition of these brands to its existing basket of brands, Birla Corp will derive synergy benefits through consolidation of its capacity.

Harsh Lodha, Chairman of Birla Corp, said: "I am very pleased to announce this very important transaction in Birla Carp's history. The Acquisition Business together with the Concreto and PSC brands, perfectly fit into our strategic vision and ambition of enhancing our competitiveness in our chosen markets. I am glad to welcome new talent and leaders to our Group, who share our convictions and professional culture".

KRISCORE Financial Advisors and SBI Capital Markets Limited were financial advisors and Nishith Desai Associates acted as counsel to Birla  Corp for this transaction.

- CA Kasliwal Ambar

FAST TRACK EXIT (FTE) FOR DEFUNCT COMPANIES

FAST TRACK EXIT (FTE) FOR DEFUNCT COMPANIES 
 (Sec 560 of 1956 Act now Sec 248 of 2013 Act)

CONDITIONS FOR FTE

The defunct company should have “Nil” Assets & Liabilities and has not commenced any business activity or operation since incorporation; or is not carrying over any business activity or operation for last one year before making application and Company which has “Active” status or identified as “Dormant” by the MCA

COMPANIES NOT ELIGIBLE FOR FTE

Listed Companies/ De-listed Companies/Section 8 Co/ Vanishing Companies/ Companies under Inspection/Investigation pending in any Court/ Companies where order under Section 234 has been issued and reply thereto or prosecution, if any, is pending in the court/ Companies against which prosecution for a non-compoundable offence is pending in court/Companies which have accepted public deposits and has made defaults in repayment of the same/Companies having secured loans/Companies having management disputes/Companies whose filing of documents has been stayed by Court or CLB or CG / Companies having dues to Taxes, banks and FI or CG or SG or any local authorities

HOW TO APPLY FOR FTE?

The application shall be made in Form FTE accompanied by filing fees of Rs. 5,000/-.

Attachments to Form FTE

1. Affidavit (as per “Annexure A” to the Circular) to be given individually by all Directors;

2. Indemnity Bond (as per “Annexure B” to the Circular) to be given individually by all Directors;

3. Statement of Accounts (as per “Annexure C” to the Circular) certified by PCA  or Statutory Auditor

4. Board Resolution stating to Strike off the name of the Company under FTE Mode;

5. Board Resolution for closure of Bank Accounts;

6. Confirmation letter duly signed by the concerned Banks Official that the Bank Account of the Company is closed;

7. The company shall disclose pending litigations, if any, involving the company while applying under FTE;

8. Form FTE shall be certified by PCA/ PCS/PCMA.

9. If database of directors not maintained by the MCA, a certificate from PCA/ PCS/PCMA  certifying that applicants are present Directors of the Company. Then no need to file Form DIR-12  and  DIR-3 (earlier  DIN 3).

PROCEDURE AT ROC

1. ROC shall examine the same and if found in order,  shall intimate the Co by issuing a notice under Section 560 (3) giving 30 days time, stating that unless cause is shown to the contrary, the name of Company be struck off from the register and the lead to dissolution of the Company.

2.  The Registrar on being satisfied shall strike off the name of the Company from its Register and send notice under Section 560 (5) of the Act for publication in the Official Gazette and the Company stands dissolved from date of publication of the notice in the Official Gazette.

3.  A Company dissolved under Section 560 of the Act can be restored before expiry of 20 years from the date of publication of notice in the Official Gazette by order of the Court. The application for restoration can be made only by the Company, member or creditor.

Complete Details for Sukanya Samriddhi Yojana

Complete Details for Sukanya Samriddhi Yojana

Sukanya Samriddhi Account Scheme is a small deposit scheme for girl child, as part of 'Beti Bachao, Beti Padhao’ campaign, which would fetch yearly interest rate of 9.1 per cent and provide income tax deduction Under section 80C of the Income Tax Act,1961.

Notification by government:

Sukanya Samriddhi Account Scheme is been notified by Ministry of Finance vide Notification No. G.S.R.863(E) Dated 02.12.2014. This Shceme become operational by notification of rules namely Sukanya Samriddhi Account Rules, 2014.

Terms to be known:

1.Depositor-

For this scheme Depositor is an individual who on behalf of a minor girlchild of whom he or she is the guardian and deposits amount in account opened under this scheme.

2.Guardian:

under this Scheme – In relation to a minor girl Child Guardian means
(i) either father or mother
(ii) where neither parent is alive or is incapable of acting, a person entitled under the law for the time being in force to have the care of the property of the minor.

1 for 1:

One Girl One Account means Depositor cannot open multiple or more than one account in the name of a Girl Child.

Maximum:

Natural or legal guardian of a girl child allowed to open one account each for two girl children

For third Girl:

Under this scheme natural or legal guardian of the girl child shall be allowed to open third account in the event of birth of twin girls as second birth or if the first birth itself results into three girl children,  production of a certificate to this effect from the competent medical authorities where the birth of such twin or triple girl children takes place.

Age limitation:

The account may be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of ten years and any girl child, who had attained the age of ten years, one year prior to the commencement of these rules shall also be eligible for opening of account under these rules. Scheme has been commenced from 02.12.2014.

Document required for Sukanya Samridhi Yojana :

1. Birth certificate of girl child.
2. Address proof.
3. Identity proof.

How to open the account :

Birth certificate of a girl child in whose name the account is opened shall be submitted by the guardian at the time of opening of the account in post office or bank along with other documents relating to identity and residence proof of the depositor. As of now, government owned banks are still in the process of completing formalities to open the Sukanya Samriddhi Yojana (SSY) Account, So you may visit any of the government banks for the purpose of opening the account ,like State Bank of India , Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank, Andhra Bank, UCO Bank, Allahabad Bank, Corporation Bank

Interest Rate:

Rate of interest on Sukanya samridhi yojana has been increased to 9.2% for financial year 2015-16

Under this scheme Interest rate is not fixed and Government will declare on yearly basis the Interest on accounts opened under these rules. For the Financial Year 2014-15 Government has declared Interest Rate of 9.10%

Interest will be compounded yearly and will be credited to account till the account gets matured or withdraw from the date of opening.In case of account holder opting for monthly interest, the same shall be calculated on the balance in the account on completed thousands, in the balance which shall be paid to the account holder and the remaining amount in fraction of thousand will continue to earn interest at the prevailing rate.

Maximum and Minimum Deposit:

The account may be opened with an initial deposit of one thousand rupees and thereafter any amount in multiple of one hundred rupees may be deposited subject to the condition that a minimum of one thousand rupees shall be deposited in a financial year but the total money deposited in an account on a single occasion or on multiple occasions shall not exceed one lakh fifty thousand rupees in a financial year.

Minimum – Rs, 1000/- Per Year

Maximum- Rs. 1,50,000/- Per Year.

- CA Kasliwal Ambar