Monday, September 26, 2016

SEBI proposes foreign portfolio investors to directly trade in corporate bonds without a broker

SEBI board has met in Mumbai and took the following important decision:

1) FPIs permitted to trade directly in Corporate Bonds: With an aim to deepen corporate bonds market by attracting more overseas funds, SEBI has decided to allow wellregulated Foreign Portfolio Investors (FPIs) to trade directly in these securities without any broker.

2) Amendment in InvIT and REIT regulations: In order to facilitate growth in Infrastructure and Real Estate, SEBI has allowed Infrastructure Investment Trusts (InvIT) and Real Estate investment Trust (REIT) to invest in a two-level special purpose vehicle structure through Holding Company (Holdco) subject to sufficient shareholding in the Holdco and the underlying SPV and other safeguards.

Mumbai ITAT grants interest on tax refund even if refund was less than 10% of gross tax

a) The assessee claimed interest under section 244A. The Assessing Officer held that, since the refund determined was less than 10 per of gross tax, no interest would be payable to the assessee under section 244A and thus, he rejected the rectification application.

b) On appeal, the Commissioner (Appeals) affirmed the order of the Assessing O􀁹icer. The Tribunal held in favour of assessee as under:

1) There was no proper justification on the part of the revenue to withhold the amount of refund beyond the date of issuance of intimation/order under section 143(1).

2) Upto the date of passing order/intimation under section 143(1), no interest shall be payable by the department to the assessee because of clear provisions of law on the statute in this regard, but for the period of delay in issuing the refund after the date of passing of the order under section 143(1), the assessee is entitled for interest.

3) Thus, the Assessing Officer was directed grant the interest under section 244A for the period falling between the date of passing of order under section 143(1) and actual date of granting of refund, at the rate of interest as would have been applicable if the refund amount would have been for an amount more than 10 per cent of the gross tax. - [2016] 73
228 (Mumbai - Trib.)

Friday, September 23, 2016

CBEC releases FAQs on GST

With the enactment of 101st Constitution Amendment Act, the road to GST is clear. The Govt. had already unveiled draft model law on GST.

The National Academy of Customs, Excise & Narcotics (‘NACEN’) is conducting a mammoth capacity building exercise to train about 60,000 indirect tax officers of the Centre and State so that officers are well equipped to implement GST when it is rolled out. Now the NACEN has released FAQs on Registration, Valuation, Refund, and Input Tax credit,etc.

The FAQs have been prepared and reviewed by a team of officials from both Centre and States. These FAQs compilation covering 24 topics with over 500 questions, will be an effective tool in disseminating knowledge on GST to Tax officials, Trade and Public. This is the first version based on the Model GST Law which has been released in the public domain. NACEN will bring out updated versions of the FAQ, as and when relevant statutes are enacted and rules are framed.

Thursday, September 22, 2016

Order not barred by limitation when it was ready to be served upon assessee before limitation period

The issue before the High Court was as under:

Whether the Tribunal erred in law in holding that the assessment order under section 143(3) received by the assessee was barred by limitation and as such perverse?

The High Court held in favour of revenue. The aggrieved-assessee filed the SLP in Supreme Court against such order. The Apex Court dismissed the SLP.

The observations of the High Court are given hereunder:

1) A representative of the assessee, on his own volition and without intimation to the Department, visited the office and found the assessment order ready to be served upon him.

2) The probability of the order being made and ready to be collected by the representative of the assessee before the period of limitation, could not also be ruled out. Thus, assessment order was not barred by limitation. - BINANI INDUSTRIES LTD. V. CIT - [2016] 73 191 (SC)

Tuesday, September 20, 2016

The concept of lifting of corporate veil can be resorted to even in execution proceedings

The concept of lifting the corporate veil is applicable not only in the cases of holding of subsidiary companies or in the case of tax evasion but can be equally applied in execution proceedings. The corporate veil can be li􀁺ed in cases where the Court from the material on record comes to the conclusion that the Judgment Debtor is trying to defeat the execution of the Award which is passed against him

The disputed questions that arose in the instant case are:

a) In which cases corporate veil can be lifted by the Court and whether the concept of lifting of corporate veil is also available in execution proceedings?

b) Whether the learned Single Judge was justified in lifting the corporate veil in this case and whether the learned Single Judge was further justified in coming to the conclusion that Bhatia Industries and Infrastructure Limited (BIIL) and Bhatia International Limited (BIL) was a single economic entity?

c) Whether any interference is called for in the order passed by the learned Single Judge? 

The High Court held as under:

Monday, September 19, 2016

DU giving xerox of books to its students as a course pack doesn't infringe Copyright Act

a) International publishers including University Press, Cambridge University Press and Taylor & Francis lodged a case against Rameshwari photocopy shop, a licensed vendor located in DU’s north campus.

b) The publishers had alleged that photocopy shop had been indulging in creating pirated version of books and selling them away to the student at very cheap prices.

c) Further publishers contended that photocopy shop was violating copyright law and causing them financial loss since student stopped purchasing their books. At the time, the Court passed an interim order preventing the vendor from selling the compilations of photocopied texts.

The High Court held as under:

1) The interests of the students can be rightly protected under the Indian Copyright Act which allows for fair dealing practice. Further, there are exemptions on “fair use” of work including educational propose from the purview of infringement.

2) Copyright is not a divine, natural or inevitable right that confers on authors/publishers the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public.

MCA doubles limit of managerial remuneration payable by Cos. having no profit or inadequate profit

MCA has notified the revised Remuneration Limits for the Companies having no or inadequate profits as per Schedule V of the Companies Act, 2013. To align the interest of managerial person in companies, it has been decided to amend the Schedule V of the companies act for enhancing the managerial remuneration payable by the companies having no profit or inadequate profit it its managerial person.

The following points have been kept in mind by the companies while calculating the managerial remuneration:

i) Where effective capital is negative or less than 5 crores, then a company can pay upto Rs. 60 lakhs (earlier the limit was Rs. 30 lakhs) per annum as a remuneration to its managerial person.

ii) If effective capital is more than 5 crores but less than 100 crores, then a company can pay upto Rs. 84 lakhs (earlier it was Rs. 42 lakhs)

Friday, September 16, 2016

IDS payments shall not be reflected in 26AS; Govt. reiterates its stand on confidentiality of info

The Income Declaration Scheme, 2016 (‘IDS’) provides an opportunity to persons who have not paid full taxes in past to come forward and declare their undisclosed income and assets. The IDS is open for declaration up to 30.09.2016.

Govt. reiterates that the information contained in a valid declaration under IDS is confidential and shall not be shared with any authority. Further, the payments under IDS shall neither be reflected in 26AS statement nor can be viewed by the Assessing Officer in the Online Tax Accounting System (OLTAS) of the department in the interest of confidentiality.

Thursday, September 15, 2016

Threatening letter issued by CA to recover fees from client is an act of professional misconduct


a) The CA used to file Income Tax returns of client and his family members.

b) The client received a bill from CA demanding sum of Rs. 3.8 lakhs as professional fee for filing returns and his family members for 19 years. Further bill was accompanied with written statement threating to initiate legal action against him if the payment was not made.

c) The client filed a complaint with the ICAI council against such CA. The Council held that the CA was guilty of 'professional misconduct' for annexing a note to the bill which contains a language not expected from a Chartered Accountant.

The High Court held as under:

1) The Disciplinary Committee opined that CA gave no explanation as to why for each year as and when professional services were rendered, a bill was not raised. Further the Disciplinary committee did not delve further into merits of the dispute, the reason appeared to be that the dispute was a civil dispute and was sub- judice.

2) But, with respect to the written communication appended by way of note to the bill, it opined that the language was threatening and not expected of a CA who is looked upon by the society as a dignified professional.

3) The Court concurs with the opinion of Disciplinary Committee held that the CA had committed a professional misconduct. [2016] 73 83 (Delhi)

Wednesday, September 14, 2016

No denial of exemption on maturity of life insurance policy just because policy was taken from foreign insurer


a) The assessee received a certain amount on account of maturity of life insurance policy taken by her husband from American Insurance Company in Abu Dubai. She claimed tax exemption on such amount under section 10(10D).

b) The Assessing Officer disallowed the claim of the assessee on the ground that the insurance policy was not taken from Indian insurance company and, therefore, provisions of section 10(10D) were not applicable.

c) The Commissioner (Appeals) upheld the order of the Assessing Officer. The aggrieved assessee filed the instant appeal before the ITAT.

The ITAT held in favour of assessee as under:

1) Section 10(10D) provides that any sum received under life insurance policy is eligible for exemption, except in case of exceptions as culled out under clauses (a), (b) and (c). It was not the case of the revenue that the assessee falls under any of the exemption as enumerated in clauses (a), (b) and (c) of section 10(10D).