Monday, February 15, 2016

Assessee can change its claim of credit either as input or as capital goods at any stage of proceedings

1.    Assessee took CENVAT Credit on rails and other track materials, namely, sleepers, paints and crossings etc.Department denied credit on ground that same did not fall within definition of inputs, as they did not go in mainstream manufacture.
2.    Subsequently, during the appellate proceedings, assessee claimed credit of such goods as capital goods.The department argued that since ground of goods being 'capital goods' was not raised before lower authorities, same could not be raised for first time before Tribunal.

Subsidy received from AE for specific purpose can't be treated as income until it is spent

1)    Assessee was a wholly owned subsidiary of Canon Singapore Pvt. Ltd (hereafter ‘CSPL’). It was engaged in purchase and resale of 'Canon' products for its holding company ‘CSPL’ in India.
2)    Assessing Officer (AO) made certain additions to the income of assessee which reflected unutilised subsidy received by assessee from its holding company.
3)    AO observed that the subsidies received by the assessee become its property notwithstanding that the same had not been spent for the purposes for which they were received.
4)    On appeal, tribunal reversed the observation taken by AO; aggrieved-revenue filed instant appeal before the High Court.

MCA issues draft format for financial statements in line with Ind AS

On 9th February, 2016, Ministry of Corporate Affairs issued draft format for financial statements (Revised Schedule III) in line with Indian Accounting Standards (Ind AS). The said format, if approved, shall be applicable on companies who are applying Ind AS voluntarily or  shall apply mandatorily w.e.f 1st Aril 2016 or 1st April, 2017, as the case may be which is specified in Companies (Indian Accounting Standards) Rules, 2015.

Proposed revised Schedule III is similar to existing Schedule III of the Companies Act, 2013 subject to some differences. The major differences are as follows:

Guidance notes issued on fraud reporting and bank audit

Guidance note on fraud reporting
The Institute of Chartered Accountants of India (ICAI) has issued guidance note on fraud reporting under section 143(12) of the Companies Act, 2013. It provides guidance on how an auditor of a company can fulfill requirements of the aforesaid section. It clarifies that provisions of Section 143(12) apply to the auditor only when he is the first person to identify the instances of fraud during performance of his duties as an auditor. The auditor should report any fraud under section 143(12) even if the same is required to be/has been reported under any other statute or to any other regulator.

Govt. isn't abusing its powers if it requires employees to travel via Air India to avail of LTC

Where Government employees were asked by Government to undertake air travel under LTC from OP airlines, Government being consumer enjoyed liberty to exercise its choice of airlines and no case of contravention of sections 3 and 4 was made out against Government and OP airlines


a)  The informant, a Government employee, filed information against Air India, its subsidiaries and the Government of India alleging contravention of section 4 of Competition Act, 2012