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:

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

Facts:

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)

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.

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

Facts:

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 taxmann.com 83 (Delhi)

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

Facts:

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).

Payments made by 'Yash Raj Films' for making copies of film negative weren't technical services

Facts:

a) Assessee-company (i.e. Yash Raj Films) made payments to Adlab for making copies of prints for the films.

b) Assessing Officer (AO) noticed that the assessee had not made deducted TDS as per the provision of section 194J in respect of payments made to Adlabs Ltd.

c) Assessee's stand was that the work performed by Ablab did not involve any technical or professional services, therefore payments were covered under section 194C.

d) On appeal, CIT(A) granted relief to the assessee. Aggrieved by the order of CIT, revenue filed appeal before Tribunal.

Tribunal held in favour of assessee as under:

1) The contract was made for taking out multiple prints of the final negative which was given to Adlab. Such jobs or work contracts of making several prints of the same final negative did not involve any technical or professional services.

2) In view of above facts, CIT (A) was justified in holding that assessee has rightly deducted TDS on the payments made to Adlabs, for supplying copies of final negative as per the provisions of section 194C. - [2016] 73 taxmann.com 73 (Mumbai - Trib.)

Course launched by USA University in India isn't its business activity as it is registered as NPO

Facts:

a) The Regents of the University of California (‘UCLA’) entered into an agreement with Northwest Universal Education Private Ltd (‘NUEP’) to launch a Management Program in India which would train the senior executives of the companies.

b) It agreed to send its professors for training the senior executives working in India in respect of management techniques.

c) The applicant raised following questions:

- Whether program fee received by the Applicant is chargeable to tax in India as ‘fees for included services’ under Article 12 of the India-US DTAA?

- Whether the activities undertaken by it in India, viz., teaching would constitute its PE in India in terms of Article 5 of the India-US DTAA?

The Authority held as under:

1) Since the nature of the activity by the applicant in that case was educational activity, it could not amount to fees for included services particularly because of the provision of Article 12(5)(C).

SEBI tightens screw on promoters for enforcement of exit option in case of compulsory delisting

Under the existing delisting norms a Recognized Stock Exchange has power to delist the equity shares of listed company on certain grounds. The whole time directors and promoters of Company (which has been compulsory delisted) are debarred from accessing the securities markets for a period of 10 years from the date of compulsory delisting. 

The existing delisting Regulations provides that pursuant to compulsory delisting of a company, the promoter shall acquire delisted equity shares from the public shareholders, subject to their option of retaining their equity shares, by paying them the fair value. 

In addition to the existing delisting Regulations, SEBI has imposed new restrictions on promoters and whole time directors of company to ensure effective enforcement of exit option to the public shareholders in case of compulsory delisting of company. Accordingly, SEBI hereby directs that in case of such companies whose fair value is positive:

a) such a company and the depositories shall not effect transfer of any of the equity shares and corporate benefits (like dividend, rights, bonus shares, split, etc.) shall be frozen, for all the equity shares, held by the promoters/ promoter group till the promoters of such company provide an exit option to the public shareholders in compliance with delisting Regulations;

b) the promoters and whole-time directors of the compulsorily delisted company shall also not be eligible to become directors of any listed company till the exit option is provided.

Subsidiary company can adopt calendar year as its FY for consolidation of accounts

Facts

a) Universal Robots (India) Pvt. Ltd., is an Indian Subsidiary of Universal Robots AS, which is registered in Denmark.

b) It had adopted FY ending March 31, 2015as per the requirement of the Companies Act, 2013. Whereas, the holding company followed the calendar year as FY. So, it realised that due to different FY it will be difficult to consolidate its accounts with that of holding company.

c) The Board of Directors of the Universal Robots (India) Pvt. Ltd.passed a resolution to change its FY to calendar year. Holding company also consented for the same. d) It filed petition to get permission to follow calendar year as its FY for consolidation of accounts.

The NCLT held as under:

1) Section 2(41) of the Companies Act, 2013 provides as follows: