Updates. 30th July 2015.

Competition Act 

Where opposite parties i.e., Hyundai, Reva and Premier held a dominant position in aftermarket for their own brand of spare parts and diagnostic tools, practice of OPs in denying availability of their genuine spare parts severely limited independent repairers and other multi brand service providers in effectively competing with authorized dealers of OPs in aftermarket and, thus, OPs abused their dominant position in contravention of section 4

Income Tax 

Where during search and seizure, investments were found in name of assessee, presumption could only be that they formed part of unaccounted income of assessee and mere fact of producing affidavit of close relatives would not be sufficient explanation.
Hemant Kumar Ghosh v. Assistant Commissioner of Income-tax, Spl. Range-4, Patna. MISC. APPEAL NO.141 OF 2008

Service Tax  

'Designated authorities' under Service Tax Voluntary Compliance Encouragement Scheme amount to 'adjudicating authorities', as they pass order/decision; hence, orders passed by them are appealable as per Finance Act, Narasimha Mills (P.) Ltd. v.Commissioner of Central Excise (Appeals). WRIT PETITION NO. 21799 OF 2014
M.P. NO. 1 OF 2014

RECENT UPDATES - JULY

➡IMPORTANTS NEWS 

1.     Govt. notifies draft Rules on Land Acquisition Act.

➡INCOME TAX

1.     Running an Allopathic Hospital isn't ultra vires to object of improving Ayurvedic system of Medicine.  59 taxmann.com 398 (Delhi) Mool Chand Khairati Ram Trust v. Director of Income-tax (Exemptions).

2.     59 taxmann.com 400 (Mumbai - Trib.) Gurudev Siddha Peeth v. Income-tax Officer, Ward- 1 (1), Kalyan

Section 115BBC is not applicable to institutions like that of assessee trust being a temple or shrine; provisions of this section are meant to check inflow of unaccounted/black money into system with a modus operandi to make out as a part of accounts of institutions like university, medical institutions where problem relating to receipt of capitation fees, etc. is generally highlighted.

3.     IT : Where assessee company expanded its existing business and claimed said expenses as pre-capitalisation cost, same was to be treated as revenue expenditure. 59 taxmann.com 180 (Delhi) Commissioner of Income-tax v. SRF Ltd.

4.     Cap gain of inherited asset is to be computed by taking CII of the year in which asset is acquired by previous owner. 59taxmann.com 202 (Ahmedabad - Trib.)  Harish kumar Babulal Shah v. Income-tax Officer, Ward 10 (3)

5.     Addition made by AO due to bogus purchases was rightly reduced by relying upon verdict of Apex Court : HC.  CIT , Ahmedabad-I vs Premkumar B. Rathi.

➡ BANKING AND CORPORATES LAWS

1.     Delhi High Court allows 'Red FM radio' to participate in e-auction of FM Channels.

2.     Unclaimed amounts of policy holders to be invested in money market instruments and FDs in scheduled banks: IRDA.

➡CST AND VAT LAWS

1.     Auction of goods is illegal if they were seized without evidence. Ruchi Soya Industries Ltd. v. State of Tripura

➡ SERVICE TAX AND EXCISE LAWS

1.     Loading, unloading and shifting of goods within factory doesn't amount to Cargo Handling Services.

2.     Normal loss of finished goods is also liable to duty unless remission application is filed for such loss. Commissioner of Customs & Central Excise v. U.P. State Sugar Corporation Ltd.

CA PRACTICE- BE AN INSURANCE SURVEYOR & LOSS ASSESSOR

CA PRACTICE- BE AN INSURANCE SURVEYOR & LOSS ASSESSOR

A Chartered Accountant can act also as  insurance  surveyor & loss assessor. …….The scope of Chartered accountant services to insurance sector is going bigger and bigger and it is the Chartered Accountants who have to take the compensatory steps to reach out at the vast insurance sector. Surveyors are independent professionals licensed by IRDA. They usually function only in non life business. Their job is to assess the actual loss and avoid false claims. Surveyors are not employees, but are independent professionals hired by the insurance company.

CA IS ELIGIBLE TO ACT AS INSURANCE SURVEYOR & LOSS

An associate member or a fellow member of the Institute of Chartered Accountants of India is eligible to secure the licence to act as Surveyor & Loss assessor. No permission is required from the Institute of Chartered accountants of India before or after procuring such licence.

The Curious Case of Black Money Stashed Abroad

BLACK MONEY(UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015 have been notified on 26^th May 2015 and Rules there under have been notified on 2^nd July 2015. It is an approach towards the promise made by Prime Minister Narendra Modi , ensuring the black money stashed abroad would be brought back to the country.

It is an one time compliance opportunity given for a limited period to people who have any foreign assets which have hitherto not been disclosed to evade the Income Tax. This could rather be a warm welcome. However the real question lies with its magnitude of response. Will it take a grand opening or open to a lukewarm response?

Setting eyes into the notification dated 3^rd July 2015, which says, "The designated Commissioner of Income Tax will inform in respect of declaration filed upto the prescribed date, i.e., 30^th September 2015  to the declarant by 31.10.2015 whether the competent authority already has any information in respect of the asset(s) declared. The declarant may revise his declaration within 15 days of receipt of the intimation from the Commissioner of Income Tax."

In a personal view, if the Government needs to achieve success in its quest then they should formulate a simple strategy which allows the declarant to form a concrete opinion and move optimistically ahead. If a declarant is entitled to the scheme, with his total liability of 60% (which includes Tax of 30% and Penalty of 30%) with the cost or fair market value of the asset, whichever is higher. However, as per aforesaid notification after filing the declaration, the declarant receives a communication from the designated commissioner that the competent authority already have the information in respect to the assets declared. This can lead to the declarant subjected to harsh penalties, fine and even rigorous imprisonment for those assets.

This is extremely detrimental to voluntary comply which is expected. The declarants should be well aware about the extreme consequences before making the declaration so that they can take a firm decision for buying the peace of mind and being a tax compliant. Government should have issued a proper guidance that cases where proceeding  has already been initiated against the assessee will not be covered under the scheme and  in all other cases, the declarant will be having a maximum liability of 60%. 

Honble Rajasthan High court admit ICAI writ on OPJS university on starting course related to "Master of CA"

Honble Rajasthan High court admit ICAI writ on OPJS university on starting course related to "Master of CA" etc. and passed following order.

Admit.
Issue notice. Issue notice of the stay application also. The rule issued is made returnable within six weeks.

In the meanwhile and until further orders, the respondent No. 3 is restrained from admitting any student in the School of Chartered Accountants for awarding Masters Degree in Chartered Accountancy, Bachelors Degree in Chartered Accountancy, Diploma in Chartered Accountancy and Certificate in Accountancy. The University shall also not award degree diploma or certificate aforesaid.

CA Dhiraj Khandelwal

OPENING OF CURRENT ACCOUNT BY BANKS - NEED FOR DISCIPLINE

RBI asks for banks to verify credit details of customers from CRILIC database before opening current accounts vide CIRCULAR DBR.LEG.BC.25/09.07.005/2015-16, DATED 2-7-2015. 

1. Banks should ensure that their branches do not open current accounts of entities which enjoy credit facilities (fund based or non-fund based) from the banking system without specifically obtaining a No-Objection Certificate (NOC) from the lending bank(s) 

2. Keeping in view the importance of credit discipline, especially for reduction in NPA level in banks, banks are advised to make use of the information available in CRILC and not limit their due diligence to seeking NOC from the bank with whom the customer is supposed to be enjoying the credit facilities as per his declaration. 

3. Banks may also seek 'No-Objection Certificate' from the drawee bank where the initial deposit to current account is made by way of a cheque. 

4. As these instructions are aimed at improving credit discipline, appropriate penal action will be taken in case of non-compliance.