Amount received by Private Companies prior to 1st April, 2014 shall not be treated as deposit under new Companies Act, 2013

1. The Ministry of Corporate Affairs (MCA), vide circular no. 5/2015 dated 30-03-2015, has clarified that amount received by private companies from their members, directors or their relatives prior to 1st April, 2014 shall not be treated as deposit under new Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014.

2. Private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement.

3. Any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made thereunder.

Circular of Ministry of Company Affairs is attached herewith.

S. 147: Reopening on ground of "oversight, inadvertence or mistake" is not permissible

CIT vs. Jet Speed Audio Pvt. Ltd (Bombay High Court)

S. 143(3) assessment order is not a scrap of paper & AO is expected to have applied his mind. Reopening on ground of "oversight, inadvertence or mistake" is not permissible

The assessee made a claim for deduction for bad debts which was allowed by the AO u/s 143(3). Subsequently, within four years from the end of the assessment year, the AO reopened the assessment u/s 148 on the ground that the amount written off as bad debts was a capital loss and could not allowed as a deduction. The Tribunal allowed the assessee’s appeal and quashed the reassessment proceedings. Before the High Court, the department urged that the reopening was valid because (a) the AO acted on an audit objection which constitutes “tangible material” and (b) as the AO had not dealt with the issue in the original assessment order, he had jurisdiction as held in Kalyanji Mavji & Co 102 ITR 287 (SC), New Light Trading Co 256 ITR 391 (Del) and Dr. Amin’s Pathology Laboratory 252 ITR 673 (Bom). HELD by the High Court dismissing the appeal:

(i) The Tribunal has rendered a finding of fact that the AO raised a query with regard to the issue which was responded to by the assessee and on satisfaction of the same the AO passed the assessment order. Therefore, reopening of assessment on an issue in respect of which a query was raised and responded to by the assessee would amount to a change of opinion;

(ii) The argument that the tangible material is the audit objections received by the AO is not acceptable because there is no mention of any tangible material in the reasons recorded. A reopening notice can be sustained only on the basis of grounds mentioned in the reasons recorded. It is not open to the Revenue to add and/or supplement later the reasons recorded at the time of issuing reopening notice;

(iii) The argument that the AO has been careless in bringing to tax a particular amount which is chargeable to tax and that the Revenue should not be precluded from issuing notice u/s 148 overlooks the fact that power to reopen is not a power to review an assessment order. At the time of passing assessment order, it expected of the AO that he will apply mind and pass an order. An assessment order is not a mere scrap of paper. To accept the submission of the department would mean to negate the well settled position in law as stated by the Supreme Court in CIT Vs. Kelvinator of India Ltd 256 ITR 1 (Delhi)(FB) that the concept of ‘change of opinion’ brought in so as to have in built test to check abuse of power;

(iv) Kalyanji Mavji & Co 102 ITR 287 (SC), where it was held that “oversight, inadvertence or mistake” in passing assessment order will give the AO jurisdiction to reopen the assessment, is not good law in view of the subsequent decision in Indian and Eastern Newspaper Society Vs. CIT 119 ITR 996. An error discovered on a reconsideration of the same material (and no more) does not give him that power. The aforesaid view on the above proportion has been reiterated by the Apex Court in A.L.A.Firm vs. CIT 183 ITR 285. New Light Trading Co 256 ITR 391 (Del) and Dr. Amin’s Pathology Laboratory 252 ITR 673 (Bom) are also distinguishable on facts. 

Varishtha Pension Bima Yojana

Sukanya Samriddhi Account Scheme

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It has been proposed in Finance Bill, 2015 that the investments made in the "Sukanya Samriddhi Account Scheme" will be eligible for deduction under section 80C of the Income Tax Act, 1961.

The interest accruing on deposits and withdrawals from any account under the scheme would be exempt under section 10(11A) of the Income Tax Act, 1961. 

[Applicable w.e.f. A.Y. 2015-16]

Service Tax Registration for single premises – Documentation, Time limits & Procedure

CBEC vide Order No. 1/2015-Service Tax notifies the following documentation, time limits and procedure with respect to filing of registration applications for single premises, which shall come into effect from 1-3-2015.

1. Applicants seeking registration for a single premises in service tax shall file the application online in the Automation of Central Excise and Service Tax (ACES) website www.aces.gov.in in Form ST-1.
2. Registration shall mandatorily require that the Permanent Account Number (PAN) of the proprietor or the legal entity being registered be quoted in the application with the exception of Government Departments for whom this requirement shall be non-mandatory.
3. E-mail and mobile number mandatory.
4. Once the completed application form is filed in ACES, registration would be granted online within 2 days
5. Registration Certificate downloaded from the ACES web site would be accepted as proof of registration dispensing with the need for a signed copy.

Documentation required

The applicant is required to submit a self attested copy of the following documents by registered post/ Speed Post to the concerned Division, within 7 days of filing the Form ST-1 online, for the purposes of verification:-

1. Copy of the PAN Card of the proprietor or the legal entity registered.
2. Photograph and proof of identity of the person filing the application.
3. Proof of Address of the premises.
4. Details of the Bank Account.
5. Memorandum / Articles of Association / List of Directors.
6. Authorisation by the Board of Directors / Partners / Proprietor  for the person filing the application.
7. Other Government registration nos. such as Sales Tax Number, CIN, etc.

The registration certificate may be revoked in any of the following situations:

1. the premises are found to be non existent or not in possession of the assessee.
2. no documents are received within 15 days of the date of filing the registration application. 
3. the documents are found to be incomplete or incorrect in any respect.  

BUDGET AND FINANCE BILL 2015 - KEY HIGHLIGHTS - INDIRECT TAX

1.      GST likely to be implemented by April, 2016.

2.    Online Central Excise / Service Tax Registration certificates to be issued within 2 working days.

3.    Assessees allowed to issue digitally signed invoices and maintain electronic records.

4.    Time limit for taking CENVAT Credit on inputs and input services increased from six months to one year.

5.    CUSTOMS

-    Customs duty reduced on certain inputs, raw materials, intermediates and components (in all 22 items).

-    Levy of Special Additional Duty (SAD) fully exempt on all goods, except populated printed circuit boards for use in manufacture of ITA bound items and reduction of the SAD on imports of certain other inputs and raw materials.

6.    EXCISE

-     Central Excise duty increased to 12.50% from existing 12.36%

-     Excise duty on leather footwear of retail sale price of more than `1,000 per pair reduced from 12% to 6%.

-     Clean Energy Cess increased from `100 to `200 per metric tonne of coal, etc. to finance clean environment initiatives.

-   Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12% to 15%.

7.    SERVICE TAX

-     Service Tax rate increased to 14% from existing 12.36%.

-     Service Tax exemption

·      For Common Effluent Treatment Plant.

·      On Varishta Bima Yojana.

·      Extended to certain Pre-cold storage warehousing.

·      On all ambulance services provided to patients. 

-  Negative List proposed to be amended and certain exemptions to be withdrawn to widen the tax base.

-     Manpower supply and security services when provided by individual, HUF, partnership firm to a body corporate brought to full reverse charge mechanism.

-   Proposal to levy Swachh Bharat Cess at a rate of 2% or less on all or certain services if need arises for financing and promoting initiatives towards Swachh Bharat.

-   Services provided by mutual fund agents, mutual fund distributors and lottery agents brought under reverse charge mechanism.

-     Credit of service tax to be allowed to service receiver of service tax paid under partial reverse charge mechanism.

BUDGET AND FINANCE BILL 2015 - KEY HIGHLIGHTS - DIRECT TAX

1.    Tax slab & Rates

-    It remains the same. However, surcharge has been increased by 2% and the revised rate is as under:

·      On Dividend Distribution Tax & Buy Back of Shares – 12%.

·     On Domestic Companies having Income between `1 core to `10 crore – 7% and those above `10 Crore – 12%. 

·  Individual, HUF, AOP, BOI, Artificial Juridical Persons, Firms, Cooperative Societies and Local Authorities Company other than domestic Category having taxable income above `1crore – 12%.

-   Reduction in rates of Corporate Tax promised to be reduced to 25% in next four years simultaneously with withdrawal of exemptions and deduction enjoyed by corporate.