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Celebration of Patang Mahotsav held on 14th January 2016 at Jesal Park, Bhayander (West)

The Institute of Chartered Accountants of India Vasai Branch of WIRC Newsletter2 February - 2016

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Lecture Meeting on Modern opportunities for Investors and Systematic Investment Planning held on 30th January 2016 at Branch Premises, Bhayander (East)

CA. Preksha Jain (Committee Member-Vasai Branch) presenting bouquet to Prof. Priyanka Acharya (Speaker)

Prof. Priyanka Acharya (Speaker) Participants

The Institute of Chartered Accountants of India Vasai Branch of WIRC Newsletter February - 2016 3

career opportunities available among them.

Branch also Celebrated Republic Day on 26th Jan 2016 at CA Students DKS Hostel and created the awareness about Indian Development Strategies and played Competition.

Forthcoming Programme

Campus Placement Programme for CA’s –Campus Interview on 17th Feb 2016.

Seminar on Union Budget Meeting - As we all know that Hon’ble Finance Minister Mr. Arun Jaitley will present Finance Bill 2016 in the Parliament on 29th Feb, 2016. To discuss the impact of budget, branch will organizes public union budget meeting on 2nd March, 2015 at Bhayander(East).

As you all know, we at Vasai Branch adopted the mission statement “Together Everyone Achieve More” for achieving the ultimate goals of sustainability, inclusive growth and overall development. In this journey of unleashing the creativity and seeking growth, we want our branch to be an active partner in building up our CA fraternity. We deeply appreciate of the assistance and guidance that was made available to us over the years in co-coordinating the various programs. New Programme conducted such as International Day of Yoga, Women Empowerment Programme and many more. In addition to that Vasai Branch started online Registration facilities for Members & Students events.

I am thankful to my Office Bearers, Managing Committee Team and the staff for their unstinted support and relentless efforts in pursuit of all the above initiatives

The New Team will soon take over in Vasai Branch and I wish that their tenure be more exciting and successful and they go from strength to strength.

With Warm Regards

CA. Umesh P. Mestry Chairman

Dear Professional Collagues,“Take up one idea. Make that one idea your life - think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success.”- Swami Vivekananda

With this belief in mind, As I pen down my last communication from the esteemed office of the Chairman of the most vibrant branch of ICAI, it is time to reflect back on the year, that passed by and I am glad to inform that all the Action Plans that were identified have been realised with the continuous Planning, Perseverance, which ultimately resulted in Progress, thus accomplishing the Mission Statement unveiled at the beginning of the year.

At the outset I wholeheartedly congratulate and welcome the new visionary leaders Hon’ble President of ICAI, CA. M. Devaraja Reddy and the Hon’ble Vice President CA. Nilesh Shivji Vikamsey torch bearers of our profession and wish them a fruitful and a promising year ahead.

I welcome and congratulate to the newly elected Managing Committee Team of Vasai Branch for the tenure of 2016-2019. I am thankful to each member who cast their vote in the branch election held on 6th February 2016 and makes the highest numbers of 775 voting. I am thankful to CA. Unmesh Narvekar, Past Chairman of Vasai Branch who performed the returning officer duties extremely efficiently and smoothly.

I congratulate WIRC Chairman CA Sunil Patodia and his crew for winning the Best Region & WICASA chairman CA Hardik Shah and his team for the best WICASA award from the ICAI by keeping the winning trend in Continuation.

Branch has joined the Celebration of Patang Mahotsav organized by Lions Club held on 14th Jan 2015 wherein CA. Sunil Patodia (Chairman-WIRC), CA. B.M. Agarwal (Past Chairman) Mrs. Suman Kothari (Corporator- MBMC) and various dignitaries from Lions Club and Corporators graced the occasion.

Branch had conducted Lecture Meeting on Modern opportunities for Investors and Systematic Investment Planning on 30th Jan, 2016.

Branch conducted Two Career Counseling Programme at Sheth Vidya Mandir English High School & Junior College in order to create awareness and guide the students about various

CHAIRMAN’S COMMUNICATION

Like every year this year also we have submitted yearly activity report to ICAI and WIRC and we are very glad to inform you that we have been awarded for Certificate of Appreciation in large branch category from ICAI for WICASA.

and achievements. I am also grateful to ICAI President -CA. Manoj Fadnis, ICAI Vice President- CA.M. Devaraja Reddy, Central Council Members, WIRC Chairman - CA Sunil Patodia, Branch Nominee- CA. Mahesh Madkholkar & all Regional Council Members for their continuous guidance, co-operation and encouragement.I would also like to thank Convenors and Deputy Convenors of Bhayander & Vasai –Virar CPE Study Circles, Past Chairman, Ex Offico Members, Faculties and various Contributors and above all to all of you for making the year memorable for me.

“Always bear in mind that your own resolution to succeed is more important than any other”.- Abraham Lincoln


FORTHCOMING PROGRAMMES FOR MEMBERSDate Seminar on Timings Venue Speakers Co-ordinators Fees CPE2nd March 2016

Public Meeting on Union Budget

5.30 pm to 8.30 pm

Indravarun Hall, Jesal park, Bhayander (East)

CA. Ashit Shah CA. Bhupendra Shah

Free 3CA. Dayaram Paliwal 9820331010

Forthcoming Programme


DIRECT TAXES - LAW UPDATE

— Compiled by — Haresh P. Kenia |

|e-mail:[email protected] |9821351838

TRANSFER PRICING-NOTIFIED TOLERANCE LIMIT U/S 92C(2) [234 TAXAMAN (st.) 176]

The Central Government vide notification no.86/2015 dated 29-10-2015 in exercise of the powers conferred by the third proviso to section 92C(2) read with rule 10CA(7) (proviso) of the Income Tax Rules,1962 notifies that where the variation between the arm’s length price determined under section 92C and the price of which the international transaction or specified domestic transaction has actuality been undertaken does not exceed, one per cent, of the latter in respect of wholesale trading and three per cent , of the latter in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for Assessment Year 2015-16.The circular also gives the definition of “wholesale trading”.

EXTENSION OF DUE DATE FOR FILING OF RETURNS OF INCOME AND AUDIT REPORTS U/S 44AB- CORRIGENDUM TO ORDER [F.NO.225/207/2015/ITA-II], Dated 1-10-2015

The CBDT vide Order F. No 225/207/2015/ITA-II, Dated 29-10-2015, clarifies that the extension of due date of filing of Return of Income is also applicable to requirement to obtain and furnish “Report of Audit “under various provisions of the Act. It is hereby clarifies that the “due date” for obtaining and E-filing report of audit under various provisions of the Act pertaining to such Returns of income also stands extended till 31-10-2015. This clarification is corrigendum to order dated 1-10-2015 wherein the CBDT has extended the “due date” for E-filing Return of income from 30th September, 2015 to 31st October,2015 in case of in case of income tax assessee’s which are covered by section 139(1) under explanation 2(a) of the Income Tax Act.

FINCANCE ACT, 2015 – EXPLANATORY NOTES TO THE PROVISIONS OF THE SAID ACT. [235 TAXAMAN (st.) 67]

The CBDT circular no 19/2015 Dated 27-11-2015 gives

amendments at a glance being explanatory notes to the provisions of the Finance Act, 2015. One may referred to above citation for more details

DEDUCTION OF TAX AT SOURCE U/S 192 OF THE INCOME TAX ACT, DURING THE FINANCIAL YEAR 2015-16 [ 236 TAXMAN (st.) 25]

The CBDT vide circular no 20/2015, dated 2-12-2015 contains the rates of deduction of income tax from the payment of income chargeable under the head “Salaries” during the financial year 2015-16 and explains certain related provisions of the Act and Income Tax Rules.

DEDUCTION U/S 80P OF THE ACT FROM INCOME OF CO-OPERATIVE SOCIETIES - INTEREST FROM NON-SLR SECURITIES OF BANKS [ 235 TAXMAN (st.) 6]

The CBDT vide circular no 18/2015, dated 2-11-2015 has clarifies the decision of Board that no appeals will be filed by the department in view of the Supreme Court decision in the case of CIT V. Nawanshahar Central Cooperative Bank Ltd 160 Taxman 48 (SC), wherein the court held that the investment made by banking concern are part of business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head “Profit and Gains of Business and Profession”. It also clarifies that though the decision was in the context of cooperative Societies/ Banks claiming deduction u/s 80P(2)(a)(i) of the Income Tax Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act,1949 applies.

The Board has issued above clarification in view of the fact that field officers are taking a view that, “expenses related to investment in non –SLR securities need to be disallowed u/s 57(i) of the Act as interest on non-SLR securities is income from other sources”

In light of the Supreme Court’s decision in the matter, the Board is of the view that the issue is well settled and accordingly decided that no appeals may henceforth be filed on this ground by the officers of the department and appeals already filed on this ground before Courts/ Tribunals may be withdrawn / not pressed upon.


— Compiled by — CA. Hemant R. Shah | e-mail: [email protected] |9869011148

SUPREME COURT:

1) CIT vs. Bank of Nova Scotia (Supreme Court) :

Penalty U/s 271C for failure to deduct TDS cannot be levied, if the Department is unable to show contumacious conduct on the part of the assessee:

The Hon. Apex Court have carefully considered the rival submissions and stated that in the instant case they are not dealing with collection of tax U/s 201(1) or compensatory interest U/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with the Revenue. In the present appeals, the only issue the Apex Court was concerned was that of levy of penalty U/s 271-C for which it is necessary to establish that there was contumacious conduct on the part of the assessee. The Supreme Court have found that on similar facts Hon’ble Delhi High Court have deleted levy of penalty u/s 271-C in the case of M/s Itochu Corporation, reported in 268 ITR 172 (Del) and in the case of CIT Vs. Mitsui & Company Ltd. Reported in 272 ITR 545.

HIGH COURTS

1) Triune Energy Services Pvt. Ltd. vs. DCIT (Delhi High Court)

Goodwill value cannot be challenged where slump sale includes sale of goodwill & such agreement is beyond any doubt (Date of Judgment: 19/11/2015)

Delhi High Court held in the case of Triune Energy Services Pvt. Ltd. vs. DCIT that if ITAT have no doubt on slump sale agreement and do not thinks that it is a colourable device than the agreement between the parties must be accepted in its totality. Indisputably, the transaction in question is a slump sale which does not contemplate separate values to be ascribed to various assets (tangible and intangible) that constitute the business undertaking, which is sold and purchased. The Agreement itself indicates that slump sale included sale of goodwill and the balance sheet drawn up on 22nd September, 2006 specifically recorded goodwill at ` 40,58,75,529/-. As Goodwill includes a host of intangible assets, which a person acquires, on acquiring a business as a going concern and valuing the same at the excess consideration paid over and above the value of net tangible assets is an acceptable accounting practice. Thus, a further exercise to value the goodwill is not warranted.

TRIBUNAL DECISIONS

1) ITO vs. M/s Shakti Securities Pvt. Ltd. (ITAT Delhi)

Reassessment not valid on mere information of investigation wing as no direct nexus estblishes with income escapement:

(Income Tax Appeal Nos. 3475/DEL/2009 & 3129/DEL/2010, Date of Judgment: 10/09/2015, AY 2001-02 & 2002-03)

ITAT Delhi held in the case of ITO vs. M/s Shakti Securities Pvt. Ltd. that merely based on Investigation Wing information without surveillance of substantiation and without any statement being mentioned therein and without nature of transaction being narrated therein and without tangible material, and further without application of mind on amount of income escaping assessment, shows that the reopening is bad in law and needs to be quashed. The present case is squarely covered by the decision of the Hon’ble High Court of Delhi delivered in Hotel Signatures Ltd. (2011) 338 ITR 51 in which reassessment proceedings held to be bad in law and decided the issue in favour of assessee.

2) Shri E. Krishnappa vs. ITO (ITAT Bangalore) (Date of Pronouncement 14/08/2015)

Initiation of penalty proceedings U/s 271(1)(c) without specifying the basis, makes such proceedings void-ab-initio

(I.T.A. Nos. 313 to 315/Bang/2014, A.Y. 2007-08 to A.Y.2009-10)

The ITAT Bangalore in the case of Shri E. Krishnappa vs. ITO held that initiation of penalty proceedings U/s 271(1)(c) without mentioning its basis i.e. concealment of income or furnishing inaccurate particulars or both would make the proceedings illegal because AO’s satisfaction of the existence of the grounds mentioned in Section 271(1)(c) is a mandatory for initiation of proceedings.

The additional ground can be admitted by the tribunal if it challenges the very legality of penalty proceedings as the same being non-curable defect.

3) Hiralal Chunilal Jain vs. ITO (ITAT Mumbai)

Bogus Purchases: Addition solely based on sales-tax Dept. info. not sustainable

(ITA No.4547/MUM/2014; Date of Pronouncement- 01/01/2016; A.Y.2009-10)

ITAT Mumbai held that addition for alleged Bogus Purchase not sustainable as AO had made the addition solely on the

RECENT CASE LAWS & – OTHER DEVELOPMENT/AMENDMENTS


basis of information received from the Sales tax Department without making any independent inquiry or following the principles of natural justice before making the addition.

Suspicion of the highest degree cannot take the place of evidence.

OTHER DEVELOPMENTS & AMENDMENTS

1) CBEC increase in Department Appeal Filing limit applies to pending Appeals also:

CBEC has, vide Instruction No.F.No.390/Misc./163/2010-JC Dated-17/12/2015 increased limits for filing appeals by Department before CESTAT to ` 10 Lacs and to ` 15 Lacs for Appeal before High Court. However, in its Instruction, it has not specified that whether it is applicable to Appeals which are pending as on 17/12/2015 or not. Now CBEC has following the footstep of CBDT clarified that increase in department appeal filing limit applies to pending appeals also. CBDT has also increased Appeal Filing limit vide Circular No. 21/2015 Dated-10th December, 2015.

2) CBDT issues Guidance Note for implementation of FATCA and CRS

The CBDT has issued a Guidance Note dated 31/12/2015 to explain the manner of ensuring compliance with the reporting requirements provided in Rules 114F to 114H and Form 61B of the Income-tax Rules, 1962 which deal with Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)

3) Provident Fund (PF) withdrawal made easier (Over 2 crores Employees to benefit)

Recently, EPFO allowed its subscribers to file their PF withdrawal applications directly to the retirement fund body without employers’ attestation thereby easing the process of PF withdrawal by employees.

Silent features and facts about new process of PF withdrawal:

1. The Universal Account Number (UAN) facility was launched last year to facilitate PF transfers while subscribers change jobs. All active subscribers have been allotted a number viz. UAN.

2. This facility is applicable for subscribers, if details such as Aadhaar, PAN and bank account are linked to their UAN and their Know-Your-Customer (KYC) verification done by their employers. More than 2 crore subscribers have verified KYC norms with the employers and can avail this new withdrawal facility.

Change in process?

Under the earlier process, after leaving a job, employees were supposed to get their withdrawal forms attested through their employers for identification of their details. This attestation of documents by the previous employer has been done away with.

Subscribers filing their claims directly without employers’ attestation would have to use new forms that have been simplified for the new process.

The easier withdrawal facility will help subscribers who find it difficult to contact their previous employers.

What are the other points to be kept in mind for withdrawal from PF

l Withdrawal claims have to be manually submitted by subscribers directly to the provident fund office. (Eventually, the EFPO plans to make the withdrawal process online to make it more subscriber-friendly)

l The earlier norm of a waiting period of two months after leaving the previous job still applies for withdrawal purpose.

l Subscribers who wish to take an advance from PF account can make partial withdrawal through the submission of Form-31. EPFO allows subscribers to take an advance in certain situations like house construction, repayment of housing loan and education of children and illness.

Note: In another important change recently, The Employees’ Provident Fund Organisation (EPFO) has removed the grace period of five days given to employers to deposit the provident fund (PF) contribution. Therefore, the employers have to pay the contribution within 15 days of end of every month.

4) For information of the Members

This is for kind information of the members that the last date for complying with the CPE Hours requirement for the Calendar Year 2015 – has been extended from 31st December, 2015 to 31st March, 2016.

The members who could not complete their respective CPE hours requirement upto 31st December, 2015 for the Calendar year 2015, are requested to kindly complete the same at the earliest and latest by 31st March, 2016.

5) Problem faced during payment of MCA Challans Through SBI Internet Banking:

Recently, many stakeholders are facing problem in making payment for the challans w.r.t. E Forms filed with Ministry of Corporate Affairs (MCA) specifically who are making payment through SBI Gateway.



When the E Forms are uploaded, system asks for payment via Credit Card/ Internet Banking/ Challan/ Pay Later. When stake holders click on INTERNET BANKING of SBI, it works smoothly till the User Id and Passwords are being filled in. But after the confirmation of payment, a blank page arise and payment gets deducted from the account with a note on MCA Site while checking over Track Transaction Status” On-line Payment confirmation unsuccessful. No Transaction Initiated. Track payment status for further details”.

When the stakeholders check the status on TRACK PAYMENT STAUS, the system remarks: NOT PAID WITH a message down as follows

Further, when the stakeholders go to make the payment second time or may be third time for the same E Form by following the process of uploading the E Form, and the status remains NOT PAID and payment gets deducted twice or thrice.

Solution : Go to the Track Payment Status TAB. Put the SRN and click submit. The above message shall be shown over with remarks NOT PAID and a message as pasted above. Stakeholders need to click on the RED BUTTON with message “here”. The payment shall be confirmed and Receipt shall be generated for the further perusal.

6) MVAT Audit Due date extended to 21/01/2016

Considering the technical snag in uploading the 704-Audit Report for the financial year 2014-15 during the last week, the last date for filing 704-Audit Report for the financial year 2014-15 is extended up to 21st January, 2016.

7) PRESS RELEASE

Initiatives for reducing litigation - regarding (Dated 15th January, 2016)

The significant steps taken by CBDT include issue of a Circular revising the monetary limits for filing of appeals by the Department with the objective of reducing litigation as a part of its initiatives to reduce grievances of the taxpayers. CBDT has also directed Principal Chief Commissioners to constitute a collegium of Chief Commissioners of Income Tax to consider withdrawal of appeals filed by the Department in cases involving tax effect above the revised monetary limit from the High Courts in cases where, no question of law is involved, the issue is considered settled by the Department, or the appeal is no longer relevant in view of subsequent amendment.


Besides this, the CBDT has issued a number of Circulars for withdrawing or not pressing of appeals on settled issues relating to the subjects listed below:

1. Non applicability of Rule 9A of the Income-tax Rules 1962 in case of abandoned feature films.

2. Measurement of the distance for the purpose of section 2(14)(iii)(b) of the Income-tax Act for the period prior to assessment year 2014-15.

3. Interest from non-statutory liquidity ratio (non-SLR) securities.

4. Allowability of employer’s contribution to funds for welfare of employees in terms of section 43(b) of the Income-tax Act.

5. TDS under section 194Aof the Act on interest on fixed deposit made on the directions of the courts.

6. Recording of satisfaction note under section 158BD/153C of the Income-tax Act.

7. Non levy of penalty u/s 271(1) (c) wherein additions/disallowances were made under normal provisions of Income-tax Act 1961 but tax was levied under MAT provisions under section 1 15JB/115JC, for cases prior to A.Y. 2016-17.

The relevant Circulars are available on the website of the Department www.incometaxindia.gov.in .

8) CBDT clarifies the legal position on applicability of penalty under section 271(1)(c) where section 115JB Book Profits are more than normal Income:

The CBDT has issued Circular No.25/2015 dated 31/12/2015 pointing out that pursuant to the judgement of the Delhi High Court in Nalwa Sons Investment Ltd. 327 ITR 543 (Delhi) and the substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now a settled position that prior to 01/04/2016, where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits U/s 115JB of the Act, then penalty U/s 271(1)(c) of the Act is not attracted with reference to additions /disallowances made under normal provisions. The CBDT has clarified that in cases prior to 01/04/2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty U/s 271(1)(c) of the Act, will depend on the nature of adjustment. The above settled position is to be followed in respect of section 115JC of the Act also. The CBDT has accordingly directed that no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon.

Career Counseling at Sheth Vidya Mandir English High School & Junior College held on 23rd January 2016 at Vasai Road (East)

Educational Visit at Kashimira Police Department held on 5th January 2016 at Mira Road (East)

Educational Visit at Kashimira Police Department held on 7th January 2016 at Mira Road (East)


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Celebration of Republic Day held on 26th January, 2016 at Vasai Road (East)


To

Undelivered please return to :

The Institute of Chartered Accountants of India,Vasai Branch of WIRCAddress: Amruta Building, Indralok Phase-II, New Golden Nest Road, Bhayander (East), Thane - 401 105. Telephone: 6556 8900. Email: [email protected] Website: www.vasai-icai.org

Editor: CA. Umesh Mestry Published by Vasai Branch of Western India Regional Council of The Institute of Chartered Accountants of India and printed at Finesse Graphics and Prints Pvt. Ltd., 309, Parvati Ind. Est., Sun Mill Compound, Lower Parel, Mumbai 400 013. Tel. : 4036 4600

The views and opinions expressed or implied are those of the authors or contribution and do not necessarily reflect those of Vasai Branch. Unsolicited articles and transparencies are sent in at the owner’s risk and the publisher accepts no liability for loss or damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of Vasai Branch.

DISCLAIMER: The Vasai branch is not in any way responsible for the result of any action taken on the basis of the advertisement published in the Newsletter. The members, however, may bear in mind the provision of the Code of Ethics while responding to the advertisements.

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